TIONG WOON CORPORATION HOLDING LTD …tiongwoon.listedcompany.com/misc/ar2012.pdfTiong Woon...

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2 MOVING AHEAD

Annual Report 2012

TIONG WOON CORPORATION HOLDING LTDCompany Registration Number: 199705837C

No. 15 Pandan Crescent

Singapore 128470

Tel: (65) 6261 7888

Fax: (65) 6777 4544

Equipment Booking Hotline: (65) 6777 4450

Email: [email protected]

1 Our Vision & Mission

2 Corporate Profile

3 TWC Group of Companies

4 Chairman’s Message

8 Business Review

12 Highlights of Our Projects

16 Board of Directors

18 5-Year Financial Highlights FY2008-FY2012

20 Corporate Information

21 Corporate Governance Report

33 Financial Contents

92 Shareholders’ Information

93 Analysis of Shareholders

94 Notice of Annual General Meeting

Proxy Form

CONTENTS

1

Tiong Woon Corporation Holding Ltd | Annual Report 2012

1


OUR VISIONTo be a world-class organisation in providing high quality and safe services

to our clients anywhere in the world

OUR MISSIONTo maximise shareholders’ value and exceed customers’ expectations as an integrated services

specialist and provider of infrastructure businesses in heavy lift and haulage, marine transportation,

and fabrication and engineering through our focus on high safety standards and reliable services.


CORPORATE PROFILE

The Group manages turnkey projects for engineering, procurement

and construction (EPC) contractors and project owners from planning

and design of heavy lifting and haulage requirements to the execution

stage in which the heavy equipment are transported, lifted and

installed at customers’ facilities. It possesses its own heavy lift and

haulage equipment, tugboats, barges and fabrication yards, which

enable them to widen its integrated services offering to its customers.

Headquartered in Singapore, TWC has establishments in Malaysia,

Indonesia, Thailand, Philippines, Vietnam, China, India and Saudi

Arabia. It is ranked as the 14th largest crane owning company

worldwide by International Cranes and Specialised Transport, a

reputable trade magazine, in its IC50 2012 survey. It is one of the top

10 companies in the world in terms of crawler crane ownership. It also

owns a single largest crane of 1,600-tonne lift and above, namely, its

Terex Demag CC 8800-1 crane.

Tiong Woon is committed to delivering high quality, reliable facilities

and services on time, on delivery, on budget and with world-class

safety.

Listed in 1999, Tiong Woon Corporation Holding Ltd

(TWC) is a leading one-stop, integrated services

specia l is t and prov ider of in f rast ructure

businesses, supporting mainly the oil and

gas, as well as petrochemical, power

and construction sectors.


CORPORATE PROFILE

2


CHINA

INDIA

SAUDI ARABIA

VIETNAM

PHILIPPINES

INDONESIA

SINGAPORE

MALAYSIA

THAILAND

SINGAPORE• Tiong Woon Corporation Holding Ltd

• Tiong Woon Crane & Transport (Pte) Ltd

• Tiong Woon Marine Pte Ltd

• Tiong Woon Enterprise Pte Ltd

• Tiong Woon International Pte Ltd

• Tiong Woon Crane Pte Ltd

• Tiong Woon Offshore Pte Ltd

• Tiong Woon China Consortium Pte Ltd

• Tiong Woon Project & Contracting Pte Ltd

• Tiong Woon Logistics Pte Ltd

• TW (Sabah) Pte Ltd

• Tiong Woon Oil & Gas Services Pte Ltd

• Soon Douglas (Pte) Ltd

• Tower Cranes Services Pte Ltd

• Tiong Woon Oasis Marine & Engineering Pte Ltd

• Tiong Woon Oasis Pte Ltd

CHINA• Tiong Woon (Huizhou) Industrial Services Co., Ltd

INDONESIA• P.T. TWC Indonesia

• P.T. TWC Bintan

• P.T. Tiong Woon Indonesia

• P.T. Tiong Woon Oasis

INDIA• Tiong Woon Project & Contracting (India)

Private Limited

MALAYSIA• Tiong Woon Crane & Transport (M) Sdn Bhd

• Ikhlas Taqwa Sdn Bhd

• Tiong Woon Oasis Sdn Bhd

• Tiong Woon Crane Sdn Bhd

PHILIPPINES• Tiong Woon Philippines, Inc

SAUDI ARABIA• TWC Arabia Ltd

THAILAND• Tiong Woon Thai Co. Ltd

• Thai Contracting & Enterprises Co., Ltd

VIETNAM• Tiong Woon Vietnam Company Limited

TWC GROUP OF COMPANIES

3


CHAIRMAN’S MESSAGE

I t has been a chal lenging year for T iong Woon

Corporation Holding Ltd (TWC) with the uncertainties

over the global economy and their effects on the

environment in which the Group operates. Despite

the euro zone debt crisis remaining unresolved, slow

recovery in the United States’ economy and slowdown

in China’s economy, TWC is moving ahead to achieve

its vision of being a world-class organisation in

providing high quality and safe services to our clients

anywhere in the world.

We seek to maximise shareholders’ value and exceed

customers’ expectations as an integrated services

specialist and provider of infrastructure businesses

in heavy lift and haulage, marine transportation, and

fabrication and engineering through our focus on high

safety standards and reliable services.

We will continue to concentrate in supporting mainly

the oil and gas as well as the petrochemical, power and

construction sectors. The Group is headquartered in

Singapore with establishments in Malaysia, Indonesia,

Thailand, Philippines, Vietnam, China, India and Saudi

Arabia.

Worldwide, TWC’s expert ise and experience are

acknowledged. It is recognised as the 14th largest

crane owning company worldwide by International

Cranes and Specialised Transport, a reputable trade

magazine, in its IC50 2012 survey. This position is up

from the 18th place attained in the same surveys over

the past two years.

PERFORMANCE REVIEWMoving ahead strategically, we will continue to focus

on our four core businesses in Heavy Lift and Haulage,

Marine Transportation, Fabrication and Engineering, and

Trading. We will strengthen our commitment to deliver

high quality and reliable facilities, and services on time,

on delivery, on budget and with good safety standards.

During the past year, TWC experienced many challenges

in managing its business. It posted S$151.2 million

revenue for the financial year ended 30 June 2012, up

41 per cent compared to S$106.9 million a year ago.

The increase was due to the overall rise in revenues

from the Group’s business segments. However, despite

the rise in turnover, TWC registered a loss before tax

of S$3.9 million due to rising expenses. These costs

have eroded already-thin margins for various projects,

particularly those secured in recent times.

The Group’s four businesses recorded the following

revenues – Heavy Lift and Haulage at S$114.8 million,

Marine Transportation at S$16.4 million, Fabrication

and Engineering at S$13.8 million, and Trading at

S$6.2 million. The Group’s main revenue contributor,

Heavy Lift and Haulage division saw revenue increased

by 34 per cent compared to the previous financial year,

due mainly to bigger integrated projects undertaken

in the Asia Pacific region. For Marine Transportation

division, revenue went up 70 per cent compared to

a year ago, as a result of several significant charter

contracts executed during the year and an increase in

its utilisation rates.

4


“

”

W o r l d w i d e , T W C ’ s

expertise and experience are

acknowledged. It is recognised

as the 14th largest crane

owning company worldwide

by International Cranes and

Specia l ised Transport , a

reputable trade magazine, in its

IC50 2012 survey. This position

is up from the 18th place

attained in the same surveys

over the past two years.

Revenue from the Fabrication and Engineering division

jumped by 177 per cent compared to the previous

year due mainly to revenues from engineering projects

executed in the course of the financial year. The

Trading division’s revenue dipped slightly by 8 per cent

compared to a year ago. This is because more low

capacity cranes were sold as compared to fewer higher

capacity cranes, which commanded higher prices, sold

in the previous financial year.

In terms of its business by geography, Singapore

remained the main revenue contributor, increasing

its contribution by 16 per cent to S$74.6 million. The

other two markets that made significant contributions

were the Middle East and Malaysia. Revenue from the

Middle East went up by 127 per cent to S$23.4 million

while revenue from Malaysia increased by 424 per cent

to S$14.5 million during the year under review. The

increase in turnover for the three markets was mainly

due to significant projects executed in the current

financial year.

Cost of sales increased by 46 per cent to S$118.9

million for the financial year due mainly to the increase in

revenue. There was also an increase in depreciation, fuel,

hire of equipment, subcontractor and wage costs. Other

operating expenses increased by 30 per cent to S$32.1

million mainly because of an increase in manpower

expenses and a higher provision for impairment loss on

trade receivables for the financial year.

5


Finance costs increased by 77 per cent to S$2.6 million

due to a lower currency translation gain of S$0.7 million

relating to foreign currency denominated borrowings,

compared to a higher translation gain of S$1.7 million

previously.

We believe our stable business fundamentals have

enabled TWC to stay ahead in the competitive business

environment. The Group’s balance sheet remains

healthy with total assets of S$384.4 million and net

assets of S$226.2 million as at 30 June 2012. This

translated to a net asset value per share of 47.85

cents. The Group generated positive net cash flow from

operations of S$35.5 million for financial year 2012. Its

cash and cash equivalent balance was S$22.8 million

with a net debt to total equity ratio of 29.5 per cent. It

has a market capitalisation of S$120.8 million, based

on 18 September 2012 closing price of 26.0 Singapore

cents per share. The total number of shares issued is

464.5 million.

In December 2011, the Group announced a rights

issue on the basis of one right share for every four

existing ordinary shares. The rights shares are priced at

an issue price of S$0.11 each, representing a discount

of approximately 48.8 per cent to the closing price

of S$0.215 per share as of 28 December 2011. The

rights issue of 92,894,102 new ordinary shares in the

company’s capital was fully subscribed.

The rights issue was to reward shareholders by

allowing them to further participate in the equity at a

price lower than the market price. In addition, TWC

hoped to strengthen its balance sheet by increasing

equity, therefore providing it with flexibility in pursuing

strategic growth and acquisition opportunities. This

included the option to expand its fleet of heavy lift and

haulage assets. Out of the S$10 million net proceeds

from the rights issue, about S$5 million was used for

general working capital.

In appreciation of the continuous support of our

shareholders, the Board of Directors is proposing a

final exempt one-tier dividend payment of 0.4 cent per

share, similar to the dividend paid out in financial year

2011. The dividends amounting to S$1.86 million will

be payable to shareholders in November 2012.

66


MARKET OUTLOOKAccording to the report on the economic outlook

for Singapore, the Singapore’s Ministry of Trade

and Industry said that the external environment

remains challenging due to the fragility in the global

economic recovery. In the United States, the strength

of household consumption will be curtailed by a high

level of unemployment while in the euro zone, ongoing

fiscal consolidation and bank deleveraging will continue

to weigh on domestic demand. Although growth in

Asia will be supported by rising domestic consumer

demand, it will be negatively affected by lacklustre

export performances amidst the external turmoil.

Despite several efforts to address the euro zone

sovereign debt crisis, a sovereign debt default cannot

be ruled out. If this happens, there will be considerable

downside for the global economy and adverse effects

on Singapore’s externally-oriented industries. As a

consequence of this macroeconomic scenario, the

Singapore economy’s growth outlook remains cautious

with uncertainties and risks still lurking in the horizon.

Barring unforeseen shocks, the Ministry of Trade and

Industry expects the Singapore economy to remain on

track to grow by 1.5 to 2.5 per cent in 2012.

According to International Cranes and Specialised

Transport magazine January 2012’s “Rental Confidence

Survey”, rental companies are facing inconsistent

demand and uncertainties about their immediate future

due to the global economic turmoil. There is cautious

optimism in the Middle East with Saudi Arabia being

one of the bright spots. In China, the government

has slowed down investment in infrastructure and

construction projects but other parts of Asia are seeing

hopeful signs. In India, the demand is for used cranes

while in the Philippines, crane rental is stable due to the

pickup of construction of building projects. Malaysia

also expects utilisation rates to increase due mainly to

some bigger projects being planned in 2012.

MOVING AHEAD STRATEGICALLYDespite the challenges in the global economic climate,

TWC is optimistic that its revenues will continue to

grow. There are business opportunities in the market

and the Group is seeing good utilisation rates for its

cranes. It will strive to secure more contracts especially

those that will give TWC decent margins and continue

to operate in a cost-effective and efficient manner.

Moving ahead, the Group’s business priorities will

continue to focus on the following:

• To actively pursue business opportunities in the

emerging markets for the Group’s core heavy lift

and haulage segment;

• To develop its fabrication and engineering

competency for marine, oil and gas projects;

• To invest in higher capacity and specialised

equipment;

• To forge strategic alliances and cooperation

with international and industry players to jointly

participate in the bidding for projects; and

• To maintain active and tight management control

of the Group’s respective business activities.

ACKNOWLEDGEMENTSOn behalf of the Board, I would like to take this

opportunity to express my deepest appreciation for

the invaluable support and kind cooperation of our

shareholders, business partners and customers. We are

grateful for your continued partnership and confidence

in us through the years.

Our heartfelt thanks also go to the management team

and staff for their loyalty and dedication in sustaining

and growing our business to what it is today. Indeed,

your hard work is much appreciated.

Last but not least, I would like to thank our Board of

Directors for their guidance and wise counsel. I look

forward to all our stakeholders’ contributions so that

together, we can move ahead to strengthen and grow

our business in the years ahead.

Ang Kah Hong

Group Chairman and Managing Director

24 September 2012

77


8

BUSINESS REVIEW

9


The Group continues to rely on its strengths to meet the challenges in its business

environment. These strengths include its good track record of more than 30 years; experienced

team of senior management, project managers and engineers; and ownership of an extensive fleet

of heavy lift and haulage equipment and marine transportation. Its other assets include TWC's good

safety record, good relationship with all its clients,

and staff strength of more than 1,000.

“

”D u r i n g t h e y e a r , T i o n g W o o n

Corpora t ion Ho ld ing L td (TWC)

is moving ahead as it focuses on

i t s ro le as a reg iona l one-s top

integrated service provider supporting

various industries such as oil and

gas, pet rochemica l , power and

construction. This focused role as an

integrated one-stop service provider

is its key advantage over its main

competitors.

With the current uncertainty in the

global economic environment, the

Group expects business conditions

to remain diff icult going forward.

Competition continues to be keen and

it still has to contend with higher costs

and aggressive pricing. The Group

expects pressures on margins to

persist.

Nonetheless, it will strive to streamline

and strengthen its operations and

exercise financial prudence to ensure

that it operates in a cost-effective

and efficient manner. It will continue

to be active in its key markets such

HEAVY LIFT AND HAULAGE

The Group’s Heavy Lift and Haulage

division supplies specialised heavy lift

and haulage equipment; and provides

planning, engineering, erection and

installation services for heavy lift and

equipment installation work.

Founded in 1978, the Group has

been pre-qualif ied by engineering

p rocu remen t and cons t ruc t i on

contractors as a heavy lift contractor

for oil and gas projects. As of end

June 2012, the Group has a total of

376 cranes including 65 tower cranes,

and 208 pieces of haulage equipment

as Singapore, Malaysia, Indonesia,

Thailand, Philippines, Vietnam, China,

India and the Middle East in the oil

and gas, petrochemical and power

generation sectors.

The Group continues to rely on its

strengths to meet the challenges in its

business environment. These strengths

include its good track record of more

than 30 years; experienced team of

senior management, project managers

and engineers; and ownership of an

extensive fleet of heavy lift and haulage

equipment and marine transportation.

Its other assets include TWC's good

safety record, good relationship with all

its clients, and staff strength of more

than 1,000.

In mov ing ahead to ach ieve i ts

bus iness goa ls and operat iona l

efficiencies, the Group is structured

into four key businesses – Heavy Lift

and Haulage, Marine Transportation,

Fabrication and Engineering, and

Trading.

10


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The Marine Transportation division

has done well for the year, increasing

its revenue by 70 per cent to S$16.4

million due to several significant charter

contracts executed in the year. The

utilisation rate of its vessels has gone

up to 66 per cent from 39 per cent a

year ago. Despite the global economic

uncertainties, the business is picking

up with many enquiries coming in.

FABRICATION AND

ENGINEERING

The Group’s Fabrication business

offers ship repair and fabrication

serv ices for o i l and gas as wel l

as offshore marine industries. Its

Eng i nee r i ng bus i ness i n vo l ves

marine construction such as berth,

jetty, power plant, desalination plant

intake and outfall construction; pipe

laying, shore protection, dredging,

reclamation, revetment works, piling

works and structure works.

During the year, the division increased

its revenue by 177 per cent to S$13.8

million compared to a year ago due

mainly to revenues from engineering

projects executed. In 2011, the revenue

came mainly from repair jobs.

Currently, TWC is ranked the 14th

l a rges t c rane own ing company

worldwide by International Cranes and

Specialised Transport, a reputable

trade magazine, in its IC50 2012

survey. The Group is one of the top

10 companies in the world in terms of

crawler crane ownership. It also owns

a single largest crane of 1,600-tonne

lift and above, namely, its Terex Demag

CC 8800-1 crane.

MARINE TRANSPORTATION

Through the Marine Transportation

business, TWC provides barging

services in Asia, the Middle East and

beyond; roll on/roll off operations;

mar ine transportat ion of project

cargoes; and chartering of tugboats

and barges.

The Group has a proven record in

marine transportation services. As of

30 June 2012, TWC owns a total of 24

vessels comprising 10 tugboats and

14 barges. The Marine Transportation

division works with the Group’s other

business divisions to bid for contracts,

thus acting as a one-stop integrated

services specialist and provider of

infrastructure businesses.

compared to 369 cranes and 202

pieces of haulage equipment a year

ago. The utilisation rate for the cranes

has improved at 66 per cent, up from

64 per cent in financial year 2011.

The Heavy Lift and Haulage division

continues to be the main contributor to

the Group’s revenue with an increase

of 34 per cent to S$114.8 mill ion

compared to a year ago because of

the wins of bigger integrated projects

undertaken in the Asia Pacific region.

Some of these projects include a

contract with JGC Corporation for

heavy lifting and installation works at

a Singapore refinery project related to

an oil major, and a contract to supply

heavy equipment for an of fshore

fabr icator project in Malaysia. In

addition, the division won a contract to

supply heavy equipment and marine

transportation in Myanmar.

11


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The Group has built up its reputation

and expertise through its strong and

experienced management team, who

has more than 20 years’ of experience

in this industry. During the year, the

division has won several big projects

including a contract involving marine

and engineering works for Tuas Spring

Desalination Plant, the largest sea

water desalination plant in Singapore

with a wholly owned subsidiary of

Hyflux Ltd as the main engineering,

p rocu remen t and cons t ruc t i on

contractor; and a contract involving

marine works for Tuas New Yard

(Phase 1), owned by Jurong Shipyard

Pte Ltd.

TRADING

T h e G r o u p ’ s T r a d i n g d i v i s i o n

complements TWC’s equipment

supply bus iness. I t invo lves the

distribution and trading of both new

and used equipment such as crawler

cranes, mobile cranes (including truck,

all terrain and rough terrain cranes),

tower cranes and hydraulic boring rigs.

In addition, the Trading division also

undertakes storage and distribution

of spare parts, and servicing of the

equipment, thus enabling TWC to be a

one-stop service centre for customers’

equipment needs.

As a specia l is t in heavy l i f t and

haulage, TWC has been awarded as

a distributor for IHI crawler cranes in

Asean except Indonesia; authorised

dealer for Jaso tower cranes in

Singapore and Malaysia; and sole

distributor for Fuwa crawler cranes

in Singapore, Thailand, Philippines,

Myanmar, Vietnam, Brunei, Laos and

Cambodia.


12

HIGHLIGHTS OF OUR PROJECTS

PROJECT Brahmaputra Petrochemical Complex

LOCATION Assam, India

SCOPE OF

WORK

Heavy lifting services

INDUSTRY Petrochemical

EQUIPMENT

USED/MODEL

NAME

Demag CC8800

Demag CC2600

PROJECT Singapore Hydro-Desulfurisation Unit

LOCATION Jurong Island, Singapore

SCOPE OF

WORK

Equipment installation


EQUIPMENT

USED/MODEL

NAME

Demag CC6800

Demag CC2800-1

Demag AC-500

Kobelco CKE1800-1F

PROJECT JG Summit Naptha Cracker

LOCATION Batangas, Philippines

SCOPE OF

WORK



EQUIPMENT

USED/MODEL

NAME

Demag CC8800-1

Demag CC2800-1

Demag CC 1400

13


PROJECT Ammonia Plant Feedstock Changeover

LOCATION Nangal, India

SCOPE OF

WORK


INDUSTRY Fertilizer Plant

EQUIPMENT

USED/MODEL

NAME

Demag CC2600

FCC250

PROJECT Manglore Refinery

LOCATION Manglore, India

SCOPE OF

WORK



EQUIPMENT

USED/MODEL

NAME

Demag CC8800

Demag CC2600

PROJECT Petronas Offshore Supply

LOCATION Kuantan-Bintulu, Malaysia

SCOPE OF

WORK

Pipe-lay-barge transportation

INDUSTRY Offshore transportation

EQUIPMENT

USED/MODEL

NAME

Tiong Woon Ocean 19


14

PROJECT Construction of anchored sheet piled

quay wall for EPCC of proposed supply

base

LOCATION Jubail Commercial Port, Saudi Arabia

SCOPE OF

WORK

Construction of a 400 m jetty and

dredging for supply base

INDUSTRY Oil and gas

PROJECT Zadco Offshore

LOCATION Persian Gulf, Middle East

SCOPE OF

WORK

Offshore transportation

INDUSTRY Oil and gas

EQUIPMENT

USED/MODEL

NAME

Tiong Woon Ocean 18

PROJECT Tuas Megayard

LOCATION Tuas, Singapore

SCOPE OF

WORK

Dredging job and barge movements

INDUSTRY Wharf construction

EQUIPMENT

USED/MODEL

NAME

Tiong Woon Ocean 11

15


PROJECT Marine works for design, supply,

installation, testing and commissioning

of seawater intake

LOCATION Jurong Island, Singapore

SCOPE OF

WORK

Cofferdam construction, dredging,

intake towers launching and 2m

diameter pipe laying, backfilling,

reinstate shore protection

INDUSTRY Water desalination

PROJECT Design, construction and maintenance

of docks, wharves, quays, piers and

other ancillary works in Tuas New Yard

(Phase 1)

LOCATION Tuas South, Singapore

SCOPE OF

WORK

Existing shore protection removal, sand

and rock dredging, new geofabric and

rock laying

INDUSTRY Ship yard

PROJECT Tuas 2 Hyflux 70 MGD desalination

design build own operate

LOCATION Tuas, Singapore

SCOPE OF

WORK

Dredging, laying of marine intake and

outfall pipeline works including casting

and launching of intake towers and

outfall diffuser, revetment temporary

works and reinstatement and

construction of collection tank

outflow pipes


16

BOARD OF DIRECTORS

Left to right:

Mr Ang Kha King, Mr Tan Swee Khim, Mr Ang Kah Hong, Mrs Carrie Cheong and Mr Wong King Kheng

Mr Ang Kah Hong is the Group Chairman and Managing Director of Tiong Woon

Corporation Holding Ltd. He joined the Board of Directors on 21 August 1997. Since its

inception in 1980, he has been a Director of the Group’s subsidiary, Tiong Woon Crane &

Transport (Pte) Ltd. He has more than 30 years of experience in the management of heavy

lift and heavy haulage operations.

He is mainly responsible for envisioning the Group as a regional integrated heavy lift,

heavy haulage and marine transportation service provider. His key responsibilities include

identifying, formulating, developing and implementing corporate objectives and business

strategies for the Group. Mr Ang is also actively involved in the corporate development

activities. His leadership has proven to be instrumental and valuable to the growth of the

Group’s businesses in recent years.

17


Mr Wong King Kheng was appointed as an Independent Director on 23 August 1999. He

is presently the Managing Partner of K K Wong and Associates, a public accounting firm in

Singapore which he founded in 2000. He is also the Managing Director and a substantial

shareholder of Soh & Wong Management Consultants Pte Ltd, which he founded in 1988.

From 1989 to 2000, Mr Wong was the Founder and Managing Partner of Soh, Wong

& Partners, a public accounting firm. Prior to that, he was an Audit Manager in Deloitte

Haskins & Sells, Singapore, an international accounting firm. He qualified as a Member of

the Institute of Chartered Accountants in England and Wales and is presently a Member

of the Institute of Certified Public Accountants, Singapore. He also sits on the boards of a

number of other listed companies as an Independent Director.

Mrs Carrie Cheong was appointed as an Independent Director of the Company on 1 July

2009. She is the Chairperson of both the Nominating and Remuneration Committees and a

member of the Audit Committee.

She is a Director and Chief Executive Officer of Carrie Cheong & Ethel Low Consulting Pte Ltd,

a company which provides business advisory services, financial management and corporate

services. She has extensive experience relating to corporate planning and financial exercises

including corporate restructuring, initial public offers, and mergers and acquisitions. Mrs Cheong

holds a Master of Business Administration from the University of Brunel, United Kingdom. She is

a Fellow of the Association of Chartered Certified Accountant, a Practising Chartered Secretary

and an Associate of The Institute of Chartered Secretaries and Administrators. She also serves

as an Independent Director and Chairperson of the Audit Committee on the board of another

public-listed company in Singapore.

Mr Ang Kha King is an Executive Director and joined the Board of Directors on 21 August

1997. He is one of the founding members and a Director of the Group’s subsidiary, Tiong

Woon Crane & Transport (Pte) Ltd, since its inception in 1980. His key responsibilities

include reviewing the internal decision-making processes of the Group’s existing businesses

and overseeing its external operations. He actively supervises its key Operations and

Maintenance Division to ensure that there are adequate machines and equipment available

for its heavy lift and haulage assignments.

Mr Tan Swee Khim is an Executive Director and was appointed to the Board of Directors

on 23 August 1999. Since 1993, he has been a Director of the Group’s subsidiary, Tiong

Woon Crane & Transport (Pte) Ltd. As the Managing Director of Tiong Woon Crane &

Transport Pte Ltd, he is responsible for managing and overseeing the Group’s heavy lift

and haulage activities in marketing, operations, maintenance and project engineering in

Singapore as well as the regional markets.

He is also responsible for spearheading the Group’s marketing activities to promote its

services to both new and existing customers and identifying business opportunities for the

Group. Mr Tan is the acting Group Managing Director in the absence of Mr Ang Kah Hong.


18

5-YEAR FINANCIAL HIGHLIGHTS FY2008-FY2012

Profit and Loss Statement

Financial year ended 30 June 2012 2011 2010 2009 2008

S$’000

Turnover 151,210 106,948 148,392 202,280 157,773

Gross Profit (GP) 32,322 25,317 43,484 75,493 55,804

Profit Before Tax (PBT) (3,875)* 1,288 28,140 50,807 33,905

Profit After Tax (PAT) (5,789)* 846 23,901 42,410 28,294

Profit After Tax and Minority Interest (PATMI) (4,847)* 951 23,927 42,326 27,963

Profit Margin

GP Margin 21.4% 23.7% 29.3% 37.3% 35.4%

PBT Margin (2.6)% 1.2% 19.0% 25.1% 21.5%

PAT Margin (3.8)% 0.8% 16.1% 21.0% 17.9%

PATMI Margin (3.2)% 0.9% 16.1% 20.9% 17.7%

Statement of Financial Position

As at 30 June 2012 2011 2010 2009 2008

S$’000

Current Assets 89,436 91,388 163,811 145,233 101,290

Non Current Assets 294,988 285,747 255,910 226,701 198,269

Total Assets 384,424 377,135 419,721 371,934 300,189

Current Liabilities 78,029 77,533 97,003 107,602 77,495

Non-Current Liabilities 80,219 75,889 93,226 86,655 86,001

Total Liabilities 158,248 153,422 190,229 194,257 163,496

Net Current Assets (Working capital) 11,407 13,855 66,808 37,631 23,795

Net Assets 226,176 223,713 229,492 177,677 136,693

Per Share (Singapore Cents)

Earnings Per Share – Basic (1.11)** 0.22 6.62 12.54 8.28

Earnings Per Share – Diluted (1.11)** 0.22 6.62 12.54 8.28

Net Asset Value 47.85 58.96 60.43 51.36 39.31

Dividend Per Share 0.40 0.40 0.40 0.40 0.40

Weighted Average Number of Shares 437,068,538 426,624,767 371,576,410 337,576,410 337,576,410

Total Number of Shares at Year End 464,470,512 371,576,410 371,576,410 337,576,410 337,576,410

Note:

* FY2012 denotes Loss Before Tax, Loss After Tax, Loss After Tax and Minority Interest

** FY2012 denotes Loss Per Share


Segmental Revenue

By Business Segment

S$’000 FY2012 FY2011

Heavy Lift and Haulage 114,789 85,553

Marine Transportation 16,445 9,663

Fabrication and Engineering 13,784 4,985

Trading 6,192 6,747

TOTAL 151,210 106,948

By Geographical Segment

S$’000 FY2012 FY2011

Singapore 74,617 64,103

Middle East 23,400 10,325

Malaysia 14,532 2,774

India 10,622 12,233

Indonesia 10,273 7,898

Thailand 2,189 3,130

China 1,496 1,148

Others 14,081 5,337

TOTAL 151,210 106,948

Heavy Lift and Haulage

Marine Transportation

Fabrication and Engineering

Trading

FY2011

80.0%

9.0%

4.7%6.3%

FY2012

75.9%

10.9%

9.1%

4.1%

59.9%

11.4%

9.7%

7.4%

2.9%

2.6%

1.1%5.0%

49.3%

9.3%1.0%

9.6%

1.5%

6.8%

15.5%

7.0%

Singapore

Middle East

Malaysia

India

Indonesia

Thailand

China

Others

FY2011FY2012

19


BOARD OF DIRECTORS

Mr Ang Kah Hong (Group Chairman & Managing Director)

Mr Ang Kha King (Executive Director)

Mr Tan Swee Khim (Executive Director)

Mr Wong King Kheng (Independent Director)

Ms Luk Ka Lai Carrie (Mrs Carrie Cheong) (Independent Director)

COMPANY SECRETARIES

Ms Joanna Lim Lan Sim, ACIS

Mr Lee Wei Hsiung, ACIS

REGISTERED OFFICE

No. 15 Pandan Crescent

Singapore 128470

Tel: (65) 6261 7888

Fax: (65) 6777 4544

SHARE REGISTRAR

Tricor Barbinder Share Registration Services

(A division of Tricor Singapore Pte Ltd)

80 Robinson Road #02-00

Singapore 068898

AUDITOR

PricewaterhouseCoopers LLP

Public Accountants and Certified Public Accountants

8 Cross Street

#17-00 PWC Building

Singapore 048424

Partner-in-charge

Mr Tan Boon Chok

(Appointed with effect from financial year ended 30 June 2009)

PRINCIPAL BANKERS

United Overseas Bank Limited

DBS Bank Limited

Overseas Chinese Banking Corporation Limited

CORPORATE INFORMATION

20


CORPORATEGOVERNANCEREPORT

21


22

CORPORATE GOVERNANCE REPORT

The Board of Directors (the “Board” or the “Directors”) of Tiong Woon Corporation Holding Ltd (the “Company”)

recognises the importance of sound corporate governance in protecting the interests of its shareholders as well

as strengthening investors’ confidence in its management and financial reporting. The Company, together with its

subsidiaries (the “Group”), is committed to maintaining a high standard of corporate governance, and adheres to

the principles and guidelines set out in the Code of Corporate Governance 2005 (the “Code”) through self-regulatory

corporate practices. The Company is reviewing the recent revisions to the Code as approved by Monetary Authority

of Singapore on 2 May 2012 and will take steps to comply with the Revised Code. There are other sections in this

annual report which contain information required by the Code. Hence, the annual report should be read in totality.

(1) BOARD MATTERS

Principle 1: Board’s Conduct of its Affairs

The Board’s primary role is to protect and enhance long-term shareholder value. It sets the overall strategy

for the Group and supervises executive management. To fulfil this role, the Board is responsible for the overall

corporate governance of the Group including setting its strategic direction, establishing goals for management

and monitoring the progress and achievement of these goals.

To assist in the execution of its responsibilities, the Board has established an Audit Committee, Nominating

Committee, Remuneration Committee as well as a Management Committee. These committees function within

clearly defined terms of references and operating procedures, which are reviewed on a regular basis. The

effectiveness of each committee is also constantly reviewed by the Board.

The full Board meets on a regular basis as and when necessary, to address any specific significant matters

that may arise.

Details of the frequency of Board and Board Committee Meetings held during the year, as well as the attendance

of each Board member at these meetings are disclosed below:–

ATTENDANCE AT BOARD & BOARD COMMITTEE MEETINGS

BOARD AUDIT REMUNERATION NOMINATING

No. of

Meetings Attendance

No. of

Meetings Attendance

No. of

Meetings Attendance

No. of

Meetings Attendance

Ang Kah Hong 5 5 NA NA NA NA NA NA

Ang Kha King 5 5 NA NA NA NA NA NA

Tan Swee Khim 5 5 4 4 1 1 1 1

Wong King Kheng 5 5 4 4 1 1 1 1

Luk Ka Lai Carrie

(Mrs Carrie Cheong)

5 5 4 4 1 1 1 1

The Board has identified a number of areas for which the Board has direct responsibility for decision-making

including but not limited to the review of Interested Persons Transactions, the Group’s internal control procedures

and the approval of major investments and funding decisions.

The Board also meets to consider the following corporate matters and actions:–

• Approval of quarterly and full year result announcements;

• Approving the nomination of board directors and appointment of key personnel;

• Approval of the annual reports and accounts;

23



• Declaration of interim dividends and proposal of final dividends;

• Convening of shareholder’s meetings;

• Approval of corporate strategies;

• Assuming responsibility for corporate governance; and

• Material acquisitions and disposal of assets.

To assist directors in discharging their duties, new directors are briefed on the business, mission and values

of the Company and regulatory issues. The Executive Chairman and Managing Director ensure that Board

members are provided with complete, adequate and timely information on a regular basis to enable them to be

fully cognisant of the affairs of the Group. Board papers incorporating sufficient information from management

are forwarded to Board members in advance of a Board Meeting to enable each member to be adequately

prepared. From time to time, the Company Secretary and the Company’s auditor will advise the directors or

if necessary, conduct briefings to the directors on the new accounting standards and corporate governance

practices as well as updates them on any changes in the Companies Act and the Listing Manual. Directors

also have the opportunities to visit the Group’s operation facilities in order to have a better understanding of

its business operations overseas.

Principle 2: Board Composition & Balance

The Board comprises five directors, two of whom are independent directors. The Directors as at the date of

this statement are:–

(i) Mr Ang Kah Hong (Group Chairman & Managing Director)

(ii) Mr Ang Kha King (Executive Director)

(iii) Mr Tan Swee Khim (Executive Director)

(iv) Mr Wong King Kheng (Independent Director)

(v) Mdm Luk Ka Lai Carrie (Mrs Carrie Cheong) (Independent Director)

The Board has two directors who are independent members representing two-fifth of the Board. The criteria

for independence are determined based on the definition provided in the Code 2005.

The Board considers an “independent” director as one who has no relationship with the Company, its related

companies or its officers that could interfere, or be reasonably perceived to interfere, with the exercise of the

directors’ independent judgement of the Group’s affairs.

The Board does examine its size regularly to satisfy that it is an appropriate size for effective decision making,

taking into account the nature and scope of the Company’s operations.

The directors are senior and experienced executives in the accounting and business professions.

The Board considers that its composition of executive and independent non-executive Directors presents a

balanced mix of knowledge, business network and extensive business and commercial experience. This balance

is important in ensuring that the strategies proposed by Management are fully discussed and examined, taking

into account the long-term interests of the Group.

Where warranted, independent non-executive directors meet without the presence of management or executive

directors to review any matter that may be raised privately.


24


Principle 3: Chairman and Managing Director

Mr. Ang Kah Hong is the Executive Chairman and Managing Director, who is mainly responsible for identifying,

formulating, developing and implementing corporate objectives and business strategies for the Group. His

leadership has proven to be instrumental and invaluable to the growth development of Group’s businesses. He

is also actively involved in the corporate development activities overseas.

As such, it is the view of the Board that it is in the interest of the Group that the Executive Chairman and the

Managing Director is the same person, so as to ensure that the Group’s business strategies are properly and

smoothly implemented throughout the organisation.

In order to ensure an appropriate balance of power, accountability and independence in the Board’s decision

making processes, all major decisions made by the Executive Chairman and the Managing Director are reviewed

by the Audit Committee. His performance is being evaluated periodically by the Nominating Committee and his

remuneration package is being reviewed periodically by the Remuneration Committee. Both the Nominating

Committee and the Remuneration Committee comprise a majority of independent directors of the Company.

As such, the Board believes that there are adequate safeguards against an uneven concentration of power and

authority in a single individual.

Principle 4: Board Membership

The Nominating Committee (or “NC”) comprises two independent directors (including the Chairman) and one

executive director.

The members of the NC as at the date of this report are:–

• Mdm Luk Ka Lai Carrie (Mrs. Carrie Cheong) (Chairman and Independent Director)

• Mr Wong King Kheng (Independent Director)

• Mr Tan Swee Khim (Executive Director)

The primary function of the NC is to determine the criteria for identifying candidates and reviewing nominations

for the appointment of directors to the Board and also to decide how the Board’s performance may be evaluated

and propose objective performance criteria for the Board’s approval. Its duties and functions are outlined as

follows:–

a. to make recommendations to the Board on all board appointments and re-nomination having regard to the

director’s contribution and performance;

b. to ensure that all directors with the exception of the Managing Director would be required to submit

themselves for re-nomination and re-election at regular intervals and at least once in every three years as

prescribed in the Articles of Association of the Company;

c. to determine annually whether a director is independent, guided by SGX-ST’s guidelines and criteria;

d. to decide whether a director is able to and has adequately carried out his duties as a director of the Company

in particular where the director concerned has multiple board representations; and

e. to decide how the Board’s performance may be evaluated and propose objective performance criteria.

The search and nomination process for new directors, if any, will be through search companies, contacts and

recommendations to cast its net as wide as possible for the right candidate.

25



In identifying and evaluating nominees for appointment as Directors, the NC assesses the candidates based

on their background, qualification, work experience and integrity. In the case of candidates for Independent

Directors, the NC will also consider the independence of such candidates. The NC reports the results of such

assessments and makes recommendations to the Board.

The NC also reviews the Company’s succession plans annually to ensure the progressive renewal of the Board

and succession and leadership development plans for Senior Management.

In accordance with the Company’s Articles of Association, all Directors (except the Managing or Joint Managing

Director or an equivalent office) shall retire from office at least once every three years by rotation and all

newly appointed directors will have to retire at the next Annual General Meeting (the “AGM”) following their

appointments. The retiring directors are eligible to offer themselves for re-election.

Mr Tan Swee Khim and Mr Wong King Kheng would be retiring by rotation under Article 104 at the forthcoming

AGM and be eligible for re-election.

The NC has nominated the retiring directors, Messrs Tan Swee Khim and Wong King Kheng, for re-election at

the forthcoming AGM. In considering the nomination, the NC took into account the contribution of the directors

with reference to their attendance and participation at Board meetings (and Board committee meetings where

applicable) as well as proficiency with which they have discharged their responsibilities. A retiring director who

is also a member of the NC abstained from nominating himself from re-election.

The profiles of the directors are set out on pages 16 and 17 of this Annual Report.

Principle 5: Board Performance

A formal assessment process is in place to assess the effectiveness of the Board as a whole and the contribution

by each Director to the effectiveness of the Board.

The evaluation of the Board is conducted annually and individual assessment of each director is also undertaken

for Director(s) who is/are due for retirement and re-election at the annual general meetings annually.

The NC uses its best efforts to ensure that Directors appointed to the Board possess the relevant background,

experience and knowledge to enable balanced and well-considered decisions to be made.

The NC also determines annually whether or not a Director with multiple board representations has been

adequately carrying out his duties as Director of the Company. While the Directors may have several directorships

in other companies, the NC takes care to ensure and is satisfied that the appointees have contributed adequate

time to meet the expectations of their role as directors.

Taking into account the results of the assessment of the effectiveness of the Board and of the individual Director

and the respective Directors’ conduct on the Board, the NC is satisfied that all the Directors have adequately

carried out their duties as Directors, notwithstanding their multiple Board representations.

Principle 6: Access to Information

The Board has separate and independent access to senior management of the Company as well as the Company

Secretary at all times. Requests for information from the Board are dealt with promptly by the management. The

Board is informed of all material events and transactions as and when they occur. The management provides

the Board with quarterly reports of the Company’s performance. The management also consults with Board

members regularly whenever necessary and appropriate. The Board is issued with board papers timely and

prior to Board meetings.


26


The Company Secretary administers, attends and prepares minutes of Board meetings, and assists the Chairman

in ensuring that Board procedures are followed and reviewed so that the Board functions effectively and the

Company’s Memorandum and Articles of Association and the relevant rules and regulations applicable to the

Company are complied with.

The Board in fulfilling its responsibilities, can as a group or individually, when deemed fit, direct the Company

to appoint professional adviser to render professional advice.

(2) REMUNERATION MATTERS

Principle 7: Procedures and Development of Remuneration Policies

The Remuneration Committee (or “RC”) comprises three members, a majority of whom are directors who are

independent of management and free from any businesses or other relationships, which may materially interfere

with the exercise of their independent judgement. As at the date of this Report, the Remuneration Committee

members are:–

• Mdm Luk Ka Lai Carrie (Mrs Carrie Cheong) (Chairman and Independent Director)

• Mr Wong King Kheng (Independent Director)


The Company is of the view that the size of the Group’s present business and operations does not justify the

appointment of a third non-executive director for the purpose of reconstituting the RC to comprise solely of

non-executive directors.

The RC’s role is to review and recommend on remuneration policies and packages for the executive directors,

the top key executives of the Company as well as employees related to the Directors. The review will cover all

aspects of remuneration including but not limited to directors’ fees, salaries, allowances, bonus, options and

benefits in kind. The Committee’s recommendations are made in consultation with the Chairman of the Board

and submitted for endorsement by the entire Board.

Principle 8: Level and Mix of Remuneration

The RC has taken into consideration, in setting the remuneration packages of the executive directors and top key

executives as well as employees related to the Directors, industry norms, the Company’s relative performance

as well as their individual performance.

The Company has a staff remuneration policy which comprises a fixed component and a variable component.

The fixed and variable components are in the form of a base salary and variable bonus that is linked to the

performance of the Company and individual.

All independent Directors have no service agreements with the Company. They are each paid a Director’s fee

which is determined by the Board and RC based on the effort and time spent as well as responsibilities as

member of the AC, NC and RC. The fees are subject to approval by the shareholders at each AGM. Except as

disclosed, the independent Directors do not receive any remuneration from the Company.

The Executive Directors have entered into service agreements/contract of service with the Company. The

service agreements/contracts of service cover the terms of employment, specifically salary and other benefits.

The service agreements of the Executive Directors include terms for termination under appropriate notice not

exceeding 6 months.

27



Principle 9: Disclosure on Remuneration

A breakdown showing the level and mix of each individual director’s and key executive’s (who are not directors

of the Group) remuneration payable for FY2012 are as follows:–

Remuneration of the Directors and Key Executives

Remuneration Bands Salary

%

Bonus

%

Fringe Benefit

%

Directors’ Fees

%

DIRECTORS

(S$250,000 to below S$500,000)

Ang Kah Hong, Chairman & Managing Director 84% – 16% –

Tan Swee Khim, Executive Director 82% – 18% –

(Below S$250,000)

Ang Kha King, Executive Director 75% – 25% –

Wong King Kheng, Independent Director – – – 100%

Luk Ka Lai Carrie (Mrs. Carrie Cheong),

Independent Director

– – – 100%

KEY EXECUTIVES

(Below S$250,000)

Toh Chiew Khim, Chief Financial Officer 87% 6% 7% –

Ang Guan Hwa, Group Chief Operating Officer 98% – 2% –

Information on Key Executives

Ms Toh Chiew Khim is the Chief Financial Officer, who is responsible for the overall financial and accounting

matters relating to the Group. Prior to joining the Group in 2003, she was the Group Financial Controller with

Cityneon International Pte Ltd for four years. Ms Toh had also worked previously in Informatics Holdings Ltd

for 11 years where she held various key accounting positions. She is a fellow member of the Association of

Chartered Certified Accountants and a qualified Certified Public Accountant with the Institute of Certified Public

Accountants of Singapore.

Mr Ang Guan Hwa is the Group Chief Operating Officer responsible for the overall operational activities of the

Group. He joined the Group as a marketing representative in 2002 and assumed leadership of the sales team

a year later. From 2006, following his promotion to Senior Manager, Mr. Ang took on additional responsibilities,

taking charge of business development, customer service, operations, workshop and safety development. He

was made Acting Chief Operating Officer in 2009 and was promoted to Group Chief Operating Officer in January

2010. Mr Ang holds a Bachelor of Science degree from University of Bradford.

Save as disclosed above, the Company does not have any employee whose remuneration exceeded $150,000

for the financial year ended 30 June 2012 and who are immediate family members of the Directors or Substantial

Shareholders.

The Company does not have any employee share option schemes.


28


(3) ACCOUNTABILITY AND AUDIT

Principle 10: Accountability

The Board believes that it should promote best practices in order to build an excellent business for the

shareholders as it is accountable to shareholders for the performance of the Company.

The Board is mindful of its obligations to provide timely and full disclosure of material information in compliance

with statutory reporting requirements. Price sensitive information is first publicly released after the review by

the Board, either before the Company meets with any group of investors or analysts or simultaneously with

such meetings. Financial results and annual reports are announced or issued within legally prescribed periods.

Periodic announcements on business and other developments of the Group via SGX-ST’s SGXNET or press

release keeps the shareholders informed about the progress of the Group.

The Board is provided with management accounts of the Group on a quarterly basis.

Management Committee

The Management Committee (or “MC”) is chaired by Mr Ang Kah Hong and comprises two other executive

directors and two key senior management personnel of the Group. The MC is responsible for managing the

affairs of the Group’s businesses and implementing measures in line with the overall strategies set by the Board.

The Committee meets on a periodic basis and on such other times where necessary.

Principle 11: Audit Committee

The Audit Committee (or “AC”) comprises three directors, the majority of whom, including the Chairman, are

independent. At the date of this report, the AC comprises the following members:

• Mr Wong King Kheng (Chairman and Independent Director)

• Mdm Luk Ka Lai Carrie (Mrs Carrie Cheong) (Independent Director)


The independent directors of the AC believe that the AC benefits and would continue to benefit from the

knowledge, experience and expertise of the executive director in carrying out its functions. There are corporate

governance practices in place where a director will not recommend or participate in decisions of the Board or

the Board Committee he sits on if he is interested or deemed to be interested in the decision. The independent

directors have performed and will continue to perform their duties independent of the management. The Board

is therefore confident that the corporate governance of the Company has not been and will not be compromised

by the existing composition of the AC.

The members of the AC, collectively, have expertise or experience in financial management and are qualified to

discharge the AC’s responsibilities.

The functions of the AC are as follows:–

a. review with the internal and external auditors of the Company, the audit plan, evaluation of the system of

internal accounting controls, audit report and ensures cooperation is given by the Company’s management

to the internal and external auditors;

29



b. review the quarterly and full year financial statements before submission to the Board for approval, focusing

in particular, on changes in accounting policies and practices, major risk areas, significant adjustments

resulting from the audit, the going concern statement, compliance with accounting standards as well as

compliance with any stock exchange and statutory/regulatory requirements;

c. review the internal control and procedures and ensure co-ordination between the external auditors and

the management, review the assistance given by management to the auditors and discuss problems and

concerns, if any, arising from the interim and final audits, and any other matters which the auditors may

wish to discuss (in the absence of management where necessary);

d. review and discuss with the external and internal auditors on (any significant findings) which has or is likely

to have a material impact on the Group’s operating results or financial position, and the management’s

response;

e. review the independence of the external auditors annually and consider the appointment or re-appointment

of the external auditors and non-audit services provided by the external auditors seeking to balance the

maintenance of objectivity and value for money;

f. review transactions falling within the scope of Chapter 9 and 10 of the Singapore Exchange Securities

Trading Limited’s Listing Manual in respect of interested person transactions and acquisitions and disposal

of assets of the Company; and

g. undertake such other reviews and projects as may be requested by the Board and will report to the Board

its findings from time to time on matters arising and requiring the attention of the Audit Committee.

The AC has unrestricted access to the management and staff of the Company and had, as at the date of this

report, met the internal auditors and the external auditors without the presence of the management.

The AC has undertaken a review of all non-audit services provided by the external auditors for the financial year

ended 30 June 2012 and is satisfied that such services would not in the AC’s opinions affect the independence

and objectivity of the external auditors. The AC will constantly bear in mind the need to maintain a balance

between the independence and objectivity of the external auditors and the work carried out by the external

auditors based on value-for-money considerations. The external auditors have unrestricted access to the AC.

During the year under review, the fees paid to the external auditors for audit and non-audit services amounted

to S$296,382 and S$76,469 respectively.

The AC has recommended to the Board that the auditors, PricewaterhouseCoopers LLP, be nominated for re-

appointment as auditors at the forthcoming AGM of the Company.

The auditors, PricewaterhouseCoopers LLP, have indicated their willingness to accept re-appointment.

Both the AC and the Board have reviewed the appointment of different auditors for its foreign-incorporated

subsidiaries and/or significant associated companies and were satisfied that the appointment of different auditors

would not compromise the standard and effectiveness of the audit of the Company.

The AC is satisfied that the Company has complied with the Listing Rules 712 and 716.

There is a Whistle-Blowing Policy for the Group in place where employees of the Group can raise concerns

about improprieties. The Policy serves to encourage and provide a channel to employees to report in good

faith and in confidence, without fear of reprisals, concerns about possible improprieties in financial reporting or

other matters. The objective for such arrangement is to ensure independent investigation of such matters and

for appropriate follow-up action.


30


Principle 12: Internal Controls

Principle 13: Internal Audit

The Board is responsible for the governance of risk. It ensures that management maintains a sound system of

risk management and internal controls to safeguard shareholders’ interests and the Company’s assets.

Although the Board acknowledges that it is responsible for the overall internal control framework, it also

recognises that no cost effective internal control system will preclude all errors and irregularities. A system is

designed to manage rather than eliminate the risk of failure to achieve business objectives, and can provide

only reasonable and not absolute assurance against material misstatement or loss.

The Company employs an internal audit manager to perform its internal audit function and the internal audit

manager reports directly to the Chairman of AC and administratively to the Chairman of the Company. The

objective of the internal audit function is to determine whether the Group’s risk management, control and

governance processes, as designed by the Company, is adequate and functioning in the required manner. The

internal audit manager has identified the Group’s main business processes and developed an audit plan that

covers the main business processes over a 2-3 year audit cycle.

The AC reviews and approves the internal audit plans and reviews the scope and results of the internal audit

performed by the internal auditors. Scheduled internal audits are carried out by the internal auditors based

on the audit plan presented to and approved by the AC on a half yearly basis or as appropriate. The internal

auditors report to the AC on areas for improvement and subsequently follow up to determine the extent of their

recommendations that have been implemented.

Based on the internal controls established and maintained by the Group, work performed by the internal

and external auditors and discussions with them including management’s responses to the auditors’

recommendations for improvements to the Group’s internal controls, the Board, with the concurrence of the

AC, is satisfied that the Company has an adequate and effective internal control system addressing financial,

operational, compliance controls and risk management which is adequate to meet the needs of the Company

in its current business environment.

Risk Management

The management oversees the Group’s risk management policies and processes and reports to the Board on

areas of significant risk to the Group’s operations. In addressing and managing the risks faced by the Group,

the management is also supported by the AC, the NC and the RC.

The Company seeks to identify areas of significant business risks as well as appropriate measures to control

and mitigate these risks. The Company reviews all significant control policies and procedures and highlights all

significant matters to the Board and the AC.

(4) SHAREHOLDERS RIGHTS AND RESPONSIBILITIES

Principle 14: Shareholders Rights

Principle 15: Communication with Shareholders

Principle 16: Conduct of Shareholder Meeting

The Company does not practise selective disclosure. In line with continuous obligations of the Company pursuant

to the Singapore Exchange’s Listing Rules, the Board’s policy is that all shareholders should be equally and

timely informed of all major developments impacting the Group.

31



Information is disseminated to our shareholders through:

• SGXNET announcements and news releases;

• Press releases on major developments;

• Annual Report prepared and issued to all shareholders; and

• Company’s website at www.tiongwoon.com which shareholders can access information on the Group.

All shareholders of the Company receive the annual report and notice of AGM. At AGMs, shareholders are

given the opportunity to voice their views and ask directors or management questions regarding the Company.

The Chairman of the Audit, Remuneration and Nominating Committees will normally be present at the annual

general meetings to answer any questions relating to the work of these committees. The external auditors are

also present to address shareholders’ queries, if any, on the conduct of audit and the preparation and content

of the auditors’ report.

(5) CODE OF BUSINESS CONDUCT

The Company’s Code of Business Conduct also sets the standards and ethical conduct expected of employees

of the Group. Directors, officers and employees are required to observe and maintain high standards of integrity,

as are in compliance with the law and the regulations, and company policies.

(6) INTERNAL CODE ON DEALING WITH SECURITIES

The Group has adopted internal practices in relation to Dealings in the Company’s Securities for guidance of

directors and key officers (the “guideline”). In line with the guideline, directors and key officers of the Group

who have access to price-sensitive and confidential information are not permitted to deal in securities of the

Company’s shares during the period commencing two weeks and one month of the announcement of the

Company’s quarterly and full year financial results respectively and ending on the date of the announcement of

such results, or when they are in possession of unpublished price sensitive information on the Group. To the best

of our knowledge, no officer of the Company has dealt in the Company’s securities on short-term considerations.

(7) MATERIAL CONTRACTS

Save for the service agreements between the Executive Directors and the Company, there are no material

contracts of the Company or its subsidiaries involving the interest of any Director or controlling shareholders

subsisting at the end of the financial year ended 30 June 2012.

(8) INTERESTED PERSON TRANSACTIONS

The Company has established procedures whereby transactions with interested persons are reported in a timely

manner to the AC so as to ensure compliance with the rules and regulations under Chapter 9 of the Singapore

Exchange’s Listing Manual.


32


The following interested person transactions took place between the Group and interested persons during the

financial year at terms agreed by the parties concerned:–

Name of Interested Person

Aggregate value of all

interested person

transactions during the

financial period under

review (excluding

transactions less than

$100,000 and transactions

conducted under

shareholders’ mandate

pursuant to Rule 920)

Aggregate value of all

interested person

transactions conducted

under shareholders’

mandate pursuant to

Rule 920 (excluding

transactions less

than $100,000)

The Group

FY 2012

The Group

FY 2012

S$’000 S$’000

Sales

D & Y Allied Engineering Pte Ltd 578 –

D & Y Allied Philippines, Inc. 3,688 –

Pollisum Engineering Pte Ltd 167 –

Purchases

Chung Hwa Engineering Construction Pte Ltd 169 –

Pollisum Engineering Pte Ltd 291 –


34 Directors’ Report

36 Statement by Directors

37 Independent Auditor’s Report

38 Consolidated Statement of Comprehensive Income

39 Balance Sheets

40 Consolidated Statement of Changes in Equity

41 Consolidated Statement of Cash Flows

42 Notes to the Financial Statements

FINANCIALCONTENTS

33


34

DIRECTORS’ REPORTFor the financial year ended 30 June 2012

The directors present their report to the members together with the audited financial statements of the Group for the

financial year ended 30 June 2012 and the balance sheet of the Company as at 30 June 2012.

DIRECTORS

The directors of the Company in office at the date of this report are as follows:

Ang Kah Hong

Ang Kha King

Tan Swee Khim

Wong King Kheng

Luk Ka Lai, Carrie

ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE SHARES AND DEBENTURES

Neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose

object was to enable the directors of the Company to acquire benefits by means of the acquisition of shares in, or

debentures of, the Company or any other body corporate.

DIRECTORS’ INTERESTS IN SHARES OR DEBENTURES

According to the register of directors’ shareholdings, none of the directors holding office at the end of the financial year

had any interest in the shares or debentures of the Company or its related corporations, except as follows:

Holdings registered in

name of director or nominee

Holdings in which a director

is deemed to have an interest

At At At At

30.6.2012 1.7.2011 30.6.2012 1.7.2011

The Company

(No. of ordinary shares)

Ang Kah Hong 4,492,500 3,594,000 181,034,262 144,827,410

Ang Kha King 3,685,000 2,947,500 181,319,262 145,055,410

Tan Swee Khim 2,627,000 2,101,000 – –

Wong King Kheng 64,000 51,000 – –

At the balance sheet date, Ang Kah Hong and Ang Kha King held 5,990,298 and 2,995,149 ordinary shares,

respectively, in a substantial shareholder of the Company, Ang Choo Kim & Sons (Pte) Limited. Their deemed interests

in the Company through Ang Choo Kim & Sons (Pte) Limited are shown above.

The directors’ interests in the ordinary shares of the Company at 21 July 2012 were the same at 30 June 2012.

DIRECTORS’ CONTRACTUAL BENEFITS

Since the end of the previous financial year, no director has received or become entitled to receive a benefit by reason

of a contract made by the Company or a related corporation with the director or with a firm of which he is a member

or with a company in which he has a substantial financial interest, except as disclosed in the financial statements and

in this report.

The total remuneration paid to the executive directors and employees who are related to the controlling shareholders

amounting to $1,374,682 exceeded 15% of the loss before taxation of the Group for the financial year ended 30 June

2012.

35


DIRECTORS’ REPORTFor the financial year ended 30 June 2012

SHARE OPTIONS

There were no options granted during the financial year to subscribe for unissued shares of the Company or its

subsidiaries.

No shares have been issued during the financial year by virtue of the exercise of options to take up unissued shares

of the Company or its subsidiaries.

There were no unissued shares in the Company or its subsidiaries under option at the end of the financial year.

AUDIT COMMITTEE

The members of the Audit Committee at the end of the financial year were as follows:

Mr Wong King Kheng (Chairman)

Mdm Luk Ka Lai, Carrie

Mr Tan Swee Khim

All members of the Audit Committee, except for Mr Tan Swee Khim, were independent directors.

The Audit Committee carried out its functions in accordance with Section 201B(5) of the Singapore Companies Act.

In performing those functions, the Committee reviewed:

• the audit plan of the Company’s independent auditor and its report on the weaknesses of internal accounting

controls arising from the statutory audit;

• the assistance given by the Company’s management to the independent auditor; and

• the balance sheet of the Company and the consolidated financial statements of the Group for the financial year

ended 30 June 2012 before their submission to the Board of Directors, as well as the independent auditor’s

report on the balance sheet of the Company and the consolidated financial statements of the Group.

The Audit Committee has recommended to the Board that the independent auditor, PricewaterhouseCoopers LLP, be

nominated for re-appointment at the forthcoming Annual General Meeting of the Company.

INDEPENDENT AUDITOR

The independent auditor, PricewaterhouseCoopers LLP, has expressed its willingness to accept re-appointment.

On behalf of the directors

ANG KAH HONG TAN SWEE KHIM

Director Director

24 September 2012


36

STATEMENT BY DIRECTORSFor the financial year ended 30 June 2012

In the opinion of the directors,

(a) the balance sheet of the Company and the consolidated financial statements of the Group as set out on pages

38 to 91 are drawn up so as to give a true and fair view of the state of affairs of the Company and of the Group

as at 30 June 2012 and of the results of the business, changes in equity and cash flows of the Group for the

financial year then ended; and

(b) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its

debts as and when they fall due.

On behalf of the directors

ANG KAH HONG TAN SWEE KHIM

Director Director

24 September 2012

37


INDEPENDENT AUDITOR’S REPORTTO THE MEMBERS OF TIONG WOON CORPORATION HOLDING LTD

REPORT ON THE FINANCIAL STATEMENTS

We have audited the accompanying financial statements of Tiong Woon Corporation Holding Ltd (the “Company”)

and its subsidiaries (the “Group”) set out on pages 38 to 91, which comprise the consolidated balance sheet of the

Group and balance sheet of the Company as at 30 June 2012, the consolidated statement of comprehensive income,

statement of changes in equity and statement of cash flows of the Group for the financial year then ended, and a

summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation of financial statements that give a true and fair view in accordance

with the provisions of the Singapore Companies Act (the “Act”) and Singapore Financial Reporting Standards, and for

devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that

assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised

and that they are recorded as necessary to permit the preparation of true and fair profit or loss accounts and balance

sheets and to maintain accountability of assets.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in

accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements

and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from

material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial

statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of

material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the

auditor considers internal control relevant to the entity’s preparation of financial statements that give a true and fair view

in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing

an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of

accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating

the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements of the Group and the balance sheet of the Company are properly

drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give

a true and fair view of the state of affairs of the Group and of the Company as at 30 June 2012, and of the results,

changes in equity and cash flows of the Group for the financial year ended on that date.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In our opinion, the accounting and other records required by the Act to be kept by the Company and by those

subsidiaries incorporated in Singapore of which we are the auditors, have been properly kept in accordance with the

provisions of the Act.

PricewaterhouseCoopers LLP

Public Accountants and Certified Public Accountants

Singapore, 24 September 2012


38

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFor the financial year ended 30 June 2012

GroupNote 2012 2011

$ $

Sales 4 151,209,515 106,947,901

Cost of sales 5 (118,887,875) (81,631,264)

Gross profit 32,321,640 25,316,637

Other income 7 259,417 193,628

Other (loss)/gains – net 8 (1,346,274) 3,273,094

Expenses

– Administrative 5 (1,311,123) (1,270,959)

– Other operating 5 (32,058,753) (24,687,150)

– Finance 9 (2,587,069) (1,458,375)

Share of profit/(loss) of associated companies 19 886,401 (78,676)

Share of loss of a joint venture 20 (39,712) –

(Loss)/profit before income tax (3,875,473) 1,288,199

Income tax expense 10 (1,914,396) (441,852)

Total (loss)/profit (5,789,869) 846,347

Other comprehensive loss:

Currency translation differences arising from consolidation 112,841 (2,882,003)

Fair value loss on cash flow hedges (510,059) –

Other comprehensive loss (397,218) (2,882,003)

Total comprehensive loss (6,187,087) (2,035,656)

(Loss)/profit attributable to:

Equity holders of the Company (4,847,258) 951,415

Non-controlling interest (942,611) (105,068)

(5,789,869) 846,347

Total comprehensive loss attributable to:

Equity holders of the Company (5,392,664) (1,649,542)

Non-controlling interest (794,423) (386,114)

(6,187,087) (2,035,656)

Earnings per share attributable to equity holders

of the Company (expressed in cents per share) 11

– Basic (1.11) 0.22*

– Diluted (1.11) 0.22*

* restated for the effects of the Rights Issue (Note 28)

The accompanying notes form an integral part of these financial statements.

39


BALANCE SHEETSAs at 30 June 2012

Group CompanyNote 2012 2011 2012 2011

$ $ $ $

ASSETS

Current assets

Cash and cash equivalents 12 22,760,355 34,706,718 33,122 54,298

Financial assets at fair value through profit or loss 13 718,274 891,815 – –

Trade and other receivables 14 59,957,370 49,486,160 – 1,475

Tax recoverable 10 17,718 65,067 – –

Inventories 15 3,215,791 3,450,685 – –

Contract work-in-progress 16 – 97,776 – –

Other assets 17 2,766,485 2,690,435 10,300 10,300

89,435,993 91,388,656 43,422 66,073

Non-current assets

Other assets 17 107,300 107,300 – –

Other receivables 18 – – 52,501,671 44,001,054

Investments in associated companies 19 1,894,434 1,008,033 1,019,555 –

Investment in a joint venture 20 1,627,556 – 2,074,399 –

Investments in subsidiaries 21 – – 38,062,100 38,197,601

Property, plant and equipment 22 290,718,377 284,253,798 – –

Deferred income tax assets 27 640,665 377,872 – –

294,988,332 285,747,003 93,657,725 82,198,655

Total assets 384,424,325 377,135,659 93,701,147 82,264,728

LIABILITIES

Current liabilities

Trade and other payables 23 40,534,549 18,792,070 1,864,935 171,940

Current income tax liabilities 10 1,867,571 1,648,728 – –

Borrowings 24 35,518,060 57,092,125 – –

Derivative financial instruments 26 108,630 – – –

78,028,810 77,532,923 1,864,935 171,940

Non-current liabilities

Borrowings 24 52,821,007 49,529,814 – –

Derivative financial instruments 26 401,429 – – –

Deferred income tax liabilities 27 26,997,012 26,359,196 – –

80,219,448 75,889,010 – –

Total liabilities 158,248,258 153,421,933 1,864,935 171,940

NET ASSETS 226,176,067 223,713,726 91,836,212 82,092,788

EQUITY

Capital and reserves attributable to the equity holders of the Company

Share capital 28 87,340,268 77,302,534 87,340,268 77,302,534

Other reserves 29 (4,227,536) (3,682,130) – –

Retained earnings 139,132,038 145,465,602 4,495,944 4,790,254

222,244,770 219,086,006 91,836,212 82,092,788

Non-controlling interest 3,931,297 4,627,720 – –

Total equity 226,176,067 223,713,726 91,836,212 82,092,788



40

CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFor the financial year ended 30 June 2012

Attributable to equity holders of the Company

Note

Share

capital

Other

reserves

Retained

earnings Total

Non-

controlling

interest

Total

equity

$ $ $ $ $ $

2012

Beginning of financial year 77,302,534 (3,682,130) 145,465,602 219,086,006 4,627,720 223,713,726

Total comprehensive loss

for the financial year – (545,406) (4,847,258) (5,392,664) (794,423) (6,187,087)

Issue of shares 28 10,218,351 – – 10,218,351 – 10,218,351

Share issue expenses 28 (180,617) – – (180,617) – (180,617)

Dividends relating to 2011 30 – – (1,486,306) (1,486,306) – (1,486,306)

Additional interest in a

subsidiary – – – – 98,000 98,000

End of financial year 87,340,268 (4,227,536) 139,132,038 222,244,770 3,931,297 226,176,067

2011

Beginning of financial year 77,302,534 (1,081,173) 148,314,532 224,535,893 4,957,387 229,493,280

Total comprehensive income/

(loss) for the financial year – (2,600,957) 951,415 (1,649,542) (386,114) (2,035,656)

Acquisition of a subsidiary 36 – – – – 9,257 9,257

Increase in stake in associate

to subsidiary 36 – – – – 25,551 25,551

Additional interest in a

subsidiary 36 – – (2,314,039) (2,314,039) 21,639 (2,292,400)

Dividends relating to 2010 30 – – (1,486,306) (1,486,306) – (1,486,306)

End of financial year 77,302,534 (3,682,130) 145,465,602 219,086,006 4,627,720 223,713,726


41


CONSOLIDATED STATEMENT OF CASH FLOWSFor the financial year ended 30 June 2012

Note 2012 2011

$ $

Cash flows from operating activities

Total (loss)/profit (5,789,869) 846,347

Adjustments for:

– Income tax expense 1,914,396 441,852

– Depreciation of property, plant and equipment 28,393,696 25,926,920

– Interest income (230,704) (173,601)

– Dividend income (28,713) (20,027)

– Interest expense 3,238,250 3,208,141

– Net gain on disposal of property, plant and equipment (2,293,914) (5,131,834)

– Fair value loss/(gain) on financial assets at fair value through

profit or loss 173,541 (122,378)

– Share of (profit)/loss of associated companies (886,401) 78,676

– Share of loss of a joint venture 39,712 –

– Unrealised translation losses 2,302,756 69,021

Operating cash flow before working capital changes 26,832,750 25,123,117

Change in operating assets and liabilities, net of effects from

disposal of a subsidiary

– Inventories 234,894 (152,640)

– Contract work-in-progress 97,776 42,811

– Trade and other receivables (10,406,286) 69,772,797

– Other current assets (76,050) (89,483)

– Trade and other payables 20,090,161 (6,502,946)

Cash generated from operations 36,773,245 88,193,656

Income tax paid (1,265,076) (858,802)

Net cash provided by operating activities 35,508,169 87,334,854

Cash flows from investing activities

Purchase of property, plant and equipment (15,270,020) (25,275,535)

Purchase of investment in associated company – (1,019,555)

Acquisition of a subsidiary, net of cash acquired 36 – (21,525)

Increase in stake in associate to subsidiary, net of cash acquired 36 – (11,657)

Additional interest in a subsidiary 36 – (2,292,400)

Interest received 230,704 173,601

Dividend received 28,713 20,027

Proceeds from disposal of property, plant and equipment 4,922,631 17,633,732

Net cash used in investing activities (10,087,972) (10,793,312)

Cash flows from financing activities

Proceeds from rights issue 10,037,734 –

Proceeds from borrowings 7,302,814 8,263,439

Repayment of borrowings (37,126,233) (73,783,885)

Repayment of finance lease liabilities (12,939,368) (9,858,163)

Interest paid (3,253,201) (3,244,365)

Dividends paid to equity holders of the Company (1,486,306) (1,486,306)

Proceeds from non-controlling interest 98,000 –

Fixed deposit pledged (771,951) (98,471)

Net cash used in financing activities (38,138,511) (80,207,751)

Net decrease in cash and cash equivalents (12,718,314) (3,666,209)

Cash and cash equivalents at beginning of financial year 32,306,994 35,973,203

Cash and cash equivalents at end of financial year 12 19,588,680 32,306,994



42

NOTES TO THE FINANCIAL STATEMENTSFor the financial year ended 30 June 2012

These notes form an integral part of and should be read in conjunction with the accompanying financial statements.

1. GENERAL INFORMATION

Tiong Woon Corporation Holding Ltd (the “Company”) is listed on the Singapore Exchange and incorporated

and domiciled in Singapore. The address of its registered office is No. 15 Pandan Crescent, Singapore 128470.

The principal activity of the Company is that of an investment holding company. The principal activities of

its subsidiaries are sales and hiring out of cranes and transport, mechanical, infrastructure and industrial

plant, engineering services and structural works, management of marine and industrial plant project, marine

transportation, fabrication, up-slipping/launching of ship, process and industrial plant engineering works for the

marine and oil and gas industries.

2. SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation

These financial statements have been prepared in accordance with Singapore Financial Reporting Standards

(“FRS”). The financial statements have been prepared under the historical cost convention, except as disclosed

in the accounting policies below.

The preparation of financial statements in conformity with FRS requires management to exercise its judgement

in the process of applying the Group’s accounting policies. It also requires the use of certain critical accounting

estimates and assumptions. The areas involving a higher degree of judgement or complexity, or areas where

assumptions and estimates are significant to the financial statements are disclosed in Note 3.

Interpretations and amendments to published standards effective in the current financial year

On 1 July 2011, the Group adopted the new or amended FRS and Interpretations to FRS (“INT FRS”) that are

mandatory for application from that date. Changes to the Group’s accounting policies have been made as

required, in accordance with the transitional provisions in the respective FRS and INT FRS.

The adoption of these new or amended FRS and INT FRS did not result in substantial changes to the Company’s

accounting policies and had no material effect on the amounts reported for the current or prior financial years.

2.2 Revenue recognition

Sales comprise the fair value of the consideration received or receivable for the sale of goods and rendering of

services in the ordinary course of the Group’s activities. Sales are presented, net of goods and services tax,

rebates and discounts, and after eliminating sales within the Group.

The Group recognises revenue when the amount of revenue and related cost can be reliably measured, it is

probable that future economic benefits will flow to the entity and when the specific criteria for each of the

Group’s activities are met as follows:

(a) Rental income

Rental income from operating leases on property (net of any incentives given to the lessees) is recognised

on a straight-line basis over the lease term.

(b) Rendering of services

Revenue from services is recognised when the services are rendered, by reference to completion of the

specific transaction assessed on the basis of the actual service provided as a proportion of the total

services to be performed.

43



2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.2 Revenue recognition (continued)

(c) Sale of cranes and equipments

Revenue from sale of cranes and equipments is recognised when a Group entity has delivered the

products to the customer, the customer has accepted the products and collectibility of the related

receivables is reasonably assured.

(d) Construction of specialised equipments

Please refer to the paragraph “Contract revenue” for the accounting policy for revenue from contract

revenue.

(e) Dividend income

Dividend income is recognised when the right to receive payment is established.

(f) Interest income

Interest income is recognised using the effective interest method.

2.3 Group accounting

(a) Subsidiaries

(i) Consolidation

Subsidiaries are entities (including special purpose entities) over which the Group has power to

govern the financial and operating policies so as to obtain benefits from its activities, generally

accompanied by a shareholding giving rise to a majority of the voting rights. The existence and

effect of potential voting rights that are currently exercisable or convertible are considered when

assessing whether the Group controls another entity. Subsidiaries are consolidated from the date

on which control is transferred to the Group. They are de-consolidated from the date on which

control ceases.

In preparing the consolidated financial statements, transactions, balances and unrealised gains on

transactions between group entities are eliminated. Unrealised losses are also eliminated but are

considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries

have been changed where necessary to ensure consistency with the policies adopted by the

Group.

Non-controlling interests are that part of the net results of operations and of net assets of

a subsidiary attributable to the interests which are not owned directly or indirectly by the

equity holders of the Company. They are shown separately in the consolidated statement of

comprehensive income, statement of changes in equity and balance sheet. Total comprehensive

income is attributed to the non-controlling interests based on their respective interests in a

subsidiary, even if this results in the non-controlling interests having a deficit balance.


44



2.3 Group accounting (continued)

(a) Subsidiaries (continued)

(ii) Acquisition of businesses

The acquisition method of accounting is used to account for business combinations by the Group.

The consideration transferred for the acquisition of a subsidiary comprises the fair value of the

assets transferred, the liabilities incurred and the equity interests issued by the Group. The

consideration transferred also includes the fair value of any contingent consideration arrangement

and the fair value of any pre-existing equity interest in the subsidiary.

Acquisition-related costs are expensed as incurred.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business

combination are, with limited exceptions, measured initially at their fair values at the acquisition

date.

On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in

the acquiree at the date of acquisition either at fair value or at the non-controlling interest’s

proportionate share of the acquiree’s net identifiable assets.

The excess of the consideration transferred, the amount of any non-controlling interest in the

acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over

the fair value of the net identifiable assets acquired is recorded as goodwill.

(iii) Disposals of subsidiaries or businesses

When a change in the Company’s ownership interest in a subsidiary results in a loss of control over

the subsidiary, the assets and liabilities of the subsidiary including any goodwill are derecognised.

Amounts recognised in other comprehensive income in respect of that entity are also reclassified

to profit or loss or transferred directly to retained earnings if required by a specific Standard.

Any retained interest in the entity is remeasured at fair value. The difference between the carrying

amount of the retained investment at the date when control is lost and its fair value is recognised

in profit or loss.

Please refer to the paragraph “Investments in subsidiaries and associated companies” for the

accounting policy on investments in subsidiaries in the separate financial statements of the

Company.

(b) Transactions with non-controlling interests

Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of control over the

subsidiary are accounted for as transactions with equity owners of the Group. Any difference between

the change in the carrying amounts of the non-controlling interest and the fair value of the consideration

paid or received is recognised in equity.

45




2.3 Group accounting (continued)

(c) Associated companies and joint venture

Associates are those entities in which the Group has significant influence, but not control, over their

financial and operating policies. Significant influence is presumed to exist when the Group holds between

20% and 50% of the voting power of another entity. Joint ventures are those entities over whose activities

the Group has joint control, established by contractual agreement and requiring unanimous consent for

strategic financial and operating decisions.

Investments in associates and joint venture (collectively referred to as “equity-accounted investees”) are

accounted for using the equity method. The consolidated financial statements include the Group’s share

of profit or loss and other comprehensive income of the equity-accounted investees, after adjustments

to align the accounting policies with those of the Group, from the date that significant influence or joint

control commences until the date that significant influence or joint control ceases. When the Group’s

share of losses exceeds its interest in an equity-accounted investee, the carrying amount of that

interest, including any long-term investments, is reduced to zero, and the recognition of further losses

is discontinued.

Unrealised gains on transactions between the Group and its equity-accounted investees are eliminated to

the extent of the Group’s interest in the equity-accounted investees. Unrealised losses are also eliminated

unless the transaction provides evidence of an impairment of the asset transferred.

When the Group purchase assets from a joint venture, it does not recognise its share of the profits of the

joint ventures arising from the Group’s purchase of assets until it resells the assets to an independent

party. However, a loss on the transaction is recognised immediately if the loss provides evidence of a

reduction in the net realisable value of current assets or an impairment loss.

The accounting policies of joint ventures have been changed where necessary to ensure consistency

with the accounting policies adopted by the Group.

Gains and losses arising from partial disposals or dilutions in investments in the equity-accounted

investees are recognised in profit or loss.

Investments in associated companies are derecognised when the Group loses significant influence. Any

retained interest in the entity is remeasured at its fair value. The difference between the carrying amount

of the retained investment at the date when significant influence is lost and its fair value is recognised

in profit or loss.

Please refer to the paragraph “Investments in subsidiaries, associated companies and joint venture” for

the accounting policy on investments in associated companies and joint venture in the separate financial

statements of the Company.


46



2.4 Property, plant and equipment

(a) Measurement

All property, plant and equipment are recognised at cost less accumulated depreciation and accumulated

impairment losses.

The cost of an item of property, plant and equipment initially recognised includes its purchase price,

projected costs of dismantlement, removal or restoration, gains or losses on qualifying cash flow hedges

and any other costs that are directly attributable to bringing the asset to the location and condition

necessary for it to be capable of operating in the manner intended by management.

(b) Depreciation

Freehold land and asset under construction are not depreciated. Depreciation is calculated using the

straight-line method to allocate depreciable amounts over their estimated useful lives as follows:

Useful lives

Buildings and leasehold land Shorter of 20 years and the lease term

Machinery

– Cranes 14 – 25 years from year of manufacture

– Other machinery 5 – 10 years

Tug boats and barges 5 – 10 years

Office equipment 5 – 10 years

Computer software 5 years

Furniture and fixtures 10 years

Office renovation 5 years

Motor vehicles 5 – 10 years

The residual values, estimated useful lives and depreciation method of property, plant and equipment

are reviewed, and adjusted as appropriate, at each balance sheet date. The effects of any revision are

recognised in profit or loss when the changes arise.

(c) Subsequent expenditure

Subsequent expenditure relating to property, plant and equipment that has already been recognised

is added to the carrying amount of the asset only when it is probable that future economic benefits

associated with the item will flow to the Group and the cost of the item can be measured reliably. Other

subsequent expenditure is recognised as repair and maintenance expense in the profit or loss during the

financial year in which it is incurred.

(d) Disposal

On disposal of an item of property, plant and equipment, the difference between the disposal proceeds

and its carrying amount is recognised in the profit or loss.

2.5 Borrowing costs

Borrowing costs are recognised in the profit or loss using the effective interest method.

47




2.6 Contract revenue

When the outcome of a contract can be estimated reliably, contract revenue and contract costs are recognised

as revenue and expenses respectively by reference to the stage of completion of the contract activity at the

balance sheet date (“percentage-of-completion method”). When the outcome of a contract cannot be estimated

reliably, contract revenue is recognised to the extent of contract costs incurred that are likely to be recoverable.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised

as an expense immediately.

Contract revenue comprises the initial amount of revenue agreed in the contract and variations in the contract

work and claims that can be measured reliably. A variation or a claim is recognised as contract revenue when it

is probable that the customer will approve the variation or negotiations have reached an advanced stage such

that it is probable that the customer will accept the claim.

The stage of completion is measured by reference to the stage of works performed relative to the total contract

value as agreed with the customers. Costs incurred during the financial year in connection with future activity

on a contract are excluded from costs incurred to date when determining the stage of completion of a contract.

Such costs are shown as contract work-in-progress on the balance sheet unless it is not probable that such

contract costs are recoverable from the customers, in which case, such costs are recognised as an expense

immediately.

At the balance sheet date, the aggregated costs incurred plus recognised profit (less recognised loss) on each

contract is compared against the progress billings. Where costs incurred plus the recognised profits (less

recognised losses) exceed progress billings, the balance is presented as due from customers on contract

revenue within “trade and other receivables”. Where progress billings exceed costs incurred plus recognised

profits (less recognised losses), the balance is presented as due to customers on contract revenue within “trade

and other payables”.

Progress billings not yet paid by customers are included within “trade and other receivables”. Advances received

are included within “trade and other payables”.

2.7 Investments in subsidiaries, associated companies and joint venture

Investments in subsidiaries, associated companies and joint venture are carried at cost less accumulated

impairment losses (Note 2.8). Non-current other receivables from subsidiaries with no fixed terms of repayment

and which are non interest-bearing are considered to be part of the Company’s net investment in these

subsidiaries. Settlement of these loans is neither planned nor likely to occur in the foreseeable future. On disposal

of investments in subsidiaries, associated companies and joint venture, the difference between net disposal

proceeds and the carrying amounts of the investments are recognised in profit or loss.

2.8 Impairment of non-financial assets

Property, plant and equipment and investments in subsidiaries and associated companies are reviewed for

impairment whenever there is any objective evidence or indication that these assets may be impaired.

For the purpose of impairment testing of the assets, the recoverable amount (i.e. the higher of the fair value

less cost to sell and value-in-use) is determined on an individual asset basis unless the asset does not generate

cash flows that are largely independent of those from other assets. If this is the case, recoverable amount is

determined for the cash-generating-unit (CGU) to which the asset belongs.


48



2.8 Impairment of non-financial assets (continued)

If the recoverable amount of the asset (or CGU) is estimated to be less than its carrying amount, the carrying

amount of the asset (or CGU) is reduced to its recoverable amount. The difference between the carrying amount

and recoverable amount is recognised as an impairment loss in the profit or loss.

An impairment loss for an asset is reversed if, and only if, there has been a change in estimates used to

determine the asset’s recoverable amount since the last impairment loss was recognised. The carrying amount

of an asset is increased to its revised recoverable amount, provided that this amount does not exceed the

carrying amount that would have been determined (net of accumulated depreciation) had no impairment loss

been recognised for the asset in prior years. A reversal of impairment loss for an asset is recognised in the

profit or loss.

2.9 Financial assets

(a) Classification

The Group classifies its financial assets in the following categories: at fair value through profit or loss and

loans and receivables. The classification depends on the purpose for which the assets were acquired.

Management determines the classification of its financial assets at initial recognition. The designation of

financial assets at fair value through profit or loss is irrevocable.

(i) Financial assets at fair value through profit or loss

A financial asset is classified in this category if acquired principally for the purpose of selling in the

short term or if so designated by the management. Assets in this category are classified under

current assets if they are either held for trading or are expected to be realised within 12 months

after the balance sheet date.

(ii) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments

that are not quoted in an active market. They are presented as current assets, except for those

maturing later than 12 months after the balance sheet date which are presented as non-current

assets. Loans and receivables are presented as “trade and other receivables”, “cash and cash

equivalents” and “deposits” on the balance sheet except for certain non-current other receivables

from subsidiaries which have been accounted for in accordance with Note 2.7.

(b) Recognition and derecognition

Regular way purchases and sales of financial assets are recognised on trade-date – the date on which

the Group commits to purchase or sell the asset.

Financial assets are derecognised when the rights to receive cash flows from the financial assets have

expired or have been transferred and the Group has transferred substantially all risks and rewards of

ownership.

On disposal of a financial asset, the difference between the carrying amount and the sale proceeds is

recognised in the profit or loss.

49




2.9 Financial assets (continued)

(c) Initial measurement

Financial assets are initially recognised at fair value plus transaction costs except for financial assets at

fair value through profit or loss, which are recognised at fair value.

(d) Subsequent measurement

Financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and

receivables are subsequently carried at amortised cost using the effective interest method.

Changes in the fair values of financial assets at fair value through profit or loss including the effects of

currency translation, interest and dividend, are recognised in the profit or loss when the changes arise.

(e) Impairment

The Group assesses at each balance sheet date whether there is objective evidence that a financial

asset or a group of financial assets is impaired and recognises an allowance for impairment when such

evidence exists.

An allowance for impairment of loans and receivables, including trade and other receivables, is recognised

when there is objective evidence that the Group will not be able to collect all amounts due according to

the original terms of receivables. Significant financial difficulties of the debtor, probability that the debtor

will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered

indicators that the receivable is impaired.

The carrying amount of these assets is reduced through the use of an impairment allowance account

which is calculated as the difference between the carrying amount and the present value of estimated

future cash flows, discounted at the original effective interest rate. When the asset becomes uncollectible,

it is written off against the allowance account. Subsequent recoveries of amounts previously written off

are recognised against the same line item in the profit or loss.

The allowance for impairment loss account is reduced through the profit or loss in a subsequent period

when the amount of impairment loss decreases and the related decrease can be objectively measured.

The carrying amount of the asset previously impaired is increased to the extent that the new carrying

amount does not exceed the amortised cost had no impairment been recognised in prior periods.

2.10 Club memberships

Club memberships are stated at cost less accumulated impairment based on a review at the balance sheet date.

2.11 Financial guarantees

The Company has issued corporate guarantees to banks for bank borrowings of its subsidiaries. These

guarantees are financial guarantees as they require the Company to reimburse the banks if the subsidiaries fail

to make principal or interest payments when due in accordance with the terms of their borrowings.

Financial guarantees are initially recognised at their fair values plus transaction costs in the Company’s balance

sheet.


50



2.11 Financial guarantees (continued)

Financial guarantees are subsequently amortised to the profit or loss over the period of the subsidiaries’

borrowings, unless it is probable that the Company will reimburse the bank for an amount higher than the

unamortised amount. In this case, the financial guarantees shall be carried at the expected amount payable to

the bank in the Company’s balance sheet.

Intragroup transactions are eliminated on consolidation.

2.12 Borrowings

Borrowings are presented as current liabilities unless the Group has an unconditional right to defer settlement

for at least 12 months after the balance sheet date.

Borrowings are initially recognised at fair value (net of transaction costs) and are subsequently carried at

amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is

recognised in the profit or loss over the period of the borrowings using the effective interest method.

2.13 Trade and other payables

Trade and other payables are initially recognised at fair value, and subsequently carried at amortised cost, using

the effective interest method.

2.14 Leases

When a Company is the lessee:

The Group leases certain property, plant and equipment from third parties.

Finance leases

Leases of property, plant and equipment where the Group assumes substantially all risks and rewards incidental

to ownership of the leased assets are classified as finance leases.

The leased assets and the corresponding lease liabilities (net of finance charges) under finance leases are

recognised on the balance sheet as property, plant and equipment and borrowings respectively, at the inception

of the leases based on the lower of the fair value of the leased assets and the present value of the minimum

lease payments.

Each lease payment is apportioned between the finance expense and the reduction in the outstanding lease

liability. The finance expense is recognised in the profit or loss on a basis that reflects constant periodic rate of

interest on the remaining balance of the finance lease liability.

Operating leases

Leases of property, plant and equipment where substantially all risks and rewards incidental to ownership are

retained by the lessors are classified as operating leases. Payments made under operating leases (net of any

incentives received from the lessors) are recognised in the profit or loss on a straight-line basis over the period

of the lease.

When a lease is terminated before the lease period expires, any payment made by the Group as penalty is

recognised as an expense when termination takes place.

51




2.14 Leases (continued)

When a Company is the lessor:

Operating leases

Leases of property, plant and equipment where the Group retains substantially all risks and rewards incidental

to ownership are classified as operating leases. The Group leases certain plant and equipment to non-related

parties. The leasing of certain plant and equipment is included with other services provided and the revenue

from such activities is classified as rendering of services.

2.15 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined on a weighted average

basis. The net realisable value is the estimated selling price in the ordinary course of business, less the cost of

completion and selling expenses.

2.16 Income taxes

Current income tax for current and prior periods is recognised at the amounts expected to be paid to or

recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively

enacted by the balance sheet date.

Deferred income tax is recognised for all temporary differences arising between the tax bases of assets and

liabilities and their carrying amounts in the financial statements except when the deferred income tax arises

from the initial recognition of an asset or liability in a transaction that is not a business combination and affects

neither accounting nor taxable profit or loss at the time of the transaction.

A deferred income tax liability is recognised on temporary differences arising on investments in subsidiaries,

except where the Group is able to control the timing of the reversal of the temporary difference and it is probable

that the temporary difference will not reverse in the foreseeable future.

A deferred income tax asset is recognised to the extent that it is probable that future taxable profit will be

available against which the deductible temporary differences can be utilised.

Deferred income tax is measured:

(i) at the tax rates that are expected to apply when the related deferred income tax asset is realised or

the deferred income tax liability is settled, based on tax rates and tax laws that have been enacted or

substantively enacted by the balance sheet date; and

(ii) based on the tax consequence that would follow from the manner in which the Group expects, at the

balance sheet date, to recover or settle the carrying amounts of its assets and liabilities.

Current and deferred income taxes are recognised as income or expense in profit or loss, except to the extent

that the tax arises from a business combination or a transaction which is recognised directly in equity. Deferred

tax arising from a business combination is adjusted against goodwill on acquisition.


52



2.17 Provisions

Provisions for asset dismantlement, removal or restoration and legal claims are recognised when the Group has

a present legal or constructive obligation as a result of past events, it is more likely than not that an outflow of

resources will be required to settle the obligation and the amount has been reliably estimated. Provisions are

not recognised for future operating losses.

The Group recognises the estimated costs of dismantlement, removal or restoration of items of property, plant

and equipment arising from the acquisition or use of assets (Note 2.4). This provision is estimated based on the

best estimate of the expenditure required to settle the obligation, taking into consideration time value.

Changes in the estimated timing or amount of the expenditure or discount rate for asset dismantlement, removal

and restoration costs are adjusted against the cost of the related property, plant and equipment, unless the

decrease in the liability exceeds the carrying amount of the asset or the asset has reached the end of its useful

life. In such cases, the excess of the decrease over the carrying amount of the asset or the changes in the

liability is recognised in the profit or loss immediately.

Provision for warranty, is recognised when the Company has a present legal or constructive obligation as a result

of past events, it is more likely than not that an outflow of resources will be required to settle the obligation

and the amount has been reliably estimated. The Company recognises the estimated costs of rectification and

guarantee work, including expected warranty costs on its contract activity.

2.18 Derivative financial instruments and hedging activities

A derivative financial instrument is initially recognised at its fair value on the date the contract is entered into

and is subsequently carried at its fair value. The method of recognising the resulting gain or loss depends on

whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.

Fair value changes on derivatives that are not designated or do not qualify for hedge accounting are recognised

in profit or loss when the changes arise.

The Group documents at the inception of the transaction the relationship between the hedging instruments

and hedged items, as well as its risk management objective and strategies for undertaking various hedge

transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of

whether the derivatives designated as hedging instruments are highly effective in offsetting changes in fair value

or cash flows of the hedged items.

The carrying amount of a derivative designated a hedge is presented as a non-current asset or liability if the

remaining expected life of the hedged item is more than 12 months, and as a current asset or liability if the

remaining expected life of the hedged item is less than 12 months. The fair value of a trading derivative is

presented as a current asset or liability.

Derivative financial instrument is carried as an asset when the fair value is positive and as a liability when the

fair value is negative. Any gains or losses arising from changes in fair value are recognised immediately in the

statement of comprehensive income, unless they qualify for hedge accounting.

53




2.18 Derivative financial instruments and hedging activities (continued)

Cash flow hedge – interest rate swap

The Group has entered into interest rate swaps that are cash flow hedges for the Group’s exposure to interest

rate risk on its borrowings. These contracts entitle the Group to receive interest at floating rates on notional

principal amounts and oblige the Group to pay interest at fixed rates on the same notional principal amounts,

thus allowing the Group to raise borrowings at floating rates and swap them into fixed rates.

The fair value changes on the effective portion of interest rate swaps designated as cash flow hedges are

recognised in other comprehensive income, accumulated in the fair value reserve and reclassified to profit or

loss when the hedged interest expense on the borrowings is recognised in profit or loss. The fair value changes

on the ineffective portion of interest rate swaps are recognised immediately in profit or loss.

2.19 Fair value estimation of financial assets and liabilities

The fair values of financial instruments traded in active markets (such as exchange-traded and over-the-counter

securities and derivatives) are based on quoted market prices at the balance sheet date. The quoted market

prices used for financial assets are the current bid prices; the appropriate quoted market prices for financial

liabilities are the current asking prices.

The fair values of financial instruments that are not traded in an active market are determined by using valuation

techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions

existing at each balance sheet date. Where appropriate, quoted market prices or dealer quotes for similar

instruments are used. Valuation techniques, such as discounted cash flow analysis, are also used to determine

the fair values of the financial instruments.

The fair values of current financial assets and liabilities carried at amortised cost approximate their carrying

amounts.

2.20 Employee compensation

(a) Defined contribution plans

Defined contribution plans are post-employment benefit plans under which the Group pays fixed

contributions into separate entities such as the Central Provident Fund on a mandatory, contractual or

voluntary basis. The Group has no further payment obligations once the contributions have been paid.

The Group’s contributions are recognised as employee compensation expense when they are due.

(b) Employee leave entitlement

Employee entitlements to annual leave are recognised when they accrue to employees. An accrual is

made for the estimated liability for annual leave as a result of services rendered by employees up to the

balance sheet date.


54



2.21 Currency translation

(a) Functional and presentation currency

Items included in the financial statements of each entity in the Group are measured using the currency

of the primary economic environment in which the entity operates (“functional currency”). The financial

statements are presented in Singapore Dollar, which is the functional currency of the Company.

(b) Transactions and balances

Transactions in a currency other than the functional currency (“foreign currency”) are translated into

the functional currency using the exchange rates at the dates of the transactions. Currency translation

differences from the settlement of such transactions and from the translation of monetary assets and

liabilities denominated in foreign currencies at the closing rates at the balance sheet date are recognised

in the profit or loss, unless they arise from borrowings in foreign currencies and other currency instruments

designated and qualifying as net investment hedges and net investment in foreign operations. Those

currency translation differences are recognised in the currency translation reserve in the consolidated

financial statements and transferred to the profit or loss as part of the gain or loss on disposal of the

foreign operation.

Non-monetary items measured at fair values in foreign currencies are translated using the exchange rates

at the date when the fair values are determined.

(c) Translation of Group entities’ financial statements

The results and financial position of all the group entities (none of which has the currency of a

hyperinflationary economy) that have a functional currency different from the presentation currency are

translated into presentation currency as follows:

(i) Assets and liabilities are translated at the closing exchange rates at the date of that balance sheet;

(ii) Income and expenses are translated at average exchange rates (unless the average rate is not a

reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates,

in which case income and expenses are translated using the exchange rates at the dates of the

transactions); and

(iii) All resulting exchange differences are recognised in the currency translation reserve.

2.22 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to senior

management of the Group whose members are responsible for allocating resources and assessing performance

of the operating segments.

2.23 Cash and cash equivalents

For the purpose of presentation in the consolidated cash flow statement, cash and cash equivalents include

cash on hand, and deposits with financial institutions which are subject to an insignificant risk of change in value.

55




2.24 Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary

shares are deducted against the share capital amount.

2.25 Dividends to Company’s shareholders

Dividends to the Company’s shareholders are recognised when the dividends are approved for payment.

3. CRITICAL ACCOUNTING ESTIMATES, ASSUMPTIONS AND JUDGEMENTS

Estimates, assumptions and judgements are continually evaluated and are based on historical experience and

other factors, including expectations of future events that are believed to be reasonable under the circumstances.

(a) Useful life of property, plant and equipment

The management of the Group determines the estimated useful life and related depreciation expense for

the property, plant and equipment. The management of the Group estimates useful life of the property,

plant and equipment by reference to expected usage of the property, plant and equipment, expected

repair and maintenance, and technical or commercial obsolescence arising from changes or improvements

in the market. The useful life and related depreciation expense could change significantly as a result of

the changes in these factors.

The carrying amount of the Group’s property, plant and equipment is $290.7 million as at 30 June 2012

(Note 22) and the depreciation charge for the year amounts to $28.4 million.

(b) Impairment of investment in subsidiaries

The Group follows the guidance of FRS 36 – Impairment of Assets in determining the indication

of impairment of investments in subsidiaries and the recoverable amount of the investments. This

determination requires significant judgement. In making this judgement, the Group evaluates, among

other factors, the market, economic or legal environment in which the subsidiaries operate, the gestation

period for new businesses, and the range of economic conditions that exist which have an impact on

the future cash flow projections.

(c) Uncertain tax positions

The Group is subject to income taxes in numerous jurisdictions. In determining the income tax liabilities,

management is required to estimate the amount of capital allowance, the deductibility of certain expenses

and the taxability of income at each tax jurisdiction.

The Group recognises liabilities for expected tax issues based on estimates of whether additional taxes

will be due. Where the final tax outcome of these matters is different from the amounts that were initially

recognised, such differences will impact the income tax and deferred tax provisions in the period in which

such determination is made.

The carrying amount of the Group’s current and deferred income tax liabilities (net) is $1.8 million (Note

10) and $26.4 million (Note 27) respectively as at 30 June 2012.


56


3. CRITICAL ACCOUNTING ESTIMATES, ASSUMPTIONS AND JUDGEMENTS (CONTINUED)

(d) Impairment of loans and receivables

Management reviews its loans and receivables for objective evidence of impairment at least quarterly.

Significant financial difficulties of the debtor, the probability that the debtor will enter bankruptcy, and

default or significant delay in payments are considered objective evidence that a receivable is impaired.

In determining this, management makes judgement as to whether there is observable data indicating

that there has been a significant change in the payment ability of the debtor, or whether there have been

significant changes with adverse effect in the technological, market, economic or legal environment in

which the debtor operates in.

Where there is objective evidence of impairment, management makes judgements as to whether an

impairment loss should be recorded as an expense. In determining this, management uses estimates

based on historical loss experience for assets with similar credit risk characteristics. The methodology and

assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly

to reduce any differences between the estimated loss and actual loss experience.

The carrying amount of the Group’s trade and other receivables that are impaired amount to $7.1 million

as at 30 June 2012 [Note 32(b)]. If the net present values of estimated cash flows increase/decrease by

10% from management’s estimates for these impaired receivables, the Group’s allowance for impairment

will decrease or increase by $343,214 and $85,286 respectively.

(e) Contract revenue

The Group uses the percentage-of-completion method to account for its contract revenue. The stage of

completion is measured by reference to the contract costs incurred to date compared to the estimated

total costs for the contract.

Significant assumptions are required to estimate the total contract costs and the recoverable variation

works that affect the stage of completion and the contract revenue respectively. In making these

estimates, management has relied on past experience and the work of specialists.

If the total contract costs of uncompleted contracts to be incurred increase/decrease by 10% from

management’s estimates, the Group’s profit will decrease/increase by $2,567,292 and $2,103,736

respectively.

4. REVENUE

Group

2012 2011

$ $

Rendering of services 126,687,632 99,726,723

Trading sales of cranes and equipment 6,191,985 6,746,672

Rental income 135,839 86,406

Contract revenue 18,194,059 388,100

Total sales 151,209,515 106,947,901

57



5. EXPENSES BY NATURE

Group

2012 2011

$ $

Cross-hire charges 9,732,468 7,360,533

Depreciation of property, plant and equipment (Note 22) 28,393,696 25,926,920

Employee compensation (Note 6) 35,194,512 31,982,144

Sub-contractor charges 12,403,905 4,817,340

Transportation expense 4,945,806 2,773,344

Upkeep of property, plant and equipment 5,174,409 4,043,644

Rental expense on operating leases 933,792 850,146

Cost of trading equipment and spare parts 5,341,221 5,899,808

Freight, handling and customs 1,907,137 2,562,993

Insurance 4,503,690 4,102,080

Contract expenses recognised (Note 16) 17,143,960 798,603

Purchases of inventories 7,875,743 7,090,531

Changes in inventories 234,894 (152,640)

Audit fees – auditor of the Company 296,382 304,921

Audit fees – other auditors* 66,336 59,129

Non-audit fees – auditor of the Company 76,469 74,308

Non-audit fees – other auditors* 40,233 30,514

Professional fees 437,182 439,002

Impairment loss on trade receivables 4,860,425 907,904

Impairment loss on trade receivables written back (135,337) (337,144)

Hire of equipment 880,266 350,547

Other expenses 11,950,562 7,704,746

Total cost of sales, administrative expenses and other operating expenses 152,257,751 107,589,373

* Includes the network of member firms of PricewaterhouseCoopers International Limited (PwCIL).

6. EMPLOYEE COMPENSATION

Group

2012 2011

$ $

Wages and salaries 32,979,815 30,052,510

Employer’s contribution to defined contribution plans

including Central Provident Fund (“CPF”) 2,214,697 1,929,634

35,194,512 31,982,144


58


7. OTHER INCOME

Group

2012 2011

$ $

Interest income

– bank deposits 230,704 173,601

Dividend income 28,713 20,027

259,417 193,628

8. OTHER (LOSS)/GAINS – NET

Group

2012 2011

$ $

Fair value (loss)/gain on financial assets at fair value through profit and loss (173,541) 122,378

Gain on disposal of property, plant and equipment – net 2,293,914 5,131,834

Insurance claims received 89,150 687,579

Currency translation loss – net (3,734,863) (3,016,102)

Miscellaneous gain 179,066 347,405

(1,346,274) 3,273,094

9. FINANCE EXPENSES

Group

2012 2011

$ $

Interest expense

– Bank borrowings 1,794,133 1,740,723

– Loan from a substantial shareholder [Note 33(c)] 3,964 9,455

– Finance lease liabilities 1,440,153 1,457,963

3,238,250 3,208,141

Currency translation gain – net (651,181) (1,749,766)

2,587,069 1,458,375

59



10. INCOME TAXES

(a) Income tax expense

Group

2012 2011

$ $

Tax expense attributable to (loss)/profit is made up of:

Current income tax

– Singapore 138,578 258,232

– Foreign 1,218,824 729,202

1,357,402 987,434

Deferred income tax (Note 27) (8,028) 536,261

1,349,374 1,523,695

Under/(over) provision in previous financial years

– current income tax 219,062 (1,621,179)

– deferred income tax (Note 27) 345,960 539,336

1,914,396 441,852

The tax expense on (loss)/profit differs from the amount that would arise using the Singapore standard

rate of income tax due to the following:

Group

2012 2011

$ $

(Loss)/profit before income tax (3,875,473) 1,288,199

Tax calculated at a tax rate of 17% (2011: 17%) (658,830) 218,994

Singapore statutory stepped income exemption (142,445) (63,012)

Income not subject to tax (161,705) (323,421)

Expenses not deductible for tax purposes 1,134,924 343,705

Utilisation of previously unrecognised tax losses (31,917) –

Effect of different tax rates in other countries 72,827 (165,436)

Deferred tax asset not recognised due to tax losses

and capital allowances 1,138,544 1,518,791

Other (2,024) (5,926)

Tax charge 1,349,374 1,523,695


60


10. INCOME TAXES (CONTINUED)

(b) Movements in current income tax liabilities/(tax recoverable)

Group Company

2012 2011 2012 2011

$ $ $ $

Current income tax liabilities 1,867,571 1,648,728 – –

Tax recoverable (17,718) (65,067) – –

1,849,853 1,583,661 – –

Balance at beginning of financial year 1,583,661 3,096,212 – (1,416,060)

Income tax (paid)/refunded (1,265,076) (858,802) – 1,392,592

Income tax expense on results

– current financial year 1,357,402 987,434 – –

– under/(over) provision in previous

financial years 219,062 (1,621,179) – 23,468

Currency translation differences (45,196) (20,004) – –

Balance at end of financial year 1,849,853 1,583,661 – –

11. EARNINGS PER SHARE

Basic and diluted earnings per share is calculated by dividing the net profit attributable to equity holders of the

Company by the weighted average number of ordinary shares outstanding during the financial year.

Group

2012 2011

Net (loss)/profit attributable to equity holders of

Tiong Woon Corporation Holding Ltd ($) (4,847,258) 951,415

Weighted average number of ordinary shares on issue

for basic and diluted earnings per share 437,068,538 426,624,767*

Basic and diluted (loss)/earnings per share (cents per share) (1.11) 0.22*

* restated for the effects of the Rights Issue (Note 28)

61



12. CASH AND CASH EQUIVALENTS

Group Company

2012 2011 2012 2011

$ $ $ $

Cash at bank and on hand 15,456,367 22,698,574 33,122 54,298

Short-term bank deposits 7,303,988 12,008,144 – –

22,760,355 34,706,718 33,122 54,298

For the purpose of presenting the consolidated cash flow statement, the consolidated cash and cash equivalents

comprise the following:

Group

2012 2011

$ $

Cash and bank balances (as above) 22,760,355 34,706,718

Less: Bank deposits pledged (3,171,675) (2,399,724)

Cash and cash equivalents per consolidated statement of cash flows 19,588,680 32,306,994

Bank deposits are pledged as collateral for bank guarantees given by the Group’s bankers to certain creditors

of the Group and to certain custom authorities.

13. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

Group

2012 2011

At fair value At fair value

$ $

Listed securities:

– Equity securities – Singapore 718,274 891,815


62


14. TRADE AND OTHER RECEIVABLES – CURRENT

Group Company

2012 2011 2012 2011

$ $ $ $

Trade receivables – third parties 60,772,924 46,828,317 – 1,475

Less: Allowance for impairment of trade

receivables (6,265,214) (1,685,355) – –

Trade receivables – net 54,507,710 45,142,962 – 1,475

Contract revenue

– Due from customers (Note 16) 1,045,530 376,469 – –

– Retentions 1,126,869 – – –

Other receivables – third parties 1,386,570 2,319,117 – –

Withholding tax recoverable 1,890,691 1,647,612 – –

59,957,370 49,486,160 – 1,475

15. INVENTORIES

Group

2012 2011

$ $

Fuel and spare parts 3,215,791 3,450,685

The cost of inventories recognised as expense and included in “cost of sales” amounted to $8,110,637 (2011:

$6,937,891).

16. CONTRACT WORK-IN-PROGRESS

Group

2012 2011

$ $

Contract work-in-progress: – 97,776

Aggregate costs incurred and profits recognised

(less losses recognised) to date on uncompleted contracts 14,817,418 764,700

Less: Progress billings (13,771,888) (388,231)

1,045,530 376,469

Presented as:

Due from customers on contract revenue (Note 14) 1,045,530 376,469

Advances received on contract revenue (Note 23) 349,652 347,060

Retentions on contract revenue (Note 14) 1,126,869 –

63



17. OTHER ASSETS

Group Company

2012 2011 2012 2011

$ $ $ $

(a) Current

Deposits 1,215,075 1,026,768 – –

Prepayments 1,551,410 1,663,667 10,300 10,300

2,766,485 2,690,435 10,300 10,300

Group

2012 2011

$ $

(b) Non-current

Club membership, at cost 137,300 137,300

Less: Accumulated impairment (30,000) (30,000)

107,300 107,300

18. OTHER RECEIVABLES – NON-CURRENT

Company

2012 2011

$ $

Other receivables from subsidiaries (non-trade)

– non-interest bearing (unsecured) 52,501,671 44,001,054

The non-interest bearing receivables have no fixed terms of repayment and are intended to be a long-term

source of additional capital for the subsidiaries. Settlement of these receivables is neither planned nor likely to

occur in the foreseeable future. As a result, management considers such receivables to be in substance part

of the Company’s net investment in these subsidiaries and has accounted for these receivables in accordance

with Note 2.7.


64


19. INVESTMENTS IN ASSOCIATED COMPANIES

Group Company

2012 2011 2012 2011

$ $ $ $

Beginning of financial year 1,008,033 85,404 – –

Investment in associated companies(a) – 1,019,555 1,019,555 –

Increase in stake in associate to subsidiary

(Note 36) – (18,250) – –

Share of profit/(loss) 886,401 (78,676) – –

End of financial year 1,894,434 1,008,033 1,019,555 –

The summarised financial information of the associated companies

are as follows:

– Assets 14,562,321 3,731,795

– Liabilities 10,981,850 345,965

– Revenue 10,532,912 13,664,490

– Net profit/(loss) 1,808,982 (23,514)

Details of the associated companies of the Group are as follows:

Name of Company Principal activities

Country of

incorporation Equity holding

2012 2011

% %

ASB Maritime

Resources (L) Ltd(a) (b)

Provision of fast crew boat

leasing in Labuan, Malaysia.

Malaysia 49 49

Asian Supply Base

Maritime Resources

Sdn Bhd(a) (c)

Provision of marine support

services for offshore drilling

activities in the oil and gas

industry.

Malaysia 49 49

(a) During the financial year, the shares of the associated companies were transferred from a subsidiary company to the

Company. In 2011, the shares of the associated companies were held by a subsidiary.

(b) Audited by Moore Stephens Chartered Accountants, Malaysia.

(c) Audited by KBCF Tan, Malaysia.

65



20. INVESTMENT IN A JOINT VENTURE

Group Company

2012 2011 2012 2011

$ $ $ $

Beginning of financial year – – – –

Investment in a joint venture 2,074,399 – 2,074,399 –

Unrealised gain on a transaction

between the Group and joint venture (407,131) –

Share of loss (39,712) – – –

End of financial year 1,627,556 – 2,074,399 –

The summarised financial information of the joint venture are as follows:

2012 2011

$ $

– Assets 5,125,196 –

– Liabilities (163,468) –

– Revenue 23,153 –

– Net loss (99,280) –

Details of the joint venture are as follows:

Name of Company Principal activities

Country of


2012 2011

% %

Held by the Company

Tiong Woon Teck Aik Hiring out of cranes and Singapore 40 –

Enterprise Pte Ltd(a) transport

(a) Audited by PricewaterhouseCoopers LLP, Singapore.

21. INVESTMENTS IN SUBSIDIARIES

Company

2012 2011

$ $

Equity investments, at cost

Beginning of financial year 39,271,294 36,052,956

Additional investments in subsidiaries 2,134,640 3,218,338

Disposal of investments in a subsidiary (100,000) –

41,305,934 39,271,294

Less: Provision for impairment in investment (3,243,834) (1,073,693)

End of financial year 38,062,100 38,197,601


66


21. INVESTMENTS IN SUBSIDIARIES (CONTINUED)

Details of the subsidiaries are as follows:

Name of companies Principal activities

Country of


2012 2011

% %

Subsidiaries held by the Company

Tiong Woon Crane & Transport

(Pte) Ltd (a)

Hiring out of cranes and

transport and trading

Singapore 100 100

Tiong Woon Crane Pte Ltd (a) Hiring out of cranes and transport Singapore 100 100

Tiong Woon Project & Contracting

Pte Ltd (a)

Mechanical and infrastructure

engineering services and structural

works

Singapore 100 100

Tiong Woon Enterprise Pte Ltd (a) Trading of cranes Singapore 100 100

Tiong Woon International Pte Ltd (a) Investment holding, hiring out of

cranes and transport and freight

forwarding services

Singapore 100 100

Soon Douglas (Pte) Ltd (a) Selling, servicing and leasing

of equipment in the petroleum,

construction, shipbuilding and

related industries

Singapore 100 100

Tiong Woon Marine Pte Ltd (a) Marine/transportation logistics

related business

Singapore 100 100

Tiong Woon Offshore Pte Ltd (a) (t) Marine/transportation logistics

related business

Singapore 100 –

TW (Sabah) Pte Ltd (a) (t) Marine/transportation logistics

related business

Singapore 100 –

Tiong Woon Oil & Gas Services

Pte Ltd (a)

Fabrication and engineering works

for oil and gas projects

Singapore 100 100

Tiong Woon Logistics Pte Ltd (a) Freight forwarding services and

logistics related business

Singapore 90 100

Tiong Woon China Consortium

Pte Ltd (a)

Hiring out of cranes and transport Singapore 75 75

Tiong Woon Oasis Pte Ltd (a) Repair and up-slipping/

launching of ships

Singapore 51 51

67




Country of


2012 2011

% %

Subsidiaries held by the Company (continued)

Tiong Woon Oasis Marine &

Engineering Pte Ltd (a) (t)

Provides process and industrial

plant engineering services,

renovation and marine related

activities including but not limited to

dredging and marine construction

Singapore 51 –

Tiong Woon Crane &

Transport (M) Sdn Bhd (f)

Hiring out of cranes and transport Malaysia 100 100

Ikhlas Taqwa Sdn Bhd (q) (s) Marine/transportation logistics

related business

Malaysia 100 100

Tiong Woon Thai Co. Ltd (c) Hiring out of cranes and transport Thailand 100 100

Thai Contracting & Enterprises

Co., Ltd (c) (s)

Hiring out of cranes and transport Thailand 100 100

P.T. TWC Indonesia (e) Hiring out of cranes and transport Indonesia 100 100

TWC Arabia Ltd (b) Hiring out of cranes and transport Saudi Arabia 100 100

Tiong Woon Vietnam Company

Limited(n)

Hiring out of cranes and transport

and trading

Vietnam 100 100

Held by subsidiary companies

Tower Cranes Services Pte Ltd (a) (k) Servicing, Erection, Jacking &

Dismantling of Tower Cranes

Singapore 100 100

P.T. Tiong Woon Indonesia (g) (o) Dormant Indonesia 100 100

P.T. TWC Bintan (e) (j) Fabrication and engineering works

for oil and gas projects

Indonesia 100 100

Tiong Woon Philippines, Inc (d) (g) Hiring out of cranes and transport Philippines 100 100

Tiong Woon Project & Contracting

(India) Private Limited (l) (p)

Mechanical and infrastructure

engineering services and structural

works

India 100 100

Tiong Woon (Huizhou) Industrial

Services Co., Ltd (i) (r)

Heavy lifting services in the oil,

gas, petrochemicals and other

related construction industries

People’s Republic

of China

75 75



68



Country of


2012 2011

% %

Held by subsidiary companies (continued)

Tiong Woon Crane Sdn Bhd (f) (h) Hiring out of cranes and transport Malaysia 70 70

Tiong Woon Oasis Sdn Bhd (f) (m) Repair and up-slipping/launching

of ships

Malaysia 51 51

P.T. Tiong Woon Oasis (e) (m) Repair and up-slipping/launching

of ships

Indonesia 51 51

Tiong Woon Offshore Pte Ltd (a) (t) Marine/transportation logistics

related business

Singapore – 100

TW (Sabah)Pte Ltd (a) (t) Marine/transportation logistics

related business

Singapore – 100

Tiong Woon Oasis Marine &

Engineering Pte Ltd (a) (t)

Process and industrial plant

engineering services, renovation

and marine related activities

including but not limited to dredging

and marine construction

Singapore – 51

(a) Audited by PricewaterhouseCoopers LLP, Singapore.

(b) Audited by PricewaterhouseCoopers, Al Juraid.

(c) Audited by Patcharin Viravan Certified Public Accountant (Thailand).

(d) Audited by Ma. Adelaida S.Valbuena-Espino.

(e) Audited by KAP Handoko & Suparmun.

(f) Audited by Baker Tilly Monteiro Heng.

(g) Wholly-owned subsidiary of Tiong Woon International Pte Ltd.

(h) Subsidiary of Tiong Woon Crane & Transport (M) Sdn Bhd.

(i) Wholly-owned subsidiary of Tiong Woon China Consortium Pte Ltd.

(j) Wholly-owned subsidiary of Tiong Woon Oil & Gas Services Pte Ltd.

(k) Wholly-owned subsidiary of Soon Douglas Pte Ltd.

(l) Wholly-owned subsidiary of Tiong Woon Project & Contracting Pte Ltd.

(m) Wholly-owned subsidiary of Tiong Woon Oasis Pte Ltd.

(n) Audited by DPCA Auditing and Consulting Company Limited.

(o) Not required to be audited under the laws of the country of incorporation.

(p) Audited by Sundaram & Narayan Chartered Accountants.

(q) Audited by Ng, Lee & Partners.

(r) Audited by Huizhou Fangzheng Certified Public Accountants.

(s) Includes share held in trust by employees of the Group.

(t) During the financial year, the shares of the subsidiaries were transferred from a subsidiary company to the Company.

In 2011, the shares of the subsidiaries were held by a subsidiary.


69



22. PROPERTY, PLANT AND EQUIPMENT

Freehold

land

Leasehold

land

Leasehold

buildings Machinery

Tug boats

and barges

Office

equipment

Computer

software

Furniture

and fixtures

Office

renovation

Motor

vehicles

Asset under

construction Total

$ $ $ $ $ $ $ $ $ $ $ $

Group

2012

Cost

Beginning of financial year 5,286,501 2,022,912 11,145,055 359,037,647 43,561,428 2,610,774 1,049,298 1,168,699 1,053,441 2,277,023 34,625 429,247,403

Additions – 119,691 355,334 32,761,786 2,316,877 899,009 37,004 37,693 39,469 435,243 2,747,832 39,749,938

Disposals – – – (7,985,983) (3,349,691) (162,784) – – (23,511) – – (11,521,969)

Reclassification 26,580 – (26,580) – – – – – 14,009 – (14,009) –

Exchange differences (239,674) (12,665) (255,133) (2,052,301) (102,223) (11,603) (48) (4,754) (6,956) (21,710) (62) (2,707,129)

End of financial year 5,073,407 2,129,938 11,218,676 381,761,149 42,426,391 3,335,396 1,086,254 1,201,638 1,076,452 2,690,556 2,768,386 454,768,243

Accumulated depreciation

Beginning of financial year – (360,574) (3,284,668) (118,668,454) (18,491,762) (2,050,660) (540,301) (206,251) (599,583) (791,352) – (144,993,605)

Depreciation charge (Note 5) – (57,507) (737,500) (22,794,950) (3,585,325) (407,756) (214,176) (120,843) (124,530) (351,109) – (28,393,696)

Disposals – – – 7,286,798 1,450,977 151,167 – – 4,310 – – 8,893,252

Exchange differences – 239 115,244 294,482 13,886 10,893 13 1,854 2,290 5,282 – 444,183

End of financial year – (417,842) (3,906,924) (133,882,124) (20,612,224) (2,296,356) (754,464) (325,240) (717,513) (1,137,179) – (164,049,866)

Net book value

End of financial year 5,073,407 1,712,096 7,311,752 247,879,025 21,814,167 1,039,040 331,790 876,398 358,939 1,553,377 2,768,386 290,718,377

Group

2011

Cost

Beginning of financial year 5,690,698 2,003,277 11,372,992 316,994,125 40,900,836 2,953,750 1,049,779 548,306 728,984 2,035,341 – 384,278,088

Additions – 147,683 358,251 54,420,338 12,815,084 178,360 – 719,438 296,508 347,025 34,625 69,317,312

Increase in stake in associate to

subsidiary (Note 36) – – – 674,503 – 36,183 – 12,052 31,333 12,302 – 766,373

Disposals – – (18,770) (10,524,235) (10,154,492) (509,864) – (97,250) – (56,526) – (21,361,137)

Exchange differences (404,197) (128,048) (567,418) (2,527,084) – (47,655) (481) (13,847) (3,384) (61,119) – (3,753,233)

End of financial year 5,286,501 2,022,912 11,145,055 359,037,647 43,561,428 2,610,774 1,049,298 1,168,699 1,053,441 2,277,023 34,625 429,247,403

Accumulated depreciation

Beginning of financial year – (312,184) (2,708,514) (107,045,716) (14,839,850) (2,209,789) (330,503) (233,245) (474,986) (550,273) – (128,705,060)

Depreciation charge (Note 5) – (53,675) (705,956) (20,434,196) (3,660,794) (371,944) (209,893) (76,130) (123,384) (290,948) – (25,926,920)

Disposals – – 21,063 8,196,883 5,540 507,487 – 96,706 – 31,560 – 8,859,239

Exchange differences – 5,285 108,739 614,575 3,342 23,586 95 6,418 (1,213) 18,309 – 779,136

End of financial year – (360,574) (3,284,668) (118,668,454) (18,491,762) (2,050,660) (540,301) (206,251) (599,583) (791,352) – (144,993,605)

Net book value

End of financial year 5,286,501 1,662,338 7,860,387 240,369,193 25,069,666 560,114 508,997 962,448 453,858 1,485,671 34,625 284,253,798

(a) Additions in the consolidated financial statements include $14,055,949 (2011: $31,416,665) and $10,423,969 (2011:

$12,625,112) acquired by means of bank borrowings and finance lease respectively.

(b) The carrying amount of plant and equipment and motor vehicles of the Group under finance lease liabilities (Note 25)

amounted to $60,143,997 (2011: $53,409,648).

(c) Bank borrowings are secured on property, plant and equipment of the Group with carrying amounts of $123,379,521

(2011: $113,869,400) [Note 24(a)].


70


23. TRADE AND OTHER PAYABLES

Group Company

2012 2011 2012 2011

$ $ $ $

Trade payables to:

– third parties 21,460,128 5,120,941 5,935 –

Other payables:

– third parties 6,001,828 3,526,432 1,697,900 18,640

Deposits and advances received 2,651,794 2,278,490 – –

Advances received on contract

revenue (Note 16) 349,652 347,060 – –

Accrued operating expenses 10,071,147 7,519,147 161,100 153,300

40,534,549 18,792,070 1,864,935 171,940

24. BORROWINGS

Group

2012 2011

$ $

Current

Bank borrowings 22,590,086 45,745,409

Finance lease liabilities (Note 25) 12,927,974 11,346,716

35,518,060 57,092,125

Non-current

Bank borrowings 35,219,527 24,849,437

Loan from a substantial shareholder (unsecured) [Note 33(c)] – 2,975,000

Finance lease liabilities (Note 25) 17,601,480 21,705,377

52,821,007 49,529,814

Total borrowings 88,339,067 106,621,939

The exposure of the borrowings of the Group to interest rate changes amounts to $8,819,763 (2011:

$34,847,853). These borrowings are contractually repriced between one to three months. The remaining

borrowings are fixed rate borrowings and are not subject to interest rate changes.

(a) Security granted

Total borrowings include secured liabilities of $84,262,565 (2011: $75,074,343) of the Group. Bank

borrowings of the Group and the Company are secured by a first legal charge over the Group’s property,

plant and equipment (Note 22). Finance lease liabilities of the Group are effectively secured over the

leased plant and equipment and motor vehicles (Note 22), as the legal titles are retained by the lessor

and will be transferred to the Group upon full settlement of the finance lease liabilities.

71



24. BORROWINGS (CONTINUED)

(b) Fair value of non-current borrowings

Carrying amounts Fair values

2012 2011 2012 2011

$ $ $ $

Group

Bank borrowings 35,219,527 24,849,437 35,056,230 24,819,744

Loan from a substantial

shareholder – 2,975,000 – 2,898,904

Finance lease liabilities 17,601,480 21,705,377 17,076,495 21,170,615

The fair values of the non-current borrowings are determined from discounted cash flows analyses, using

discount rates of an equivalent instrument at the balance sheet date which the directors expect to be

available to the Group as follows:

Group

2012 2011

USD SGD USD SGD

% % % %

Bank borrowings 2.89 2.67 2.92 3.15

Loan from a substantial

shareholder – – – 3.13

Financial lease liabilities – 3.90 – 4.50

25. FINANCE LEASE LIABILITIES

Group

2012 2011

$ $

Minimum lease payments due:

– not later than one year 13,952,053 12,604,440

– later than one year but not later than five years 18,415,978 22,830,818

32,368,031 35,435,258

Less: Future finance charges (1,838,577) (2,383,165)

Present value of finance lease liabilities 30,529,454 33,052,093

The present value of finance lease liabilities are analysed as follows:

Not later than one year (Note 24) 12,927,974 11,346,716

Later than one year but not later than five years (Note 24) 17,601,480 21,705,377

30,529,454 33,052,093

The finance lease liabilities are secured on the plant and equipment acquired under finance leases (Note 22)

as well as assignment of insurances.


72


26. DERIVATIVE FINANCIAL INSTRUMENTS

Group

Contract

notional

amount

Fair value

Liability

$ $

2012

Cash-flow hedges

– Interest rate swaps 25,783,625 (510,059)

Less: Current portion 108,630

Non-current portion (401,429)

Interest rate swaps

Interest rate swaps are transacted to hedge variable quarterly interest payments on borrowings that will mature

in 2019. Fair value gains and losses on the interest rate swaps recognised in the hedging reserve are reclassified

to profit or loss as part of interest expense over the period of the borrowings.

27. DEFERRED INCOME TAXES

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off current

income tax assets against current income tax liabilities and when the deferred income taxes relate to the same

fiscal authority. The amounts, determined after appropriate offsetting, are shown on the balance sheets as

follows:

Group

2012 2011

$ $

Deferred income tax assets:

– to be recovered within one year (640,665) (377,872)

Deferred income tax liabilities:

– to be settled within one year 289,254 169,373

– to be settled after one year 26,707,758 26,189,823

26,997,012 26,359,196

73



27. DEFERRED INCOME TAXES (CONTINUED)

The movement in the deferred income tax account is as follows:

Group

2012 2011

$ $

Balance at beginning of financial year 25,981,324 24,891,904

(Credited)/charged to profit or loss (Note 10(a)) (8,028) 536,261

Under provision in prior financial years (Note 10(a)) 345,960 539,336

Exchange differences 37,091 13,823

Balance at end of financial year 26,356,347 25,981,324

Deferred income tax assets are recognised for tax losses or capital allowances carried forward to the extent that

realisation of the related tax benefits through future taxable profits are probable. The Group has unrecognised tax

losses of approximately $22,301,121 (2011: $15,902,786) and unrecognised capital allowances of approximately

$nil (2011: $398,753) at the balance sheet date, which can be carried forward and used to offset against future

taxable income subject to meeting certain statutory requirements by those companies with unrecognised tax

losses and capital allowances in their respective countries of incorporation. The tax losses have no expiry date

except for an amount of $14,008,648 (2011: $11,534,356) which will expire between 2013 to 2017 (2011: 2013

to 2016). The capital allowances have no expiry date.

The movement in the deferred income tax assets and liabilities (prior to offsetting of balances within the same

tax jurisdiction) during the financial year is as follows:

Group

Deferred income tax liabilities

Accelerated

tax

depreciation

$

2012

Balance at beginning of financial year 26,526,131

Charged to profit or loss 809,027

Currency translation differences (73)

Balance at end of financial year 27,335,085

2011

Balance at beginning of financial year 26,609,884

Credited to profit or loss (83,727)

Currency translation differences (26)

Balance at end of financial year 26,526,131


74


27. DEFERRED INCOME TAXES (CONTINUED)

Group (continued)

Deferred income tax assets

Provisions

Unutilised

capital

allowances

and

unabsorbed

tax losses Total

$ $ $

2012

Balance at beginning of financial year (115,015) (429,792) (544,807)

Charged/(credited) to profit or loss 115,015 (586,110) (471,095)

Exchange differences – 37,164 37,164

Balance at end of financial year – (978,738) (978,738)

2011

Balance at beginning of financial year – (1,717,980) (1,717,980)

(Credited)/charged to profit or loss (115,015) 1,274,339 1,159,324

Exchange differences – 13,849 13,849

Balance at end of financial year (115,015) (429,792) (544,807)

28. SHARE CAPITAL

The Group’s share capital comprises fully paid up 464,470,512 (2011: 371,576,410) ordinary shares with no

par value, amounting to a total of $87,340,268 (2011: $77,302,534).

On 22 March 2012, the Company increased its share capital from S$77,302,533 to S$87,340,268 by way of a

rights issue of 92,894,102 new ordinary shares at an issue price of S$0.11 for each rights share, on the basis of

one rights share for every four existing ordinary shares of the Company (the “Right Issue”). The gross proceeds

from this share issues and the share issue expenses amounted to $10,218,351 and $180,617 respectively.

The newly issued rights shares rank pari passu in all respects with the existing ordinary shares of the Company.

75



29. OTHER RESERVES

Group

2012 2011

$ $

(a) Composition:

Foreign currency translation reserve (non-distributable) (4,048,750) (4,013,403)

Hedging reserve (510,059) –

Capital reserve (non-distributable) 331,273 331,273

(4,227,536) (3,682,130)

(b) Movements:

Foreign currency translation reserve

At beginning of financial year (4,013,403) (1,412,446)

Ne t currency translation differences of financial statements of foreign

subsidiaries and net currency translation difference on borrowings

designated as hedges against foreign subsidiaries 112,841 (2,882,003)

Less: Non-controlling interest (148,188) 281,046

(35,347) (2,600,957)

At end of financial year (4,048,750) (4,013,403)

Hedging reserve

At beginning of financial year – –

Fair value loss on cash flow hedges (510,059) –

At end of financial year (510,059) –

Capital reserve

At beginning and end of financial year 331,273 331,273

Capital reserve represents amounts set aside in compliance with local laws in a country where the Group

operates.

30. DIVIDENDS

Group and Company

2012 2011

$ $

Ordinary dividends paid

Final exempt (one-tier) dividend paid in respect of the previous

financial year of 0.4 cent (2011: 0.4 cent) per share 1,486,306 1,486,306

At the Annual General Meeting on 25 October 2012, a final dividend of 0.4 cents per share amounting to a

total of $1,857,882 will be recommended. These financial statements do not reflect this dividend, which will

be accounted for in shareholders’ equity as an appropriation of retained profits in the financial year ending 30

June 2013.


76


31. COMMITMENTS

(a) Capital commitments

Capital expenditure contracted for at the balance sheet date but not recognised in the financial statements

are as follows:

Group

2012 2011

$ $

Plant and equipment 11,668,726 45,441,000

(b) Operating lease commitments – where a group company is a lessee

The Group leases land and offices from non-related parties under non-cancellable operating lease

agreements. The leases have varying terms and renewal rights.

The future minimum lease payments under non-cancellable operating leases contracted for at the balance

sheet but not recognised as liabilities, are as follows:

Group

2012 2011

$ $

Not later than one year 1,214,784 960,807

Later than one year but not later than five years 2,557,296 2,500,680

Later than five years 7,544,922 8,008,357

11,317,002 11,469,844

32. FINANCIAL RISK MANAGEMENT

Financial risk factors

The Group’s activities expose it to a variety of financial risks, including foreign exchange risk, interest rate risk,

credit risk and liquidity risk. The Group’s policies for managing each of these risks are summarised below:

(a) Market risk

(i) Currency risk

The Group operates mainly in Asia with dominant operations in Singapore. Entities in the Group

regularly transact in currencies other than their respective functional currencies such as the

Singapore Dollar (“SGD”), United States Dollar (“USD”), Chinese Renminbi (“RMB”), Thai Baht

(“THB”), Saudi Arabian Riyal (“SAR”), the Euro (“EUR”) and Indian Rupee (“INR”).

The Group currently does not have a formal hedging policy with respect to its foreign exchange

exposure. The Group is in the process of formalising the policy and will continue to monitor its

foreign exchange exposure in the future and will consider hedging any material foreign exchange

exposure should the need arise.

77



32. FINANCIAL RISK MANAGEMENT (CONTINUED)

(a) Market risk (continued)

(i) Currency risk (continued)

The Group’s currency exposure based on the information provided to key management is as

follows:

SGD USD RMB THB SAR EUR INR Others Total

$ $ $ $ $ $ $ $ $

At 30 June 2012

Financial assets

Cash and cash equivalents 9,995,895 1,302,185 5,241,362 921,364 2,200,763 43,155 1,871,113 1,184,518 22,760,355

Financial assets at fair value

through profit or loss 718,274 – – – – – – – 718,274

Trade and other receivables 31,336,597 3,435,588 1,005,622 1,201,128 6,650,105 19,996 6,638,423 9,669,911 59,957,370

Deposits 385,341 – – 5,621 90,038 – 369,635 364,440 1,215,075

42,436,107 4,737,773 6,246,984 2,128,113 8,940,906 63,151 8,879,171 11,218,869 84,651,074

Financial Liabilities

Borrowings 81,979,781 6,210,069 – – – – – 149,217 88,339,067

Trade and other payables 23,213,876 6,725,042 226,811 553,653 2,754,896 160,085 537,475 6,362,711 40,534,549

105,193,657 12,935,111 226,811 553,653 2,754,896 160,085 537,475 6,511,928 128,873,616

Net financial

(liabilities)/assets (62,757,550) (8,197,338) 6,020,173 1,574,460 6,186,010 (96,934) 8,341,696 4,706,941 (44,222,542)

Le ss: Net financial liabilities/

(assets) denominated in the

respective entities’ functional

currencies 62,948,921 – (6,020,173) (1,574,460) (6,186,010) – (4,474,905) (3,376,794) 41,316,579

Currency Exposure 191,371 (8,197,338) – – – (96,934) 3,866,791 1,330,147 (2,905,963)

At 30 June 2011

Financial assets

Cash and cash equivalents 19,455,392 1,470,168 4,540,428 837,781 1,571,300 3,930,098 1,073,002 1,828,549 34,706,718


through profit or loss 891,815 – – – – – – – 891,815

Trade and other receivables 29,955,881 1,771,726 536,208 1,043,534 8,075,370 296,258 6,437,372 1,369,811 49,486,160

Deposits 306,072 – – 4,863 32,635 – 504,727 178,471 1,026,768

50,609,160 3,241,894 5,076,636 1,886,178 9,679,305 4,226,356 8,015,101 3,376,831 86,111,461

Financial Liabilities

Borrowings (77,293,865) (10,442,324) – – – (18,807,720) – (78,030) (106,621,939)

Trade and other payables (13,781,403) (234,300) (129,516) (236,570) (1,793,448) (193,862) (1,659,057) (763,914) (18,792,070)

(91,075,268) (10,676,624) (129,516) (236,570) (1,793,448) (19,001,582) (1,659,057) (841,944) (125,414,009)

Net financial (liabilities)/

assets (40,466,108) (7,434,730) 4,947,120 1,649,608 7,885,857 (14,775,226) 6,356,044 2,534,887 (39,302,548)

Le ss: Net financial liabilities/

(assets) denominated in the

respective entities’ functional

currencies 40,582,264 – (4,947,120) (1,649,608) (7,550,247) – (3,879,347) (1,666,582) 20,889,360

Currency Exposure 116,156 (7,434,730) – – 335,610 (14,775,226) 2,476,697 868,305 (18,413,188)


78




(i) Currency risk (continued)

If the USD and EUR change against the SGD by 5% (2011: 1%) and INR change against the SGD

by 10% (2011: 1%) with all other variables including tax rate being held constant, the effects arising

from the net financial liability/asset position will be as follows:

2012 2011

Increase/(decrease)

Profit

after tax

Profit

after tax

$ $

Group

USD against SGD

– strengthened (340,190) (61,708)

– weakened 340,190 61,708

EUR against SGD

– strengthened (4,023) (122,634)

– weakened 4,023 122,634

INR against SGD

– strengthened 320,944 20,557

– weakened (320,944) (20,557)

The Company does not have any currency exposure as its financial assets and financial liabilities

are all denominated in Singapore dollars.

(ii) Price risk

The Group has insignificant exposure to equity price risk as it does not hold any significant equity

financial assets.

(iii) Cash flow and fair value interest rate risk

Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will

fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that

the fair value of a financial instrument will fluctuate due to changes in market interest rates. The

Group’s income and operating cash flows are substantially independent of changes in market

interest rates.

The Group is exposed to interest rate risk through the impact of rate changes on interest-bearing

liabilities. The Group’s borrowings include bills payable, trust receipt, finance lease liabilities,

revolving credit, term loans, loan from a substantial shareholder, bank loans and transferable loan

facility. The Group manages these cash flow interest rate risks using floating-to-fixed interest rate

swaps.

79





(iii) Cash flow and fair value interest rate risk (continued)

The Group’s borrowings at variable rates on which effective hedges have not been entered into,

are denominated mainly in SGD. If the SGD interest rates increase/decrease by 0.50% (2011:

0.10%) with all other variables including tax rate being held constant, the effect on the profit after

tax will be as follows:

Group

2012 2011

Increase/(decrease)

Profit After Tax

$ $

Interest rate

– increased (35,818) (28,657)

– decreased 35,818 28,657

(b) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in

financial loss to the Group. The major classes of financial assets of the Group and of the Company are

bank deposits and trade and other receivables. For trade and other receivables, the Group adopts the

policy of dealing only with customers with an appropriate credit history, and obtaining sufficient security

where appropriate to mitigate credit risk. For bank deposits, the Group adopts the policy of dealing with

banks with high credit-rating assigned by international credit-rating agencies.

Concentrations of credit risk with respect to trade and other receivables are limited due to the Group’s

large number of customers who are dispersed over the Asian region.

Due to these factors, management believes that there is no additional credit risk beyond amounts provided

for collection losses inherent in the Group’s trade receivables.

(i) Financial assets that are neither past due nor impaired

The Group’s and Company’s major classes of financial assets are bank deposits and trade and

other receivables.

Bank deposits that are neither past due nor impaired are mainly deposits with banks with high

credit-ratings assigned by international credit-rating agencies. Trade and other receivables that

are neither past due nor impaired are substantially companies with a good collection track record

with the Group.

The maximum exposure to credit risk for each class of financial instruments is the carrying amount

of that class of financial instruments presented on the balance sheet except for the corporate

guarantees provide to banks for borrowings and banking facilities of certain subsidiaries (Note 34).


80



(b) Credit risk (continued)

(ii) Financial assets that are past due and/or impaired

There is no other class of financial assets that is past due and/or impaired except for trade

receivables.

The age analysis of trade receivables past due but not impaired is as follows:

Group

2012 2011

$ $

Past due 1 to 30 days 9,846,744 6,699,538

Past due 31 to 60 days 5,900,058 4,660,884

Past due 61 to 90 days 2,400,087 3,075,417

Past due 90 days 17,971,112 17,805,913

36,118,001 32,241,752

The carrying amount of trade receivables individually determined to be impaired and the movement

in the related allowance for impairment are as follows:

Group

2012 2011

$ $

Gross amount 7,118,070 3,741,122

Less: Allowance for impairment (6,265,214) (1,685,355)

852,856 2,055,767

Beginning of financial year 1,685,355 1,248,350

Allowance made 4,725,088 570,760

Allowance utilised (80,305) (116,238)

Currency translation difference (64,924) (17,517)

End of financial year 6,265,214 1,685,355

The impaired trade receivables arises mainly from sales to customers who have disputes in the

invoices which could not be resolved despite several negotiations with customers or are suffering

significant losses in their operations. Hence, it is uncertain that the customers would be willing or

able to settle the outstanding balances.

81




(c) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through

an adequate amount of committed credit facilities deemed necessary to finance the Group’s operations.

The table below analyses the maturity profile of the non-derivative financial liabilities of the Group and

the Company based on contractual undiscounted cash flows.

1 year

or less

Between 1

and 2 years

Between 2

and 5 years

More than

5 years Total

$ $ $ $ $

2012

Group

Trade and other payables (40,534,549) – – – (40,534,549)

Borrowings (37,713,881) (23,839,225) (27,942,638) (3,423,683) (92,919,427)

(78,248,430) (23,839,225) (27,942,638) (3,423,683) (133,453,976)

2011

Group


Borrowings (59,388,836) (39,885,727) (11,685,142) – (110,959,705)

(78,180,906) (39,885,727) (11,685,142) – (129,751,775)

1 year

or less

Between 1

and 2 years

Between 2

and 5 years

More than

5 years Total

$ $ $ $ $

2012

Company


2011

Company

Trade and other payables (171,940) – – – (171,940)


82



(c) Liquidity risk (continued)

The table below analyses the maturity profile of the derivative financial liabilities of the Group based on

contractual undiscounted cash flows.

1 year

or less

Between 1

and 2 years

Between 2

and 5 years

More than

5 years Total

$ $ $ $ $

2012

Group

Net-settled interest

rate swaps

– Cash flow hedges (264,957) (205,305) (271,996) (27,102) (769,360)

2011

Group

Net-settled interest

rate swaps

– Cash flow hedges – – – – –

(d) Capital risk

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going

concern and to maintain an optimal capital structure so as to maximise shareholder value.

In order to maintain or achieve an optimal capital structure, the Group may adjust the amount of

dividend payment, return capital to shareholders, issue new shares, buy back issued shares, obtain new

borrowings or sell assets to reduce borrowings.

Management monitors capital based on a gearing ratio. The gearing ratio is calculated as net debt divided

by total capital. Net debt is calculated as borrowings plus trade and other payables less cash and cash

equivalents. Total capital is calculated as equity (excluding non-controlling interest) plus net debt.

Group

2012 2011

$ $

Net debt 106,113,261 90,707,291

Total equity 222,244,770 219,086,006

Total capital 328,358,031 309,793,297

Gearing ratio 0.32 0.29

The Group is in compliance with all externally imposed capital requirements for the financial years ended

30 June 2011 and 2012.

83




(e) Fair value measurements

The fair values of current financial assets and liabilities, carried at amortised cost, approximate their

carrying amounts.

The fair values of financial liabilities carried at amortised cost are estimated by discounting the future

contractual cash flows at the current market interest rates that are available to the Group for similar

financial liabilities.

The fair value of financial assets at fair value through profit or loss is based on the following fair value

measurement hierarchy:

(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);

(b) inputs other than quoted prices included within Level 1 that are observable for the asset or liability,

either directly (ie as prices) or indirectly (ie derived from prices) (Level 2); and

(c) inputs for the asset or liability that are not based on observable market data (unobservable inputs)

(Level 3).

The following table presents the financial assets and liabilities measured at fair value:

Level 1 Level 2 Level 3 Total

Group

As at 30 June 2012

Assets


through profit or loss 718,274 – – 718,274

Liabilities

Derivative financial instruments – (510,059) – (510,059)

As at 30 June 2011

Assets


through profit or loss 891,815 – – 891,815

The fair value of financial instruments traded in active markets is based on quoted market prices at the

balance sheet date. The quoted market price used for financial assets held by the Company is the current

bid price. These instruments are included in Level 1.

The fair value of financial instruments that are not traded in an active market (for example, over-the-

counter derivatives) is determined by using valuation techniques. The Group uses a variety of methods

and makes assumptions that are based on market conditions existing at each balance sheet date. The

fair value of interest rate swaps is calculated as the present value of the estimated future cash flows.

These investments are classified as Level 2 and comprise derivative financial instruments.


84



(f) Financial instruments by category

The carrying amounts of financial assets at fair value through profit or loss are disclosed on the face of

the balance sheet. The aggregate carrying amounts of loans and receivables and financial liabilities at

amortised cost are as follows:

Group Company

2012 2011 2012 2011

$ $ $ $

Loans and receivables 83,932,800 85,219,646 33,122 55,773

Financial liabilities at

amortised cost 129,383,675 125,414,009 1,864,935 171,940

33. RELATED PARTY TRANSACTIONS

In addition to the information disclosed elsewhere in the financial statements, the following transactions took

place between the Group and related parties at terms agreed between the parties:

(a) Sales and purchases of goods and services

Group

2012 2011

$ $

Sales to corporations in which certain directors or their close

family members have control or significant influence over

– Sales of cranes and equipment 240,576 1,411,991

– Rendering of services 4,261,800 44,321

Purchases from corporations in which certain directors or their

close family members have control or significant influence over

– Rental of cranes and equipment 488,190 39,984

– Provision of sub-contractor services 62,602 1,065,438

– Purchase of ordinary shares – 28,560

– Interest charged on loan [Note 33(c)] 3,964 9,455

85



33. RELATED PARTY TRANSACTIONS (CONTINUED)

(b) Key management personnel compensation

Key management personnel compensation is as follows:

Group

2012 2011

$ $

Salaries and other short-term employee benefits 3,449,145 3,347,109

Post-employment benefits – contribution to CPF 159,275 144,853

3,608,420 3,491,962

Included in above is total compensation to directors of the Company of $1,004,764 (2011: $969,894).

(c) Loan from a substantial shareholder

The loan from a substantial shareholder amounting to $nil (2011: $2,975,000), as set out in Note 24, is

fully repaid during the current financial year.

34. CONTINGENT LIABILITIES

The Company has issued the following corporate guarantees to banks for borrowings and banking facilities of

certain subsidiaries with net liability positions.

Company

2012 2011

$ $

Corporate guarantees provided to banks 5,024,000 –


86


35. SEGMENT INFORMATION

Management has determined the operating segments based on the reports reviewed by the Senior Management

of the Group that are used to make strategic decisions. The Senior Management of the Group comprises the

Group Chairman, Executive Directors, the Group Chief Operating Officer and the Chief Financial Officer.

The segment information provided to the Senior Management of the Group for the reportable segments is as

follows:

(a) Reportable segments

Heavy lift

and haulage

Marine

transportation

Fabrication

and

engineering Trading Total

$ $ $ $ $

Financial year ended

30 June 2012

Sales:

– external sales 114,788,530 16,444,650 13,784,350 6,191,985 151,209,515

– inter-segment sales 1,456,244 4,564,412 2,760,894 – 8,781,550

116,244,774 21,009,062 16,545,244 6,191,985 159,991,065

Elimination (8,781,550)

151,209,515

Segment result 3,126,127 1,482,179 (5,925,269) 268,727 (1,048,236)

Other income 259,417

Other loss (1,346,274)

Finance costs (2,587,069)

Share of profits in associated

companies 886,401

Share of loss in a joint venture (39,712)

Loss before tax (3,875,473)

Income tax expense (1,914,396)

Net loss (5,789,869)

Other segment items

Capital expenditure – property,

plant and equipment 33,226,714 1,966,122 4,556,012 1,090 39,749,938

Depreciation 22,061,332 3,591,144 2,735,821 5,399 28,393,696

Segment assets 325,741,346 25,467,660 27,920,080 1,132,584 380,261,670

Investment in associated

companies 1,894,434

Investment in a joint venture 1,627,556

Unallocated assets 640,665

Consolidated total assets 384,424,325

Segment liabilities (28,268,935) (3,748,692) (6,598,510) (1,918,412) (40,534,549)

Unallocated liabilities (117,713,709)

Consolidated total liabilities (158,248,258)

87



35. SEGMENT INFORMATION (CONTINUED)

(a) Reportable segments (continued)

Heavy lift

and haulage

Marine

transportation

Fabrication

and

engineering Trading Total

$ $ $ $ $

Financial year ended

30 June 2011

Sales:

– external sales 85,553,106 9,663,340 4,984,783 6,746,672 106,947,901

– inter-segment sales 604,019 2,420,670 779,500 – 3,804,189

86,157,125 12,084,010 5,764,283 6,746,672 110,752,090

Elimination (3,804,189)

106,947,901

Segment result 4,749,424 (2,069,968) (3,533,838) 212,910 (641,472)

Other income 193,628

Other gains – net 3,273,094

Finance costs (1,458,375)

Share of losses in associated

companies (78,676)

Profit before tax 1,288,199

Income tax expense (441,852)

Net profit 846,347

Other segment items

Capital expenditure – property,

plant and equipment 54,871,035 12,821,122 2,389,688 1,840 70,083,685

Depreciation 20,236,910 3,665,939 2,018,797 5,274 25,926,920

Segment assets 314,375,899 28,167,456 26,850,366 6,356,033 375,749,754

Investment in associated

companies 1,008,033

Unallocated assets 377,872

Consolidated total assets 377,135,659

Segment liabilities (11,572,601) (2,339,084) (4,136,054) (744,331) (18,792,070)

Unallocated liabilities (134,629,863)

Consolidated total liabilities (153,421,933)


88



(a) Reportable segments (continued)

Revenue between segments are carried out at arm’s length. Inter-segment revenue are eliminated on

consolidation. The revenue from non-related parties reported to the Senior Management of the Group

is measured in a manner consistent with that in the consolidated statement of comprehensive income.

The Senior Management of the Group assesses the performance of the operating segments based on

a measure of earnings before other income, other gains/(losses) – net, finance costs, share of losses

in associated company and income tax expense. Other income, other gains/(losses) – net and finance

costs are not allocated to segments as these are not considered to be part of the operating activities

of the segments.

Capital expenditure comprises additions to property, plant and equipment.

Reportable segments’ assets

The amounts provided to the Senior Management of the Group with respect to total assets are measured

in a manner consistent with that of the financial statements. These assets are allocated based on the

operations of the segment. All assets are allocated to reportable segments other than investment in

associated company and deferred income tax assets.

Reportable segments’ liabilities

The amounts provided to the Senior Management of the Group with respect to total liabilities are

measured in a manner consistent with that of the financial statements. These liabilities are allocated

based on the operations of the segment. All liabilities are allocated to the reportable segments other than

borrowings and current and deferred income tax liabilities.

Revenue from major business segments

At 30 June 2012, the Group is organised into four main reportable segments:

• Heavy lift and haulage – Hiring out of cranes and provision of transportation.

• Marine transportation – Provision of wharfing and stevedoring services.

• Fabrication and engineering – Provision of fabrication, ship-building, ship-repair and process &

industrial plant engineering services.

• Trading – Trading of heavy equipment and spare parts.

89




(b) Geographical information

The Group’s four main reportable segments operate in seven main geographical areas:

(i) Singapore is the home country of the Group. The areas of operation are principally heavy lift and

haulage, marine transportation, fabrication and engineering, trading and other operations of the

Group.

(ii) The Middle East – the main activity is heavy lift and haulage.

(iii) Malaysia – the main activity is heavy lift and haulage.

(iv) India – the main activity is heavy lift and haulage.

(v) Indonesia – the main activities are principally heavy lift and haulage and marine transportation.

(vi) Thailand – the main activity is heavy lift and haulage.

(vii) China – the main activity is heavy lift and haulage.

Other countries – comprise the Philippines, Vietnam and Brunei and the main activity is heavy lift and

haulage.

Sales Non-current assets*

2012 2011 2012 2011

$ $ $ $

Singapore 74,616,507 64,102,487 252,628,769 243,825,035

Middle East 23,399,922 10,325,211 603,000 535,784

Malaysia 14,531,816 2,774,315 10,845,246 9,681,328

India 10,622,399 12,233,300 6,092,163 8,873,398

Indonesia 10,273,001 7,898,444 7,888,594 8,937,764

Thailand 2,188,604 3,129,586 3,078,264 3,145,776

China 1,496,176 1,147,730 10,205,731 10,142,851

Other countries 14,081,090 5,336,828 3,005,900 227,195

151,209,515 106,947,901 294,347,667 285,369,131

* Does not include deferred income tax assets.

With the exception of Singapore, Middle East and India, no other individual country contributed more

than 10% of consolidated sales or non-current assets.

Sales are based on the country in which the customer is located. Non-current assets are shown by the

geographical area where the assets are originated.


90


36. BUSINESS COMBINATIONS

(a) Acquisition of a subsidiary

On 9 June 2011, the Group acquired 70% of equity interest in Tiong Woon Crane Sdn Bhd (“TWCSB”)

for a cash consideration of $21,525. The principal activity of TWCSB is that of hiring out of cranes and

transport in Malaysia. The identifiable assets acquired and liabilities assumed are as follows:

At

fair value

$

Trade and other receivables 30,782

Total identifiable net assets 30,782

Less: Non-controlling interest’s proportionate share (9,257)

Consideration transferred for the business and cash outflow on acquisition 21,525

The acquired business contributed revenue of $233,179 and net profit after tax of $1,004 to the Group

for the period from 9 June 2011 to 30 June 2011.

(b) Increase in stake in associate to subsidiary

On 14 April 2011, the Group increased its equity interest in Tiong Woon Oasis Marine & Engineering Pte.

Ltd. (“TWOME”) from 35% to 51% at a cash consideration of $48,000. The cash flow effect arising from

the increase in stake in TWOME is as follows:

At

fair value

$

Cash and cash equivalents 36,343

Trade and other receivables 502,506

Property, plant and equipment 766,373

Trade and other payables (1,213,421)

Total identifiable net assets 91,801

Less: Amount previously recognised as investment in associated company (18,250)


Consideration transferred for the business 48,000

Less: Cash and cash equivalents in subsidiary acquired (36,343)

Cash outflow on additional stake in associate to subsidiary 11,657

The acquired business contributed revenue of $1,167,600 and net profit after tax of $431,702 to the

Group for the period from 14 April 2011 to 30 June 2011.

91



36. BUSINESS COMBINATIONS (CONTINUED)

(c) Additional interest in a subsidiary

On 3 March 2011, the Group increased its investment in TW (Sabah) Pte. Ltd. (“TW Sabah”) from 51%

to 100% at a price consideration of $2,292,400. The cash flow effect arising from the additional interest

in TW Sabah is as follows:

At

fair value

$

Identifiable net assets acquired from non-controlling shareholders 2,314,039


Cash outflow on additional interest in a subsidiary 2,292,400

37. NEW OR REVISED ACCOUNTING STANDARDS AND INTERPRETATIONS

Certain new standards, amendments and interpretations to existing standards have been published and are

relevant for the Group’s accounting periods beginning on or after 1 July 2012 or later periods and which the

Group has not early adopted.

Management has assessed that the new or revised accounting standards and interpretations do not have any

material impact to the Group.

38. AUTHORISATION OF FINANCIAL STATEMENTS

These financial statements were authorised for issue in accordance with a resolution of the Board of Directors

of Tiong Woon Corporation Holding Ltd on 24 September 2012.


92

SHAREHOLDERS’ INFORMATIONAs at 14 September 2012

DISTRIBUTION OF SHAREHOLDERS BY SIZE OF SHAREHOLDINGS AS AT 14 SEPTEMBER 2012

SIZE OF SHAREHOLDINGS

NO. OF

SHAREHOLDERS % NO. OF SHARES %

1 – 999 37 0.65 12,335 0.00

1,000 – 10,000 2,621 46.09 13,378,110 2.88

10,001 – 1,000,000 3,002 52.79 157,018,625 33.81

1,000,001 and above 27 0.47 294,061,442 63.31

Total 5,687 100.00 464,470,512 100.00

TWENTY LARGEST SHAREHOLDERS AS AT 14 SEPTEMBER 2012

NAME OF SHAREHOLDER NO. OF SHARES %

1 ANG CHOO KIM & SONS (PTE) LIMITED 181,034,262 38.98

2 MAYBANK KIM ENG SECURITIES PTE LTD 12,251,75 2.64

3 CITIBANK NOMINEES SINGAPORE PTE LTD 10,908,00 2.35

4 PHILLIP SECURITIES PTE LTD 9,981,68 2.15

5 UNITED OVERSEAS BANK NOMINEES PTE LTD 8,549,50 1.84

6 DBS NOMINEES PTE LTD 7,368,00 1.59

7 UOB KAY HIAN PTE LTD 7,312,00 1.57

8 OCBC SECURITIES PRIVATE LTD 6,270,50 1.35

9 HSBC (SINGAPORE) NOMINEES PTE LTD 5,867,00 1.26

10 MECO PTE LTD 5,250,00 1.13

11 LO KAI LEONG @ LOH KAI LEONG 4,415,00 0.95

12 DBS VICKERS SECURITIES (SINGAPORE) PTE LTD 3,737,50 0.80

13 ANG KHA KING 3,685,00 0.79

14 ONG KIAN KOK 3,390,00 0.73

15 CITIBANK CONSUMER NOMINEES PTE LTD 2,955,50 0.64

16 BANK OF SINGAPORE NOMINEES PTE LTD 2,674,00 0.58

17 KOH CHEW KWEE 2,628,00 0.57

18 AMFRASER SECURITIES PTE. LTD. 2,378,00 0.51

19 OCBC NOMINEES SINGAPORE PTE LTD 2,240,75 0.48

20 NG CHWEE CHENG 1,992,50 0.43

TOTAL: 284,888,942 61.34

Based on the information available above, approximately 41.38% of the issued ordinary shares of the Company is held

by the public and therefore, Rule 723 of the Listing Manual of the SGX-ST is complied with.

93


ANALYSIS OF SHAREHOLDERSAs at 14 September 2012

Number Of Shares

Substantial Shareholders Direct Interest Deemed Interest

Ang Choo Kim & Sons (Pte.) Limited 181,034,262 –

Ang Kah Hong 4,492,500 181,034,262(1)

Ang Kha King 3,685,000 181,319,262(2)

(1) This represents Mr Ang Kah Hong’s deemed interest of 181,034,262 shares held in the name of Ang Choo Kim & Sons (Pte.)

Limited.

(2) This represents Mr Ang Kha King’s deemed interest of 181,319,262 shares held in the name of the following:–

(a) 285,000 shares held by his wife, Mdm Toh Koon Tee

(b) 181,034,262 shares held by Ang Choo Kim & Sons (Pte.) Limited

DIRECTORS’ INTEREST IN SHARES

As at 21 July 2012

According to the register maintained under Section 164 of the Companies Act, Cap. 50, the Directors had an interest

in the shares of the Company on the 21st day after the end of the financial year as undernoted:

Shareholdings registered

in the name of Directors

or in which Directors

have a direct interest

as at 21.07.2012

Shareholdings in which

Directors are deemed

to have an interest

as at 21.07.2012

S$ S$

Ang Kah Hong 4,492,500 181,034,262(1)

Ang Kha King 3,685,000 181,319,262(2)

Tan Swee Khim 2,627,000 –

Wong King Kheng 64,000 –

Luk Ka Lai Carrie (Mrs Carrie Cheong) – –

(1) This represents Mr Ang Kah Hong’s deemed interest of 181,034,262 shares held in the name of Ang Choo Kim & Sons (Pte.)

Limited.

(2) This represents Mr Ang Kha King’s deemed interest of 181,319,262 shares held in the name of the following:–

(a) 285,000 shares held by his wife, Mdm Toh Koon Tee

(b) 181,034,262 shares held by Ang Choo Kim & Sons (Pte.) Limited


94

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY given that the Annual General Meeting of the Company will be held at No.15 Pandan Crescent,

Singapore 128470 on Thursday, 25 October 2012 at 9.00 a.m. to transact the following business:–

AS ORDINARY BUSINESS

1. To receive and adopt the Audited Financial Statements of the Company for the financial year

ended 30 June 2012 and the Report of Directors and Auditors thereon.

Resolution 1

2. To approve a tax exempt (1-tier) final dividend of 0.4 cent per share for the financial year

ended 30 June 2012.

Resolution 2

3. To approve Directors’ fees of S$80,000/- for the year ended 30 June 2012. (2011: S$80,000/-) Resolution 3

4. To re-elect the following Directors who are retiring in accordance with the Company’s Articles

of Association:–

(a) Mr Tan Swee Khim (Retiring under Article 104) Resolution 4

(b) Mr Wong King Kheng (Retiring under Article 104) Resolution 5

Mr Wong King Kheng will upon re-election as Director of the Company, remain as the Chairman

of the Audit Committee and a member of the Nominating and Remuneration Committees and

will be considered independent for the purposes of Rule 704(8) of the Listing Manual of the

Singapore Exchange Securities Trading Limited.

5. To re-appoint Messrs PricewaterhouseCoopers LLP as auditors of the Company and to

authorise the Directors to fix their remuneration.

Resolution 6

6. To transact any other business that may be transacted at an Annual General Meeting of the

Company of which due notice shall have been given.

AS SPECIAL BUSINESS

To consider and, if thought fit, to pass the following Ordinary Resolution with or without modifications:–

7. Authority To Allot And Issue Shares Resolution 7

“That pursuant to Section 161 of the Companies Act, Chapter 50, and the Listing Rules of

the Singapore Exchange Securities Trading Limited, approval be and is hereby given to the

Directors of the Company at any time to such persons and upon such terms and for such

purposes as the Directors may in their absolute discretion deem fit, to:

(a) (i) issue shares in the capital of the Company whether by way of rights, bonus or

otherwise;

(ii) make or grant offers, agreements or options that might or would require shares

to be issued or other transferable rights to subscribe for or purchase shares

(collectively, “Instruments”) including but not limited to the creation and issue of

warrants, debentures or other instruments convertible into shares;

(iii) issue additional Instruments arising from adjustments made to the number of

Instruments previously issued in the event of rights, bonus or capitalisation

issues; and

95



(b) (notwithstanding the authority conferred by the shareholders may have ceased to be in

force) issue shares in pursuance of any Instrument made or granted by the Directors

while the authority was in force;

provided always that

the aggregate number of shares to be issued pursuant to this resolution (including

shares to be issued in pursuance of Instruments made or granted pursuant to this

resolution) does not exceed 50% of the Company’s issued share capital, of which the

aggregate number of shares (including shares to be issued in pursuance of Instruments

made or granted pursuant to this resolution) to be issued other than on a pro rata basis

to shareholders of the Company does not exceed 20% of the issued share capital of the

Company, and for the purpose of this resolution, the issued share capital shall be the

Company’s issued share capital at the time this resolution is passed, after adjusting for;

(i) new shares arising from the conversion or exercise of convertible securities;

(ii) new shares arising from exercising share options or vesting of share awards

outstanding or subsisting at the time this resolution is passed provided the

options or awards were granted in compliance with Part VIII of Chapter 8 of the

Listing Manual of the Stock Exchange of Singapore Ltd; and

(iii) any subsequent consolidation or subdivision of the Company’s shares; and

such authority shall, unless revoked or varied by the Company at a general meeting,

continue in force until the conclusion of the next Annual General Meeting or the date

by which the next Annual General Meeting of the Company is required by law to be

held, whichever is the earlier.”

By Order of the Board

Joanna Lim Lan Sim (Ms)

Company Secretary

1 October 2012


96


Statement Pursuant to Articles 64 of the Company’s Articles of Association

The effect of the resolution under the heading “Special Business” in this Notice of the Annual General

Meeting (“AGM”) are:–

The Ordinary Resolution No. 7 above, if passed, will authorise the Directors from the date of the above Meeting until

the next Annual General Meeting to issue shares and convertible securities in the Company up to an amount not

exceeding in aggregate 50% of the total number of issued shares (excluding treasury shares) of the Company of which

the total number of shares and convertible securities issued other than on a pro-rata basis to existing shareholders

shall not exceed 20% of the total number of issued shares (excluding treasury shares) of the Company. Rule 806(3) of

the Listing Rules of the SGX-ST currently provides that the percentage of issued share capital is based on the share

capital of the Company at the time the mandate is passed after adjusting for:

(a) new shares arising from the conversion or exercise of convertible securities;

(b) new shares arising from exercising share options or vesting of share awards outstanding or subsisting at the time

this resolution is passed provided the options or awards were granted in compliance with Part VIII of Chapter

8 of the Listing Manual of the Stock Exchange of Singapore Ltd; and

(c) any subsequent consolidation or subdivision of the Company’s shares.

This authority will, unless revoked or varied at a general meeting, expire at the next Annual General Meeting of the

Company.

NOTES:

1. A Member of the Company entitled to attend and vote at the Meeting is entitled to appoint a proxy and vote in his stead;

2. A Member of the Company which is a Corporation is entitled to appoint its authorized representative or proxy to vote on its

behalf;

3. A proxy need not be a Member of the Company;

4. The instrument appointing a proxy must be deposited at the registered office of the Company at No. 15 Pandan Crescent

Singapore 128470 not later than 48 hours before the time appointed for the Meeting;

5. The sending of a proxy form by a member does not preclude him from attending and voting in person at the Annual General

Meeting, if he finds that he is able to do so.

TIONG WOON CORPORATION HOLDING LTD

(Company Registration No. 199705837C)

(Incorporated in the Republic of Singapore)

PROXY FORM

Important

1. For investors who have used their CPF monies to buy Tiong Woon Corporation Holding Ltd shares, this Annual Report 2012 is forwarded to them at the request of their CPF Approved Nominees and is sent solely FOR INFORMATION ONLY.

2. This Proxy Form is not valid for use by CPF investors and shall be ineffective for all intents and purposes if used or purported to be used by them.

3. CPF investors who wish to vote should contact their CPF Approved Nominees.

I/We (Name)

of (Address)

being *a member/members of Tiong Woon Corporation Holding Ltd (the “Company”), hereby appoint:

Name Address

NRIC/

Passport No.

Proportion of

shareholdings to be

represented by proxy

(%)

*and/or

as *my/our *proxy/proxies to vote for *me/us on *my/our behalf and, if necessary, to demand a poll, at the Annual

General Meeting of the Company to be held at No. 15 Pandan Crescent, Singapore 128470 on 25 October 2012 at

9.00 a.m. and at any adjournment thereof.

*I/We direct *my/our proxy/proxies to vote for or against the Resolutions to be proposed at the Annual General Meeting

as indicated with an “X” in the spaces provided hereunder. If no specific directions as to voting are given, the *proxy/

proxies will vote or abstain from voting at *his/their discretion.

Ordinary Resolutions For Against

To receive and adopt the Audited Financial Statements of the Company for the financial year

ended 30 June 2012 and the Report of the Directors and Auditors thereon. (Resolution 1)

To approve a tax exempt (1-tier) final dividend of 0.4 cent per share for the financial year ended

30 June 2012. (Resolution 2)

To approve Directors’ fees of S$80,000/- for the year ended 30 June 2012. (2011: S$80,000)

(Resolution 3)

To re-elect Mr Tan Swee Khim who is retiring in accordance with the Company’s Articles of

Association. (Resolution 4)

To re-elect Mr Wong King Kheng who is retiring in accordance with the Company’s Articles

of Association. (Resolution 5)

To re-appoint Messrs PricewaterhouseCoopers LLP as auditors of the Company and to

authorise the Directors to fix their remuneration. (Resolution 6)

To approve the Ordinary Resolution pursuant to Section 161 of the Companies Act,

Chapter 50. (Resolution 7)

Dated this day of , 2012. Total Number of Shares Held

Signature(s) of Member(s)/Common Seal

* Delete accordingly

Notes:

1. A member of the Company entitled to attend and vote at the Annual General Meeting is entitled to appoint not

more than two proxies to attend and vote in his stead. Such proxy need not be a member of the Company.

2. Where a member of the Company appoints two proxies, he shall specify the proportion of his shareholding

(expressed as a percentage of the whole) to be represented by each such proxy.

3. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly

authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must

be executed either under its common seal or under the hand of its attorney or duly authorised officer.

4. A corporation which is a member of the Company may authorise by resolution of its directors or other governing

body such person as it thinks fit to act as its representative at the Annual General Meeting, in accordance with

its Articles of Association and Section 179 of the Companies Act, Chapter 50 of Singapore.

5. The instrument appointing proxy or proxies, together with the power of attorney or other authority (if any) under

which it is signed, or notarially certified copy thereof, must be deposited at the registered office of the Company

at No. 15 Pandan Crescent Singapore 128470 not later than 48 hours before the time set for the Annual General

Meeting.

6. A member should insert the total number of shares held. If the member has shares entered against his name in

the Depository Register (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore), he should

insert that number of shares. If the member has shares registered in his name in the Register of Members of

the Company, he should insert the number of shares. If the member has shares entered against his name in the

Depository Register and shares registered in his name in the Register of Members of the Company, he should

insert the aggregate number of shares. If no number is inserted, this form of proxy will be deemed to relate to

all the shares held by the member of the Company.

7. The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly

completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions

of the appointor specified in the instrument appointing a proxy or proxies. In addition, in the case of members

of the Company whose shares are entered against their names in the Depository Register, the Company may

reject any instrument appointing a proxy or proxies lodged if such members are not shown to have shares

entered against their names in the Depository Register 48 hours before the time appointed for holding the Annual

General Meeting as certified by The Central Depository (Pte) Limited to the Company.

8. A Depositor shall not be regarded as a member of the Company entitled to attend the Annual General Meeting

and to speak and vote thereat unless his name appears on the Depository Register 48 hours before the time

set for the Annual General Meeting.

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