Ueec Ar SGX

MOVING FORWARD
Annual Report 2010
about uE E&C LtD.

UE E&C Ltd., a subsidiary of United Engineers Limited, is an established, integrated mechanical and electrical (M&E) engineering and construction company. We provide integrated M&E engineering services that include high and low-voltage electrical power distribution, air-conditioning and mechanical ventilation, and fire protection, alarm and sanitary systems. For construction, we provide a comprehensive range of services, from design and build, civil works to general construction for residential, industrial, commercial and institutional buildings as well as infrastructural works. To extend a more complete value chain to our customers, we also provide total power solutions, load testing services, rental and supply of metal forms, supply of flooring tiles, and rental and distribution of industrial equipment. In addition, we engage in residential property development through joint ventures. Headquartered in Singapore, we have overseas operations in Brunei, China, Vietnam and Malaysia.
uE E&C Ltd. / Annual Report 2010
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EnginEEring growth
We provide a wide range of M&E engineering services that include high and lowvoltage electrical power distribution, air-conditioning and mechanical ventilation, and fire protection, alarm and sanitary systems.
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ConstruCting the future

We provide a wide range of construction services that include design and build, civil works and general construction for residential, industrial, commercial and institutional buildings as well as infrastructural works.
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gEnErating success
We provide construction-related services that include total power solutions, load testing services, rental and supply of metal forms, supply of flooring tiles, and rental and distribution of industrial equipment.
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t g ot al tin ing al P an tes owe or ds r solutions and Load Flo up f r ply nt ly o of m en etal Forms and supp me tal ip and Equ Distri trial bution of indus Pro t perty Developmen
othErs
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ti le
CorPoratE inFormation
board of Directors Norman Ip Ka Cheung (Independent Chairman) Chua Hock Tong (Executive Director and Chief Executive Officer) Kwan Chiew Choi (Independent Director) Pok Soy Yoong (Independent Director) Tan Soo Kiang (Independent Director) Jackson Chevalier Yap Kit Siong (Non-Executive Director) audit Committee Pok Soy Yoong (Chairman) Kwan Chiew Choi (Member) Tan Soo Kiang (Member) nominating Committee Kwan Chiew Choi (Chairman) Norman Ip Ka Cheung (Member) Pok Soy Yoong (Member) remuneration Committee Tan Soo Kiang (Chairman) Norman Ip Ka Cheung (Member) Jackson Chevalier Yap Kit Siong (Member) Joint Company secretaries Tan Ching Chek, LLB (Hons), Associate of the Institute of Chartered Secretaries and Administrators Lo Swee Oi, Associate of the Institute of Chartered Secretaries and Administrators BSL Corporate Services Pte Ltd 220 Orchard Road #05-01 Midpoint Orchard Singapore 238852 Tel: (65) 6235 3388 Fax: (65) 6235 3178 Website: www.bslcs.com.sg registered office and Principal Place of business 12 Ang Mo Kio Street 64 #03-13 UE BizHub CENTRAL Singapore 569088 Tel : (65) 6818 8666 Fax: (65) 6818 8682 Website: www.ueec.sg share registrar and share transfer office Boardroom Corporate & Advisory Services Pte. Ltd. 50 Raffles Place #32-01 Singapore Land Tower Singapore 048623 auditors Ernst & Young LLP Public Accountants and Certified Public Accountants One Raffles Quay North Tower, Level 18 Singapore 048583 Partner-in-charge: Michael Sim Juat Quee Certified Public Accountant (Appointed with effect from financial year ended 31 December 2010) Principal bankers Oversea-Chinese Banking Corporation Limited Baiduri Bank Berhad Citibank, N.A., Singapore Branch DBS Bank Ltd The Hongkong and Shanghai Banking Corporation Limited United Overseas Bank Limited
The initial public offering of the Company was sponsored by Oversea-Chinese Banking Corporation Limited (the Issue Manager, Underwriter and Placement Agent). The Issue Manager, Underwriter and Placement Agent assume no responsibility for the contents of this annual report.
Four-YEar FinanCiaL ProFiLE oF thE grouP

income statement ($000) Revenue Profit before Tax Income Tax Expense Profit Net of Tax Profit Attributable to Owners of the Parent, Net of Tax statement of Financial Position ($000) Property, Plant and Equipment Investment Properties Non-Current Investments Other Non-Current Assets Net Current Assets (See note below) 34,351 7,500 10,667 50,375 32,118 135,011 88,756 309 28,372 13,659 3,915 135,011 164,399 1.9 26,738 10,500 4,092 64,981 (10) 106,301 14,686 5,559 31,692 49,912 4,452 106,301 227,749 15.5 23,456 10,010 1,407 55,550 (8,681) 81,742 (10,754) 4,163 38,998 46,353 2,982 81,742 225,046 NM 19,807 10,580 815 24,767 2,646 58,615 (9,594) 3,931 14,560 45,937 3,781 58,615 192,367 NM 2010 381,853 54,960 (9,923) 45,037 39,785 2009 394,801 35,117 (4,079) 31,038 29,023 2008 327,025 6,189 (742) 5,447 4,545 2007 249,636 7,840 (325) 7,515 7,417
Shareholders Equity Non-Controlling Interests Short and Long-Term Borrowings Other Non-Current Liabilities Deferred Tax Liabilities
Net Debt ($000) Debt to Equity (gross) (times) NM: Not meaningful
Note: In arriving at net current assets, short-term borrowings have been excluded but deferred tax assets have been included. Per ordinary share Earnings per Ordinary Share ()* - Profit Attributable to Ordinary Shareholders
19.9
14.5
2.3
3.7
* Calculated based on the pre-invitation share capital of 200,000,000 ordinary shares for all financial years for comparative purposes.
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Four-YEar FinanCiaL Charts oF thE grouP

381,853 394,801 327,025 249,636
grouP rEvEnuE ($000) 2010 2009 2008 2007
rEvEnuE bY businEss sEgmEnts ($000)
45,037 Construction Engineering 31,215 324,477 (8.2%) (85.0%) building materials and Equipment 26,161 (6.8%)
31,038
grouP ProFit nEt oF tax ($000) 2010 2009
5,447
7,515
2008
2007
19.9
14.5
rEvEnuE bY gEograPhiCaL sEgmEnts ($000)
Earnings PEr orDinarY sharE ()* 2010 2009
3.7 2.3
singapore 312,119 (81.7%)
other asian other asEan Countries Countries 61,531 8,203 (16.1%) (2.2%)
2008
2007
* Calculated based on the pre-invitation share capital of 200,000,000 ordinary shares for all financial years for comparative purposes.
LEttEr to sharEhoLDErs
DEar sharEhoLDErs, On behalf of the Board of Directors, we are pleased to present you the inaugural annual report of UE E&C Ltd. (UEEC) and its group of companies (the UEEC Group) for the financial year ended 31 December 2010. We successfully launched our initial public offering (IPO) on 16 February 2011 and our shares debuted on the Mainboard of Singapore Exchange Securities Trading Limited on 25 February 2011. FINANCIAL PERFORMANCE The UEEC Groups gross profit rose 47% to $67.5 million, and gross profit margin rose to 17.7% compared with 11.6% in 2009 despite a slight dip in revenue from $394.8 million in 2009 to $381.9 million in 2010. Attributable profit increased 37% to $39.8 million compared with $29.0 million in 2009. Earnings per ordinary share1 was 19.9 cents compared with 14.5 cents in 2009. Net asset per ordinary share1 was $0.44 as at 31 December 2010 compared with $0.07 as at 31 December 2009. A NEW START FOR AN ESTABLISHED NAME We were spun off from United Engineers Limited and its group of companies (the UE Group) to become a separately-listed company. Although UEEC has only been newly listed, each of our two principal subsidiaries United Engineers (Singapore) Pte Ltd and Greatearth Construction Pte Ltd (Greatearth) has close to 30 years of proven track record in the mechanical and electrical (M&E) engineering and construction business respectively. Our construction subsidiary in Brunei, United Engineers (B) Sdn Bhd (UEB), has also been an active player in Brunei for the last 20 years. Post listing, our enhanced profile will allow us direct access to the capital markets for a wider range of funding options. This will enable the UEEC Group to be more focused and actively pursue its target growth initiatives. Being a subsidiary of the UE Group, which has close to 100 years of history, we will leverage on its established branding and business network across various countries to enhance our business development activities. While we continue to collaborate with the UE Group on property development projects, we will also work with other developers in the market on a wider range of projects.
Calculated based on the pre-invitation share capital of 200,000,000 ordinary shares for both financial years for comparative purposes
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We successfully launched our initial public offering on 16 February 2011 and our shares debuted on the mainboard of singapore Exchange securities trading Limited on 25 February 2011.
norman ip Ka Cheung, Chairman (seated) Chua hock tong, Chief Executive Officer
SINGAPORE AS PRIMARY MARKET WITH OVERSEAS ExPANSION Going forward, our business mainstay will still be M&E engineering and construction. With the UEEC Groups expertise and long track record in these two areas, we can provide customers with a more integrated and innovative solution. We will also likely achieve better cost control, delivery time, and higher and more reliable service quality for development projects. Singapore will remain our core market for business. We are positive about the Singapore construction industry this year. The Building and Construction Authority projected Singapores total construction demand at between $22 billion and $28 billion for 2011, which we believe will give rise to a year of bustling activities. We will explore increasing our presence in overseas markets such as Vietnam and China where they offer good growth potential for some of our businesses. At the same time, we will also cautiously seek business opportunities in the Middle East, especially in Abu Dhabi and Qatar, for our M&E engineering business as we see a strong demand for construction activities there. As at 31 December 2010, our order book was about $632 million. AustvIllE REsIDENCEs: A SUCCESSFUL BLUEPRINT FOR OUR INTEGRATED SERVICES In January 2011, the UEEC Group launched its first executive condominium (EC) project, Austville Residences, located at Sengkang East Avenue/Buangkok Drive. The 540-unit project has sold more than 30% as at March 2011 although sales were somewhat affected by the Governments introduction of new measures to curb property speculation during its launch. Austville Residences demonstrates the integrated capabilities of the UEEC Group which ranges from land bidding, project financing, architectural design, engineering and construction, project management, property development, to sales and marketing. The UEEC Group will continue to participate in the bidding of land parcels for Design, Build and Sell Scheme (DBSS), EC and private housing projects, and take a minority stake in any such development projects provided we are appointed as the main contractor.
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GROWTH AREAS: POWER SOLUTIONS AND CLEAN TECHNOLOGY While we continue to expand our existing businesses, we will also nurture new businesses for sustainable growth in future. We intend to increase our fleet of power generators, load banks and transformers under our power solution business in order to expand our customer base in Singapore and overseas. This business has consistently achieved strong growth in the last few years, serving the burgeoning MICE (meetings, incentives, conventions and exhibitions) industry in Singapore, as well as other industries such as ship repair, shipbuilding and mining. We will also leverage on our M&E engineering business network to embark on the exclusive distribution of a new range of airconditioners that employs a hybrid technology proven to be more energy efficient than conventional inverter technology air-conditioners. With the world rapidly progressing towards a sustainable future, we are developing our competitive edge in clean technology-related engineering products and services to enhance our position as a premier M&E engineering player in the region. WORKPLACE SAFETY AND HEALTH ATTAINS NEW HEIGHTS The UEEC Group recognises that workplace safety and health is paramount in its business. Through continual reviews and enforcements, our workplace safety and health standards have improved considerably over the years. During the year, Greatearth was OHSAS 18001 and bizSAFE STAR certified. Greatearth also received a Safety and Health Award Recognition for Projects (SHARP) award for the mixed development at One-North. Organised by the Singapore Ministry of Manpower, the SHARP award recognises projects and worksites that have good workplace safety and health performance and occupational health and safety management systems. For the above worksite, Greatearth also attained close to 2.5 million accident-free man-hours during the year, surpassing the national benchmark of 1 million accident-free man-hours set by Workplace Safety and Health (WSH) Council for the 2010 WSH Performance Award.
ACKNOWLEDGEMENTS We wish to take this opportunity to express our sincere gratitude to all our stakeholders, namely customers, employees, business associates, sub-contractors, suppliers and bankers for their support and contributions during the year. To thank shareholders for the success of our IPO and their continuing support in the years ahead, depending on the financial performance and the cash requirements of the UEEC Group, we are working towards a dividend payment for this current year. We would also like to thank our fellow directors for their wise counsel and support, and the management team and staff for their hard work and dedication. Thank you.
Chua hock tong Chief Executive Officer
norman ip Chairman
Water sprinkler pumps for fire protection systems in the mixed development at One-North
rEviEW oF oPErations
M&E ENGINEERING The UEEC Groups principal mechanical and electrical (M&E) engineering subsidiary, United Engineers (Singapore) Pte Ltd (UES), provides a wide range of M&E engineering services, including high and low-voltage electrical power distribution, airconditioning and mechanical ventilation systems as well as fire protection, alarm and sanitary systems. During the year, UES commissioned the electrical power distribution and faade lighting works, and guestroom management system for the Marina Bay sands integrated resort. It also continued M&E engineering works at the UE Groups mixed development project at One-North which is expected to be commissioned in April 2011. A number of new projects were secured during the year, including M&E engineering works for the UE Groups mixed development in Changi Business Park, uE BizHub EAst, and the mixed development straddling 277 Orchard Road (the former specialists Centre/Hotel Phoenix site) and 218 Orchard Road (the former Orchard Emerald site). It was also awarded additional electrical contracts by the Marina Bay sands integrated resort for the sands sky Park restaurants, spa and gymnasium. Together, these new contracts boosted the M&E engineering divisions order book to more than $100 million. Our M&E engineering subsidiary in Vietnam, United Engineers (Vietnam) Limited, carried out M&E engineering works at Marble Mountain Beach Resort in Danang. This project is scheduled for commissioning in 2011. We see a strong demand for sustainable products and services and will therefore embark on the distribution of a new range of air-conditioners that employs a hybrid technology proven to be more energy efficient than conventional inverter technology air-conditioners. CONSTRUCTION The UEEC Groups principal construction subsidiary, Greatearth Construction Pte Ltd (Greatearth), provides a wide range of integrated construction services, including design and build, civil works and general construction for residential, industrial, commercial and institutional buildings as well as infrastructural works. During the year, Greatearth successfully completed the construction of condominium projects, Paterson suites at Paterson Road and the Riverine By the Park at Kallang Road. For the above Singapore-based projects that were completed in the year, Greatearth scored an average of 85 points (out of 100) in the Building and Construction Authority of Singapore-certified CONQUAS score, a national quality yardstick for the Singapore construction industry. For the recently-completed projects, the Riverine By the Park and Paterson suites, Greatearth saw improved CONQUAS score at 90.6 and 91.2 respectively.
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Greatearth also made good progress at ongoing projects such as the mixed development project at One-North, of which the condominium, the Rochester, was constructed up to 38th storey2, and the hotel, Park Avenue Rochester, 26th storey3. For Park Central @ AMK, a Design, Build and Sell Scheme (DBSS)project at Ang Mo Kio Street 52, the structural construction of all 30 storeys of the four tower blocks was completed. Greatearth also secured new construction contracts for uE BizHub EAst and Austville Residences. The UEEC Groups construction subsidiary in Brunei, UEB, completed the construction of the multi-purpose hall and fire station for Sungai Liang Industrial Park Administration Hub, the new American Embassy building at Jalan Kebangsaan, and the Simulation Training Centre for the Royal Brunei Armed Forces at Penanjong Garrison. During the year, UEB secured new building contracts for 12 semidetached and 206 terrace house units at Lorong Tengah Seria and 126 terrace house units at Kampong Rataie, all under the National Housing Scheme. OTHERS On the property development front, the UEEC Group is currently developing three projects Park Central @ AMK at Ang Mo Kio Street 52, Ascentia sky at Alexandra Road and Austville Residences at Sengkang East Avenue/Buangkok Drive. Park Central @ AMK, co-developed with United Engineers Developments Pte Ltd (UED), is a DBSS project that is under construction and is expected to obtain Temporary Occupation Permit (TOP) in Q2 2011. Ascentia sky, co-developed with UED and Winpride Investment Pte Ltd, is a 373-unit condominium expected to obtain TOP in 2013. Austville Residences, co-developed with UED and LMG Realty Pte Ltd, is a 540-unit EC that was launched in January 2011 and is expected to obtain TOP in 2013. The UEEC Groups subsidiary, UE-IBP Building Materials Pte Ltd, is a supplier of imported flooring tiles mainly from Italy, Spain and China. During the year, it secured contracts to supply tiles to a number of local building projects, including the integrated civic, cultural, retail and entertainment hub at One-North developed by CapitaLand Limited and Rock Productions Pte Ltd, and the alteration and addition works in Raffles City. The UEEC Groups subsidiaries, UE-Tradetec (Singapore) Pte Ltd (UET) and Anhui Anxin Energy Co., Ltd. (Anhui Anxin), are total power solution specialists to industries that require emergency, immediate and uninterrupted power supply. During the year, UET provided power solutions for the National Day Parade, Singapore 2010 Youth Olympic Games, Singapore Grand Prix Formula 1 Night Race and the YTL Concert of Celebration 2010 in Singapore. Anhui Anxin provided power solutions for the World Exposition 2010 Shanghai, China (for the China Pavilion and Performing Arts Centre) and Asian Games in Guangzhou, China.
2 3
Top floor for the condominium tower Top floor for the hotel tower
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the uEEC Group supplies flooring tiles for residential and commercial projects
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boarD oF DirECtors
1/ NORMAN IP KA CHEUNG Independent Director and Non-Executive Chairman Mr Norman Ip was appointed to our Board of Directors on 22 December 2010. Mr Ip is the Chairman of the board of Malaysia Smelting Corporation Berhad and also serves on the board of Australia Oriental Minerals NL. He is an independent and non-executive director of WBL Corporation Limited and is also a director of United Engineers Limited (UEL), Great Eastern Holdings Limited, AIMS AMP Capital Industrial REIT Management Limited and a member of the Building and Construction Authority. He retired in October 2009 as the President & Group CEO and Executive Director of The Straits Trading Company Limited, which main activities are in real estate, mining and hospitality. Mr Ip graduated with a Bachelor of Science (Economics) degree from the London School of Economics and Political Science. He is a Fellow of both the Institute of Chartered Accountants in England and Wales and the Institute of Certified Public Accountants, Singapore. 2/ CHUA HOCK TONG Executive Director and CEO Mr Chua Hock Tong was appointed to our Board of Directors on 22 December 2010. Mr Chua is the founder of Greatearth Construction and has over 30 years of experience in the construction industry. He held various senior positions in the UE Groups construction division and was last serving as a Divisional Managing Director before he became the CEO of UEEC. He started out his career as a quantity surveyor and had worked in several construction firms prior to setting up Greatearth Construction. Mr Chua is a member of the Singapore Institute of Management, the Singapore Institute of Surveyors and Valuers and was an associate of the Australian Institute of Quantity Surveyors. He holds a diploma in Quantity Surveying from the Royal Melbourne Institute of Technology.
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3/ KWAN CHIEW CHOI Independent Director Mr Kwan Chiew Choi was appointed to our Board of Directors on 22 December 2010 and is also the chairman of our Nominating Committee. Mr Kwan is currently an independent non-executive commissioner on the board of commissioners of PT Bank OCBC NISP Tbk. He worked in Oversea-Chinese Banking Corporation Limited (OCBC Bank) since 1987 and held various positions before becoming the head of Credit Control and Approval where he was responsible for the credit risk management of OCBC Banks global corporate and financial institution portfolio. Mr Kwan has over 30 years of experience in corporate banking before he retired in 2007. He graduated from the University of Singapore (now known as the National University of Singapore) with a Bachelor of Social Sciences (Honours) degree. 4/ POK SOY YOONG Independent Director Mr Pok Soy Yoong was appointed to our Board of Directors on 22 December 2010 and is also the chairman of our Audit Committee. Mr Pok is currently a non-executive director of Mapletree Logistics Trust Management Ltd., Pavilion Foundation Limited and the Inland Revenue Authority of Singapore. He was the Head of Tax at Ernst & Young Solutions LLP when he retired from professional practice on 31 December 2008. He also served as the Chief Operating Officer (Tax) of the Ernst & Young Far East Tax Practices, covering 15 countries. Mr Poks tax career spanned 32 years in the areas of Singapore direct tax and international tax. He was a non-executive director of Ernst & Young Customs & International Trade Services Private Limited and Ernst & Young Customs and International Trade Services (Far East) Limited. In addition, he was a member on the board of the Tax Academy of Singapore. Having passed the relevant examinations, he was admitted to membership of both the Chartered Institute of Taxation, the United Kingdom, and the Association of Certified Accountants, the United Kingdom. He relinquished these memberships upon his retirement from professional practice at end 2008.
5/ TAN SOO KIANG Independent Director Mr Tan Soo Kiang was appointed to our Board of Directors on 22 December 2010 and also serves as the chairman of our Remuneration Committee. Mr Tan is currently an independent director of Pertama Holdings Limited and a consultant of Wee Swee Teow & Company, a firm of advocates and solicitors, with more than 30 years of experience in legal practice. His main practice areas encompass general commercial and criminal litigation. He has been with Wee Swee Teow & Company since 1992. Prior to that, he was with the Singapore Legal Service. Mr Tan was awarded the Public Service Medal (PBM) in 2007. He was admitted to the Singapore Bar in 1977 and graduated from the University of Singapore (now known as the National University of Singapore) with a Bachelor of Law (Honours) degree. 6/ JACKSON CHEVALIER YAP KIT SIONG Non-Executive Director Mr Jackson Yap was appointed to our Board of Directors on 22 December 2010. Mr Yap is currently the Group Managing Director and CEO of UEL. He joined UEL in 1997 as its Chief Operating Officer and was appointed to his current position in 2001. In his role as UELs CEO, he has overall responsibility for leading the management team in implementing the strategic goals and directions set by the board of UEL. Prior to joining UEL, Mr Yap was with Exxon Chemical Singapore as Planning Manager. He also spent seven years with Shell Eastern Petroleum undertaking a variety of jobs in process engineering, energy conservation and quality control. He also sits on the board of Apex Healthcare Berhad and United Wearnes Technology Pte Ltd. He graduated from the University of Auckland with a Bachelor of Engineering (Chemical and Materials) (Honours) degree.
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ComPanY managEmEnt
CHAN TUCK LEE Deputy CEO Mr Chan Tuck Lee was appointed as our UEEC Groups deputy CEO on 23 December 2010. He joined the UE Group in 1991 as a project manager and had since held various senior positions in the engineering department before his last position as divisional managing director. Mr Chan had also worked in several property development, contracting and consultancy firms in Malaysia, Indonesia and Singapore prior to joining the UE Group. He is currently a council member of the Singapore Electrical Contractors and Licensed Electrical Workers Association and the Singapore Green Building Council (Electrical Taskforce). Mr Chan holds a Bachelor of Science (Honours) degree in Electronic and Electrical Engineering from the Loughborough University of Technology, England. He is also a registered Professional Engineer in Singapore and Malaysia since 1995 and 1984 respectively, and is a licensed electrical worker (Engineer Grade) registered with the Energy Market Authority of Singapore. POON WAI GAH Financial Controller Ms Poon Wai Gah was appointed as our UEEC Groups Financial Controller on 23 December 2010. She has more than 26 years of experience in the area of finance and accounting. She joined the UE Group in 1989 as a finance manager and had since held various positions in the finance department before her last position as vice president of finance group accounting. Ms Poon had also worked in an international audit firm and a bank in its accounts department prior to joining the UE Group. Ms Poon holds a Bachelor of Accountancy degree from the National University of Singapore and is a member of the Institute of Certified Public Accountants of Singapore. TAN KAY YAN General Manager, Strategy and Risk Mr Tan Kay Yan was appointed as our UEEC Groups General Manager, Strategy and Risk on 23 December 2010. He joined the UE Group in 2004 as a strategy deployment manager and had since held various positions before his last position as general manager of the corporate planning department. Prior to joining the UE Group, Mr Tan had been working in companies in the telecommunication and property sectors. Mr Tan graduated from the National University of Singapore with a Bachelor of Engineering (Electrical) (Honours) degree and holds an Executive Master of Business Administration from the Helsinki School of Economics. LEE SENG POH Divisional General Manager, Construction, Equipment and Materials Mr Lee Seng Poh was appointed as our UEEC Groups Divisional General Manager, Construction, Equipment and Materials on 23 December 2010. He joined the UE Group in 1989 as a project manager and had since held various positions before his last position as general manager of UEB. Prior to joining the UE Group, he had been working in various construction companies. Mr Lee graduated from the Royal Melbourne Institute of Technology with a Bachelor of Civil Engineering degree. TAI CHEE YICK General Manager, M&E Engineering Mr Tai Chee Yick was appointed as our UEEC Groups General Manager, M&E Engineering on 23 December 2010. He joined the UE Group in 1990 as a project manager and had since held various positions before his last position as general manager of UES Holdings Pte Ltd. He has design experience in consultancy services involving projects in countries including Australia, China and Indonesia before joining the UE Group. Mr Tai graduated from the National University of Singapore with a Bachelor of Engineering (Mechanical) degree. He is also a registered Professional Engineer in Singapore since 1986.
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CORPORATE GOVERNANCE
The Company is committed to a high standard of corporate governance to ensure effective self-regulation practices are in place to enhance corporate performance and accountability. This report outlines the Companys main corporate governance practices with references to the principles of the Code of Corporate Governance (the Code). The Code forms part of the Continuing Listing Obligations of the Singapore Exchange Securities Trading Limited (SGX-ST)s Listing Manual. ThE BOARds CONduCT Of iTs AffAiRs Principle 1: Every company should be headed by an effective Board to lead and control the company. The Board is collectively responsible for the success of the company. The Board works with Management to achieve this and the Management remains accountable to the Board. The Board has six members comprising one Executive Director, one Non-Executive Director and four Non-Executive and Independent Directors. The Board comprises the following members: Name of director Norman Ip Ka Cheung Chua Hock Tong Kwan Chiew Choi Pok Soy Yoong Tan Soo Kiang Jackson Chevalier Yap Kit Siong Position in Board Chairman Member Member Member Member Member Appointment Independent Chairman Executive Director and Chief Executive Officer Independent Director Independent Director Independent Director Non-Executive Director
The Companys Articles of Association permit Directors to attend meetings through the use of audio-visual communication equipment. In between Board meetings, important matters concerning the Company are also put to the Board for its decision by way of circulating resolutions in writing for the Directors approval together with supporting memoranda to enable the Directors to make informed decisions. In 2010, the Board held several meetings to deliberate on issues relating to the Companys listing application. The Company was formally admitted to the Official List of the SGX-ST on 25 February 2011. As of 28 February 2011, the Directors held the following meetings and their attendance are as indicated: Board of directors Meeting 1 1 1 1 1 1
Type of Meeting Norman Ip Ka Cheung Chua Hock Tong Kwan Chiew Choi Pok Soy Yoong Tan Soo Kiang Jackson Chevalier Yap Kit Siong
*
Audit Committee 1* 1* 1 1 1 1*
Remuneration Committee 1 1* 1* 1* 1 1
Nominating Committee 1 1* 1 1 1* 1*
attendance by invitation
The profile of each Director and other relevant information as at the date of this report are set out on Pages 20 to 21 of the Annual Report.
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The Board oversees the business affairs of the Group, sets strategic directions and approves budgets and reviews the Groups performance. In addition to its statutory duties, the Boards principal functions are: (i) (ii) (iii) (iv) (v) (vi) supervising the overall management of the business and affairs of the Group and approving the Groups corporate and strategic policies and direction; formulating and approving financial objectives of the Group and monitoring its performance such as reviewing and approving of results announcements and approving of annual financial statements; overseeing the processes for evaluating the adequacy of internal controls and risk management including the review and approval of interested person transactions; assuming responsibility for corporate governance and compliance with the Companies Act, Cap. 50, and the rules and regulations of the relevant regulatory bodies; evaluating performance of Management; and ensuring the necessary financial and human capital resources are available for the Group to meet its objectives.
Matters that are specifically reserved for the approval of the Board include, among others, any material acquisitions and disposals of assets, corporate or financial restructuring, proposing of dividends, annual budgets, significant legal and financial issues, announceable matters, interested person transactions, appointment and resignation of directors and key management staff and other matters as may be considered by the Board from time to time. The Board has adopted a set of internal guidelines on the matters requiring Board approval. Certain functions have also been delegated to various Board committees, namely, the Audit Committee, the Remuneration Committee and the Nominating Committee. Changes to regulations and accounting standards are monitored closely by Management. To keep pace with regulatory changes, where these changes have an important bearing on the Companys or Directors disclosure obligations, Directors are briefed either during Board meetings or at specially-convened sessions conducted by professionals. The Group conducts a comprehensive orientation program for newly appointed Directors to familiarize themselves with its business activities, strategic directions, policies and corporate governance practices. In order to ensure that the Board is able to fulfill its responsibilities, prior to the Board meetings, the Management provides the members of the Board with management accounts, as well as relevant background information and documents relating to items of business to be discussed at a Board meeting before the scheduled meeting. The Directors are also regularly briefed on the business activities of the Group. The Board has separate and independent access to the Company Secretaries at all times and one of the Company Secretaries attend all Board and Committee meetings and are responsible for ensuring that Board procedures are followed. The Board also has access to independent professional advice, where necessary, at the Companys expense. BOARd COMPOsiTiON ANd GuidANCE Principle 2: There should be a strong and independent element on the Board, which is able to exercise objective judgement on corporate affairs independently, in particular, from Management. No individual or small group of individuals should be allowed to dominate the Boards decision making. The Board comprises six members of whom one is Executive Director, one is Non-Executive Director and four are Non-Executive and Independent Directors. Independent Directors comprise more than one third of the Board members. There is strong and independent element on the Board. The Board is able to exercise objective judgement independently from Management and no individual or small group of individuals dominate the decisions of the Board. The Nominating Committee is of the view that the current Board size of six Directors is appropriate taking into account the nature and scope of the Groups operations, the core competency and a broad range of industry knowledge and the business experience of the Directors to govern and contribute to the effectiveness and success of the Group.
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ChAiRMAN ANd ChiEf ExECuTiVE OffiCER Principle 3: There should be a clear division of responsibilities at the top of the company the working of the Board and the executive responsibility of the companys business which will ensure a balance of power and authority, such that no one individual represents a considerable concentration of power. The Company has a separate Chairman and Chief Executive Officer who are not related. There is a clear segregation of the roles and responsibilities between the Chairman and the Chief Executive Officer. The Chairman is independent and non-executive in nature, and relates to the workings of the Board as a whole. In particular, he focuses on: (i) (ii) (iii) (iv) (v) (vi) leading the Board to ensure its effectiveness on all aspects of its role and setting its agenda; ensuring that the Directors receive accurate, timely and clear information; ensuring effective communication with shareholders; encouraging constructive relations among Board members and their interaction with Management; facilitating the effective contribution of non-executive director; and promoting high standards of corporate governance.
The Chief Executive Officer is Mr Chua Hock Tong, the most senior executive in the Company who bears executive responsibility for the management of the Company and the Group. He is also responsible for the running of the Groups business and has the full executive responsibilities over the business directions and operational decisions of the Group. BOARd MEMBERshiP ANd BOARd PERfORMANCE Principle 4: There should be a formal and transparent process for the appointment of new directors to the Board. Principle 5: There should be a formal assessment of the effectiveness of the Board as a whole and the contribution by each director to the effectiveness of the Board. The Nominating Committee comprises the following Directors: Kwan Chiew Choi Norman Ip Ka Cheung Pok Soy Yoong - Chairman - Member - Member
All members of this committee are Independent and Non-Executive Directors. The Nominating Committees written key terms of reference describe its responsibilities, and these include: (i) (ii) (iii) (iv) (v) reviewing and assessing candidates for directorships (including executive directorships) before nominating such candidates for the approval of our Board of Directors; reviewing and recommending to our Board of Directors the re-election of any Directors under the retirement provisions in accordance with our Articles of Association at each annual general meeting; reviewing the composition of our Board of Directors annually to ensure that our Board of Directors has an appropriate balance of Independent Directors and ensuring an appropriate balance of expertise, skills, attributes and abilities among our Directors; reviewing and determining annually if a Director is independent, in accordance with the Code and any other salient factors; and where a Director has multiple board representations, deciding whether the Director is able to and has been adequately carrying out his duties as Director.
The Directors submit themselves for re-nomination and re-election at regular intervals of at least once every three years. Pursuant to Article 91 of the Companys Articles of Association, one third of the Board Directors are to retire from office by rotation and be subject to re-election at the Annual General Meeting (AGM) of the Company. In addition, Article 97 of the Companys Articles of Association, requires a newly appointed director to submit himself for retirement and re-election at the AGM immediately following his appointment. Thereafter, he is subject to retirement by rotation once every three years. The Nominating Committee has recommended Mr Norman Ip Ka Cheung, Mr Chua Hock Tong, Mr Kwan Chiew Choi, Mr Pok Soy Yoong, Mr Tan Soo Kiang and Mr Jackson Chevalier Yap Kit Siong, who are retiring at the forthcoming Annual General Meeting, to be re-elected. All the directors are retiring under Article 97 of the Companys Articles of Association. The retiring directors have offered themselves for re-election. The Board has accepted the recommendations of the Nominating Committee.
25
The dates of initial appointment of each Director are set out as follows: Name of director Norman Ip Ka Cheung Chua Hock Tong Kwan Chiew Choi Pok Soy Yoong Tan Soo Kiang Jackson Chevalier Yap Kit Siong Position in Board Chairman Member Member Member Member Member Appointment Independent Chairman Executive Director and Chief Executive Officer Independent Director Independent Director Independent Director Non-Executive Director date of Appointment 22 December 2010 22 December 2010 22 December 2010 22 December 2010 22 December 2010 22 December 2010
The Board, through the delegation of its authority to the Nominating Committee has made its best efforts to ensure each director possess the experience, knowledge and skills critical to the Groups business. This is necessary to enable the Board to make sound and well-considered decisions. The Nominating Committee, in considering the nominating of any director for re-election, will evaluate the performance of the Director involved. The Nominating Committee will formally evaluate the effectiveness of the Board from the year 2011. The formal evaluation will take into consideration the complementary nature of the contribution of each director and the collective nature of the contribution of the Board as a whole. The Nominating Committee is of the view that whilst it is important for directors to devote sufficient time and attention to the affairs of the Group, the issue relating to multiple board representations should be left to the judgment and discretion of each director. The Nominating Committee believes that contributions from each director can be reflected in other ways other than the reporting of attendances of each director at Board and Committee Meetings as well as the frequency of such Meetings. A director would have been appointed on the strength of his experience and his potential to contribute to the proper guidance of the Group and its business. To focus on a directors attendance at formal Meetings alone may lead to a narrow view of a directors contribution. It may also not do justice to his contributions, which can be in many forms, including Managements access to him for guidance or exchange of views outside the formal environment of the Board. The Nominating Committee is of the opinion that the Directors, who have been classified as independent under the Board Composition section, are indeed independent and the current size of the Board is adequate for the purposes of the Group. The search and nomination process for new directors, if any, will be through search companies, contacts and recommendations that go through the normal selection process, to cast its net as wide as possible for the right candidates. New directors are appointed after the Nominating Committee has reviewed and nominated them for appointment. Such new directors submit themselves for re-election at the next AGM of the Company. ACCEss TO iNfORMATiON Principle 6: In order to fulfil their responsibilities, Board members should be provided with complete, adequate and timely information prior to board meetings and on an on-going basis. All Directors receive a set of Board papers that include explanatory information relating to matters to be brought before the Board, copies of disclosure notes and internal group financial statements prior to Board meetings. This is generally sent to them at least three days prior to Board meetings. This is to allow sufficient time for the Board members to obtain further explanations, where necessary, to be properly briefed and adequately prepare for Board meetings. In addition, Directors receive the management accounts of the Company and have unrestricted access to the records and information of the Company. The Non-executive and Independent Directors have access to senior executives in the Company and other employees to seek additional information if required. To facilitate such access, the contact particulars of the senior management and secretaries of the Company have been provided to the Directors. The Directors whether collectively or individually may, at the Companys expense, seek and obtain independent professional advice when necessary to discharge their duties effectively. The Company Secretaries have the responsibility to ensure that Board procedures are followed and that all applicable rules and regulations are complied with. One or both of the Company Secretaries are in attendance at meetings of the Board and Sub-Committees. The appointment and removal of the Company Secretary should be a matter for the Board as a whole.
26
PROCEduREs fOR dEVELOPiNG REMuNERATiON POLiCiEs, LEVEL ANd Mix Of REMuNERATiON ANd disCLOsuRE Of REMuNERATiON Principle 7: There should be a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration packages of individual directors. No director should be involved in deciding his own remuneration. Principle 8: The level of remuneration should be appropriate to attract, retain and motivate the directors needed to run the company successfully but companies should avoid paying more than is necessary for this purpose. A significant proportion of executive directors remuneration should be structured so as to link rewards to corporate and individual performance. Principle 9: Each company should provide clear disclosure of its remuneration policy, level and mix of remuneration, and the procedure for setting remuneration in the companys annual report. It should provide disclosure in relation to its remuneration policies to enable investors to understand the link between remuneration paid to directors and key executives, and performance. The Remuneration Committee comprises the following Directors: Tan Soo Kiang Norman Ip Ka Cheung Jackson Chavelier Yap Kit Siong - Chairman - Member - Member
Mr Tan Soo Kiang and Mr Norman Ip Ka Cheung are Independent Directors. Mr Jackson Chavelier Yap Kit Siong is a Non-Executive Director. The Remuneration Committees written key terms of reference describe its responsibilities, and these include: (i) (ii) (iii) recommending to the Board of Directors, in consultation with the Chairman of the Board of Directors, for endorsement, a comprehensive remuneration policy framework and guidelines for remuneration of the Directors and key executives; recommending specific remuneration packages for each of the Directors and the Chief Executive Officer; in the case of service agreements, considering what compensation commitments the Directors or key executives contracts of service, if any, would entail in the event of early termination with a view to be fair and avoid rewarding poor performance and to recognise the duty to mitigate loss; approving performance targets for assessing the performance of each of the key managerial personnel and recommending such targets as well as employee specific remuneration packages for each of such key managerial personnel, for endorsement by the Board of Directors; and administering the Share Options Schemes of the Company, if any.
(iv)
(v)
Although the recommendations are made in consultation with Management, the remuneration packages are ultimately approved by the Board. No Director is involved in deciding his own remuneration. The Company adopts a remuneration policy for employees comprising a fixed component and a variable component. The fixed component is in the form of a base salary. The variable component is in the form of a variable bonus that is linked to the performance of the Company and the individual. Directors fees are set in accordance with the remuneration framework comprising basic fees and committee fees. These are subject to the approval of the shareholders at the forthcoming AGM. The following table shows the constitution (in percentage terms) of the remuneration of Directors, during the financial year 2010, in bands of $250,000. Bonus/Profit sharing % 37 -
Remuneration Band and Name of director $500,000 and above Chua Hock Tong Below $250,000 Norman Ip Ka Cheung Kwan Chiew Choi Pok Soy Yoong Tan Soo Kiang Jackson Chavelier Yap Kit Siong
*
salary % 53 -
Other Benefits % 10 -
fees* % 100 100 100 100 100
Total % 100 100 100 100 100 100
In recognition of the Directors time spent towards the Companys preparation for its listing on the SGX-ST, a sum of S$15,000 has been recommended for approval at the AGM.
27
In the interest of maintaining good morale and a strong spirit of teamwork within the Group, the disclosure relating to the top 5 key executives (who are not Directors) of the Group have been made within bands of $250,000. Their profiles are found on Page 22. Remuneration Band $250,001 - $500,000 Below $250,000 No. of Executives 3 2
There are no employees of the Group who are immediate family members of a director or a substantial shareholder. The Company does not have a share option scheme. ACCOuNTABiLiTy Principle 10: The Board should present a balanced and understandable assessment of the companys performance, position and prospects. The Board, through its announcements of the Group financial results to shareholders, aims to present a balanced and understandable assessment of the Groups position and prospects. In preparing the financial statements, the Directors have: (i) (ii) (iii) (iv) selected suitable accounting policies and applied them consistently; made judgments and estimates that are reasonable and prudent; ensured that all applicable accounting standards have been followed; and prepared financial statements on the basis that the directors have reasonable expectations, having made enquires, that the Group and Company have adequate resources to continue operations for the foreseeable future.
AudiT COMMiTTEE ANd iNTERNAL CONTROLs Principle 11: The Board should establish an Audit Committee with written terms of reference which clearly set out its authority and duties. Principle 12: The Board should ensure that the Management maintains a sound system of internal controls to safeguard the shareholders investments and the companys assets. The Audit Committee comprises the following Directors: Pok Soy Yoong - Chairman Kwan Chiew Choi - Member - Member Tan Soo Kiang All members of this committee are Independent and Non-Executive Directors. The role of the Audit Committee is to assist the Board of Directors in overseeing the adequacy of the overall internal control functions, the internal audit functions within the Group, the relationship of those functions to external audit, the scope of audit by the external auditor and their independence as well as corporate and financial risk management. The Audit Committees written key terms of reference describe its responsibilities, and these include: (i) (ii) (iii) (iv) (v) (vi) assisting our Board of Directors in discharging its statutory responsibilities on financing and accounting matters; reviewing significant financial reporting issues and judgments to ensure the integrity of the financial statements and any formal announcements relating to financial performance; reviewing the scope and results of the audit and its cost effectiveness, and the independence and objectivity of the external auditors; reviewing and evaluating with internal and external auditors, the adequacy and effectiveness of the system of internal controls, including financial, operational and compliance controls, and risk management policies and framework; reviewing any interested person transactions as defined in the Listing Manual; appraising and reporting to the Board of Directors on the audits undertaken by the external auditors and internal auditors, the adequacy of disclosure of information, and the appropriateness and quality of the system of management and internal controls;
28
(vii) (viii) (ix)
(x)
making recommendations to the Board of Directors on the appointment, re-appointment and removal of the external auditors and internal auditors, and approving the remuneration and terms of engagement of the external auditors and internal auditors; reviewing any actual or potential conflicts of interest that may involve our Directors as disclosed by them to our Board and exercising directors fiduciary duties in this respect; reviewing on a periodic basis the framework and processes established for the implementation of the terms of the Non-Competition Deed with United Engineers Limited group of companies (UE Group) in order to ensure that such framework and processes remain appropriate; and reviewing Whistle-Blowing investigations within the Group and ensuring appropriate follow-up action, if required.
The Audit Committee has been given full access and obtained the co-operation of the Management of the Company. The Audit Committee has the explicit authority to investigate any matter within its terms of reference. It also has full access to and co-operation by Management and full discretion to invite any Director or executive officer to attend its meetings, and reasonable resources to enable it to discharge its functions properly. The Audit Committee has met with the external auditors without the presence of the management. The Audit Committee also met with the external auditors to discuss the results of their examinations and their evaluation of the systems of internal accounting controls. The Audit Committee has reviewed the amount of non-audit fees paid to the external auditors and is of the view that the independence of the external auditors has not been compromised. The Audit Committee has recommended to the Board the re-appointment of Ernst & Young LLP for the year ending 31 December 2011. The Audit Committee has also put in place a whistle blowing policy which provides well-defined and accessible channels in the Group through which employees may raise concerns in the event that they encounter any improper conduct within the Group. iNTERNAL AudiT Principle 13: The Company should establish an internal audit function that is independent of the activities it audits. The Board is cognizant of its responsibility for maintaining a sound system of internal controls to safeguard the investment of its shareholders and the assets and business of the Group. The appointed external auditors of the Company carry out, in the course of their statutory audit, an annual review of the effectiveness of the material internal controls of the Company to the extent of their scope as laid out in their audit plan. Material non-compliance and internal control weaknesses noted during their audit, and the recommendations of the external auditors, are reported to the Audit Committee. For FY2010, the Board is of the view that based on the reports from the external auditors, the system of internal controls that has been maintained by the Management of the Company throughout the financial year was adequate to meet the needs of the Company. The Company intends to outsource the internal audit function of the Group and will appoint internal auditors in respect of FY2011. COMMuNiCATiON wiTh shAREhOLdERs ANd shAREhOLdER PARTiCiPATiON Principle 14: Companies should engage in regular, effective and fair communication with shareholders. Principle 15: Companies should encourage greater shareholder participation at AGMs, and allow shareholders the opportunity to communicate their views on various matters affecting the company. The Company does not practise selective disclosure. Price sensitive information is always released on SGXNET after trading hours. Results and annual reports are announced or issued within the mandatory periods. Shareholders are encouraged to attend the AGM to ensure a greater level of shareholder participation and for them to be kept up to date as to the strategies and goals of the Group. All shareholders of the Company receive a copy of the Annual Report, the Notice of AGM and circulars and notices pertaining to any Extraordinary General Meetings of the Company. To facilitate participation by the shareholders, the Articles of the Company allow the shareholders to attend and vote at general meetings of the Company by proxies. Separate resolutions on each distinct issue are requisite. At the AGM, the external auditors as well as the Directors are in attendance to answer queries from shareholders. Shareholders are given the opportunity at general meetings of the Company to air their views and query the Directors and Management on matters relating to the Group and its operations.
29
dEALiNGs iN sECuRiTiEs The Company has adopted an internal code which prohibits dealings in the securities of the Company by directors and officers while in possession of price-sensitive information. The Directors and officers are prohibited from dealing in the securities of the Company during the period beginning one month before the announcement of the quarterly and annual results respectively, and ending on the date of the announcement. In addition, officers are expected to observe insider trading laws at all times even when dealing in securities within the permitted trading period. disCLOsuRE Of MATERiAL CONTRACTs There was no material contract entered into by the Company or any of its subsidiaries involving the interests of any Directors. iNTEREsTEd PERsON TRANsACTiONs The Company has set out procedures governing all interested person transactions to ensure that they are carried out on an arms length basis, on normal commercial terms and will not be prejudicial to the interests of the Company and its shareholders. Disclosure according to the Rule 907 of the SGX-ST Listing Manual in respect of interested person transactions for FY2010 is stated in the following table: Aggregate value of all interested person transactions during the financial year under review (excluding transactions less than s$100,000 and transactions conducted under shareholders mandate pursuant to Rule 920 of the sGx Listing Manual) -
Name of interested Person United Engineers Limited Group (A) Contract Value 1 (B) Revenue 1 (C) Interest income (D) Finance costs (E) Management fees and consultancy services expenses (F) Purchases
1
Aggregate value of all interested person transactions conducted under the shareholders mandate pursuant to Rule 920 of the Listing Manual (excluding transactions less than s$100,000) 689,400,000 228,683,000 3,106,000 197,000 1,567,000 1,077,000
Revenue forms part of the Contract Value
usE Of iPO PROCEEds The Company refers to the net IPO proceeds of approximately $28.7 million raised from the initial public offering of its shares on 25 February 2011. As at the date of this report, the Company has not utilised any proceeds. The Company will provide periodic updates on the use of the IPO proceeds through SGXNET.
30
Financial StatementS
Directors report 32 Statement by directors 35 Independent auditors report 36 Consolidated income statement 37 Consolidated statement of comprehensive income 38 Statements of financial position 39 Statements of changes in equity 40 Consolidated statement of cash flows 43 Notes to the financial statements 45 Statistics of Shareholding 94 Substantial Shareholders 95 Notice of Annual General Meeting 96 Proxy Form 99
31
DiRectORS RePORt
The directors are pleased to present their report to the members together with the audited consolidated financial statements of UE E&C Ltd. (the Company) and its subsidiaries (collectively, the Group) and the statement of financial position and statement of changes in equity of the Company for the financial year ended 31 December 2010. DiRectORS The directors of the Company in office at the date of this report are as follows: Norman Ip Ka Cheung Chua Hock Tong Kwan Chiew Choi Pok Soy Yoong Tan Soo Kiang Jackson Chevalier Yap Kit Siong (Chairman) (Appointed on 22 December 2010) (Executive Director and Chief Executive Officer) (Appointed on 22 December 2010) (Appointed on 22 December 2010) (Appointed on 22 December 2010) (Appointed on 22 December 2010) (Appointed on 22 December 2010)
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 objects are, or one of whose objects is, to enable the directors of the Company to acquire benefits by means of the acquisition of shares or debentures of the Company or any other body corporate. DiRectORS inteReStS in SHaReS anD DeBentUReS The directors, who held office at the end of the financial year, had, according to the register of directors shareholdings required to be kept under Section 164 of the Singapore Companies Act, Cap. 50, an interest in the share capital of the Company and related companies as follows: Direct interest 1 January 2010 or 31 date of December appointment 2010 interest in the company Ordinary Shares Chua Hock Tong interest in Ultimate Holding company: United engineers limited Ordinary Stock Units Chua Hock Tong Jackson Chevalier Yap Kit Siong Unissued Ordinary Shares under Option Jackson Chevalier Yap Kit Siong Convertible Bonds Chua Hock Tong Unissued Ordinary Shares underlying the Convertible Bonds Chua Hock Tong Deemed interest 1 January 2010 or 31 date of December appointment 2010
23,791,311
143,333 393,000
143,333 393,000
827,000
827,000
1,340
1,340
1,000
1,000
32
DiRectORS RePORt
Direct interest 1 January 2010 or 31 date of December appointment 2010 interest in Subsidiary: Greatearth Holding Pte ltd Ordinary Shares Chua Hock Tong
Deemed interest 1 January 2010 or 31 date of December appointment 2010
149,999
There was no change in any of the above-mentioned interests between the end of the financial year and 21 January 2011. Except as disclosed in this report, no director who held office at the end of the financial year had interests in the share capital of the Company or of its related companies, either at the beginning of the financial year or date of appointment, if later, or at the end of the financial year. DiRectORS cOntRactUal BeneFitS Except as disclosed in the financial statements, since the end of the previous financial period, no director of the Company 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 the director is member, or with a company in which the director has a substantial financial interest except that certain directors have employment relationships with related corporations of the holding company and received remuneration in those capacity and those disclosed in the notes to the financial statements. SHaRe OPtiOnS During the financial year, there were: (i) (ii) no options granted by the Company to any person to take up unissued shares in the Company; and no shares issued by virtue of any exercise of options to take up unissued shares of the Company.
As at the end of the financial year, there were no unissued shares of the Company under option. aUDit cOmmittee The Audit Committee comprises the following Directors: Pok Soy Yoong Chairman Kwan Chiew Choi Member Tan Soo Kiang Member The Audit Committee convened its first meeting on 28 February 2011 with full attendance from all members. The Audit Committee carried out its functions in accordance with Section 201B(5) of the Singapore Companies Act, Cap. 50. The Audit Committee reviewed the Companys accounting policies and internal controls on behalf of the Board of Directors and performed the functions specified in the Singapore Companies Act and Singapore Exchange Listing Manual. In performing its functions, the Committee reviewed the overall scope of the external audit. It met with the Companys external auditors to discuss the results of their examinations and their evaluation of the Companys system of internal accounting controls. The Audit Committee also reviewed the financial statements of the Company and the consolidated financial statements of the Group as well as the auditors report thereon. The Audit Committee nominates Ernst & Young LLP as auditors of the Company for the financial year ending 31 December 2011 to be approved and appointed by the Company at the forthcoming Annual General Meeting. Further details regarding the Audit Committee are disclosed in the Report on Corporate Governance of the Companys Annual Report for the financial year ended 31 December 2010.
33
DiRectORS RePORt
aUDitORS Ernst & Young LLP have expressed their willingness to accept re-appointment as auditors.
On behalf of the board of directors,
nORman iP Ka cHeUnG Director 18 March 2011 Singapore
cHUa HOcK tOnG Director
34
Statement BY DiRectORS
We, NORMAN IP KA CHEUNG and CHUA HOCK TONG, being two of the directors of UE E&C LTD., do hereby state that, in the opinion of the directors, (i) the accompanying statements of financial position, consolidated income statement, consolidated statement of comprehensive income, statements of changes in equity and consolidated statement of cash flows together with notes thereto are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2010 and the results of the business, changes in equity and cash flows of the Group and the changes in equity of the Company for the financial year ended on that date, and 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.
(ii)
On behalf of the board of directors,
nORman iP Ka cHeUnG Director 18 March 2011 Singapore
cHUa HOcK tOnG Director
35
inDePenDent aUDitORS' RePORt

For the financial year ended 31 December 2010
To the members of UE E&C Ltd. Report on the financial statements We have audited the accompanying financial statements of UE E&C Ltd. (formerly known as Ljubica Limited) (the Company) and its subsidiaries (collectively, the Group) which comprise the statement of financial position of the Group and the Company as at 31 December 2010, the statements of changes in equity of the Group and Company and the consolidated income statement, consolidated statement of comprehensive income, and consolidated statement of cash flows of the Group for financial year ended 31 December 2010, and a summary of significant accounting policies and other explanatory notes. managements 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, Cap. 50 (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 and loss accounts and balance sheets and to maintain accountability of assets. auditors 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 auditors judgment, 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 entitys preparation of the 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 entitys 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 statement of financial position and statement of changes in equity 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 31 December 2010 and the results, changes in equity and cash flows of the Group and the changes in equity of the Company for the 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.
ernst & Young llP Public Accountants and Certified Public Accountants Singapore 18 March 2011
36
cOnSOliDateD incOme Statement

(In Singapore dollars) GROUP Note 2010 $000 381,853 (314,310) 67,543 2009 $000 394,801 (349,007) 45,794
Revenue Cost of sales Gross profit Other items of income Interest income Other income Other items of expense Distribution expenses Administrative expenses Finance costs Other expenses Share of results of associates Profit before tax Income tax expense Profit net of tax Profit attributable to: Owners of the parent Non-controlling interests
6 7
3,147 2,771
2,276 7,367
(6,932) (10,800) (1,428) (5,898) 6,557 54,960 (9,923) 45,037
(5,770) (9,326) (2,076) (5,943) 2,795 35,117 (4,079) 31,038
9 10
39,785 5,252 45,037
29,023 2,015 31,038
earnings per ordinary share attributable to owners of the parent (cents per share) Basic and diluted 11 19.9 14.5
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
37
cOnSOliDateD Statement OF cOmPReHenSiVe incOme

For the financial year ended 31 December 2010 (In Singapore dollars) GROUP 2010 $000 Profit net of tax Other comprehensive income: Net effect of exchange differences arising from translation of financial statements of foreign operations Share of other comprehensive income of associates Other comprehensive income for the year, net of tax total comprehensive income for the year Total comprehensive income attributable to: Owners of the parent Non-controlling interests 45,037 2009 $000 31,038
68 78 146 45,183
(93) (109) (202) 30,836
39,902 5,281 45,183
28,840 1,996 30,836
38
StatementS OF Financial POSitiOn

as at 31 December 2010
(In Singapore dollars) GROUP Note 2010 $000 2009 $000 2010 $000 cOmPanY 2009 $000
assets non-current assets Property, plant and equipment Investment properties Investments in subsidiaries Investments in associates Deferred tax assets Trade and other receivables Other investments total non-current assets current assets Inventories Income tax receivables Trade and other receivables Other investments Gross amount due from customers for contract work Prepayments Property held for sale Cash and bank balances total current assets total assets equity and liabilities equity Share capital Retained earnings Other reserves equity, attributable to owners of the parent Non-controlling interests total equity non-current liabilities Deferred tax liabilities Trade and other payables Borrowings Finance leases total non-current liabilities current liabilities Provisions Income tax payable Trade and other payables Borrowings Finance leases Gross amount due to customers for contract work total current liabilities total liabilities total equity and liabilities
12 13 14 15 16 19 17
34,351 7,500 10,667 91 50,375 102,984
26,738 10,500 3,731 135 64,981 361 106,446
105,673 105,673
18 19 17 20 21 22 23
1,884 10 130,260 9,625 31,479 1,604 4,266 62,485 241,613 344,597
1,769 10 106,904 9,087 28,953 4,894 6,619 11,588 169,824 276,270
1,447 1,178 2,625 108,298
24 25
106,851 40,741 (58,836) 88,756 309 89,065
12,530 2,556 (400) 14,686 5,559 20,245
106,851 (895) 105,956 105,956
16 27 26 28
3,915 13,607 52 17,574
4,452 49,664 2,379 248 56,743
27 26 28 20
3 9,376 184,657 28,372 196 15,354 237,958 255,532 344,597
91 3,644 157,249 29,313 484 8,501 199,282 256,025 276,270
2,342 2,342 2,342 108,298
39
StatementS OF cHanGeS in eQUitY

(In Singapore dollars) attributable to owners of the parent Share capital (note 24) $000 12,530 Retained earnings $000 (23,067) 29,023 Other reserves (note 25) $000 (217) equity attributable nontotal to owners of controlling reserves the parent interests $000 (23,284) 29,023 $000 (10,754) 29,023 $000 4,163 2,015 total equity $000 (6,591) 31,038
GROUP at 1 January 2009 Profit net of tax Net effect of exchange differences arising from translation of financial statements of foreign operations Share of other comprehensive income of associates Total comprehensive income for the year contributions by and distributions to owners Dividends paid Dividends paid to non-controlling interest total transactions with owners in their capacity as owners at 31 December 2009 at 1 January 2010 Profit net of tax Net effect of exchange differences arising from translation of financial statements of foreign operations Share of other comprehensive income of associates Total comprehensive income for the year contributions by and distributions to owners Adjustment arising from Restructuring Exercise Capital and subvention contributions from a related company relating to the Restructuring Exercise Transfers of reserves arising from Restructuring Exercise Issuance of new ordinary shares Dividends paid Dividends paid to non-controlling interest total contributions by and distributions to owners
29,023
(90) (93) (183)
(90) (93) 28,840
(90) (93) 28,840
(3) (16) 1,996
(93) (109) 30,836
12,530 12,530
(3,400) (3,400) 2,556 2,556 39,785
(400) (400)
(3,400) (3,400) 2,156 2,156 39,785
(3,400) (3,400) 14,686 14,686 39,785
(600) (600) 5,559 5,559 5,252
(3,400) (600) (4,000) 20,245 20,245 45,037
39,785
51 66 117
51 66 39,902
51 66 39,902
17 12 5,281
68 78 45,183
(12,530)
(70,718)
(70,718)
(83,248)
489
(82,759)
99,238
26,100 (27,700)
38,158 (26,100)
38,158 (27,700)
38,158 99,238 (27,700)
(3,300)
38,158 99,238 (27,700) (3,300)
86,708
(1,600)
(58,660)
(60,260)
26,448
(2,811)
23,637
40

(In Singapore dollars) attributable to owners of the parent equity attributable nontotal to owners of controlling reserves the parent interests $000 $000 $000
GROUP
Share capital (note 24) $000
Retained earnings $000
Other reserves (note 25) $000
total equity $000
changes in ownership interests in subsidiary that do not result in a loss of control Acquisition of non-controlling interests Discount paid on acquisition of non-controlling interests total changes in ownership interests in subsidiary total transactions with owners in their capacity as owners at 31 December 2010
7,613
7,613
(7,720)
(107)
107
107
107
107
7,613
107
107
7,720
(7,720)
94,321 106,851
(1,600) 40,741
(58,553) (58,836)
(60,153) (18,095)
34,168 88,756
(10,531) 309
23,637 89,065
41

(In Singapore dollars) equity attributable to owners of the parent $000 (895) (895)
cOmPanY at 9 march 2010, date of incorporation Loss net of tax Other comprehensive income for the year total comprehensive income for the year contributions by and distributions to owners Issuance of new ordinary shares total contributions by and distributions to owners changes in ownership interests in subsidiary that do not result in a loss of control Acquisition of non-controlling interests total changes in ownership interests in subsidiary total transactions with owners in their capacity as owners at 31 December 2010 * Amount less than $1,000
Share capital (note 24) $000 *
Retained earnings $000 (895) (895)
total reserves $000 (895) (895)
total equity $000 * (895) (895)
99,238 99,238
99,238 99,238
99,238 99,238
7,613 7,613
7,613 7,613
7,613 7,613
106,851 106,851
(895)
(895)
106,851 105,956
106,851 105,956
42
cOnSOliDateD Statement OF caSH FlOWS

For the financial year ended 31 December 2010 (In Singapore dollars) GROUP 2010 $000 cash flows from operating activities Profit before tax Adjustments: Allowance for doubtful trade receivables Allowance for doubtful other receivables Allowance for doubtful trade receivables written back Allowance for inventory obsolescence Allowance for inventory obsolescence written back Amortisation of receivables and payables Depreciation of property, plant and equipment Dividend income from investment securities Gain on fair value adjustment on held-for-trading investments Gain on disposal of available-for-sale investment Gain on disposal of property, plant and equipment Gain on fair value adjustment on investment properties Finance cost Interest income Share of results of associates Operating cash flows before changes in working capital Property held for sale - Development expenditure - Proceeds from progress billings (Increase)/decrease in inventories Increase in gross amount due from customers for contract work Increase in gross amount due to customers for contract work Decrease/(increase) in trade and other receivables and prepayments Increase in trade and other payables and provisions cash flows from operations Interest received Interest paid Income tax (paid)/refund net cash flows from operating activities cash flows from investing activities Acquisition of a subsidiary arising from Restructuring Exercise Purchase of property, plant and equipment Proceeds from disposal of investment properties Proceeds from disposal of property, plant and equipment Proceeds from disposal of available-for-sale investments Dividends received from investment securities Investment in an associate Loans given to associates net cash flows used in investing activities 2009 $000
54,960
35,117
101 302 (66) 247 (194) 389 4,344 (152) (539) (869) (207) (500) 1,428 (3,147) (6,557) 49,540
296 782 (112) (7) 4,037 (121) (6,076) (227) (490) 2,076 (2,276) (2,795) 30,204
(4,264) 7,102 (179) (1,597) 6,853 15,320 9,054 81,829 36 (1,801) (2,039) 78,025
(8,520) 9,447 1,181 (3,277) 1,055 (16,847) 6,684 19,927 271 (2,851) 622 17,969
(2,700) (15,059) 3,500 2,213 1,230 152 (300) (17,443) (28,407)
(8,313) 262 121 (2,600) (10,530)
43
cOnSOliDateD Statement OF caSH FlOWS

For the financial year ended 31 December 2010 (In Singapore dollars) GROUP 2010 $000 cash flows from financing activities Dividends paid Dividends paid to non-controlling interests Contribution from holding companies (Repayment of)/proceeds from trust receipts and bills payable Repayment of obligations under finance leases Proceeds from bank loans Repayment of bank loans Increase in revolving bank loans net cash flows used in financing activities net increase in cash and cash equivalents Cash and cash equivalents at the beginning of year Effect of exchange rate changes on cash and cash equivalents cash and cash equivalents at the end of year (note 23) 2009 $000
(27,700) (3,300) 36,392 (370) (485) 16,500 (27,500) 3,001 (3,462) 46,156 4,542 (18) 50,680
(3,400) (600) 1,640 (475) (3,670) 396 (6,109) 1,330 2,974 238 4,542
44
nOteS tO tHe Financial StatementS

31 December 2010
cORPORate inFORmatiOn The Company was incorporated in the Republic of Singapore on 9 March 2010 as a public company, limited by shares under the name of Ljubica Limited with an issued and paid up share capital of $2 comprising 2 ordinary shares. On 1 December 2010, the Company changed its name to UE E&C Ltd. The registered office and the principal place of business of the Company are located at 12 Ang Mo Kio Street 64 #03-13 UE BizHub CENTRAL, Singapore 569088. The principal activity of the Company is that of investment holding company. The principal activities of the subsidiary companies are disclosed in Note 14 to the financial statements. The ultimate holding company of UE E&C Ltd. is United Engineers Limited (UEL) which is incorporated in Singapore. On 25 February 2011, the Company was admitted to the official list of Singapore Exchange Securities Trading Limited. The Company issued 70,000,000 new ordinary shares at $0.48 per share in connection with its public offering. The net proceeds arising from this amounted to approximately $28,700,000.
tHe ReStRUctURinG eXeRciSe The Group was formed through a restructuring exercise (the Restructuring Exercise) in preparation for the Companys listing on the Singapore Exchange Securities Trading Limited (SGX-ST). Pursuant to the Restructuring Exercise, UE E&C Ltd. became the holding company of the Group. In accordance with Recommended Accounting Practice 12, Merger Accounting for Common Control Combinations for financial statements prepared under Part IX of the Fifth Schedule to the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005, where the combining entities or business have been under common control but have not formed a legal group as at the end of the groups latest reporting period, the financial statements of the entities or businesses may, if meaningful, be presented on a combined basis (as distinct from consolidated financial statements) provided that the common control combination under which the legal group is formed is completed before the date of approval of the combined financial statements by the directors. The Restructuring Exercise is considered to be a business combination involving entities under common control and is accounted for by applying the pooling of interests method. Accordingly, the assets and liabilities of these entities and business transferred have been included in 2009 financial statements at their carrying amounts. Although the Restructuring Exercise occurred in December 2010, the 2009 financial statements present the financial condition and results of operations as if the entities and business had always been combined since the beginning of the earliest period presented. The Restructuring Exercise involved the following steps: A. Acquisition of Anhui Anxin Energy Co., Ltd Pursuant to a sale and purchase agreement entered into between UES Holdings Pte Ltd (formerly known as United Engineers (Singapore) Pte Ltd) (UES Holdings), a wholly owned subsidiary of UEL and UE-Tradetec (Singapore) Pte Ltd (UET), UET agreed to acquire the entire registered capital of Anhui Anxin Energy Co., Ltd. (AA) for cash consideration of approximately $2.7 million, being the sum equal to two times the value of the net asset value of AA as at 31 March 2010. B. Sale of UE-Tradetec (Singapore) Pte Ltds shareholding interest in Lysaght Corrugated Pipe (S) Pte Ltd Pursuant to a sale and purchase agreement entered into between UEL and UET, UET sold its entire shareholding interest in Lysaght Corrugated Pipe (S) Pte Ltd (Lysaght) to UEL based on UETs share of the net asset value of Lysaght and its subsidiaries as of 31 December 2009.
45

31 December 2010
tHe ReStRUctURinG eXeRciSe (continued) C. Acquisition of property located at 2 Gul Street 4, Singapore 629234 (Gul Street Property) Pursuant to a sale and purchase agreement entered into between UEL and UET, UET agreed to acquire the Gul Street Property from UEL for a cash consideration of approximately $2.4 million, being the sum equal to the purchase price, stamp duty and legal fees paid by UEL. D. Acquisition of UE-Tradetec (Singapore) Pte Ltd Pursuant to a sale and purchase agreement entered into between UEL and the Company, the Company agreed to purchase the entire issued and fully paid share capital of UET based on the net asset value of UET as at 31 March 2010 which was satisfied by the allotment and issue of 27,475,520 shares credited as fully paid by the Company to UEL. E. Acquisition of UES Holdings interests in Greatearth Holding Pte Ltd and its subsidiaries, United Engineers (Vietnam) Limited and United Engineers (B) Sdn Bhd. Pursuant to a share purchase agreement entered into between UES Holdings and the Company, the Company agreed to purchase UES Holdings interests in the following subsidiaries: 85% shareholding interest in Greatearth Holding Pte Ltd and its subsidiaries (GEH) entire charter capital of United Engineers (Vietnam) Limited (UEV) 90% shareholding interest in United Engineers (B) Sdn Bhd (UEB)
based on the aggregate net asset value of GEH as at 31 March 2010, issued share capital of UEV and the negative net asset value of UEB as at 31 March 2010, which was satisfied by the allotment and issue of 145,454,036 shares credited as fully paid by the Company to UES Holdings. F. Acquisition of Mechanical and Electrical Engineering Business (M&E Business) Pursuant to a business transfer agreement entered into between UES Holdings, United Engineers (Singapore) Private Limited (UES), a newly incorporated wholly owned subsidiary of the Company and the Company, UES agreed to purchase the M&E Business from UES Holdings based on the net assets value of the M&E Business as at 31 March 2010 which was satisfied by the allotment and issue of 77,256,835 shares credited as fully paid by the Company to UES Holdings. G. Sale of Mr. Chua Hock Tongs Shareholding Interest in Greatearth Holding Pte Ltd and its subsidiaries Pursuant to a sale and purchase agreement entered into with Mr. Chua Hock Tong, the Company agreed to purchase Mr. Chua Hock Tongs 15% shareholding interest in GEH which was satisfied by the allotment and issue of 23,791,311 (see Note 24) shares credited as fully paid by the Company to Mr. Chua Hock Tong. 3 SUmmaRY OF SiGniFicant accOUntinG POlicieS 3.1 Basis of preparation The financial statements of the Group and the statement of financial position and statement of changes in equity of the Company have been prepared in accordance with Singapore Financial Reporting Standards (FRS). The financial statements have been prepared on the historical cost basis except for investment properties and held-for-trading investments that have been measured at their fair values. The financial statements are presented in Singapore dollars (SGD or $) and all values in the tables are rounded to the nearest thousand ($000) except when otherwise indicated.
46

31 December 2010
SUmmaRY OF SiGniFicant accOUntinG POlicieS (continued) 3.2 changes in accounting policies
The accounting policies adopted are consistent with those of the previous financial year except in the current financial year, the Group has adopted all the new and revised Singapore Financial Reporting Standards (FRSs) and Interpretations of FRS (INT FRS) that are relevant to its operations and effective for annual periods beginning on or after 1 January 2010. The adoption of these standards and interpretations did not have any material effect on the financial statements of the Group and the Company. 3.3 Standards issued but not yet effective The Group has not adopted the following relevant standards and interpretations that have been issued but not yet effective: Description Effective for annual periods beginning on or after 1 February 2010 1 July 2010 1 January 2011 1 January 2011
/ m&e
Amendment to FRS 32 Financial Instruments: Presentation - Classification of Rights Issues INT FRS 119 Extinguishing Financial Liabilities with Equity Instruments Revised FRS 24 Related Party Disclosures Amendments to INT FRS 114 Prepayments of a Minimum Funding Requirement
Except for the revised FRS 24, the directors expect that the adoption of the other standards and interpretations above will have no material impact on the financial statements in the period of initial application. The nature of the impending changes in accounting policy on adoption of the revised FRS 24 is described below. Revised FRS 24 Related Party Disclosures The revised FRS 24 clarifies the definition of a related party to simplify the identification of such relationships and to eliminate inconsistencies in its application. The revised FRS 24 expands the definition of a related party and would treat two entities as related to each other whenever a person (or a close member of that persons family) or a third party has control or joint control over the entity, or has significant influence over the entity. The revised standard also introduces a partial exemption of disclosure requirements for government-related entities. The Group is currently determining the impact of the changes to the definition of a related party has on the disclosure of related party transaction. As this is a disclosure standard, it will have no impact on the financial position or financial performance of the Group when implemented in 2011. 3.4 Basis of consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the end of the reporting period. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full. Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Business combinations (other than combinations involving entities or businesses under common control which are accounted for by applying the pooling of interest method) are accounted for by applying the acquisition method. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are recognised as expenses in the periods in which the costs are incurred and the services are received.
47

31 December 2010
SUmmaRY OF SiGniFicant accOUntinG POlicieS (continued) 3.4 Basis of consolidation (continued) When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree. Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability will be recognised in accordance with FRS 39 either in profit or loss or as change to other comprehensive income. If the contingent consideration is classified as equity, it is not be remeasured until it is finally settled within equity. In business combinations achieved in stages, previously held equity interests in the acquiree are re-measured to fair value at the acquisition date and any corresponding gain or loss is recognised in profit or loss. The Group elects for each individual business combination, whether non-controlling interest in the acquiree (if any) is recognised on the acquisition date at fair value, or at the non-controlling interests proportionate share of the acquiree net identifiable assets. Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non controlling interest in the acquiree (if any), and the fair value of the Groups previously held equity interest in the acquiree (if any), over the net fair value of the acquirees identifiable assets and liabilities is recorded as goodwill. In instances where the latter amount exceeds the former, the excess is recognised as a gain on bargain purchase in profit or loss on the acquisition date. Business combinations involving entities or businesses under common control are accounted for by applying the pooling of interest method. The assets and liabilities of the combining entities or businesses are reflected at their existing carrying amounts in the combined financial statements. The retained earnings and other reserves recognised in the combined financial statements are the retained earnings and other reserves of the combining entities or businesses immediately before the combination. Any difference between the consideration paid and the share capital of the acquired entity or the net tangible asset amount of the acquired business is reflected within equity as merger reserve or deficit. The combined profit and loss account reflects the results of the combining entities or businesses for the full year, irrespective of when the combination takes place. Comparatives are presented as if the entities or businesses had always been combined since the date the entities or businesses had come under common control. 3.5 transactions with non-controlling interests Non-controlling interests represent the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company, and are presented separately in the consolidated statement of comprehensive income and within equity in the consolidated statements of financial position, separately from equity attributable to owners of the Company. Changes in the Company owners ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any differences between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received are recognised directly in equity and attributed to owners of the parent. 3.6 Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of consideration received or receivable, excluding discounts, rebates, and sales taxes or duty. The Group assesses its revenue arrangements to determine if it is acting as principal or agent. The Group has concluded that it is acting as a principal in all of its revenue arrangements. The following specific criteria must also be met before revenue is recognised:
48

31 December 2010
SUmmaRY OF SiGniFicant accOUntinG POlicieS (continued) 3.6 Revenue recognition (continued) Sale of goods Revenue from sale of goods is recognised upon the transfer of significant risk and rewards of ownership of the goods to the customer. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods. Rental income Rental income arising on investment properties are accounted for on a straight-line basis over the lease terms. The aggregate costs of incentives provided to lessees are recognised as a reduction of rental income over the lease term on a straight-line basis. Revenue from rental of machinery, equipment and metal products are recognised on a straight-line basis over the lease term as they become receivable according to the provision of the lease agreement. Construction contract revenue Revenue from construction contracts is recognised on the percentage of completion method. Further details can be found in Note 3.18. Rendering of services Revenue from services rendered is recognised upon services performed. Dividend income Dividend income is recognised when the Groups right to receive payment is established. Interest income Interest income is recognised using the effective interest method. Development properties held for sale The Group recognises income on property development projects when the risk and rewards of ownership have been transferred to the buyer through either the transfer of legal title or an equitable interest in a property. In cases where the Group is obliged to perform any significant acts after the transfer of legal title or equitable interest, revenue is recognised as the acts are performed based on the percentage of completion method, which is an allowed alternative method under Recommended Accounting Practice 11, Pre-completion Contracts for the Sale of Development Property (RAP 11) issued by the Institute of Certified Public Accountants of Singapore in October 2005. Under the percentage of completion method, profit is brought into the income statement only in respect of sales procured and to the extent that such profit relates to the progress of construction work. The progress of construction work is measured by the proportion of the construction costs incurred to date to the estimated total construction costs for each project.
49

31 December 2010
SUmmaRY OF SiGniFicant accOUntinG POlicieS (continued) 3.7 employee benefits Equity compensation benefits Prior to 31 December 2009, certain employees of the Group receive remuneration in the form of options to subscribe for ordinary stock units of the holding company under the United Engineers Share Option Scheme 2000 (Scheme 2000) as consideration for services rendered. The cost of these equity-settled transactions with employees is measured by references to the fair value of the options at the date on which the options are granted. This cost is recognised in the income statement, with a corresponding increase in capital reserve, over the vesting period. The cumulative expense recognised at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Groups best estimate of the number of options that will ultimately vest. The charge or credit to the income statement for a period represents the movement in cumulative expenses recognised as at the beginning and end of that period. No expense is recognised for options that do not ultimately vest, except for options where vesting is conditional upon a market, which are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance and/or service conditions are satisfied. Defined contribution plans The Group participates in the national pension schemes as defined by the laws of the countries in which it has operations. As required by law, the Groups companies in Singapore make contributions to the Central Provident Fund (CPF) scheme in Singapore, a defined contribution pension scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed. Employee leave entitlement Employee entitlements to annual leave are recognised as a liability when they accrue to employees. The estimated liability for leave is recognised for services rendered by employees up to the end of the reporting period. 3.8 Foreign currencies The Groups consolidated financial statements are presented in Singapore dollars, which is also the parent companys functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. (a) Transactions and balances Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the end of the reporting period. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Exchange differences arising on the settlement of monetary items or on translating monetary items at the end of the reporting period are recognised in the income statement except for exchange differences arising on monetary items that form part of the Groups net investment in foreign operations, which are recognised initially in other comprehensive income as foreign currency translation in the statement of financial position. The foreign currency translation reserve is reclassified from equity to income statement of the Group on disposal of the foreign operation.
50

31 December 2010
SUmmaRY OF SiGniFicant accOUntinG POlicieS (continued) 3.8 Foreign currencies (continued) (b) Group companies The assets and liabilities of foreign operations are translated into Singapore dollars at the rate of exchange ruling at the end of the reporting period and their income statement are translated at the weighted average exchange rates for the year. The exchange differences arising on the translation are taken directly to other comprehensive income. On disposal of a foreign operation, the cumulative amount recognised in foreign currency translation reserve relating to that particular foreign operation is recognised in the income statement. In the case of a partial disposal without loss of control of a subsidiary that includes a foreign operation, the proportionate share of the cumulative amount of the exchange differences are re-attributed to non-controlling interest and are not recognised in profit or loss. For partial disposals of associates or jointly controlled entities that are foreign operations, the proportionate share of the accumulated exchange differences is reclassified to profit or loss. The Group has elected to recycle the accumulated exchange differences in the separate component of other comprehensive income that arises from the direct method of consolidation, which is the method the Group uses to complete its consolidation. 3.9 income taxes Current taxation Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the date of the end of the reporting period, in the countries where the Group operates and generates taxable income. Current taxes are recognised in the income statement except to the extent that the tax relates to items recognised outside income statement, either in other comprehensive income or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in where applicable tax regulations are subject to interpretation and establishes provisions where appropriate. Deferred taxation Deferred income tax is provided using the liability method on temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognised for all temporary differences, except: Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and In respect of taxable temporary differences associated with investments in subsidiaries and associates, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except: Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
51

31 December 2010
SUmmaRY OF SiGniFicant accOUntinG POlicieS (continued) 3.9 income taxes (continued) Deferred taxation (continued) In respect of deductible temporary differences associated with investments in subsidiaries and associates, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred tax asset is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at the end of each reporting period and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the end of each reporting period. Deferred tax relating to items recognised outside income statement is recognised outside income statement. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority. Goods and services taxation/sales tax Revenues, expenses and assets are recognised net of the amount of goods and services taxation/sales tax except: Where the goods and services taxation/sales tax incurred in a purchase of assets or services is not recoverable from the taxation authority, in which case the goods and services taxation/sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and Receivables and payables that are stated with the amount of goods and services taxation/sales tax included.
The net amount of goods and services taxation/sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position. 3.10 Property, plant and equipment All items of property, plant and equipment are initially recorded at cost. Such cost includes the cost of replacing part of the property, plant and equipment and borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying property, plant and equipment. The accounting policy for borrowing costs is set out in Note 3.25. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, 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. Subsequent to recognition, property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as follows: Leasehold land and buildings Light plant and machinery Heavy plant and machinery Motor vehicles and other assets over the terms of lease ranging from 9 to 99 years 2 to 10 years 11 to 15 years 2 to 5 years
52

31 December 2010
SUmmaRY OF SiGniFicant accOUntinG POlicieS (continued) 3.10 Property, plant and equipment (continued) Assets under construction included in capital work-in-progress are not depreciated as these assets are not yet available for use. The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. The residual value, useful life and depreciation method are reviewed at each financial year-end, and adjusted prospectively, if appropriate. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in profit or loss in the year the asset is derecognised. 3.11 investment properties Investment properties are those properties that are held on a long-term basis for their investment potential and income. Investment properties are initially recorded at cost, including transaction costs. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met. Subsequent to initial recognition, investment properties are measured at fair value, which reflects market conditions at the end of the reporting period. Gains or losses arising from changes in the fair values of investment properties are included in profit or loss in the year in which they arise. Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in profit or loss in the year of retirement or disposal. Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to owner occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. For a transfer from owner occupied property to investment property, the property is accounted for in accordance with the accounting policy for property, plant and equipment set out in Note 3.10 up to the date of change in use. 3.12 impairment of non-financial assets The carrying amounts of the Groups non-financial assets are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, or when annual impairment assessment for an asset is required, the Group makes an estimate of the assets recoverable amount. An assets recoverable amount is the higher of an assets or cash-generating units fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset or cash generating unit considered impaired and its written down to its recoverable amount. In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses of continuing operations are recognised in profit or loss in those expense categories consistent with the function of the impaired asset; except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation.
53

31 December 2010
SUmmaRY OF SiGniFicant accOUntinG POlicieS (continued) 3.12 impairment of non-financial assets (continued) For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the assets recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the assets recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. The increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase. 3.13 Subsidiaries and associates Subsidiary A subsidiary is an entity over which the Group has the power to govern the financial and operating policies so as to obtain benefits from its activities. In the Companys separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses. Associate An associate is an entity, not being a subsidiary or a joint venture, in which the Group has significant influence. An associate is equity accounted for from the date the Group obtains significant influence until the date the Group ceases to have significant influence over the associate. The Groups investments in associates are accounted for using the equity method. Under the equity method, the investment in associates is measured in the statement of financial position at cost plus post-acquisition changes in the Groups share of net assets of the associates. Goodwill relating to an associate is included in the carrying amount of the investment and is neither amortised nor tested individually for impairment. Any excess of the Groups share of the net fair value of the associates identifiable assets, liabilities and contingent liabilities over the cost of the investment is deducted from the carrying amount of the investment and is recognised as income as part of the Groups share of results of the associate in the period in which the investment is acquired. The profit or loss reflects the share of the results of operations of the associates. Where there has been a change recognised in other comprehensive income by the associates, the Group recognises its share of such changes in other comprehensive income. Unrealised gains and losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the associates. The Groups share of the profit or loss of its associates is shown on the face of profit or loss after tax and non-controlling interests in the subsidiaries of associates. When the Groups share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. After application of the equity method, the Group determines whether it is necessary to recognise any additional impairment loss on the Groups investment in its associate. The Group determines at the end of each reporting period whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in profit or loss.
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31 December 2010
SUmmaRY OF SiGniFicant accOUntinG POlicieS (continued) 3.13 Subsidiaries and associates (continued) Associate (continued) The financial statements of the associates are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group. Upon loss of significant influence over the associate, the Group measures any retained investment at its fair value. Any difference between the carrying amount of the associate upon of significant influence and the fair value of the aggregate of the retained investment and proceeds from disposal is recognised in profit or loss. 3.14 investments Investments are classified as financial assets at fair value through profit or loss, held-to-maturity investments or available-for-sale financial assets, as appropriate. The accounting policies for the aforementioned categories of financial assets are stated in Note 3.16. 3.15 inventories Inventories are stated at the lower of cost and net realisable value. The costs of all inventories determined on a weighted average basis where necessary, allowance is provided for damaged, obsolete and slow moving items to adjust the carrying value of inventories to the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs to completion and the estimated costs necessary to make the sale. 3.16 Financial assets Initial recognition and measurement Financial assets are recognised on the statement of financial position when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. The Group determines the classification of its financial assets at initial recognition. When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs. Subsequent measurement The subsequent measurement of financial assets depends on their classification as follows: Financial assets at fair value through profit or loss Financial assets held for trading are classified as financing assets at fair value through profit or loss. Financial assets held for trading are derivatives (including separated embedded derivatives) or financial assets acquired principally for the purpose of selling in the near term. Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value of the financial assets are recognised in the profit or loss. Net gains or net losses on financial assets at fair value through profit or loss include exchange differences, interest and dividend income.
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31 December 2010
SUmmaRY OF SiGniFicant accOUntinG POlicieS (continued) 3.16 Financial assets (continued) Loans and receivables Non-derivative financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less impairment. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, as well as through the amortisation process. Available-for-sale financial assets Available-for-sale financial assets are financial assets that are not classified in any of the three preceding categories. After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial asset are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in the income statement. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to the income statement as a reclassification adjustment when the financial asset is derecognised. Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss. Derecognition A financial asset is derecognised where the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. 3.17 impairment of financial assets The Group assesses at the end of each reporting period whether there is any objective evidence that a financial asset is impaired. If any such indication exists, or when annual impairment assessment for an asset is required, the Group makes an estimate of the assets recoverable amount. Financial assets carried at amortised cost For financial assets carried at amortised cost, the Group first assesses individually whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be recognised are not included in a collective assessment of impairment. If there is objective evidence that an impairment loss on financial assets carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows discounted at the financial assets original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. The impairment loss is recognised in profit or loss.
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31 December 2010
SUmmaRY OF SiGniFicant accOUntinG POlicieS (continued) 3.17 impairment of financial assets (continued) Financial assets carried at amortised cost (continued) When the asset becomes uncollectible, the carrying amount of impaired financial assets is reduced directly or if an amount was charged to the allowance account, the amounts charged to the allowance account are written off against the carrying value of the financial asset. To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss. Financial assets carried at cost If there is objective evidence (such as significant adverse changes in the business environment where the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on financial assets carried at cost has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods. Available-for-sale financial assets In the case of equity investments classified as available-for-sale, objective evidence of impairment include (i) significant financial difficulty of the issuer or obligor, (ii) information about significant changes with an adverse effect that have taken place in the technological, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in equity instrument may not be recovered; and (iii) a significant or prolonged decline in the fair value of the investment below its cost. Significant is to be evaluated against the original cost of the investment and prolonged against the period in which the fair value has been below its original cost. If an available-for-sale financial asset is impaired, an amount comprising the difference between its acquisition cost (net of any principal repayment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is transferred from other comprehensive income and recognised in profit or loss. Reversals of impairment losses in respect of equity instruments are not recognised in profit or loss. Reversals of impairment losses in respect of equity instruments are not recognised in profit or loss, increase in their fair value after impairment is recognised directly in other comprehensive income. 3.18 construction contracts 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 end of the reporting period, when the outcome of a construction contract can be estimated reliably. When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that are likely to be recoverable and contract costs are recognised as expense in the period in which they are incurred. An expected loss on the construction contract is recognised as an expense immediately when it is probable that total contract costs will exceed total contract revenue. Contract revenue comprises the initial amount of revenue agreed in the contract and variations in contract work, claims and incentive payments to the extent that it is probable that they will result in revenue and they are capable of being reliably measured.
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31 December 2010
SUmmaRY OF SiGniFicant accOUntinG POlicieS (continued) 3.18 construction contracts (continued) Revenue arising from fixed price contracts is recognised in accordance with the percentage of completion method. The stage of completion is measured by reference to professional surveys of work performed. Revenue from cost plus contracts is recognised by reference to the recoverable costs incurred plus a percentage of the contract fee earned during the year. Percentage of the contract fee earned is measured by the proportion that the costs incurred to date bear to the estimated total costs of the contract. Only costs that reflect services performed are included in the estimated total costs of the contract. Where the contract outcome cannot be measured reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable. 3.19 Properties held for sale Development properties held for sale Development properties held for sale are stated at cost plus estimated profits to-date less progress billings. Allowance for foreseeable losses is made when it is anticipated that the net realisable value has fallen below cost. Costs includes cost of land and construction, related overhead expenditure and financing charges incurred up to the completion of construction. Financing charges incurred to finance the development of such properties are capitalised during the period that is required to complete and prepare each property for its sale. Net realisable value represents the estimated selling price less costs to be incurred in selling the property. Developments are considered completed upon the issue of Temporary Occupation Permit. When completed, development properties held for sale are transferred to completed properties held for sale. Profit on development properties held for sale is recognised on partly completed projects which have been sold and is based on the percentage of completion method (refer to Note 3.6). The expected profit is assessed having regard to the sales procured less attributable total costs including the cost of land, construction and interest and after making due allowance for known potential costs over-runs and allowance for contingencies. Progress billing to purchasers of residential units for sale are shown as a deduction from the cost of the development properties held for sale. Completed properties held for sale Completed properties held for sale are stated at the lower of cost and net realisable value. Cost includes cost of land and construction, related overhead expenditure, and financing charges and other net costs incurred during the period of development. The costs are assigned by using specific identification. Net realisable value represents the estimated selling price less costs to be incurred in selling the property. Allowance for impairment is made when it is anticipated that the net realisable value has fallen below cost. Revenue from completed properties held for sale is recognised upon execution of Sale and Purchase Agreements. 3.20 cash and cash equivalents Cash and cash equivalents comprise cash on hand and at bank, demand deposits and short-term, highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. These also include bank which form an integral part of the Groups cash management.
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31 December 2010
SUmmaRY OF SiGniFicant accOUntinG POlicieS (continued) 3.21 Borrowings Borrowings are presented as current liabilities unless the Group has an unconditional right to defer settlement for at least 12 months after the end of the reporting period. Borrowings are initially recognised at fair value (net of transaction costs) and subsequently carried at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in income statement over the period of the borrowings using the effective interest method. 3.22 Financial liabilities Initial recognition and measurement Financial liabilities are recognised on the statement of financial position when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. The Group determines the classification of its financial liabilities at initial recognition. Financial liabilities are recognised initially at fair value, plus, in the case of financial liabilities other than derivatives, directly attributable transaction costs. Subsequent measurement The measurement of financial liabilities depends on their classification as follows: Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss includes financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value. Financial liabilities are classified as held for trading if they are acquired for the purpose of selling in the near term. This category includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Subsequent to initial recognition, financial liabilities at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value of the financial liabilities are recognised in profit or loss. The Group has not designated any financial liabilities upon initial recognition at fair value through profit or loss. Other financial liabilities After initial recognition, other financial liabilities are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process. Derecognition A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the profit or loss.
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31 December 2010
SUmmaRY OF SiGniFicant accOUntinG POlicieS (continued) 3.23 Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic resources will be required to settle the obligation, and the amount of the obligation can be estimated reliably. Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. A provision for warranty is recognised for all products under warranty at the end of the reporting period. The provision is calculated based on service history. 3.24 leases The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date: whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset. For arrangements entered into prior to 1 January 2005, the date of inception is deemed to be 1 January 2005 in accordance with the transitional requirements of INT FRS 104. As lessor Leases where the Group retains substantially all the risks and rewards of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income. The accounting policy for rental income is set out in Note 3.6. Contingent rents are recognised as revenue in the period in which they are earned. As lessee Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss. Contingent rents, if any, are charged as expenses in the periods in which they are incurred. Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term. Operating lease payments are recognised as expense in profit or loss on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place. 3.25 Borrowing costs Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
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31 December 2010
SUmmaRY OF SiGniFicant accOUntinG POlicieS (continued) 3.26 contingencies A contingent liability is : (a) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the Group; or (b) a present obligation that arises from past events but is not recognised because: (i) It is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or (ii) The amount of the obligation cannot be measured with sufficient reliability.
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. Contingent liabilities and assets are not recognised on the statement of financial position of the Group, except for contingent liabilities assumed in a business combination that are present obligations and which the fair values can be reliably determined. 3.27 Government grants Government grants are recognised at their fair value when there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises as expenses the related costs for which the grants are intended to compensate. Grants related to income are deducted in reporting the related expenses. 3.28 Segment reporting For management purposes, the Group is organised into operating segments based on their products and services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management of the Company who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 36, including the factors used to identify the reportable segments and the measurement basis of segment information. 3.29 Related parties A party is considered to be related to the Group if: (a) The party, directly or indirectly through one or more intermediaries, (i) controls, is controlled by, or is under common control with, the Group; (ii) has an interest in the Group that gives it significant influence over the Group; or (iii) has joint control over the Group; The party is an associate; The party is a jointly-controlled entity; The party is a member of the key management personnel of the Group or its parent; The party is a close member of the family of any individual referred to in (a) or (d); or The party is an entity that is controlled, jointly controlled or significantly influenced by or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (d) or (e); or The party is a post-employment benefit plan for the benefit of the employees of the Group, or of any entity that is a related party of the Group.
(b) (c) (d) (e) (f)
(g)
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31 December 2010
SUmmaRY OF SiGniFicant accOUntinG POlicieS (continued) 3.30 Share capital and share issuance expenses Proceeds from issuance of ordinary shares are recognised as share capital in equity. Incremental costs directly attributable to the issuance of ordinary shares are deducted against share capital.
SiGniFicant accOUntinG JUDGementS anD eStimateS The preparation of the Groups financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the end of each reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future periods. 4.1 Judgements made in applying accounting policies The following are the judgements, apart from those involving estimations, made by management in the process of applying the Groups accounting policies that have the most significant effect on the amounts recognised in the financial statements. Assessment of operating lease commitments as lessor The Group has entered into commercial property leases on its investment property portfolio. The Group has determined, based on an evaluation of the terms and conditions of the arrangements, that it retains all the significant risks and rewards of ownership of these properties and so accounts for the contracts as operating leases. Assessment of allowance for doubtful receivables Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less allowance for doubtful receivables. In assessing the allowance for receivables, the Group takes into account the duration of the settlement agreement and whether any subsequent payments were in default. Income tax The Group has exposure to income taxes in a few jurisdictions. Significant judgement is involved in determining the Group-wide provision for income taxes. Tax is computed in accordance with taxation rules in each jurisdiction. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. 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 Groups income tax payable, deferred tax liabilities and deferred tax assets as at 31 December 2010 was $9,376,000 (2009: $3,644,000), $3,915,000 (2009: $4,452,000) and $91,000 (2009: $135,000) respectively. 4.2 Key sources of estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the end of each reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. Useful lives of plant and machinery The cost of plant and machinery is depreciated on a straight-line basis over the useful lives estimated to be within 2 to 15 years. The carrying amount of the plant and machinery as at 31 December 2010 was $27,039,000 (2009: $25,480,000). Changes in the expected level of usage could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.
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31 December 2010
SiGniFicant accOUntinG JUDGementS anD eStimateS (continued) 4.2 Key sources of estimation uncertainty (continued) Useful lives of plant and machinery (continued) Based on managements estimates, a 5% difference in the expected useful lives of these assets would result in less than 1% (2009: 1%) variance in the Groups profit for the financial year. Construction contracts The Group recognises contract revenue to the extent of contract costs incurred where it is probable those costs will be recoverable or based on the stage of completion method. The stage of completion is measured by reference to professional surveys of work performed. Significant assumptions are required in determining the stage of completion, the extent of the contract costs incurred, the estimated total contract revenue and contract costs and liquidated damage claims, as well as the recoverability of the contract costs incurred. Total contract revenue also includes an estimation of the recoverable variation works that are recoverable from the customers. In making the estimation, the Group evaluates by relying on past experience and knowledge of the project engineers and/or the work of specialists. An estimation of recoverable variation works amounting to $13,641,000 (2009: $6,439,000) was taken into consideration in arriving at the estimated revenue of construction contracts. Any shortfall in recovery of this estimation will impact the results of the Group by the same quantum. The gross amount due from customers for contract work was $31,479,000 (2009: $28,953,000). The gross amount due to customers for contract work was $15,354,000 (2009: $8,501,000). Impairment of loans and receivables The Group assesses at the end of each reporting period whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Groups loans and receivables with impairment indicators at the end of the reporting period is disclosed in Note 19 to the financial statements. If the present value of estimated future cash flows of receivables that are past due but not impaired and those that are impaired, varies by 5% from managements estimates, the Groups allowance for impairment will increase by $109,000 (2009: $80,000). Revaluation of investment properties The Groups investment properties, with a carrying amount of $7,500,000 as at 31 December 2010 (2009: $10,500,000) are stated at their estimated fair values which are determined annually by independent professional valuers. These estimated fair values may differ from the prices at which the Groups investment properties could be sold at a particular time, since actual selling prices are negotiated between willing buyers and sellers. Also, certain estimates require an assessment of uncontrollable factors, such as overall market conditions. As a result, actual results of operations and realisation of these investment properties could differ from the estimates set forth in these financial statements.
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31 December 2010
ReVenUe GROUP 2010 $000 Revenue from construction contracts Rental income from rental of machinery Rental income from investment properties (Note 13) Rendering of services Sale of properties Sale of goods 348,432 13,313 352 6,831 6,878 6,047 381,853 2009 $000 361,050 12,383 428 3,739 9,693 7,508 394,801
inteReSt incOme GROUP 2010 $000 Interest income from loans and receivables 3,147 2009 $000 2,276
OtHeR incOme GROUP 2010 $000 Dividend income from investment securities Gain on fair value adjustment on held-for-trading investments Gain on disposal of available-for-sale investment Gain on disposal of property, plant and equipment Gain on fair value adjustment on investment properties (Note 13) Gain on disposal of scrap Management fees Rental income from premises Other sundry income 152 539 869 207 500 114 107 273 10 2,771 2009 $000 121 6,076 227 490 385 56 12 7,367
Finance cOStS GROUP 2010 $000 Interest expense on: - Bank loans and bank overdrafts - Finance leases - Loans and amounts due to: Holding company Related companies Less: Interest expense capitalised in: Property held for sale (Note 22) Total finance costs 2009 $000
1,365 35 67 293 1,760 (332) 1,428
1,943 49 156 432 2,580 (504) 2,076
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31 December 2010
PROFit BeFORe taX The following items have been included in arriving at profit before tax: GROUP 2010 $000 Allowance for doubtful trade receivables (Note 19) Allowance for doubtful other receivables (Note 19) Allowance for doubtful trade receivables written back (Note 19) Allowance for inventory obsolescence (Note 18) Allowance for inventory obsolescence written back (Note 18) Amortisation of receivables and payables Depreciation of property, plant and equipment (Note 12) Direct operating expenses arising from investment properties (Note 13) Foreign exchange loss, net Legal fees Listing expenses Management fees and consultancy services Non-audit fees paid to auditors for professional services - Auditors of the Group - Other auditors Operating lease expense (Note 30) Staff costs (including directors remuneration) - Salaries, wages, bonuses and other costs - Central Provident Fund and other defined contribution plans - Grant income from jobs credit scheme
* Includes $106,000 non-audit fees paid to auditors of the Group.
2009 $000 (296) (782) 112 7 (4,037) (64) (527) (654) 1,412 (130) (48) 632 (27,661) (1,752) 911
(101) (302) 66 (247) 194 (389) (4,344) (45) (426) (63) (895)* 1,739 (56) (84) 463 (24,629) (1,553) 71
During the financial year ended 31 December 2009, the Singapore Finance Minister announced the introduction of a Jobs Credit Scheme (Scheme). Under this Scheme, the Group received a 12% cash grant on the first $2,500 of each months wages for each employee on their Central Provident Fund payroll. During the financial year, the Group received its grant income of $71,000 (2009: $911,000) under the Scheme. 10 incOme taX eXPenSe Major components of income tax expense The major components of income tax expense for the years ended 31 December 2010 and 2009 are: GROUP 2010 $000 Current taxation: - current year - under provision in respect of prior years - tax losses transferred to holding company 2009 $000
9,064 107 9,171
3,741 570 (1,691) 2,620
Deferred taxation: - effect of reduction in tax rate - over provision in respect of prior years - origination and reversal of temporary differences Income tax expense recognised in the income statement
752 9,923
(163) (2) 1,624 4,079
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31 December 2010
10
incOme taX eXPenSe (continued) Relationship between tax expense and accounting profit The reconciliation of the tax expense and the product of accounting profit multiplied by the applicable corporate tax rate for the years ended 31 December 2010 and 2009 are as follows: GROUP 2010 $000 Profit before tax 54,960 9,343 2,209 (383) (54) (407) 382 (163) 107 (1,115) 4 9,923 2009 $000 35,117 5,970 163 (814) (73) 241 (163) 384 (24) 568 (475) (1,691) (7) 4,079
Tax at Singapore statutory tax rate of 17% Adjustments: Expenses not deductible for tax purposes Income not subject to taxation Singapore statutory income exemption Impact of different tax rates applicable to profits in the countries where the Group operates Effect of reduction in tax rate Deferred tax assets not recognised Benefits from previously unrecognised tax losses Under provision in respect of prior years Share of results of associates Unabsorbed tax losses transferred Others Income tax expense recognised in the income statement
The corporate income tax rate applicable to Singapore companies of the Group was reduced to 17% for the year of assessment 2010 onwards from 18% for year of assessment 2009. The corporate income tax rate applicable to a Malaysian subsidiary of the Group was reduced from 26% in 2008 to 25% in 2009. In 2009, the Group transferred unabsorbed trade losses amounting to $9,395,000 to the holding company, United Engineers Limited under the group relief system, subject to compliance with the relevant rules and procedures and agreement of tax authority. Current year tax expense in 2009 is net of the tax effect of the trade losses transferred. 11 eaRninGS PeR SHaRe Basic earnings per share is calculated by dividing the Groups net profits attributable to owners of the parent for both the financial years by the pre-invitation share capital of 200,000,000 ordinary shares. Diluted earnings per share is calculated by dividing the Groups net profits attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all the potential dilutive ordinary shares into ordinary shares. There were no potential dilutive ordinary shares existing during the financial year.
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31 December 2010
11
eaRninGS PeR SHaRe (continued) The following tables reflect the profit and share data used in the computation of basic and diluted earnings per share for the years ended 31 December 2010 and 2009:
GROUP 2010 Profit for the year attributable to owners of the parent used in computation of basic and diluted earnings per share ($000) Pre-invitation share capital (000) 12 PROPeRtY, Plant anD eQUiPment motor vehicles and other assets $000 2009
39,785 200,000
29,023 200,000
GROUP cost At 1 January 2009 Additions Disposals Exchange differences At 31 December 2009 and 1 January 2010 Additions Disposals Exchange differences At 31 December 2010 accumulated depreciation At 1 January 2009 Charge for the year Disposals Exchange differences At 31 December 2009 and 1 January 2010 Charge for the year Disposals Exchange differences At 31 December 2010 net carrying amount At 31 December 2010 At 31 December 2009
leasehold land and buildings $000
capital work-inprogress $000
metal forms $000
Plant and machinery $000
total $000
553 553 2,375 2,928
3,856 3,856
5,003 132 (761) 4,374 72 (558) 3,888
40,612 8,018 (502) (453) 47,675 8,229 (2,563) (262) 53,079
4,352 163 (173) (66) 4,276 527 (847) (21) 3,935
50,520 8,313 (1,436) (519) 56,878 15,059 (3,968) (283) 67,686
459 55 514 39 553
4,600 312 (761) 4,151 200 (558) 3,793
19,050 3,780 (486) (149) 22,195 4,611 (679) (87) 26,040
2,955 512 (154) (33) 3,280 407 (726) (12) 2,949
27,064 4,659 (1,401) (182) 30,140 5,257 (1,963) (99) 33,335
2,375 39
3,856
95 223
27,039 25,480
986 996
34,351 26,738
67

31 December 2010
12
PROPeRtY, Plant anD eQUiPment (continued) Assets held under finance leases The carrying amount of office equipment, motor vehicles and plant and machinery held under finance leases as at 31 December 2010 was $815,000 (2009: $1,202,000). Leased assets are pledged as security for the related finance lease liabilities. GROUP 2010 $000 The depreciation charge for the financial year in the income statement is as follows: Depreciation for the financial year Current financial years depreciation charged to construction projects Charged to the income statement 2009 $000
5,257 (913) 4,344
4,659 (622) 4,037
13
inVeStment PROPeRtieS GROUP 2010 $000 At 1 January Disposals Gain on fair value adjustment recognised in the income statement (Note 7) At 31 December income statement: Rental income from investment properties (Note 5): - Minimum lease payments Direct operating expenses (including repairs and maintenance) (Note 9) arising from: - Rental generating properties - Non-rental generating properties 10,500 (3,500) 500 7,500 2009 $000 10,010 490 10,500
352
428
(45) (45)
(57) (7) (64)
Valuation of investment properties Investment properties are stated at their fair values as at the end of the financial year based on accredited independent professional valuations carried out by Knight Frank Pte Ltd for the investment properties at 31 December 2010 and 2009. The valuations are based on the income method that makes reference to estimated market rental values and equivalent yields. The investment properties held by the Group as at 31 December are as follows: Description and location existing use tenure Unexpired lease term 2010 2009 80 years 81 years
2 units 3-storey shophouses with attic at Nos. 99 and 101 Tanjong Pagar Road, Singapore
Shops and offices
99 years leasehold from 19.03.1992
68

31 December 2010
13
inVeStment PROPeRtieS (continued) Valuation of investment properties (continued) Description and location existing use tenure Unexpired lease term 2010 2009 * 84 years
No.81 Joo Chiat Road #01-01/02/03 and #02-01/02/03, Singapore
Shops and offices
99 years leasehold from 23.06.1995
* On 21 May 2010, the Group disposed of its investment property at No.81 Joo Chiat Road for $3,500,000. 14 inVeStmentS in SUBSiDiaRieS cOmPanY 2010 $000 Unquoted equity shares at cost The subsidiaries as at 31 December are as follows: Percentage of equity held by the Group 2010 2009 % % 105,673 2009 $000
name of company
Principal activities (Place of business)1
incorporated in Singapore Greatearth Construction Pte Ltd Greatearth Corporation Pte Ltd Greatearth Holding Pte Ltd Maxdin Pte Ltd UE-IBP Building Materials Pte Ltd UE-Tradetec (Singapore) Pte Ltd Building contractors Building contractors Investment holding Property investment Bulk supply of building materials Supply of machinery, equipment and metal products Mechanical and electrical engineering 100 100 100* 100 70 100 85 85 85 85 59.5 100
United Engineers (Singapore) Private Limited incorporated in malaysia2 GE Construction Sdn Bhd
100*
Building contractors (Malaysia)
100
85
69

31 December 2010
14
inVeStmentS in SUBSiDiaRieS (continued) Percentage of equity held by the Group 2010 2009 % %
name of company
Principal activities (Place of business)1
incorporated in Brunei2 United Engineers (B) Sdn Bhd Civil, electrical, mechanical engineers and contractors (Brunei) 90* 90
incorporated in the Peoples Republic of china3 Anhui Anxin Energy Co., Ltd. Leasing of generator sets (The Peoples Republic of China) 100 100
incorporated in Vietnam2 United Engineers (Vietnam) Limited

1 2
Engineering and construction (Vietnam)
100*
100
Place of business in Singapore unless otherwise stated. Audited by member firms of Ernst & Young Global in the respective countries. 3 Audited by Hua Pu Tian Jian Certified Public Accountants (Beijing) Co., Ltd. * Direct subsidiaries of UE E&C Ltd. 15 inVeStmentS in aSSOciateS GROUP 2010 $000 Unquoted equity shares at cost Share of post acquisition reserves 800 9,867 10,667 2009 $000 500 3,231 3,731
The associates as at 31 December are as follows: name of company Principal activities (Place of business)1 Percentage of equity held 2010 2009 % %
Held through subsidiaries incorporated in Singapore Greatearth Developments Pte Ltd MaxLee Development Pte Ltd
1
Property development and leasing Property development and investment
50 30
50
Place of business in Singapore unless otherwise stated.
70

31 December 2010
15
inVeStmentS in aSSOciateS (continued) The summarised financial information of the associates not adjusted for the proportion of ownership interest held by the Group is as follows: GROUP 2010 $000 assets and liabilities: Current assets Non-current assets total assets Current liabilities Non-current liabilities total liabilities Results: Revenue Profit for the year 2009 $000
375,511 29,935 405,446 (161,099) (222,631) (383,730)
182,493 27,492 209,985 (26,149) (176,373), (202,522)
187,791 13,096
83,810 5,590
16
DeFeRReD taX Movement in deferred tax liabilities/(assets): GROUP 2010 $000 At 1 January Charged to the income statement (Note 10) - current year - over provision in respect of prior years Effect arising from Restructuring Exercise At 31 December The deferred taxation balance comprises: Deferred tax liabilities Unremitted offshore income Excess of net book value over the tax written down value of property, plant and equipment Fair value adjustment on held-for-trading investments Fair value adjustment on investment properties Other items 4,317 752 (1,245) 3,824 2009 $000 2,858 1,461 (2) 4,317
31 2,809 51 1,013 11 3,915
2,237 1,244 971 4,452
Deferred tax assets Provisions Other items
(91) (91) 3,824
(121) (14) (135) 4,317
71

31 December 2010
16
DeFeRReD taX (continued) Unrecognised tax losses and capital allowances The Group has unabsorbed tax losses of approximately $1,719,000 (2009: $3,832,000) and unutilised capital allowances of approximately $744,000 (2009: $1,608,000) for the financial year ended 31 December 2010 that are available for set-off against future assessable income of the companies in which the losses arose, for which no deferred tax asset is recognised due to uncertainty of its recoverability. The use of these tax losses is subject to agreement with the tax authorities and compliance with certain provisions of the tax legislation of the respective countries in which the companies operate. Unrecognised temporary differences relating to investments in subsidiaries At the end of the reporting period, no deferred tax liability (2009: Nil) has been recognised for taxes that would be payable on the undistributed earnings of the Groups overseas subsidiaries. The Group has determined that undistributed earnings of its subsidiaries will not be distributed in the foreseeable future. Such temporary differences arising principally from a Malaysian subsidiary for which no deferred tax liability has been recognised in 2009 amounting to approximately $1,116,000. The deferred tax liability is estimated to be $279,000. In 2010, no temporary differences arising for the undistributed earnings of the subsidiary as the subsidiary is in a net deficit reserves which are not available for distribution.
17
OtHeR inVeStmentS GROUP 2010 $000 non-current: Available-for-sale financial assets Unquoted equity shares at cost current: Held-for-trading investments Quoted equity shares During the year, the Group has disposed of its available-for-sale investment for a gain of $869,000 (Note 7). 2009 $000
361
9,625
9,087
18
inVentORieS GROUP 2010 $000 Inventories, at lower of cost and net realisable value Trading inventories Inventories are stated after deducting allowance of income statement: Inventories recognised as an expense in cost of sales Inclusive of the following charge (Note 9): - Allowance for inventory obsolescence - Allowance for inventory obsolescence written back 2009 $000
1,884 423
1,769 370
6,071 247 (194)
5,678 (7)
72

31 December 2010
19
tRaDe anD OtHeR ReceiVaBleS GROUP 2010 $000 non-current: Loans receivable from associates Retention sums 2009 $000 2010 $000 cOmPanY 2009 $000
30,162 20,213 50,375
34,951 30,030 64,981
current: Trade receivables Amounts due from related companies Amounts due from associates Retention sums Allowance for doubtful trade receivables
37,436 15,845 7,752 36,649 (286) 97,396
57,590 16,569 3,790 21,616 (348) 99,217
Other receivables: Claims/expenses recoverable Deposits Loans receivable from associates Sundry and other receivables Allowance for doubtful other receivables Trade and other receivables (current) Trade and other receivables (current and non-current) Add: Cash and bank balances (Note 23) Total loans and receivables
6,919 2,654 22,233 2,924 (1,866) 32,864 130,260 180,635
6,778 1,610 879 (1,580) 7,687 106,904 171,885
62,485 243,120
11,588 183,473
1,178 1,178
Trade receivables Trade receivables are non-interest bearing and are generally on 30 day terms. They are recognised at their original invoice amounts which represent their fair values on initial recognition. Retention sums Retention sums relate to construction contracts in progress. Loans receivable from associates Loans receivable from associates are unsecured and are subject to effective interest rate fixed at 6.50% per annum. Amounts due from related companies and associates Amounts due from related companies and associates are unsecured, trade in nature, non-interest bearing, repayable on demand and are to be settled in cash.
73

31 December 2010
19
tRaDe anD OtHeR ReceiVaBleS (continued) Receivables that are past due but not impaired The Group has trade and other receivables amounting to $9,863,000 (2009: $16,704,000) that are past due at the end of the reporting period but not impaired. These receivables are unsecured and the analysis of their aging at the end of the reporting period is as follows: GROUP 2010 $000 Trade and other receivables past due: Less than 30 days 30 to 60 days 61 to 90 days 91 to 120 days More than 120 days 2009 $000
786 1,353 949 191 6,584 9,863
3,531 5,121 485 437 7,130 16,704
Receivables that are impaired The Groups trade and other receivables that are impaired at the end of the reporting period and the movement of the allowance accounts used to record the impairment are as follows: GROUP 2010 $000 Trade and other receivables nominal amounts Less: Allowance for doubtful receivables 6,329 (2,152) 4,177 2009 $000 4,686 (1,928) 2,758
Movements in allowance accounts: GROUP trade Receivables 2010 2009 $000 $000 At 1 January Charge for the year Written off Written back Exchange differences At 31 December (348) (101) 95 66 2 (286) (1,555) (296) 1,388 112 3 (348) Other Receivables 2010 2009 $000 $000 (1,580) (302) 16 (1,866) (798) (782) (1,580)
Trade and other receivables that are individually determined to be impaired at the end of the reporting period relate to debtors that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.
74

31 December 2010
20
GROSS amOUnt DUe FROm/(tO) cUStOmeRS FOR cOntRact WORK GROUP 2010 $000 Aggregate amount of costs incurred and recognised profits (less recognised losses) to-date Less: Progress billings 853,200 (837,075) 16,125 2009 $000 632,533 (612,081) 20,452
Presented as: Gross amount due from customers for contract work Gross amount due to customers for contract work
31,479 (15,354) 16,125 48,463
28,953 (8,501) 20,452 43,745
Retention sums on construction contract included in trade receivables 21 PRePaYmentS GROUP 2010 $000 Advance payment to sub-contractor for materials Prepaid listing expense Other prepaid expenses 52 1,447 105 1,604 2009 $000 4,689 205 4,894
cOmPanY 2010 $000 1,447 1,447 2009 $000
Prepaid listing expenses relate to payments for professional fees directly attributable to the Companys offering of securities subsequent to 31 December 2010. 22 PROPeRtY HelD FOR Sale GROUP 2010 $000 Aggregate amount of costs incurred and recognised profits (less recognised losses) to-date Less: Progress billings As at 31 December Interest capitalised during the year (Note 8) Effective interest rate per annum (%) 29,705 (25,439) 4,266 332 6.35% to 9.40% 2009 $000 24,956 (18,337) 6,619 504 4.89% to 8.75%
75

31 December 2010
22
PROPeRtY HelD FOR Sale (continued) The Group uses the percentage of completion method for recognising revenue from partly completed projects. Had the completed contract method been adopted, the impact on the financial statements of the Group will be as follows: GROUP 2010 $000 Increase/(decrease) in: Opening balance of retained earnings Revenue recognised for the financial year Construction costs recognised for the financial year Profit/(loss) for the financial year Carrying value of property held for sale: - beginning of financial year - end of financial year 2009 $000
(3,247) (6,779) (11,706) 4,927 (3,247) 1,680
(2,383) (9,447) (8,583) (864) (2,383) (3,247)
The property held for sale held by the Group relates to 294 units acquired through the provision of construction services on the development of Megalong Shopping Mall in Malaysia. As at 31 December 2010 there were 47 (2009: 111) unsold units. The stage of completion as at 31 December 2010 was 100% (2009: 95%). The accounting policy relating to the property held for sale is stated in Note 3.19. 23 caSH anD caSH eQUiValentS GROUP 2010 $000 cash and bank balances: Cash and bank balances Fixed deposits 2009 $000 2010 $000 cOmPanY 2009 $000
52,485 10,000 62,485
11,588 11,588
1,178 1,178
Bank balances and deposits earn effective interest at floating rates based on daily bank deposit rate. Short-term fixed deposits are made for varying periods of between one day and three months depending on the cash requirements of the Group, and earn effective interest at rates ranging from 0.04% to 7.75% (2009: 0.18% to 0.36%). For the purpose of consolidated statements of cash flows, cash and cash equivalents comprise the following at the end of the reporting period: GROUP 2010 $000 Cash and bank balances Bank overdrafts (Note 26) Cash and cash equivalents 62,485 (11,805) 50,680 2009 $000 11,588 (7,046) 4,542
76

31 December 2010
24
SHaRe caPital GROUP 2010 no. of shares 000 issued and fully paid ordinary shares At 1 January1 Adjustment arising from Restructuring Exercise Issuance of ordinary shares Acquisition of non-controlling interests Consolidation of shares At 31 December
1
2009 $000 No. of shares 000 $000
11,000 (11,000) 276,209 23,791 (100,000) 200,000
12,530 (12,530) 99,238 7,613 106,851
11,000 11,000
12,530 12,530
Applying the pooling of interest method of accounting share capital and number of shares for the Group represents the aggregate paid up capital and number of shares of its subsidiary companies. cOmPanY 2010 no. of shares 000 $000 No. of shares 000 2009 $000
issued and fully paid ordinary shares At 9 March, date of incorporation Issuance of ordinary shares Acquisition of non-controlling interests Consolidation of shares At 31 December * Amount less than $1,000 The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restriction. The ordinary shares have no par value. As of the date of incorporation, the issued and paid-up ordinary share capital was $2.00 comprising two shares. As of 31 December 2010, the issued and paid-up ordinary share capital increased to 300,000,000 ordinary shares on completion of Restructuring Exercise. On 11 February 2011, the Company undertook a share consolidation of every three shares into two shares, which reduced the total number of shares issued by the Company from 300,000,000 ordinary shares to 200,000,000 ordinary shares. Arising from the share consolidation, the Company adjusted the total number of shares issued from 300,000,000 ordinary shares to 200,000,000 ordinary shares as at 31 December 2010. Following the Companys initial public offering of 70,000,000 shares, representing approximately 25.9% of the Companys enlarged post-offering share capital of 270,000,000 ordinary shares, the Company was listed on the Mainboard of the SGX-ST on 25 February 2011. 276,209 23,791 (100,000) 200,000 * 99,238 7,613 106,851
77

31 December 2010
25
OtHeR ReSeRVeS GROUP 2010 $000 Foreign currency translation reserve Share of other comprehensive expenses of associates, net of tax Merger deficit (a) Foreign currency translation reserve Foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Groups presentation currency. GROUP 2010 $000 At 1 January Net effect of exchange differences arising from translation of financial statements of foreign operation At 31 December (b) Share of other comprehensive expenses of associates Share of other comprehensive expenses of associates relate to share of associates deficit in hedging reserve. GROUP 2010 $000 At 1 January Share of other comprehensive income of associates At 31 December (c) merger deficit Merger deficit represents the difference between the value of shares issued by the Company in exchange for the value of shares acquired in respect of the acquisition of subsidiaries and business accounted for under the pooling-of-interests method arising from the restructuring exercise carried out in 2010. (411) 67 (344) 2009 $000 (318) (93) (411) 11 50 61 2009 $000 101 (90) 11 61 (344) (58,553) (58,836) 2009 $000 11 (411) (400)
26
BORROWinGS GROUP 2010 $000 current: Bank overdrafts Trust receipts and bills payable: - unsecured Bank loans (unsecured) non-current: Bank loans (unsecured): - repayable within 2 years - repayable within 3 to 5 years total borrowings 11,805 4,580 11,987 28,372 2009 $000 7,046 5,255 17,012 29,313
28,372
2,256 123 2,379 31,692
78

31 December 2010
26
BORROWinGS (continued) Bank overdrafts Bank overdrafts are repayable on demand and bear effective interest rates ranging from 5.88% to 8.80% (2009: 1.61% to 3.16%) per annum. Bank overdrafts of a subsidiary amounting to approximately $10,021,000 for the financial year ended 31 December 2010 (2009: $4,549,000) was secured by way of assignment of proceeds from projects, subordination of advances from a related company in favour of the bankers and endorsement of insurance policies in favour of one of the banks and guaranteed by a related company. Trust receipts and bills payable Trust receipts and bills payable are unsecured, bear effective interest rates ranging from 1.55% to 2.11% (2009: 1.61% to 3.16%) per annum and have an average maturity period of 3 to 6 months. Bank loans Bank loans bear interest at floating interest rates ranging from 2.99% to 7.25% (2009: 7.55% to 9.25%) per annum.
27
tRaDe anD OtHeR PaYaBleS GROUP 2010 $000 non-current: Amount due to a related company Retention sums and accrued job cost 2009 $000 2010 $000 cOmPanY 2009 $000
13,607 13,607
25,230 24,434 49,664
current: Trade payables Retention sums
150,239 7,897 158,136
111,936 4,219 116,155
Other payables Accrued staff cost Accrued job cost Advance from customers Other accruals Other payables Deposits Retention monies and deposits Central Provident Fund and other defined contribution schemes Loans from holding company Loans from related companies Amounts due to holding company Amounts due to related companies Interest payables Sundry payables Trade and other payables (current) Trade and other payables (current and non-current) 5,456 7,088 1,460 6,874 2,296 501 357 63 2,317 46 63 26,521 184,657 198,264 5,978 2,989 556 3,282 3,269 88 492 463 1,620 9,000 62 13,226 50 19 41,094 157,249 206,913 2,342 2,342 2,342 2,342
79

31 December 2010
27
tRaDe anD OtHeR PaYaBleS (continued) GROUP 2010 $000 Add: Borrowings (Note 26) Finance leases (Note 28) Total financial liabilities carried at amortised cost 2009 $000 2010 $000 cOmPanY 2009 $000
28,372 248 226,884
31,692 732 239,337
2,342
Retention sums and accrued job cost Retention sums payable to sub-contractors relate to amounts withheld (up to 5% of the contract sum) under contractual terms from amounts payable to the sub-contractors as the construction work progresses. The monies are generally released to the sub-contractors upon the certification of completion of work and/or finalisation of contract accounts, which is typically 12 to 18 months after physical completion of the project. Non-current retention sums relate to amounts that are not payable within the next 12 months. Non-current accrued job cost relates to costs accrued for projects applying the percentage of completion method, which are not expected to be paid within the next 12 months. Trade and other payables Trade payables are non-interest bearing and are normally settled on 30 to 60 days terms. Other payables are non-interest bearing and have an average term of six months. Loans from holding company Loans from holding company in 2009 are unsecured, non-trade in nature, and bear effective interest at floating rates ranging from 5.38% to 6.50% per annum. The loans have been repaid in 2010. Loans from related companies Loans from related companies in 2009 are unsecured, non-trade in nature and bear effective interest at floating rates ranging from 2.50% to 8.75% per annum. The loans have been repaid in 2010. Amounts due to holding company Amounts due to holding company are unsecured, non-trade in nature, repayable on demand, and to be settled in cash. The effective interest rate is fixed at 6.50% per annum for 2010 (2009: 6.50%). Amounts due to related companies Amounts due to related companies are unsecured, non-trade in nature, bear effective interest fixed at 6.50% per annum for 2010 (2009: 6.50%), repayable on demand, and are to be settled in cash. Non-current amount due to a related company in 2009 is interest free, unsecured and is not expected to be repayable within the next 12 months.
80

31 December 2010
28
Finance leaSeS The Group has finance leases for certain items of office equipment, motor vehicles and plant and machinery. The leases have no renewal option or escalation clauses included in the contracts. There are no restrictions placed upon the Group by entering into these leases. Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows:
GROUP 2010 $000 minimum lease payments Not later than one year Later than one year but not later than five years More than 5 years Total minimum lease payments Less: Amounts representing finance charges Present value of minimum lease payments 229 58 287 (39) 248 Present value of payments 196 52 248 248 Minimum lease payments 519 244 19 782 (50) 732 2009 $000 Present value of payments 484 229 19 732 732
The maturity of the finance leases for years ended 31 December 2010 and 2009 are due on August 2011 and by year 2012. The average discount rate per annum implicit in the leases for 2010 and 2009 are 2.5% to 7.82%. 29 FUtURe caPital cOmmitmentS GROUP 2010 $000 Capital expenditure contracted for as at the end of the reporting period but not recognised in the financial statements 2009 $000
743
81

31 December 2010
30
OPeRatinG leaSe cOmmitmentS As lessee The Group has entered into commercial property leases for its office premises and certain office equipment that are non-cancellable within a year. The leases expire at various dates until 2012 and contain provisions for rental adjustments. Some of the leases have no renewal options or contingent rent provision include in the lease agreements but one of the leases will be renewed for a further term of 2 years upon expiry. There are no restrictions placed upon the lessee by entering into these leases. Operating lease payments recognised in profit or loss in 2010 amounted to $463,000 (2009: $631,905). The Group is restricted from subleasing leased equipment to third parties. Future minimum rental payable under non-cancellable operating leases at the end of the reporting period are as follows: GROUP 2010 $000 Not later than one year Later than one year but not later than five years More than five years 1,771 3,476 5,247 2009 $000 1,056 1,071 8 2,135
As lessor The Group has entered into commercial properties leases on its investment properties (Note 13). All leases include a clause to enable revision of the rental charge on an annual basis based on prevailing market condition. These non-cancellable leases have remaining lease terms of 1 to 3 years. Future minimum rental receivable under non-cancellable operating leases at the end of the reporting period are as follows: GROUP 2010 $000 Not later than one year Later than one year but not later than five years 309 127 436 2009 $000 283 138 421
31
DiViDenDS PaiD The following dividends were paid: GROUP 2010 $000 Declared and paid during the year: Dividends on ordinary shares: Interim tax-exempt (one-tier) dividend of Nil (2009: $0.27) per ordinary shares Interim tax-exempt (one-tier) dividend of $22.00 (2009: Nil) per ordinary shares Interim tax-exempt (one-tier) dividend of $1.80 (2009: Nil) per ordinary shares 2009 $000
22,000 9,000 31,000
4,000 4,000
The dividends declared and paid are to the existing shareholders prior to the Restructuring Exercise.
82

31 December 2010
32
SiGniFicant RelateD PaRtY tRanSactiOnS An entity or individual is considered a related party of the Group for the purposes of the financial statements if: (i) it possesses the ability (directly or indirectly) to control or exercise significant influence over the operating and financial decisions of the Group or vice versa; or (ii) it is subject to common control or common significant influence. The following significant transactions between the Group and related parties took place at terms agreed between the parties during the year ended 31 December 2010. (a) Sale and purchase of goods and services GROUP 2010 $000 Revenue from construction contracts: - related companies - associates Rental income from related companies Interest income: - holding company - related companies - associates Interest expense: - holding company - related companies Management fees and consultancy services expenses: - holding company - related companies Rental expenses: - holding company - related companies Dividends paid: - holding company - related companies Other purchases from related companies (b) compensation of key management executives GROUP 2010 $000 Short-term employee benefits Central Provident Fund Total compensation paid to key management executives 2,826 28 2,854 2009 $000 1,655 31 1,686 2009 $000
163,140 65,543 20
57,394 35,470
8 3,106
118 7 2,122
(67) (293)
(156) (432)
(807) (932)
(734) (678)
(139) (13)
(232) (86)
(9,000) (18,700) (1,105)
(3,400) (117)
83

31 December 2010
32
SiGniFicant RelateD PaRtY tRanSactiOnS (continued) (b) compensation of key management executives (continued) GROUP 2010 $000 Comprise amounts paid to: - Directors of the Company - Other key management executives 2009 $000
1,911 943 2,854
925 761 1,686
The remuneration of key management personnel is determined by the Directors having regards to the performance of individuals and market trends. Details of the share-based payment are disclosed in Note 3.7. The share-based payment scheme has expired in 2009 and the Company currently does not have other share option scheme. Directors fees amount to $15,000 (2009:Not applicable) 33 Financial RiSK manaGement OBJectiVeS anD POlicieS The Groups principal financial instruments comprise bank loans and overdrafts, cash and bank balances. The main purpose of these financial instruments is to raise finance for the Groups operations. The Group has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations. The Group is exposed to financial risks arising from its operations and the use of financial instruments. The main risks arising from the Groups financial instruments are credit risk, market price risk, foreign currency risk, interest rate risk and liquidity risk. The following sections provide details regarding the Groups exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks. credit risk Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. Credit risk arising from the inability of a customer to meet the terms of the Groups financial instrument contracts is generally limited to the amounts. The Groups exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including investment securities and cash and bank balances), the Group minimises credit risk by dealing exclusively with high credit rating counterparties. It is the Groups policy to sell to a diverse group of customers who have been assessed for their credit worthiness to reduce credit risk. The Group has set up formal Business Unit Credit Committees for some of the subsidiaries to oversee the management of the Groups debts. Exposure to credit risk At the date of the statements of financial position, the Groups maximum exposure to credit risk is represented by the carrying amount of trade and other receivables recognised in the statements of financial position. No other financial assets carry a significant exposure to credit risk.
84

31 December 2010
33
Financial RiSK manaGement OBJectiVeS anD POlicieS (continued) Credit risk concentration profile The Group determines concentrations of credit risk by monitoring the country and industry sector profile of its trade and other receivables on an on-going basis. The credit risk concentration profile of the Groups trade and other receivables at the date of the statements of financial position is as follows: GROUP 2010 $000 % of total $000 2009 % of total
By country Singapore Brunei Malaysia China Vietnam
149,270 27,049 1,899 2,256 161 180,635
83 15 1 1 100
136,544 23,691 9,959 1,461 230 171,885
79 14 6 1 100
By industry sectors Construction Engineering Building materials and equipment
162,424 7,389 10,822 180,635
90 4 6 100
141,810 18,798 11,277 171,885
83 11 6 100
Financial assets that are neither past due nor impaired Trade and other receivables that are neither past due nor impaired are creditworthy debtors with good payment record with the Group. Cash and bank balances and investment securities that are neither past due nor impaired are placed with or entered into with reputable financial institutions or companies with high credit ratings and no history of default. Financial assets that are either past due or impaired Information regarding financial assets that are either past due or impaired is disclosed in Note 19 (Trade and other receivables). market price risk Market price risk is the risk that the fair value or future cash flows of the Groups financial instruments will fluctuate because of changes in market prices (other than interest or exchange rates). The Group is exposed to equity price risk arising from its investment in quoted equity instruments. These instruments are quoted on the SGX-ST in Singapore and are classified as held-for-trading financial assets. It is not the Groups policy to actively trade in quoted equity instruments. The Groups holdings of the quoted equity instrument that are classified as held-for-trading investments (Note 17) arose from the settlement of trade debts from its customer by way of shares issued. Sensitivity analysis for equity price risk At 31 December 2010 if the quoted equity instruments listed in the SGX-ST had been 5%, higher/lower with all other variables held constant, the Groups profit net of tax would have been $481,000 (2009: $454,000) higher/lower arising as a result of higher/lower fair value gains on held-for-trading instruments in equity instruments respectively.
85

31 December 2010
33
Financial RiSK manaGement OBJectiVeS anD POlicieS (continued) Foreign currency risk The Group has exposure to foreign exchange risk as a result of transactions denominated in a currency other than the respective functional currencies of Group entities, arising from normal trading activities. Approximately 1% (2009: 1%) of the Groups sales is denominated in currencies other than the respective functional currencies of Group entities. The Group has foreign currencies exposure mainly in United States dollars (USD) and Vietnamese Dong (VND) in its cash and bank balances, trade receivables, trade payables, overdrafts and trust receipts and bills payable. It is in the Groups policy to hedge these risks through foreign currency forward contracts, to protect against volatility associated with foreign currency purchases of materials and other assets and liabilities created in the normal course of business. The Group does not use foreign currency forward contracts for trading purposes. As at 31 December 2010, the Group did not enter into foreign currency forward contracts as the exposure of the foreign currency risk is inconsequential. In addition to transactional exposure, the Group is also exposed to currency translation risk arising from its net investments in foreign operations. The Groups net investments in foreign subsidiaries are not hedged as currency positions are considered to be long-term in nature. Sensitivity analysis for foreign currency risk The following table demonstrates the sensitivity of the Groups profit net of tax to a reasonably possible change in the USD and VND exchange rate against SGD for the year ended 31 December 2010, with all other variables held constant. GROUP Profit net of tax 2010 2009 $000 $000
USD/SGD - strengthened 5% - weakened 5% VND/SGD - strengthened 5% - weakened 5% interest rate risk
-32 32 18 -18
-11 11 3 -3
Interest rate risk is the risk that the fair value or future cash flows of the Groups financial instruments will fluctuate because of changes in market interest rates. The Groups interest rate exposure relates primarily from their loans and borrowings. The Groups loans at floating rate given to related parties form a natural hedge for its non-current and current floating rate bank loans. Majority of the Groups financial assets and liabilities are at floating rates and are contractually repriced at intervals of 1, 2, 3 or 6 months (2009: 1, 2, 3 or 6 months) from the date of the statements of financial position. The Groups policy is to manage interest costs using combination of fixed and floating rate debts taking into consideration the funding requirements of the Group. Sensitivity analysis for interest rate risk At 31 December 2010, if SGD interest rates had been 75 basis points lower/higher with all other variables held constant, the Groups profit net of tax would have been $64,000 (2009: $90,000) higher/lower arising mainly as a result of lower/higher interest expense on loans and borrowings respectively.
86

31 December 2010
33
Financial RiSK manaGement OBJectiVeS anD POlicieS (continued) liquidity risk Liquidity risk is the risk that the Group will encounter difficulty in meeting financial obligations due to shortage of funds. The Groups exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Groups objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities. The Groups liquidity risk management policy is to monitor its net operating cash flows and maintain an adequate level of committed banking facilities through regular review of its working capital requirements. For the year ended 31 December 2010 approximately 100% (2009: 92%) of the Groups borrowings (Note 26) will mature in less than one year based on the carrying amount reflected in the financial statements. The table below summarises the maturity profile of the Groups financial assets and liabilities at the date of the statements of financial position based on contractual undiscounted repayment obligations. 2010 1 year or less $000 1 to 5 years $000 Over 5 years $000
total $000
Financial assets: Trade and other receivables Other investments Cash and bank balances Total undiscounted financial assets Financial liabilities: Trade and other payables Borrowings Finance leases Total undiscounted financial liabilities Total net undiscounted financial (liabilities)/assets 2009
130,260 9,625 62,485 202,370
50,375 50,375
180,635 9,625 62,485 252,745
184,657 28,372 196 213,225 (10,855) 1 year or less $000
13,607 52 13,659 36,716 1 to 5 years $000
Over 5 years $000
198,264 28,372 248 226,884 25,861
total $000
Financial assets: Trade and other receivables Other investments Cash and bank balances Total undiscounted financial assets Financial liabilities: Trade and other payables Borrowings Finance leases Total undiscounted financial liabilities Total net undiscounted financial (liabilities)/assets
106,904 9,087 11,588 127,579
64,981 361 65,342
171,885 9,448 11,588 192,921
157,249 29,313 484 187,046 (59,467)
49,664 2,379 229 52,272 13,070
19 19 (19)
206,913 31,692 732 239,337 (46,416)
87

31 December 2010
34
FaiR ValUe OF Financial inStRUmentS (A) Fair value of financial instruments that are carried at fair value The following table shows an analysis of financial instruments carried at fair value by level of fair value hierarchy: 2010 $000 Quoted prices in active markets for identical instruments (Level 1) Financial assets: Held-for-trading investments (Note 17) - Equity instruments (quoted) At 31 December 2010
Significant other observable inputs (Level 2)
Significant unobservable inputs (Level 3)
Total
9,625 9,625
9,625 9,625
2009 $000 Quoted prices in active markets for identical instruments (Level 1) Financial assets: Held-for-trading investments (Note 17) - Equity instruments (quoted) At 31 December 2009
Significant other observable inputs (Level 2)
Significant unobservable inputs (Level 3)
Total
9,087 9,087
9,087 9,087
Fair value hierarchy The Group classifies fair value measurement using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels: Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices), and Level 3 Inputs for the asset or liability that are not based on observable market data (unobservable inputs)
Determination of fair value Quoted equity instruments (Note 17): Fair value is determined directly by reference to the published market bid price at the date of statements of financial position.
88

31 December 2010
34
FaiR ValUe OF Financial inStRUmentS (continued) (B) Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value Management has determined that the carrying amounts of cash and bank balances, current trade and other receivables, current trade and other payables, loans and amounts due to/from holding company and related companies and borrowings, based on their notional amounts, reasonably approximate their fair values because these are mostly short-term in nature or that they are floating rate instruments that are repriced to market interest rates on or near the date of the statements of financial position. (C) Fair value of financial instrument by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value. The fair value of financial assets and liabilities by classes that are carried at fair value and whose carrying amounts are not reasonable approximation of fair value are as follows: GROUP 2010 carrying amount $000 Financial assets: Loans receivable from associates Retention sums Available-for-sale - unquoted equity shares Financial liabilities: Amount due to a related company Retention sums Finance leases Fair value $000 Carrying amount $000 2009 Fair value $000
27,845 20,213
24,782 17,989
34,951 30,030 361
31,106 26,727 #
13,607 248
12,110 287
25,230 24,434 732
* 21,746 782
# Investments in unquoted equity shares carried at cost Fair value information has not been disclosed for the Groups investment in unquoted equity shares that are carried at cost because the fair value cannot be measured reliably. The unquoted equity shares represent ordinary shares in Lysaght Corrugated Pipe (S) Pte Ltd that is not quoted in any market. The unquoted equity investment has been disposed of during the year. * Amount due to a related company Amount due to a related company have no fixed term of repayment. Accordingly the fair value cannot be measured reliably as the timing of the future cash flows cannot be determined. Determination of fair value Obligations under retention sums and finance leases above are estimated by discounting expected future cash flows at market incremental lending rate for similar types of lending or leasing arrangements at the statements of financial position.
89

31 December 2010
35
caPital manaGement The Groups objectives when managing capital are to safeguard the Groups ability to continue as a going concern and to maintain an optimal capital structure so as to maximise shareholder value. The Group manages its capital structure and may make adjustment to it, in light of changes in economic conditions. In order to manage or adjust the capital structure, the Group may obtain new borrowings or reduce its borrowings. No changes were made in the objectives, policies and processes during the years ended 31 December 2010 and 2009. The Group monitors capital using debt to equity ratio. GROUP 2010 $000 Borrowings (Note 26) Trade and other payables (Note 27) Finance lease (Note 28) Less : Cash and bank balances (Note 23) Net debt Equity, attributable to owners of the parent Debt to equity 28,372 198,264 248 (62,485) 164,399 88,756 1.9 2009 $000 31,692 206,913 732 (11,588) 227,749 14,686 15.5
36
SeGment inFORmatiOn For management purposes, the Group is organised into business units based on their products and services, and the reportable operating segments are as follows: (i) Construction Construction and civil engineering contractor in the construction of residential, industrial and commercial buildings for both private and public sectors. (ii) Engineering Provides a wide spectrum of building engineering services encompassing mechanical and electrical engineering. (iii) Building materials and equipment Provide rental of generators, transformers and air compressors, power packages, load testing systems and metal forms; and sales of used metal forms, industrial equipment and spare parts and wholesale distribution of building materials such as tiles to the mining, manufacturing, shipbuilding, ship repair, and marine industries. Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss. Allocation basis and transfer pricing Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Segment accounting policies are the same as the policies described in Note 3.28. The Group generally accounts for inter-segment sales and transfers as if the sales or transfers were to third parties at current market prices. Segment revenue, expenses and results include transfers between business segments. These transfers are eliminated on consolidation.
90

31 December 2010
36
SeGment inFORmatiOn (continued) (a) (i) Business segments The following tables present revenue and profit information regarding industry segments for the years ended 31 December 2010 and 2009 and certain asset and liability information regarding industry segments as at 31 December 2010 and 2009: Building materials and equipment $000
construction $000 Year ended 31 December 2010 Segment revenue Sales to external customers Inter-segment sales total revenue Segment results Finance costs Interest income Share of results of associates Profit before tax Income tax expense Profit net of tax Segment assets Investment in associates Total assets Segment liabilities Other segment information: Capital expenditure Allowance for doubtful trade receivables Allowance for doubtful other receivables Allowance for doubtful trade receivables written back Allowance for inventory obsolescence Allowance for inventory obsolescence written back Amortisation of receivables and payables Depreciation of property, plant & equipment Gain on fair value adjustment on held-for-trading investments Gain on disposal of available-for-sale investment Gain on disposal of property, plant and equipment Gain on fair value adjustment on investment properties
engineering $000
corporate services and others $000
elimination $000
total $000
324,477 3,975 328,452 37,105
31,215 34,237 65,452 4,633
26,161 3,584 29,745 5,841
(895)
(41,796) (41,796)
381,853 381,853 46,684 (1,428) 3,147 6,557 54,960 (9,923) 45,037 333,930 10,667 344,597 255,532
6,557
245,239 10,667
37,077
48,989
2,625
205,349
27,480
20,361
2,342
985 302 389 200 178 500
6 101 53 15 509
14,068 13 247 194 4,129 30 869 29
15,059 101 302 66 247 194 389 4,344 539 869 207 500
91

31 December 2010
36
SeGment inFORmatiOn (continued) (a) Business segments (continued) Building materials and equipment $000
construction $000 Year ended 31 December 2009 Segment revenue Sales to external customers Inter-segment sales total revenue Segment results Finance costs Interest income Share of results of associate Profit before tax Income tax expense Profit net of tax Segment assets Investment in associate Total assets Segment liabilities Other segment information: Capital expenditure Allowance for doubtful trade receivables Allowance for doubtful other receivables Allowance for doubtful trade receivables written back Allowance for inventory obsolescence written back Depreciation of property, plant & equipment Gain on fair value adjustment on held-for-trading investments Gain on disposal of property, plant and equipment Gain on fair value adjustment on investment properties
engineering $000
elimination $000
total $000
283,679 283,679 13,602
87,814 7,371 95,185 14,112
23,308 1,178 24,486 4,408
(8,549) (8,549)
394,801 394,801 32,122 (2,076) 2,276 2,795 35,117 (4,079) 31,038 272,539 3,731 276,270 256,025
2,795
206,467 3,731
29,030
37,042
177,085
58,318
20,622
1,334 103 782 278 24 490
43 18 5,973
6,979 150 112 7 3,741 103 203
8,313 296 782 112 7 4,037 6,076 227 490
92

31 December 2010
36
SeGment inFORmatiOn (continued) (b) Geographical segments Revenue and non-current assets information based on the geographical location of customers and assets respectively are as follows: Revenue 2010 $000 Singapore Other ASEAN countries Other Asian countries 312,119 61,531 8,203 381,853 2009 $000 308,361 81,807 4,633 394,801 non-current assets 2010 2009 $000 $000 33,386 2,190 6,275 41,851 30,821 1,909 4,508 37,238
Non-current assets information presented above consist of property, plant and equipment and investment properties as presented in the statements of financial position. Information about major customers Revenue from three major customers amount to $228,683,000 (2009: $92,864,000) arising from construction services rendered by the construction segment. These three customers are related parties within the United Engineers Group. 37 eVentS aFteR Date OF Statement OF Financial POSitiOn On 10 March 2011, the Groups wholly-owned subsidiary, Greatearth Construction Pte Ltd signed an option for the sale of its investment properties at 99 and 101 Tanjong Pagar Road Singapore, for a total cash consideration of $10.1 million to an unrelated party. The option is to be exercised by the purchaser not later than 11 April 2011. Once exercised, the sale is expected to be completed by 30 June 2011.
38
aUtHORiSatiOn OF Financial StatementS The financial statements of the Company for the year ended 31 December 2010 were authorised for issue in accordance with a resolution of the directors on 18 March 2011.
93
StatiSticS OF SHaReHOlDinGS
as at 14 march 2011
Number of Fully Issued and Paid up Shares (excluding treasury shares) Amount of Issued and Paid Up Shares Class of Shares Voting Rights Treasury Shares DiStRiBUtiOn OF SHaReHOlDinGS: Size of Shareholdings 1 - 999 1,000 - 10,000 10,001 - 1,000,000 1,000,001 and above TOTAL
: 270,000,000 : $89,614,003 : Ordinary Shares : 1 vote per share : Nil
no. of Shareholders 0 879 397 13 1,289
% 0.00 68.19 30.80 1.01 100.00
no. of Shares 0 4,681,000 36,194,000 229,125,000 270,000,000
% 0.00 1.73 13.41 84.86 100.00
tWentY laRGeSt SHaReHOlDeRS name of Shareholders 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 UES HOLDINGS PTE. LTD. UNITED ENGINEERS LIMITED CHUA HOCK TONG 2G CAPITAL PTE LTD BANK OF SINGAPORE NOMINEES PTE LTD HSBC (SINGAPORE) NOMINEES PTE LTD JEREMY LEE SHENG POH ASDEW ACQUISITIONS PTE LTD LIM TECK CHENG F H LEE HOLDINGS PTE LTD OCBC SECURITIES PRIVATE LTD UNITED OVERSEAS BANK NOMINEES PTE LTD CHANG WEI CHIAN BENJAMIN LIM CHYE HUAT @ BOBBY LIM CHYE HUAT TAN SEE TEE KOR YONG KOO REDROCK CAPITAL PTE LTD CHAN BOON HUI CHEW LEOK CHUAN HO LEE GROUP PTE LTD no. of Shares Held 148,473,914 35,665,212 15,860,874 7,000,000 4,860,000 3,800,000 3,154,000 2,700,000 2,000,000 1,500,000 1,448,000 1,413,000 1,250,000 900,000 849,000 830,000 600,000 500,000 500,000 500,000 233,804,000 % 54.99 13.21 5.87 2.59 1.80 1.41 1.17 1.00 0.74 0.56 0.54 0.52 0.46 0.33 0.31 0.31 0.22 0.19 0.19 0.19 86.60
94
SUBStantial SHaReHOlDeRS
as at 14 march 2011
name
Direct interest no. of Shares % 15,860,874 35,665,212 148,473,914 5.87 13.21 54.99
Deemed interest no. of Shares % 148,473,914 54.99
Chua Hock Tong United Engineers Limited1 UES Holdings Pte. Ltd.1
note: UES Holdings Pte. Ltd. (UES Holdings) is a wholly-owned subsidiary of United Engineers Limited (UEL). Accordingly, UEL is deemed to be interested in 148,473,914 shares held by UES Holdings.
PUBlic FlOat Based on the Register of Shareholders as at 14 March 2011, and to the best knowledge of the Company, the percentage of shareholding held in the hands of the public is approximately 25.75%. Accordingly, the Company complies with Rule 723 of the Listing Manual.
95
nOtice OF annUal GeneRal meetinG
nOtice iS HeReBY GiVen tHat the Annual General Meeting of UE E&C Ltd. (the Company) will be held on Thursday, 28 April 2011 at 3.30 p.m. at The Auditorium, 12 Ang Mo Kio Street 64, UE BizHub CENTRAL, Singapore 569088 for the purpose of transacting the following business: ORDinaRY BUSineSS 1. To receive and adopt the Directors Report and Audited Financial Statements for the financial period from 9 March 2010 (Date of Incorporation) to 31 December 2010 and the Auditors' Report thereon. Resolution 1 To approve payment of Directors' fees of $15,000 for the financial period from 9 March 2010 to 31 December 2010. (2009: Not Resolution 2 applicable). To re-elect the following Directors, each of whom retires pursuant to Article 97 of the Company's Articles of Association and, being eligible, offers himself for re-election: (i) (ii) (iii) (iv) (v) (vi) 4. 5. Mr Norman Ip Ka Cheung Mr Chua Hock Tong Mr Kwan Chiew Choi [see explanatory note (a)] Mr Pok Soy Yoong [see explanatory note (b)] Mr Tan Soo Kiang [see explanatory note (c)] Mr Jackson Chevalier Yap Kit Siong Resolution 3 Resolution 4 Resolution 5 Resolution 6 Resolution 7 Resolution 8 Resolution 9 Resolution 10
2.
3.
To re-appoint Ernst & Young LLP as Auditors and to authorise the Directors to fix their remuneration. To transact any other business which may properly be transacted at an Annual General Meeting.
SPecial BUSineSS To consider and, if thought fit, to pass the following resolution as an Ordinary Resolution: 6. That: Resolution 11 approval be and is hereby given, for the purposes of Chapter 9 of the Listing Manual ("Chapter 9") of the Singapore Exchange (i) Securities Trading Limited (SGX-ST), for the Company, its subsidiaries and associated companies that are considered to be "entities at risk" (as that term is used in Chapter 9), or any of them, to enter into any of the transactions falling within the types of Mandated Interested Person Transactions described in Appendix A of the Company's letter to shareholders dated 12 April 2011 (the "Letter"), with any party who is of the class of Mandated Interested Persons described in Appendix A of the Letter, provided that such transactions are made on normal commercial terms and in accordance with the review procedures for Mandated Interested Person Transactions (the IPT Mandate); (ii) the IPT Mandate shall, unless revoked or varied by the Company in general meeting, continue in force until the conclusion of the next Annual General Meeting of the Company; and the Directors of the Company be and are hereby authorised to complete and do all such acts and things (including, without limitation, executing all such documents as may be required) as they may consider expedient or necessary or in the interests of the Company to give effect to the IPT Mandate and this Resolution. [see explanatory note (d)]
(iii)
By Order of the Board Tan Ching Chek and Lo Swee Oi Joint Company Secretaries Dated: 12 April 2011
96
nOtice OF annUal GeneRal meetinG
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 on his behalf. A proxy need not be a member of the Company. If the appointer is a corporation, the instrument appointing a proxy must be under seal or the hand of its duly authorised officer or attorney. The instrument appointing a proxy must be deposited at the Companys Registered Office not less than 48 hours before the time set for the Annual General Meeting or any adjournment thereof.
2)
3)
eXPlanatORY nOteS (a) Mr Kwan Chiew Choi is a member of the Audit Committee and is considered an independent Director for the purposes of Rule 704(8) of the Listing Manual. Mr Pok Soy Yoong is the Chairman of the Audit Committee and is considered an independent Director for the purposes of Rule 704(8) of the Listing Manual. Mr Tan Soo Kiang is a member of the Audit Committee and is considered an independent Director for the purposes of Rule 704(8) of the Listing Manual. The ordinary resolution in Resolution 11, if passed, will renew, effective until the conclusion of the next Annual General Meeting, the IPT Mandate to enable the Company, its subsidiaries and associated companies which are considered "entities at risk" to enter in the ordinary course of business into certain types of interested person transactions with specific classes of the Company's interested persons. Particulars of the IPT Mandate are set out in the Company's letter to shareholders dated 12 April 2011 accompanying the Annual Report 2010.
(b)
(c)
(d)
97
This page has been intentionally left blank.
imPORtant
1. For investors who have used their cPF monies to buy Ue e&c ltd. shares, this Annual Report is sent to them at the request of their CPF Agent Banks and is sent solely FOR INFORMATION ONLY. 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.
2.
(Company Registration No. 201005048D) (Incorporated In the Republic of Singapore)
PROXY FORm
3. CPF investors who wish to attend the Annual General Meeting as OBSERVERS must submit their requests through their respective Agent Banks so that their Agent Banks may register, in the required format with the Company Secretary, by the time frame specified. (agent Banks: Please see note 9 on required format). any voting instructions must also be submitted to their agent Banks within the time frame specified to enable them to vote on the cPF investors behalf.
I/We (Name) ______________________________________________, NRIC/Passport No./Co. Regn. No.: _______________________________ of (Address) ____________________________________________________________________________________________________________ being a member/members of UE E&C LTD. (the company) hereby appoint: nRic/PaSSPORt nUmBeR PROPORtiOn OF SHaReHOlDinGS (%)
name
aDDReSS
and/or (delete as appropriate) name aDDReSS nRic/PaSSPORt nUmBeR PROPORtiOn OF SHaReHOlDinGS (%)
as my/our proxy/proxies to attend and to vote for me/us on my/our behalf and, if necessary, to demand a poll, at the Annual General Meeting of the Company (the meeting) to be held on Thursday, 28 April 2011 at 3.30 p.m. at The Auditorium, 12 Ang Mo Kio Street 64, UE BizHub CENTRAL, Singapore 569088 and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for or against the resolutions to be proposed at the Meeting as indicated hereunder. If no specific direction as to voting is given, the proxy/proxies will vote or abstain from voting at his/their discretion, as he/they will on any other matter arising at the Meeting. nO. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. ORDinaRY ReSOlUtiOnS ORDinaRY BUSineSS Adoption of Reports and Audited Financial Statements Approval of Directors Fees Re-election of Mr Norman Ip Ka Cheung Re-election of Mr Chua Hock Tong Re-election of Mr Kwan Chiew Choi Re-election of Mr Pok Soy Yoong Re-election of Mr Tan Soo Kiang Re-election of Mr Jackson Chevalier Yap Kit Siong Re-appointment of Auditors Any other business SPecial BUSineSS Renewal of the General Mandate for Interested Person Transactions FOR aGainSt
Dated this _________ day of ___________________ 2011.
total no. of Shares Held ___________________________________________ Signature(s) of Member(s)/Common Seal
imPORtant: PleaSe ReaD nOteS OVeRleaF
nOteS 1. 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, Cap. 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 that number of shares. If the member has shares entered against his name in the Depository Register and registered in his name in the Register of Members, he should insert the aggregate number of shares. If no number is inserted, this instrument appointing a proxy or proxies will be deemed to relate to all shares held by the member. A member of the Company entitled to attend and vote at the Meeting is entitled to appoint one or two proxies to attend and vote in his stead. A proxy need not be a member of the Company. Where a member appoints two proxies, the appointments shall be invalid unless he specifies the proportion of his shareholding (expressed as a percentage of the whole) to be represented by each proxy. Completion and return of this instrument appointing a proxy shall not preclude a member from attending and voting at the Meeting. Any appointment of a proxy or proxies shall be deemed to be revoked if a member attends the Meeting in person, and in such event, the Company reserves the right to refuse to admit any person or persons appointed under the instrument of proxy, to the Meeting. The instrument appointing a proxy or proxies must be deposited at the Companys registered office at 12 Ang Mo Kio Street 64, #03-13 UE BizHub CENTRAL, Singapore 569088 not less than 48 hours before the time appointed for the Meeting. 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 a duly authorised officer. Where an instrument appointing a proxy is signed on behalf of the appointor by an attorney, the letter or power of attorney or a duly certified copy thereof must (failing previous registration with the Company) be lodged with the instrument of proxy, failing which the instrument may be treated as invalid. A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks fit to act as its representative at the Meeting, in accordance with section 179 of the Companies Act, Chapter 50 of Singapore. Agent Banks acting on the request of CPF Investors who wish to attend the Meeting as observers are requested to submit in writing, a list of details of the Investors names, NRIC/Passport numbers, addresses and numbers of shares held. The list, signed by an authorised signatory of the Agent Bank, should reach the Company Secretary, at the registered office of the Company not later than 48 hours before the time appointed for the Meeting.
2.
3.
4.
5.
6.
7.
8.
9.
GeneRal The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed, 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 shares entered in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if the member, being the appointor, is not shown to have shares entered against his name in the Depository Register as at 48 hours before the time appointed for holding the Meeting, as certified by The Central Depository (Pte) Limited to the Company.
Ue e&c LtD. 12 Ang Mo Kio Street 64 #03-13 UE BizHub CENTRAL Singapore 569088 Tel: (65) 6818 8666 Fax: (65) 6818 8682
Company Registration No: 201005048D

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MOVING FORWARD

Annual Report 2010

about uE E&C LtD.

uE E&C Ltd. / Annual Report 2010

uE E&C Ltd. / Annual Report 2010

ConstruCting the future

uE E&C Ltd. / Annual Report 2010

uE E&C Ltd. / Annual Report 2010

io n ib u t istr systems rD n w e il a t i o o te m s t P n sys al ve ry ta ri c c a l ni sa

d b u il nd na o rk s sig lW c tio n De iv i s tru C l Con a er

intEgratED soLutions aCross thE vaLuE Chain

uE E&C Ltd. / Annual Report 2010

Four-YEar FinanCiaL ProFiLE oF thE grouP

Four-YEar FinanCiaL Charts oF thE grouP

grouP rEvEnuE ($000) 2010 2009 2008 2007

rEvEnuE bY businEss sEgmEnts ($000)

grouP ProFit nEt oF tax ($000) 2010 2009

rEvEnuE bY gEograPhiCaL sEgmEnts ($000)

Earnings PEr orDinarY sharE ()* 2010 2009

singapore 312,119 (81.7%)

uE E&C Ltd. / Annual Report 2010

uE E&C Ltd. / Annual Report 2010

Chua hock tong Chief Executive Officer

uE E&C Ltd. / Annual Report 2010

uE E&C Ltd. / Annual Report 2010

uE E&C Ltd. / Annual Report 2010

uE E&C Ltd. / Annual Report 2010

uE E&C Ltd. / Annual Report 2010

uE E&C Ltd. / Annual Report 2010

fees* % 100 100 100 100 100

Total % 100 100 100 100 100 100

uE E&C Ltd. / Annual Report 2010

(vii) (viii) (ix)

uE E&C Ltd. / Annual Report 2010

Revenue forms part of the Contract Value

Deemed interest 1 January 2010 or 31 date of December appointment 2010

On behalf of the board of directors,

nORman iP Ka cHeUnG Director 18 March 2011 Singapore

cHUa HOcK tOnG Director

On behalf of the board of directors,

nORman iP Ka cHeUnG Director 18 March 2011 Singapore

cHUa HOcK tOnG Director

inDePenDent aUDitORS' RePORt

cOnSOliDateD incOme Statement

(6,932) (10,800) (1,428) (5,898) 6,557 54,960 (9,923) 45,037

(5,770) (9,326) (2,076) (5,943) 2,795 35,117 (4,079) 31,038

39,785 5,252 45,037

29,023 2,015 31,038

cOnSOliDateD Statement OF cOmPReHenSiVe incOme

(93) (109) (202) 30,836

39,902 5,281 45,183

28,840 1,996 30,836

StatementS OF Financial POSitiOn

34,351 7,500 10,667 91 50,375 102,984

26,738 10,500 3,731 135 64,981 361 106,446

1,884 10 130,260 9,625 31,479 1,604 4,266 62,485 241,613 344,597

1,769 10 106,904 9,087 28,953 4,894 6,619 11,588 169,824 276,270

1,447 1,178 2,625 108,298

106,851 40,741 (58,836) 88,756 309 89,065

12,530 2,556 (400) 14,686 5,559 20,245

106,851 (895) 105,956 105,956

3,915 13,607 52 17,574