Technics AR11 A4

Growing our
RETURNS PRESENCE FUTURE
TECHNICS OIL & GAS LIMITED

Annual Report
2011
CONTENTS
01 02 04 06 12 16 18 19 20 Corporate Profile Our Services Financial Highlights Chairmans Statement Operations Review Board of Directors Key Executives Corporate Structure Financial Contents
CORPORATE PROFILE
Technics Oil & Gas Limited (Technics or referred to collectively as the Group) is a leading full service integrator of compression systems and process modules for the global offshore oil and gas sector. Technics designs, concept engineers and fabricates process modules and equipment, including gas compression packages, which are integrated to form the operating system for production operations and storage applications in offshore and onshore oil and gas exploration and production activities (O&G). The Group also manufactures super-size gas compression systems, topsides and process modules of more than 500 MT each. Synonymous with safety, quality and reliability, Technics is an authorized integrator of gas compression systems for three world-leading USA gas compressor manufacturers, Ariel Inc., Cameron and Frick. Established in 1990 as a modest start-up with only 12 staff, Technics has grown from strength to strength and became a public-listed entity on Singapore Exchange SESDAQ in April 2003 and was upgraded to Mainboard of the Singapore Exchange in January 2008. Notably, Technics was also successfully listed on the Taiwans overthe-counter market, Gre Tai Securities Market via Taiwan Depository Receipts in February 2011, making it the debut SGX counter to be listed on GreTai Securities Market. Since its listings, Technics has embarked on an on-going, multipronged expansion programme to address the immense business potential in the oil and gas sector. In addition to its engineering and fabrication facilities, Technics operates two waterfront yards (total: 49,610 square metres) located in Singapore and Indonesias Batam Island. The construction of the jetty in the expanded Singapore yard has been completed since the end of 2009. The jetty is equipped with customised heavy-lift material handling facility for direct offloading of completed process modules weighing up to 1,000 tonnes from the shore onto a regular barge. With a current strength of 567 full-time employees including in-house design and engineering team, Technics is one of the leading premier supply vendors for gas compression systems and topside process modules and equipment for Floating Production, Storage and Offloading (FPSO) and Mobile Offshore Production Units (MOPUs), as well as fixed platforms, oil rigs and semi-submersibles. Other products include subsea high pressure manifolds, sub-sea protective structures and piping skids, as well as metering skids and mud-gas separators. Over the past years, Technics has made strategic business ventures to expand its service and product offerings so as to entrench itself in the growing O&G and marine market. Technics subsidiary, Norr Systems, provides electrical propulsion systems and ship-board automation systems, as well as dynamic positioning training for offshore vessels to operator teams under the Nautical Institute Scheme on Dynamic Positioning Vessel Control, using a L3-Communications NMS6000 Dynamic Positioning System. Technics has also incorporated a subsidiary, Technics Systems Solutions Pte Ltd , which will design, engineer, integrate, test and supply automation components for the O&G and Power industries. Meanwhile, the Groups subsidiary in Suzhou, China - M2E Corp (Suzhou) Co., Ltd, manufactures crankshafts for compressors and engines. In August 2009, it secured a S$15 million contract from a new customer Husky Injection Molding Systems Ltd to supply key machine building components for a period of three years, demonstrating its technical strength and capabilities to secure new orders and service top global customers. The Groups business coverage now encompasses Singapore, Indonesia, Malaysia, Thailand, Vietnam, USA, Middle East, Australia, Myanmar and Bangladesh, with offices in Singapore, Batam, Jakarta and Vietnam. Fuelled by a strong commitment to excel and backed by a network that includes some of the worlds leading multinational corporations, major equipment principals and strategic partners, Technics is poised to scale greater heights.
TECHNICS OIL & GAS LIMITED | Annual Report 2011 |
01
OUR SERVICES
Engineering, Procurement, Construction and Commissioning (EPCC)
Design, procure, fabricate, install and commission process modules and equipment for oil and gas exploration and production on a turnkey project basis. These modules and equipment will form the operating system of the production and storage facility for oil and gas.
Glycol Dehydration Unit
Flash Gas Compressor Package
Test Separator
Contract Engineering (CE)

For customers in the oil and gas industry who do not require fully integrated turnkey services as in an EPCC project, we are able to customise our services to procure materials and fabricate and install modules or equipment for them.
Procurement and Other Services (PS)

We offer after sales services to our project customers and supply spare parts and equipment, such as specialised valves and measuring equipment (flow meters and gauges), for oil and gas exploration and production. We also provide repair and maintenance services to the oil and gas industry.
Gas Compression Package FPSO
LP & HP Flare Scrubber Skid
02
| TECHNICS OIL & GAS LIMITED | Annual Report 2011
Growing our
RETURNS
Our strong results were driven by higher contribution from subsidiaries as a result of our ongoing expansion programme to tap into the potential of the oil and gas sector. We continued to secure various contracts from existing and new clients including those from new target markets.
03
FINANCIAL HIGHLIGHTS
INCOME STATEMENT HIGHLIGHTS S$ million
Revenue Cost of Sales Gross Profit Net Profit after Tax before Non-Controlling Interests Total Assets Total Equity Total Cash and Equivalents
FY2010
103.6 (59.9) 43.7 16.4 112.0 23.6 45.3
FY2011
125.8 (78.9) 46.9 18.7 141.9 49.2 20.8
KEY FINANCIAL RATIOS FY2010

GP Margin NP Margin EPS (SGD cts) NAV (SGD cts) per share Net Gearing ratio Return on Assets Return on Equity 42.2 15.8 11.83 18.69 Net Cash 14.6 67.0
FY2011
37.3 14.9 9.71 25.21 0.42 13.2 36.0
REVENUE For the years ended 30 September S$ million 150 120 90 60 30 0 59.99 90.78 103.58 20 125.80
NET PROFIT For the years ended 30 September S$ million
130.25
16.38 16 12 8 4 0 2.97 3.81 6.18
18.71
2007
2008
2009
2010
2011
2007
2008
2009
2010
2011
04
FINANCIAL HIGHLIGHTS
REVENUE BREAKDOWN BY BUSINESS SEGMENTS (%)
2% 26% 72%
2009
2% 35% 63%
Engineering Procurement Construction and Commissioning Contract Engineering Procurement and Other Services
2010
5% 36% 59%
2011
05
CHAIRMANS STATEMENT The successful listing on Taiwan grants the Group ready access to the different equity markets in the Asia Pacific region when the opportunity arises.
Dear Shareholders,
I am pleased to present to you our annual report for the financial year ended 30 September 2011 (FY2011). FY2011 has been an eventful year for the Group as we marked significant milestones in our corporate history. The most notable achievement will be the Groups market debut in Taiwan with its successful listing on the GreTai Securities Market, Taiwans over-the-counter stock exchange, on 25th February 2011. We were successfully dual-listed on the Taiwan Stock Exchange via our issuance of Taiwan Depository Receipts (TDR) in February 2011. Technics took the lead as the first Singapore listed company to be listed and traded on the Gretai Securities Market in the history. The Group has also dedicated great efforts to sustain the order winning momentum in FY2011. The Group roped in S$185.1 million worth of new contracts during the financial year under review and chalked up record-high outstanding order book of S$141.0 million as at 9th November 2011. Our fundamentals remain sound and balance sheet remains in very good health. Final phase of the expansion programme is expected to be completed by the end of the year 2011. Additional capacity from our new in-house facilities and
expanded yard space will allow us to cope with existing pipeline of projects and accommodate new projects. In terms of returning value to shareholders, Technics have been consistent in our dividend payout for the last few years. This year, with our record net profit attributable to equity holders and our solid cash position, the Board was pleased to propose our highest ever full year dividend of 12.0 Singapore cents per ordinary share. This represents an astounding dividend payout ratio of 124% in FY2011, highest in corporate history. Moving ahead, we will align our business focus to concentrate on engineering, procurement, construction and commissioning (EPCC) projects for onshore and offshore gas compression systems relating to booster and recovery applications. These EPCC projects allow Technics to leverage on strong technical expertise and capabilities by managing the projects on a turnkey basis. Margins are, therefore, relatively more attractive to that of Contract Engineering (CE) and Procurement and Other Services (PS) projects. Technics remains committed to expand our portfolio offerings and to entrench ourselves deeper into new markets like Australia, the Middle East and Russia in the coming year. I am pleased to share with you the key highlights of FY2011.
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CHAIRMANS STATEMENT
FY2011 - A RECORD-SETTING YEAR First Singapore Listed Company to be listed on Taiwan GreTai Securities We are proud to update our shareholders that we are now dual-listed on GreTai Securities Market Taiwan, Taiwans over-the-counter market on 25th February 2011 via the issuance of Taiwan Depository Receipts (TDR). We have issued a total of 40 million shares of the Company, comprising of 13 million new shares (the New Shares) to be issued by the Company, and 27 million vendor shares (comprising shares held by the controlling shareholders). The shares are allotted on the basis of 2 TDR shares to 1 ordinary share and a net proceed of S$12.7 million was raised. The net proceeds were utilised towards repayment of bank borrowings to reduce interest payments and enhance gearing ratio of the Group. The successful listing on Taiwan grants the Group ready access to the different equity markets in the Asia Pacific region when the opportunity arises. At the same time, the two markets, Singapore and Taiwan, attract different investor profiles and will thereby widen the investor base of the Company and increase the liquidity of our shares. In particular, it enables the Company to benefit from its exposure to a wider range of private and institutional investors. Strong and Sustainable Profit Growth We concluded FY2011 with record setting revenue and net profit attributable to equity holders. The Groups revenue hit about S$125.8 million in FY2011, 21% year-on-year (y-o-y) increase from S$103.6 million in FY2010. Net profit attributable to shareholders rose by 14% y-o-y to S$18.7 million in FY2011. The increase in revenue was primarily attributed by higher revenue contributions from the relevant recognition of work-in-progress items carried out on CE and PS projects. However, more CE projects have also resulted in lower gross profit margins of 37% in FY2011 as compared to 42% in FY2010. Despite higher business volume and activities, the Group has managed to keep operating expenses (marketing and distribution costs and administrative expenses) under tight lid as operating expenses remained fairly consistent at 21% of the Groups revenue in FY2011. Our balance sheet remained rosy with solid cash and cash equivalent balance of S$20.7 million as at 30 September 2011. Gearing ratio improved to 0.84 as at 30 September 2011 as compared to 1.51 as at 30 September 2010 as a result of enlarged shareholding base due to issuance of new shares and conversion of warrants into ordinary shares during the year. Dividend With a view to rewarding shareholders for their continued support of Technics and the strength of the Groups ongoing financial position, the Board was pleased to propose a total dividend payout of 12.0 Singapore cents per share, amounting to S$24.3 million. This translates to a dividend payout ratio high of 124% in FY2011. A resolution has been passed and approved in December 2010 in relation to the Groups dividend policy. It was indicated in the resolution that the Group will propose and recommend an annual cash dividend of between 5% to 75% of the Groups distributable profits to be paid to shareholders as long as the Group remained listed on SGXMainboard and Taiwan Stock Exchange. The Group has repeatedly outdone itself in this aspect as the Groups dividend payout ratio was maintained above 50% for the past 3 years. Upholding Contract Winning Momentum Technics continue to reel in new orders in FY2011 and secured approximately S$185.1 million worth of new contracts during the year. Consequently, order book swelled to a record high of S$141.0 million as at 9 November 2011 with progressive delivery throughout FY2012. Technics clinched two CE contracts in the Russia Federation amounting to a total of S$28.9 million during the year. This is an important stepping
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CHAIRMANS STATEMENT
stone for the Group as we marched into a new geographical market that has huge potential demand for the Groups service offerings. Technics will be responsible for supplying Oil & Gas Process Equipment for modification of Jack-up rig and an offshore Oil Wellhead Satellite platform in the Russia Federation. Apart from Russia Federation, the Group is targeting to move into Middle East as well. The Group was awarded a contract worth S$23.5 million from a Middle East Oil & Gas Company in January 2011 for EPCC of Process Equipment for Early Production Systems. With project duration of 8 months, the Group shall deliver Process Equipment for Early Production Systems consisting of Wellhead Manifolds, Test Separators, Three Phase Separators, Gas KO Drums, Flare KO Drums, Heater Treater, Scraper Traps, Corrugated Plate Separators, Hydrogen Sulfide Removal Module and Flare Stacks and Burners. Technics has also gained traction in Vietnam with yet another EPCC contract from JV Vietsovpetro (VSP) for the provisioning of the topside equipments for wellhead satellite platforms
named GT-1 for the White Bear and MT-1 for the White Cat oilfields in offshore Vietnam, worth an estimated S$32.0 million. These series of contracts awarded by VSP demonstrates the customers strong confidence in Technics technical and execution capabilities. Including this latest contract, Technics has been awarded a total of 15 wellhead satellite platform orders by VSP. To date, thirteen projects have been completed and delivered, including RC-6 and RC-7 which were delivered in June 2011. At our subsidiary level, the Group announced on both January 2011 and March 2011 that its 51% owned subsidiary, Norr Systems Pte Ltd (Norr Systems), had been awarded three turnkey construction and service contracts worth S$48.4 million for the design, engineering, procurement and manufacturing and supply of ship automation (Hydraulic and Electrical equipment). The supply of equipment also includes main engines and all auxiliary equipments on board vessel as well as provision of project management on site to deliver quality vessels to the owner. Norr Systems shall also provide the maintenance and servicing of the entire three vessels for the subsequent 7 years after completion of the turnkey contract.
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CHAIRMANS STATEMENT
Our strategy of expanding existing portfolio offerings appears to be fruitful as Norr Systems continue to build track record to establish itself in the market. Expansion of portfolio offerings On 18 August 2011, Technics has incorporated a 51%-owned subsidiary, Technics Systems Solutions Pte Ltd, to design, engineer, integrate, test and supply integrated control & safety system, Pneumatic & Hydraulic Wellhead Control Panels and Turbo Machinery Control to Oil & Gas, Power and General Industries. This investment is consistent with the Groups strategy to expand portfolio offerings and to leverage on the growth opportunities present in the integrated automation market for the Oil & Gas and Power industries. BROAD PERSPECTIVES ON THE GLOBAL AND REGIONAL OIL & GAS SECTOR* (*Figures here variously derived from DNB Nor, Infield (the Energy Analysts) and various online sources ) Asias Increasing Dominance Asia continues to be Technics key market place. Overall, we expect the markets for offshore oil and gas in Asia to grow in tandem with the increasing intensity and complexity of oil exploration and production. In a report by Infield, the firm expects that regions expected recovery in offshore activity will continue to significantly drive up demand for fixed, floating and subsea units in the short term. The report forecast that surge in platform installations globally will continue steadily until 2012 and both Asia and the Middle East and Caspian will construct close to 43% and 37% of the fixed platforms in 2011 and 2012 respectively. Signs of Increasing Capital Equipment Spending in Offshore Sector We have witnessed series of rig order wins in the market and also improved activity in the Exploration and Production (E&P) operations. Analysts from DnB NOR believe that these factors will facilitate the market to absorb the enlarged Offshore Support Vessel (OSV) fleet by 2012. Furthermore, a relatively stable oil price will continue to spur demand for E&P activities and thereby stimulate demand for OSV new builds. STRATEGIC PLANS Building Up EPCC Growth Momentum As in the earlier years, the Group shall continue to build on its platform of core EPCC capabilities particularly in the FPSO conversion, fixed platforms as well as onshore and offshore gas compression systems and recovery applications. Our geographical focus can be categorised into two spheres prospective new markets and traditional markets. In prospective new markets such as Russia, Middle East and Australia, our strategy is to build up a network of strong and reliable partnerships that can bring us into deeper engagement with the key customers such as oil majors in their respective geographies. This will however take time to achieve. In our traditional markets such as Singapore, Vietnam, Malaysia, Indonesia and Thailand, we are constantly and actively engaged in bidding process across a wide spectrum of large scale projects. Whilst the prospective new markets present immense potential to leapfrog into new areas of growth, we will still require the traditional markets to continue to supply a stable base of projects which we can effectively rely on for the long term. Expansion of Portfolio Offerings With a recurring base of EPCC contracts from key customers in traditional markets, Technics have also been actively building up a wider range of engineering services in order to offer total engineering solutions to a variety of key customers. Our subsidiaries such as Norr Systems, M2E, Wecom, and newly-incorporated indirect subsidiaries, Norr Systems Hydraulics Pte Ltd and Bloomfoss Pte Ltd, provides a wide array of engineering services for us to synergistically cross market. In the long run, we believe the different
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CHAIRMANS STATEMENT
clientele bases from various engineering services open new possibilities for unique marketing and solution offerings. Capacity Expansion With our fully functioning fabrication yard, waterfront space, jetty, warehousing and office facilities at our Loyang yard in Singapore, we have started to generate interests from customers and partners who are keen to tap on our onestop vendor services. Aside from being able to utilise our jetty and waterfront spaces for our internal loading and offloading activities for heavy process equipment and modules, Technics can offer repair, maintenance, fabrication and other auxiliary services to visiting vessels. Hence, we intend to position ourselves as a mini offshore supply base (OSB) as our Loyang yard is the only other alternative jetty and waterfront facilities along the Loyang Industrial Estate. The existing large scale Loyang OSB has already been operating at closed to full capacity. As OSBs are in short supply in Singapore, we intend to collaborate with a tenant partner who would like to utilise our base to service a wider range of customers. OUTLOOK As of 9 November 2011, the Group has a total outstanding order book of about $141.0 million for progressive delivery through to the end of FY2011. These project schedules are typically subject to changes that could be due to various factors, e.g. customers requesting variations to original project specifications, or adjustment to shipment schedules by overseas manufacturers of major equipment, notably premium-branded engines of non-standard specifications. Our customers, who are mainly, oil and gas majors, leading FPSO operators and end users, maintain longer term perspectives on their operation requirements that are not affected by the prevailing oil prices. Hence, they are continuing with the previously agreed schedules for the delivery of contracts awarded to us. The Group has already submitted proposals or is continuing to follow up with prospective customers for the projects in the regional markets. Indicative timelines remain ontrack. Nevertheless, given the extent of the global credit crunch that has impacted the worlds major economies; the Group remains alert on new challenges that may arise in its external environment. In view of the sizeable order book, current yard schedules and the expected completion of our expanded yard space and new in-house facilities in early next year, barring unforeseen circumstances the Group will remain profitable for FY2012. A WORD OF APPRECIATION On behalf of the Group, I would like to take this opportunity to express our heartfelt appreciation to our customers, business partners and associates for their ongoing support throughout this year. We could not have achieved the set of strong results in FY2011 without your confidence and trust. We certainly look forward to your continued support of Technics as we look towards the future to build a deeper and broader range of engineering solutions for the oil and gas markets. I would also like to put forward a special note of thanks to the Directors, management and staff of Technics whose commitment, diligence and integrity have raised our operational and financial performance towards a higher level every year. With your support, I am confident that we can continue to build upon the current momentum and achieve greater heights.
Ting Yew Sue Executive Chairman and Group Managing Director
10
Growing our
PRESENCE
USA China Bangladesh Middle East Myanmar Thailand Vietnam Malaysia Singapore Indonesia Australia
Business Location Business & Office Location
The Group continues to make inroads into potential growth markets, strengthening our presence to build confidence in our capabilities and position us for long-term growth in these new markets.
11
OPERATIONS REVIEW
Technics has successfully clinched 5 new Contract Engineering (CE) contracts, including two contracts in the Russia Federation, amounting to a total of S$28.9 million in FY2011.
NEW DEVELOPMENTS Order winning momentum continues into the financial year ended 30 September 2011 (FY2011) as Technics chalked up about S$185.1 million worth of new contracts during the year. Consequently, order book swelled to a record high of S$141.0 million as at 9 November 2011 with progressive delivery throughout FY2012. Technics has successfully clinched 5 new Contract Engineering (CE) contracts, including two contracts in the Russia Federation, amounting to a total of S$28.9 million in FY2011. The order wins from Russia Federation represents a significant and important milestone for Technics as it marks the Groups first foray into a new geographical market, which is in line with the Groups growth strategies. Technics will be responsible for supplying Oil & Gas Process Equipment for modification of Jack-up rig and an offshore Oil Wellhead Satellite platform in the Russia Federation. This is a good opportunity for the Group to build up track record and exposure in the new market so as to leverage on the huge untapped market in Russia.
The Group has also made inroads in the Middle East market with a S$23.5 million contract win from a Middle East Oil & Gas Company in January 2011 for the engineering, procurement, construction and commissioning (EPCC) of Process Equipment for Early Production Systems. With project duration of 8 months, the Group shall deliver Process Equipment for Early Production Systems consisting of Wellhead Manifolds, Test Separators, Three Phase Separators, Gas KO Drums, Flare KO Drums, Heater Treater, Scraper Traps, Corrugated Plate Separators, Hydrogen Sulfide Removal Module and Flare Stacks and Burners. On 13 September 2011, Technics secured yet another EPCC contract from JV Vietsovpetro (VSP) for the provisioning of the topside equipments for wellhead satellite platforms named GT-1 for the White Bear and MT-1 for the White Cat oilfields in offshore Vietnam, worth an estimated S$32.0 million. These are scheduled for completion by June 2012. Technics will be responsible for the engineering, project management, procurement, fabrication, supervision of installation and hook up, onshore and offshore commissioning of topside modules
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OPERATIONS REVIEW
for the two platforms. It will also supply the full package of equipment and systems, such as oil and gas processing equipment, power generation, electrical/control, accommodation modules, as well as other auxiliary equipments and systems. Including this latest contract, Technics has been awarded a total of 15 wellhead satellite platform orders by VSP. To date, thirteen projects have been completed and delivered, including RC-6 and RC-7 which were delivered in June 2011. VSPs vote of confidence is a strong testament to the Groups capabilities, quality and efficient services.
AT SUBSIDIARYS LEVEL The Groups 51% owned subsidiary, Norr Systems Pte Ltd (Norr Systems) has also gained traction in contract wins in FY2011 as it secured turnkey construction and service contracts worth S$74.0 million during the year. Norr Systems will design, engineer, procure and manufacture and supply ship automation (Hydraulic and Electrical equipment). Norr Systems will also supply equipment including main engines and all auxiliary equipments onboard vessel as well as provision of project management on site to deliver quality vessels to the owner. Furthermore, Norr Systems shall provide service contract for maintenance and servicing for the subsequent seven years after completion of the turnkey contracts.
13
OPERATIONS REVIEW
INCORPORATION OF NEW SUBSIDIARIES On 18 August 2011, Technics has incorporated a 51%-owned subsidiary, Technics Systems Solutions Pte Ltd, to design, engineer, integrate, test and supply integrated control & safety system, Pneumatic & Hydraulic Wellhead Control Panels and Turbo Machinery Control to Oil & Gas, Power and General Industries. This investment is consistent with the Groups strategy to expand portfolio offerings and to leverage on the growth opportunities present in the integrated automation market for the Oil & Gas and Power industries. Norr Systems has also incorporated 60%-owned subsidiary, Norr Systems Hydraulics Pte Ltd (Norr Hydraulics) and 100%-owned subsidiary, Bloomfoss Pte Ltd (Bloomfoss) in March 2011 and May 2011 respectively. Norr Hydraulics will manufacture Marine, Offshore, Oil & Gas hydraulics equipments while Bloomfoss will manufacture and repair pumps and hydraulics components. Technics, through its 51% equity interest in Norr Systems, will therefore holds 30.6% effective interest in Norr Hydraulics and 30.6% effective interest in Bloomfoss. MAJOR PROJECT MILESTONES During the period under review, the following project milestones had been completed or are scheduled for completion in the near term: EPCC contract for provisioning of topside equipments for wellhead satellite platforms GT-1 & MT-1 to VSP at the White Bear and White Cat oilfields are scheduled for completion in Q4FY2012 CE contract for fabrication Structural module for compressors for a Malaysian customer to be scheduled for completion in Q2FY2012 Contract Engineering (CE) contract for fabrication and supply of Gas Compressor Package for a Malaysian End-User to be completed in Q2FY2012 Major projects work in progress EPCC contract for supplying process Major projects completed Delivery of fast-tracked provision of topside equipments for wellhead satellite platforms RC-6 and RC-7 VSP at the Dragon oilfield in June 2011
equipment for Early Production Systems to a Middle East Oil & Gas company to be scheduled for completion in Q1FY2012
14
OPERATIONS REVIEW
SINGAPORE OPERATIONS The Group embarked on a multi-pronged expansion programme over the past years and Technics is proud to update that the final phase of improvement in the Singapore yard is expected to be completed by December 2011. PLACEMENT EXERCISE Pursuant to the Groups proposed issuance of Taiwan Depository Receipts (TDR), 13,000,000 Placement Shares have been allotted and issued at a share issue price of S$1.008 for each Placement Share on 22nd February 2011 to the custodian bank for the depository bank appointed by the Company for the Proposed TDR Issue. The Placement Shares were listed on Singapore Stock Exchange on 24 February 2011 and the net proceeds of S$12.7 million were fully utilized towards the partial repayment of the Groups bank borrowings.
CORPORATE DEVELOPMENT Technics has marked its debut on the Taiwan Stock Exchange as it was successfully listed via the issuance of TDR on 25th February 2011. Technics is the first Singapore listed company to be listed on the Taiwans over-the-counter market, the GreTai Securities Market. The Group has issued a total of 40 million shares, comprises of 13 million new ordinary shares (to be issued by the Company) and 27 million vendor shares (shares held by controlling shareholders), on a basis of 2 TDR shares for every 1 ordinary shares issued. The counter receives overwhelming subscription for the five consecutive trading days once the shares are officially traded on 25th February 2011. Net proceeds from the TDR exercise of S$12.7 million are fully utilized towards repayment of bank borrowings to reduce interest payments and enhance gearing ratio of the Group.
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BOARD OF DIRECTORS
Ting Yew Sue Executive Chairman and Group Managing Director
Tay Mian Cheo, David Executive Director and a co-founder of Technics
Ting Tiong Ching Executive Director
TING YEW SUE, ROBIN is our Executive Chairman and Group Managing Director. He is responsible for the general management and overall strategic planning and direction of our Group. He is also the Managing Director of the subsidiary, Technics Offshore Engineering Pte Ltd (TOE), overseeing the Singapore operations. Between 1990 and 1995, Mr Ting is the pioneer entrepreneur to set up and develop the market in Vietnam. Mr Ting has more than 38 years of experience in design, engineering and production of process modules and integrated system for the oil and gas industry. Prior to the founding of TOE in 1990, he was the Operations Manager in charge of the day-to-day management and operations of Hup Seng Offshore Engineering Pte Ltd, an engineering company servicing the oil and gas industry from 1968 to 1990.
TAY MIAN CHEO, DAVID is our Executive Director and a co-founder of Technics. He spearheads the Groups business development, sales and marketing initiatives to expand into new business segments and geographical markets in the Middle East, Asia-Pacific, India and Africa. Mr Tay also leads the forging of partnerships and alliances he was instrumental in the fostering of the Groups two recent agreements with Dubaibased Global Process Systems as well as our Joint Operations in Indonesia. He has more than ten years experience in business development and sales in the oil and gas industry, of which six years were spent in Vietnam. Prior to joining Technics, he was the sales and marketing manager of a precision engineering company, Ritz Precision Engineering Pte Ltd. TING TIONG CHING is our Executive Director. He joined the Group in 1998 as a Sales Engineer before being disrupted to further his studies in the United Kingdom. Armed with a Bachelor degree in mechanical and electrical engineering, Deren returned to the Group in 2002. He is currently responsible for the planning and implementation of the marketing strategy and sales performance of the commercial department.
16
BOARD OF DIRECTORS
Ong Siew Peng Independent Director
Dr Liew Jat Yuen Richard Independent Director
ONG SIEW PENG is our Independent Director. He is an Executive Director and Corporate Mediator and Advisor with Corporate Brokers International Pte Ltd, a strategic investment search company focusing on small and medium enterprise. Since 2001, he is responsible for corporate mediation regarding mergers and acquisitions matters, providing financial and management advice, strategic business planning and strategic investor search advice. He is also an Executive Director of PowerSource International Pte Ltd, a local diesel engine distributor for the Asia Pacific region; as well as an Executive Director of Perfex International Pte Ltd, a local radiator and heat exchanger manufacturer. On 1 January 2005, he was appointed as an Independent Director and Audit Committee Chairman of NH Ceramics Ltd, a company listed on SGX SESDAQ.
DR LIEW JAT YUEN RICHARD is our Independent Director. He is currently a professor in the Department of Civil and Environmental Engineering at the National University of Singapore. He is also an independent director of Yongnam Holdings. He is a registered professional Engineer in Singapore, an ASEAN chartered professional engineer and a Chartered Engineer in U.K. He has extensive research and practical experience in building and offshore industries and has consulted on numerous construction and offshore engineering projects in Singapore and the region. An international renowned expert in steel and composite structures and fire safety engineering, he provides specialist advices to the design and construction of high-rise and large span steel structural systems and has been involved in many national and international committees on design standards, product specifications and constructional practices and safety and made significant contributions to numerous guidelines for practice.
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KEY EXECUTIVES
LAM MAY YIH is our Group Financial Controller and is responsible for the overall aspects of financial & strategic planning, budgeting and corporate matters of the Group. May Yih has been with the Group since 2001 as a Group Finance Manager and being promoted in December 2007. She is a graduate of the Association of Chartered Certified Accountants and is a Fellow Member of the Association as well as a Certified Public Accountant of Singapore. TAN KIA TECK is our Director, Sales and Marketing of Technics Offshore Engineering Pte Ltd and is responsible for managing & developing existing business as well as identifying and securing new business opportunities of the Group. Prior to joining the Group in 1993 during his University vacation as Assistant Design Engineer, he served 6 years as an Infantry Army Officer in the Singapore Arm Forces. He returned to the Group in 1994 as Proposal Engineer after achieving his Honor Degree in Mechanical Engineering at University of Glasgow, United Kingdom. Kia Teck has more than 17 years of experience in cost estimation, sales & marketing as well as project management in the oil and gas industry, he is also one of our longer serving staff in the Group. MURUGAIAN MOHAN RAJKUMAR is our Regional Manager of Technics Offshore Engineering Pte Ltd (Compression Division) and is responsible for the performance of the Compression Division. Mohan has been with the Group since August 2005 and he has more than 18 years of experience in handling rotating and allied equipment in the oil and gas industry. KIANG LONG HOON is our Managing Director of Wecom Engineering Pte Ltd and is responsible for the profitability, operations and management of the entire subsidiary. Prior to joining Wecom in 2010, he is our Sales and Marketing Director. He has centralised responsibility for the sales and marketing activities of the Group outside Vietnam. He is also in charge of project tender evaluation and negotiation for the Group outside Vietnam. Long Hoon has over 30 years of experience in cost estimation, project planning, sales and marketing in the oil & gas and shipbuilding industries. Prior to joining Technics in 1997, he spent 15 years as a Marketing Manager with Applied Engineering Pte Ltd, an engineering company providing design and fabrication service to chemical and petrochemical industries. His responsibilities then included cost estimation, sales and marketing. JOHN LIGHTBODY is our Director of Technics Engineering Australia Pty Ltd and is responsible for the profitability, operations and management of the entire subsidiary. John joined the Group in January 2006 and he brought with him more than 20 years of experience in the oil and gas, structural steel, mining and manufacturing industries. DR LEE YAK WAN is the General Manager for Petro Process System Pte Ltd, a subsidiary company for Technics Oil & Gas Limited. He is accountable for the performance of the teams sales and operations functions. He is also incharge of providing the engineering expertise and supporting in tendering of projects to all the other companies under Technics Oil & Gas Limited. Dr Lee Yak Wan has achieved his Doctorate Degree from Aston University in United Kingdom in the area of Engineering and Applied Science. He has 17 years of wide industry experience in engineering, operation, project management, sales and marketing, research, business development in many industries that include Oil & Gas and Marine industries. Prior joining Petro Process System Pte Ltd in 2009, he spent 5 years as a Assistant/ General Manager with Marshal Technology Mktg & Engrg Pte Ltd and Terasaki Electric Co. (F.E.) Pte Ltd, both are engineering companies that provide design, integration and fabrication products to the shipbuilding, ship repairing, oils gas industries, power generating plants, petrochemical plants and commercial construction industries. His responsibilities then included running the overall business operations and sales functions. LEE TONG HUA is the Senior General Manager for Norr Systems Pte Ltd and is responsible for the profitability, operations and management of the entire subsidiary. Kenneth has been working in Marine and Offshore industry for more than 14 year with vast experience in Management. Apart from Management skill, he is also experience in product designing and software programming. Some of the company marine control software is, in fact, written by him. In addition, he has good knowledge and working relationship in China Marine market.
18
GROUP STRUCTURE
100% 100%
TECHNICS ENGINEERING AUSTRALIA PTY LTD (TEA) M2E CORPORATION (SUZHOU) CO., LTD 100%
TECHNICS OFFSHORE ENGINEERING PTE LTD (TOE)
51%
TECHNICS SYSTEMS SOLUTIONS PTE LTD (TSS) 99% 56%
M2E CORPORATION LTD (HONG KONG)
100%
AMF TECH ASIA SDN BHD (AMF TECH)
PT. TECHNICS OFFSHORE JAYA (PT. TOJ)
BLOOMFOSS PTE LTD
TECHNICS OIL & GAS LIMITED (Parent Company) TECHNICS OFFSHORE INTERNATIONAL PTE LTD (TOI) 1% 100% NORR SYSTEMS 60% HYDRAULICS PTE LTD
51%
40% 51% NORR SYSTEMS PTE LTD (NORR) 100% PETRO PROCESS SYSTEM PTE LTD (PPS) WECOM 54.67% ENGINEERING PTE LTD 100% WECOM MARINE PTE LTD FIRST OIL PTE LTD
19
FINANCIAL CONTENTS
21 29 32 33 35 36 37 Corporate Governance Directors Report Statement By Directors Independent Auditors Report Consolidated Statement of Comprehensive Income Statements of Financial Position Statements of Changes in Equity 39 41 92 93 95 Consolidated Statement of Cash Flows Notes to the Financial Statements Additional Information Required for Disclosures Shareholdings Statistics Notice of Annual General Meeting Proxy Form
Corporate Governance Report
The Board of Directors (the Board) of Technics Oil & Gas Limited is committed to achieving high standards of corporate governance to ensure investor condence in the Company as a trusted business enterprise. The Board and Management will continue to uphold good corporate governance practices to enhance long-term value and returns for shareholders and protect shareholders interests. This report describes the Companys corporate governance practices with reference made to the principles of the Code of Corporate Governance 2005 (the Code).
BOARD OF DIRECTORS
Principle 1: Boards Conduct of its Affairs
The Board provides leadership to the Group by setting the corporate policies and strategic aims. The main functions of the Board, apart from its statutory responsibilities, are to:

Review nancial performance of the Group; Approve major investment and funding decisions; Oversee the process for evaluating the adequacy of internal controls, risk assessment, nancial reporting and compliance; Evaluate the performance and determine the compensation of key management personnel; and Assume the responsibility for overall corporate governance of the Group.
The Board meets at least four times a year to review and approve, inter alia, the quarterly nancial results of the Company, including the half-year and year-end results. Apart from Board meetings, important matters are also put to the Board for approval by way of circulating resolutions in writing. The Board has established Committees to assist it in discharging its responsibilities. These Committees operate under clearly dened terms of reference. The three Committees are:

Audit Committee (the AC) Nominating Committee (the NC) Remuneration Committee (the RC)
The attendances of the Directors at meetings of the Board and Board Committees, as well as the frequency of such meetings during the nancial year are as follows: Attendance at Meetings Board Committees Audit Nominating 4 2 No. of Meetings Attended 2 4 4* 4 2 2*
No. of meetings held Board Members Ting Yew Sue Tay Mian Cheo Ting Tiong Ching Ong Siew Peng Dr Liew Jat Yuen Richard
* Chairman
Board 4 4 4 4 4 4
Remuneration 3
3 3 3*
21
Certain matters specically reserved for decision by the Board are those related to approval of announcements of nancial results, approval of annual reports and nancial statements, convening of shareholders meeting, dividend payment, major contracts, material acquisitions and disposal of assets and corporate restructuring matters. New directors, when appointed, will be briefed on the Groups business and Corporate Governance policies. Familiarization visits, including overseas ofces, are organized, if necessary, to facilitate a better understanding of the Groups operations. Board members are encouraged to attend seminars and received training to improve themselves in the discharge of their duties as directors. The Company works closely with professionals to provide its directors with changes to relevant laws, regulations and accounting standards. Principle 2: Board Composition and Balance
The Board comprises three Executive Directors and two Independent Directors. This composition complies with the Codes requirement that at least one-third of the Board should be made up of Independent Directors. Each director has been appointed on the strength of his calibre, expertise and experience. The Board and management recognise the advantage of open and constructive debate. To facilitate this, Board members are supplied with relevant, complete and accurate information on a timely basis. The Independent Directors may challenge managements assumptions and also extend guidance to the management, in the best interest of the Company. The independence of each Director is reviewed annually by the NC based on the Codes denition of what constitutes an independent director. The NC is of the view that the current Board has an independent element ensuring objectivity in the exercise of judgment on corporate affairs independently from the management. The NC is also of the view that no individual or a small group of individuals dominates the Boards decision making process. The Board is of the opinion that it current board size of ve Directors is appropriate, taking into account, the nature and scope of the Companys operations. The Boards composition reects the broad range of experience, skills and knowledge necessary for the effective stewardship of the Group. Principle 3: Role of Chairman and Group Managing Director
The Chairman and the Group Managing Director of the Company is Mr Ting Yew Sue. The Board is of the view that, given the scope and nature of the operations of the Group and the strong element of independence of the Board, it is not necessary to separate the functions of Chairman and Managing Director. As Chairman, Mr Ting Yew Sue bears responsibility for the working of the Board and, together with the AC, ensures the integrity and effectiveness of the governance process of the Board. As Managing Director, Mr Ting Yew Sue bears the overall daily operational responsibility for the Groups business.
NOMINATING COMMITTEE
Principle 4: Board Membership
The NC comprises three directors, a majority of whom including the Chairman are independent. Chairman: Members: Dr Liew Jat Yuen Richard Ong Siew Peng Ting Yew Sue (Independent Director) (Independent Director) (Group Managing Director)
The main role of the NC is to make the process of Board appointments and re-appointments transparent and to assess the effectiveness of the Board as a whole and the contribution of individual Director to the effectiveness of the Board.
22
When a vacancy arises under any circumstances, or where it is considered that the Board would benet from the services of a new director with a particular skill, the NC, in consultation with the Board, determines the selection criteria and selects the candidates with the appropriate expertise and experience for the position. The NC performs the following functions:
Recommend the appointment and re-appointment of Directors; Review annually the independence of each Director, and ensure that the Board comprises at least one-third Independent Directors; Decide, where a Director has multiple board representation, whether the Director is able to and adequately carries out his duties as Director of the Company; Decide how the Boards performance may be evaluated and propose objective performance criteria to assess effectiveness of the Board; and Perform assessment of the effectiveness of the Board as a whole and the contribution of individual Director.
The Articles of Association of the Company require one-third of the Directors to retire and subject themselves to re-election by the shareholders in every Annual General Meeting. In addition, all Directors of the Company shall retire from ofce at least once every three years. Key information regarding the directors can be found under the Board of Directors section of this annual report. Information on shareholdings in the Company held by each Director is set out in the Directors Report section of the Annual Report. Principle 5: Board Performance
The NC has established an appraisal process to assess the performance and effectiveness of the Board as a whole as well as to access the contribution of individual Director. The appraisal process focuses on a set of performance criteria which includes qualitative and quantitative factors such as principal functions, duciary duties, attendance record, level of participation at meetings, and guidance provided to the management. The NC is of the opinion that the Board and each member of the Board has been effective due to the active participation of every Board member during each meeting. Principle 6: Access to Information
The members of the Board in their individual capacity have access to complete information on a timely basis in the form and quality necessary for the discharge of their duties and responsibilities. Prior to each Board meeting, the members of the Board are each provided with the relevant documents and information to enable them to obtain a comprehensive understanding of the issues to be deliberated upon to enable them to arrive at an informed decision. The Directors have unrestricted access to the Companys senior management at all times. The Company Secretary attends Board meetings and is responsible for ensuring that the Board meeting procedures are followed and that applicable rules, acts and regulations are complied with. The appointment and removal of the Company Secretary is a matter for the Board as a whole. Each Director, whether individually or as a group, has the right to seek independent professional advice as and when necessary, in furtherance of their duties. The cost of such professional advice will be borne by the Company.
23
REMUNERATION COMMITTEE
Principle 7: Procedures for Developing Remuneration Policies
The RC comprises two Independent Directors and an Executive Director. Dr Liew Jat Yuen Richard, an Independent Director is Chairman of the Remuneration Committee. Chairman: Members: Dr Liew Jat Yuen Richard Ong Siew Peng Tay Mian Cheo (Independent Director) (Independent Director) (Executive Director)
The Board believes that the current RC composition is considered adequate as the majority of the members including the Chairman, is Non-Executive and Independent. To minimize the risk of any potential conict of interest, each member of the RC shall abstain from voting on any resolution in respect of his remuneration package The Company may also engage an external consultant to advise on all remuneration and related matters of Directors and senior management, as and when circumstances require to ensure that the Directors remuneration is fair and reasonable and benchmarked against comparable companies. The Executive Directors remuneration packages are based on service agreement. These included a prot sharing scheme that is performance related to align their interests with those of the shareholders. Independent Directors are paid yearly Directors fees of an agreed amount and these fees are subject to shareholders approval at the Annual General Meeting. The terms of reference of the Committee are as follows:
Recommend to the Board a framework of remuneration for the Executive Directors and other key members of the executive management; Determine specic remuneration packages for each Executive Director; and Determine targets for any performance-related pay schemes operated by the Company.
The recommendations of the RC are submitted to the Board for endorsement. All aspects of remuneration, including but not limited to directors fees, salaries, allowances, bonuses, options and benets in kind are covered by the RC. The RC has access to expert professional advice on human resource matters whenever there is a need to consult externally. In its deliberations, the RC will take into consideration industry practices and norms in compensation in addition to the Companys relative performance to the industry and the performance of the individual Director. No individual Director is involved in deciding his own remuneration. Principle 8: Level and Mix of Remuneration
The remuneration package of the Executive Directors and key members of executive management generally comprises two components. One component is xed in the form of a base salary, car allowance and handphone allowance. The other component is variable consisting of incentive bonuses. The incentive bonuses are dependent on the nancial performance of the Company as the RC strongly supports and endorses the exible wage system as it gives the Company more exibility to ride through economic downturns. The RC has adopted set protability levels to be achieved before incentive bonuses are payable. The Independent Directors are paid Directors fees for their efforts and time spent, responsibilities and contributions to the Board, subject to the approval by shareholders at the Annual General Meeting.
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Principle 9:
Disclosure on Remuneration
The level and mix of remuneration (in percentage terms) for the Directors for the nancial year ended 30 September 2011 (FY2011) is as follows: Variable or Performance Related Income/ Bonus
Remuneration Band & Name of Director Above $500,000 Ting Yew Sue Tay Mian Cheo Ting Tiong Ching Below $250,000 Ong Siew Peng Dr Liew Jat Yuen Richard
Base/Fixed Salary
Directors Fees
Total
30% 26% 24%
70% 74% 76%
100% 100% 100%
100% 100%
100% 100%
No option has been granted to the above Directors. The breakdown of remuneration of each key executive (who is not a Director) in percentage terms for the nancial year ended 30 September 2011 is as follows: Base/Fixed Salary Variable or Performance Related Income/Bonus
Remuneration Band & Name of Key Executive Below $250,000 Lam May Yih Tan Kia Teck Murugaian Mohan Kiang Long Hoon John Lightbody Dr Lee Yak Wan Lee Tong Hua No option has been granted to the above key executives.
Total
79% 84% 92% 93% 89% 91% 93%
21% 16% 8% 7% 11% 9% 7%
100% 100% 100% 100% 100% 100% 100%
Based on the bands established above, the remuneration of each key executive who is not a Director is below S$250,000. There is no employee in the Group, being an immediate family member of a Director, whose remuneration exceeded S$150,000 during the year. The Circular to shareholders in relation to the proposed Technics Performance Share Plan had been approved by the shareholders during the Extraordinary General Meeting held on 17 November 2008. The members of the Committee administering the Plan are the Remuneration Committee members as stated above. As the Share Plan is designed as a compensation plan to motivate Group Executives, all employees who are Controlling Shareholders or their Associates will not be eligible to participate in the Share Plan. In addition, both Executive Directors and Non-Executive (including Independent Directors) are also not eligible to participate in the Share Plan. Employees of Associated Company will not be eligible to participate in the Share Plan. During the nancial year ended 30 September 2011, no awards have been granted to eligible participants under the Technics Performance Share Plan.
25
AUDIT COMMITTEE
Principle 11: Audit Committee
The AC comprises three Directors, a majority of whom including the Chairman are Non-Executive Independent Directors Chairman: Members: Ong Siew Peng Dr Liew Jat Yuen Richard Tay Mian Cheo (Independent Director) (Independent Director) (Executive Director)
The proles of the members of the AC are set out in the Board of Directors section. The Board is of the view that the AC has the requisite nancial management expertise and experience to discharge its responsibilities properly. The terms of reference of the Committee are as follows:
Review the audit plans, the system of internal accounting controls and the audit report in conjunction with the external auditors; Review the assistance given by the Companys ofcers to the external auditors; Review the independence and objectivity of the external auditors annually; Nominate the external auditors for re-appointment; Review the quarterly nancial statements of the Company, including the half-year and full-year results and the respective announcements before submission to the Board of Directors; Give due consideration to the requirements of the Listing Rules of the Singapore Exchange Securities Trading Limited and Review interested person transactions.
The AC has direct access to and full co-operation of the Companys management. It has full discretion to invite any Director or executive ofcer to attend its meetings and is given reasonable resources to enable it to discharge its functions. During the nancial year, the AC met four times to review the announcements of its quarter, half-year and full-year results before being approved by the Board for release to SGXNET. The AC also met with the external auditors without the presence of the Companys management. The AC, having reviewed the amount of non audit related services to the Group and being satised that such services will not prejudice the nature and extent of independence and objectivity of the external auditors, have recommended to the Board the nomination of Messrs RSM Chio Lim LLP for re-appointment as external auditors of the Company. The Company has put in place a whistle-blowing framework, endorsed by the AC where the employees of the Company may, in condence, raise concerns about possible corporate improprieties in matters of nancial reporting or other matters. Details of the whistle-blowing policies and arrangements have been made available to all employees. Principle 12: Internal Controls
The Board acknowledges that it is responsible for maintaining a sound system of internal controls to safeguard shareholders interests and maintain accountability of its assets. While no cost-effective internal control system can provide absolute assurance against loss or misstatement, the Groups internal controls and systems have been designed to provide reasonable assurance that assets are safeguarded, operational controls are in place, business risks are suitably protected, proper accounting records are maintained and nancial information used within the business and for publication, are reasonable and accurate.
26
Principle 13:
Internal Audits
The Company has outsourced and appointed Messrs Nexis TS Risk Advisory Pte Ltd as its internal auditors. The internal auditor reports directly to the AC, which assists the Board in monitoring and managing internal control and risks of the Group. The AC will approve the internal audit plan and ensure adequacy of resources for the internal auditors to perform its tasks.
COMMUNICATION WITH SHAREHOLDERS

Principle 10: Principle 14: Principle 15: Accountability Communication with Shareholders Greater Shareholder Participation
The Board believes in timely communication of information to shareholders and public. It is the Companys policy that all shareholders and the public should be equally and timely informed of all major developments that impact the Company. Communication is made through:
Annual reports that are issued to all shareholders and non-shareholders. They may access the SGX-ST website for a soft copy of the annual report; Announcement of quarter, half-year and full-year results on the Singapore Exchange Securities Trading Limiteds SGXNET; Disclosure on the SGXNET; Press releases on major developments of the Company; and Companys website at www.technicsgrp.com from which shareholders can access information on the Company.
The Board supports the Codes principle to encourage shareholder participation. The Articles allow a shareholder to appoint one or two proxies to attend and vote instead of the shareholder. The Board takes note that there should be separate resolution at general meetings on each substantially separate issue and supports the Codes principle as regards to bundling of resolutions. Resolutions are as far as possible, structured separately and are voted on independently. All Directors including Chairpersons of the Board, AC, RC and NC and senior management are in attendance at the Annual General Meetings (AGMs) and Extraordinary General Meetings to allow shareholders the opportunity to air their views and ask Directors or management questions regarding the Company. The external auditors are also invited to attend the AGMs and are available to assist the Directors in addressing any relevant queries by the shareholders relating to the conduct of the audit, the preparation and contents of the auditors report.
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INTERESTED PERSON TRANSACTIONS

Aggregate value of all interested person transactions during the nancial year under review (excluding transactions less than S$100,000 and transactions conducted under shareholders mandate pursuant to Rule 920) S$732,270 S$243,837
Name of interested person Hup Seng Offshore Engineering (Pte) Ltd Hyrax Pte Ltd
Aggregate value of all interested person transactions conducted under shareholders mandate pursuant to Rule 920 (excluding less than S$100,000)
The Company has established internal control policies to ensure that transactions with interested persons are properly reviewed and approved, and are conducted at an arms length basis.
SECURITIES TRANSACTION
The Company has issued a policy on dealings in the securities of the Company to its Directors and key employees (including employees with access to price-sensitive information to the Companys shares), setting out the implications of insider trading and guidance on such dealings. The Companys ofcers are not allowed to deal in the Companys shares during the period commencing two weeks before the announcement of the Companys nancial statements for each of the rst three quarters of its nancial year, or one month before the announcement of the Companys half-year and full-year results and ending on the date of the announcement of the relevant results. Directors and executives are also expected to observe insider trading laws at all times even when dealing with securities within the permitted trading period.
MATERIAL CONTRACTS
There was no material contracts entered into by the Company or any of its subsidiaries involving the interest of any Director or controlling shareholder in FY2011.
RISK MANAGEMENT
The Company regularly reviews and improves its business and operational activities to take into account the risk management perspective. The Company seeks to identify areas of signicant business risk as well as appropriate measures to control and mitigate these risks. The Company reviews all signicant control policies and procedures and highlights all signicant matters to the AC.
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Directors' Report
The directors of the company are pleased to present their report together with the audited nancial statements of the company and of the group for the reporting year ended 30 September 2011.
1.
Directors at Date of Report

The directors of the company in ofce at the date of this report are: Executive Directors: Ting Yew Sue Tay Mian Cheo Ting Tiong Ching Non-Executive Independent Directors: Ong Siew Peng Dr Liew Jat Yuen Richard
2.
Arrangements to Enable Directors to Acquire Benets by Means of the Acquisition of Shares and Debentures
Neither at the end of the reporting year nor at any time during the reporting year did there subsist any arrangement whose object is to enable the directors of the company to acquire benets by means of the acquisition of shares or debentures in the company or any other body corporate.
3.
Directors Interests in Shares and Debentures

The directors of the company holding ofce at the end of the reporting year had no interests in the share capital and debentures of the company and related corporations as recorded in the register of directors shareholdings kept by the company under section 164 of the Companies Act, Cap. 50, except as follows: Direct interest Name of directors and companies in which interests are held Technics Oil & Gas Limited (the company) Ting Yew Sue Tay Mian Cheo Ting Tiong Ching Ong Siew Peng Dr Liew Jat Yuen Richard At beginning of the reporting year or date of appointment if later At end of the reporting year At 21 October 2011
Number of shares of no par value 43,206,775 6,964,675 4,128,000 50,000 25,000 28,310,662 5,162,012 14,128,000 175,000 37,500 Deemed interest 28,310,662 5,162,012 14,128,000 175,000 37,500
Tay Mian Cheo
5,000,000
5,000,000
5,000,000
29
Directors' Report
4.
Contractual Benets of Directors

Since the beginning of the reporting year, no director of the company has received or become entitled to receive a benet which is required to be disclosed under section 201(8) of the Companies Act, Cap. 50, by reason of a contract made by the company or a related corporation with the director or with a rm of which he is a member, or with a company in which he has a substantial nancial interest except as disclosed in the nancial statements. There were certain transactions (shown in the financial statements under related party transactions) with corporations in which certain directors have an interest.
5.
Options to Take Up Unissued Shares

During the reporting year, no option to take up unissued shares of the company or any corporation in the group was granted.
6.
Options Exercised
During the reporting year, there were no shares of the company or any corporation in the group issued by virtue of the exercise of an option to take up unissued shares.
7.
Unissued Shares Under Option

At the end of the reporting year, there were no unissued shares under option.
8.
Audit Committee
The members of the audit committee at the date of this report are as follows: Ong Siew Peng (Chairman of the Audit Committee and Non-Executive Independent Director) Dr Liew Jat Yuen Richard (Non-Executive Independent Director) Tay Mian Cheo (Executive Director) The audit committee performs the functions specied by section 201B(5) of the Companies Act. Among other functions, it performed the following:
Reviewed with the independent external auditors their audit plan; Reviewed with the independent external auditors their evaluation of the companys internal accounting control, and their report on the nancial statements and the assistance given by the companys ofcers to them; Reviewed with the internal auditors the scope and results of the internal audit procedures; Reviewed the nancial statements of the group and the company prior to their submission to the directors of the company for adoption; and Reviewed the interested person transactions (as dened in Chapter 9 of the Listing Manual of SGX).
Other functions performed by the audit committee are described in the report on corporate governance included in the annual report. It also includes an explanation on how independent auditor objectivity and independence is safeguarded where the independent auditors provide non-audit services. The audit committee has recommended to the board of directors that the independent auditors, RSM Chio Lim LLP, be nominated for re-appointment as independent auditors at the next annual general meeting of the company.
30
Directors' Report
9.
Independent Auditors
The independent auditors, RSM Chio Lim LLP, have expressed their willingness to accept re-appointment.
10.
Subsequent Developments
There are no signicant developments subsequent to the release of the groups and companys preliminary nancial statements, as announced on 10 November 2011, which would materially affect the groups and companys operating and nancial performance as of the date of this report.
On Behalf of the Directors
Ting Yew Sue Director
Tay Mian Cheo Director 20 December 2011
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Statement by Directors
In the opinion of the directors, (a) the accompanying consolidated statement of comprehensive income, statements of nancial position, statements of changes in equity, consolidated statement of cash ows, and notes thereto are drawn up so as to give a true and fair view of the state of affairs of the company and of the group as at 30 September 2011 and of the results and cash ows of the group and changes in equity of the company and of the group for the reporting year then ended; 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.
(b)
The board of directors approved and authorised these nancial statements for issue.
On Behalf of the Directors
Ting Yew Sue Director
Tay Mian Cheo Director 20 December 2011
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Independent Auditors' Report

to the Members of Technics Oil & Gas Limited
(Registration No:200205249E)
Report on the Consolidated Financial Statements

We have audited the accompanying consolidated nancial statements of Technics Oil & Gas Limited and its subsidiaries (the group), which comprise the statements of nancial position of the group and the company as at 30 September 2011, and the consolidated statement of comprehensive income, statement of changes in equity and consolidated statement of cash ows of the group, and statement of changes in equity of the company for the reporting year then ended, and a summary of signicant accounting policies and other explanatory information.
Managements Responsibility for the Financial Statements

Management is responsible for the preparation of consolidated nancial 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 sufcient 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 statement of comprehensive income and statements of nancial position and to maintain accountability of assets.
Independent Auditors Responsibility

Our responsibility is to express an opinion on these consolidated nancial 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 consolidated nancial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated nancial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the consolidated nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation of consolidated nancial 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 consolidated nancial statements. We believe that the audit evidence we have obtained is sufcient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated nancial statements of the group and the statement of nancial 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 30 September 2011 and the results, changes in equity and cash ows of the group and the changes in equity of the company for the reporting year ended on that date.
33
Independent Auditors' Report

to the Members of Technics Oil & Gas Limited
(Registration No:200205249E)
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 independent auditors have been properly kept in accordance with the provisions of the Act.
RSM Chio Lim LLP Public Accountants and Certied Public Accountants Singapore 20 December 2011 Partner-in-charge of audit: Derek How Beng Tiong Effective from year ended 30 September 2009
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Consolidated Statement of Comprehensive Income

year ended 30 September 2011
Group Notes 2011 $000 125,798 (78,923) 46,875 1,908 1,452 (2,187) (24,242) (1,259) (1,230) 16 21,333 (4,541) 16,792 2010 $000 103,583 (59,899) 43,684 102 755 (1,795) (17,982) (1,353) (3,069) (941) 19,401 (4,833) 14,568
Revenue Cost of Sales Gross Prot Other Items of Income Interest Income Other Credits Other Items of Expense Marketing and Distribution Costs Administrative Expenses Finance Costs Other Charges Share of Prot (Loss) from Equity-Accounted Associates Prot Before Tax from Continuing Operations Income Tax Expense Prot Net of Tax Other Comprehensive Income: Exchange Differences on Translating Foreign Operations, Net of Tax Total Comprehensive Income Prot Attributable to Owners of Parent, Net of Tax Loss Attributable to Non-Controlling Interests, Net of Tax Prot Net of Tax Total Comprehensive Income Attributable to Owners of the Parent Total Comprehensive Income Attributable to Non-Controlling Interests Total Comprehensive Income Earnings per Share Earnings per Share Currency Unit Basic Diluted
6 7 5
8 16,800 18,709 (1,917) 16,792 18,736 (1,936) 16,800
(166) 14,402 16,382 (1,814) 14,568 16,184 (1,782) 14,402
Cents 10 10 9.71 9.71
Cents 11.83 10.08
The accompanying notes form an integral part of these nancial statements.

35
Statements of Financial Position

as at 30 September 2011
Group Notes 2011 $000 2010 $000 Company 2011 2010 $000 $000
ASSETS Non-Current Assets Property, Plant and Equipment, Total Investments in Subsidiaries Investments in Associates Finance Lease Receivables, Non-Current Other Assets, Non-Current Total Non-Current Assets Current Assets Inventories Trade and Other Receivables, Current Finance Lease Receivables, Current Other Assets, Current Cash and Cash Equivalents Total Current Assets Total Assets EQUITY AND LIABILITIES Equity attributable to owners of the parent Share Capital Retained Earnings/(Accummulated Losses) Other Reserves, Total Equity, Attributable to Owners of the Parent, Total Non-Controlling Interests Total Equity Non-Current Liabilities Deferred Tax Liabilities Finance Leases, Non-Current Other Financial Liabilities, Non-Current Total Non-Current Liabilities Current Liabilities Income Tax Payable, Current Trade and Other Payables, Current Other Liabilities, Current Finance Leases, Current Other Financial Liabilities, Current Dividends Payable Total Current Liabilities Total Liabilities Total Equity and Liabilities
13 14 15 16 17
34,123 148 11,292 700 46,263
31,368 31,368
1 7,659 7,660
1 11,455 11,456
18 20 16 21 22
8,690 29,978 2,521 33,641 20,767 95,597 141,860
9,325 13,088 12,978 45,271 80,662 112,030
47,221 15 40 47,276 54,936
33,292 319 212 33,823 45,279
23 24
46,950 4,860 137 51,947 (2,775) 49,172
7,132 10,380 6,954 24,466 (908) 23,558
46,950 (1,091) 45,859 45,859
7,132 9,597 6,844 23,573 23,573
9 25 26
1,200 122 4,417 5,739
1,005 43 5,067 6,115
289 289
138 138
27 28 25 26 12
4,348 27,331 12,196 22 36,870 6,182 86,949 92,688 141,860
3,578 18,920 15,688 40 30,386 13,745 82,357 88,472 112,030
203 2,403 6,182 8,788 9,077 54,936
2,198 5,625 13,745 21,568 21,706 45,279
36
Statements of Changes in Equity

Foreign Currency Translation Reserve $000
Group:
Total Equity $000
Attributable to Parent Sub-Total $000
Share Capital $000
Retained Earnings $000
Warrant Reserve $000
NonControlling Interest $000
Current Year: Opening Balance at 1 October 2010 Movements in Equity: Total Comprehensive Income for the Year Incorporation of Subsidiaries Liquidation of Subsidiary Exercise of Warrants (Note 23) Issue of Share Capital (Note 23) Purchase of Treasury Shares (Note 23) Dividend paid/ payable (Note 12) Closing Balance at 30 September 2011 Previous Year: Opening Balance at 1 October 2009 Adjustments to Beginning Balance Arising from Adoption of Revised FRS 27 (Note 38) Restated Opening Balance at 1 October 2009 Movements in Equity: Total Comprehensive Income for the Year Acquisition of Subsidiaries (Note 29) Purchase of Treasury Shares (Note 23) Dividends Payable (Note 12) Closing Balance at 30 September 2010
23,558
24,466
7,132
10,380
110
6,844
(908)
16,800 138 (69) 28,363 12,718 (8,055) (24,281) 49,172
18,736 28,363 12,718 (8,055) (24,281) 51,947
35,155 12,718 (8,055) 46,950
18,709 52 (24,281) 4,860
27 137
(6,844)
(1,936) 138 (69) (2,775)
28,225
28,180
14,589
6,439
308
6,844
45
28,225
1,304 29,484
14,589
1,304 7,743
308
6,844
(1,304) (1,259)
14,402 2,133 (7,457) (13,745) 23,558
16,184 (7,457) (13,745) 24,466
(7,457) 7,132
16,382 (13,745) 10,380
(198) 110
6,844
(1,782) 2,133 (908)

37
Statements of Changes in Equity (Contd)

Company: Current Year: Opening Balance at 1 October 2010 Movements in Equity: Total Comprehensive Income for the Year Issue of Share Capital (Note 23) Exercise of Warrants (Note 23) Purchase of Treasury Shares (Note 23) Dividends Payable (Note 12) Closing Balance at 30 September 2011 Previous Year: Opening Balance at 1 October 2009 Movements in Equity: Total Comprehensive Income for the Year Purchase of Treasury Shares (Note 23) Dividends Paid (Note 12) Closing Balance at 30 September 2010
Total Equity $000
Share Capital $000
(Accumulated Losses) / Retained Earnings $000
Warrant Reserve $000
23,573 13,541 12,718 28,363 (8,055) (24,281) 45,859
7,132 12,718 35,155 (8,055) 46,950
9,597 13,541 52 (24,281) (1,091)
6,844 (6,844)
22,665 22,110 (7,457) (13,745) 23,573
14,589 (7,457) 7,132
1,232 22,110 (13,745) 9,597
6,844 6,844
38
Consolidated Statement of Cash Flows

2011 $000 Cash Flows From Operating Activities Prot Before Tax Adjustments for: Depreciation of Property, Plant and Equipment Interest Income Interest Expense Share of (Prot)/Loss of Associates Negative Goodwill Arising from Acquisition of Subsidiaries Gain on Disposal of Plant and Equipment Foreign Exchange Adjustment Losses Operating Cash Flows before Changes in Working Capital Inventories Trade and Other Receivables, Current Other Assets, Current Trade and Other Payables, Current Other Liabilities, Current Net Cash Flows from Operations Before Interest and Tax Income Taxes Paid Net Cash Flows (Used in) From Operating Activities Cash Flows From Investing Activities Purchase of Property, Plant and Equipment Disposal of Property, Plant and Equipment Increase in Investment in Subsidiaries (Note 14) Acquisition of Subsidiary (Net of Cash Acquired) (Note 14) Increase in Investment in Associates Disposal of Subsidiary (Net of Cash Disposed) (Note 11) Finance Lease Receivable Other Assets, Non-Current Interest Received Net Cash Flows Used in Investing Activities 2010 $000
21,333 3,384 (1,908) 1,259 (16) (118) 124 24,058 692 (16,174) (20,661) 8,742 (3,492) (6,835) (3,578) (10,413)
19,401 2,404 (102) 1,353 941 (72) (6) 1,545 25,464 253 39,276 78 (8,862) (9,162) 47,047 (1,519) 45,528
(6,185) 306 98 (120) (79) (13,813) (700) 1,602 (18,891)
(11,408) 21 (1,326) 102 (12,611)

39
Consolidated Statement of Cash Flows (Contd)

2011 $000 Cash Flows From Financing Activities Dividend Paid to Equity Owners Issue of Shares Purchase of Treasury Shares Cash from Exercise of Warrants Decrease in Other Financial Liabilities, Non-Current Increase from New Borrowings Finance Lease Repayments Cash Restricted in Use Interest Paid Net Cash Flows From (Used in) Financing Activities Net (Decrease) Increase in Cash and Cash Equivalents Net Effect of Exchange Rate Changes Cash and Cash Equivalents, Statement of Cash Flows, Beginning Balance Cash and Cash Equivalents, Statement of Cash Flows, Ending Balance (Note 22A)
2010 $000
(31,844) 12,718 (8,055) 28,363 (56,869) 67,781 (90) 1,798 (1,259) 12,543 (16,761) (913) 26,074 8,400
(7,457) (18,694) 17,000 (30) (4,044) (1,353) (14,578) 18,339 (1,262) 8,997 26,074
40
Notes to the Financial Statements

1. General
The company is incorporated in Singapore with limited liability. The nancial statements are presented in Singapore dollars and they cover the parent and the groups subsidiaries. The board of directors approved and authorised these nancial statements for issue on 20 December 2011. The companys principal activities are the provision of management services and that of investment holding company. It is listed on the Singapore Exchange Securities Trading Limited. The principal activities of the subsidiaries are described in Note 14 below. The registered ofce is: 8 Wilkie Road #03-01 Wilkie Edge Singapore 228095. The company is domiciled in Singapore.
2.
Summary of Signicant Accounting Policies

Accounting Convention The nancial statements have been prepared in accordance with the Singapore Financial Reporting Standards (FRS) and the related Interpretations to FRS (INT FRS) as issued by the Singapore Accounting Standards Council and the Companies Act, Cap. 50. The nancial statements are prepared on a going concern basis under the historical cost convention except where an FRS requires an alternative treatment (such as fair values) as disclosed where appropriate in these nancial statements. Basis of Presentation The consolidation accounting method is used for the consolidated nancial statements that include the nancial statements made up to the end of the reporting year of the company and all of its directly and indirectly controlled subsidiaries. Consolidated nancial statements are the nancial statements of the group presented as those of a single economic entity. The consolidated nancial statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances. All signicant intragroup balances and transactions, including prot or loss items and dividends are eliminated in full on consolidation. The results of the investees acquired or disposed of during the reporting year are accounted for from the respective dates of acquisition or up to the dates of disposal which is the date on which effective control is obtained of the acquired business until that control ceases. On disposal the attributable amount of goodwill if any is included in the determination of the gain or loss on disposal. The equity accounting method is used for associates in the group nancial statements. Changes in the groups ownership interest in a subsidiary that do not result in the loss of control are accounted for within equity. When the group loses control of a subsidiary it derecognises the assets and liabilities and related equity components of the former subsidiary. Any gain or loss is recognised in prot or loss. Any investment retained in the former subsidiary is measured at its fair value at the date when control is lost and is subsequently accounted as available-for-sale nancial assets in accordance with FRS 39. The companys nancial statements have been prepared on the same basis, and as permitted by the Companies Act, Cap. 50, no statement of income is presented for the company. Basis of Preparation of the Financial Statements The preparation of nancial statements in conformity with generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the nancial statements and the reported amounts of revenues and expenses during the reporting year. Actual results could differ from those estimates. The estimates and assumptions are reviewed on an ongoing basis. Apart from those involving estimations, management has made judgements in the process of applying the entitys accounting policies. The areas requiring managements most difcult, subjective or complex judgements, or areas where assumptions and estimates are signicant to the nancial statements, are disclosed at the end of this footnote, where applicable.
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2. Summary of Signicant Accounting Policies (Contd)
Revenue Recognition The revenue amount is the fair value of the consideration received or receivable from the gross inow of economic benets during the reporting year arising from the course of the ordinary activities of the entity and it is shown net of any related sales taxes, estimated returns and rebates. Revenue from the sale of goods is recognised when signicant risks and rewards of ownership are transferred to the buyer, there is neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, and the amount of revenue and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Revenue from rendering of services that are of short duration is recognised when the services are completed. Revenue from rendering of long-term services is recognised by reference to the stage of completion of the transaction at the end of the reporting year determined by the proportion of the cost incurred to date bears to the estimated total cost of the transaction and the amount of revenue, stage of completion, and the costs incurred for the transaction and the costs to complete the transaction can be measured reliably. Rental revenue is recognised on a time-proportion basis that takes into account the effective yield on the asset on a straight-line basis over the lease term. Interest is recognised using the effective interest method. Dividend from equity instruments is recognised as income when the entitys right to receive payment is established. Revenue from construction contracts is recognised in accordance with the accounting policy on construction contracts (see below). Construction Contracts When the outcome of a construction contract can be estimated reliably, the revenue and costs associated with the contract are recognised as revenue and expenses respectively by reference to the stage of completion of the contract activity at the end of the reporting year using the proportion that contract costs incurred for work performed to date bear to the estimated total contract costs method except where this would not be representative of the stage of completion. Contract costs consist of costs that relate directly to the specic project, costs that are attributable to contract activity in general and can be allocated to the project and such other costs as are specically chargeable to the customer under the terms of the contract. Variations in contract work, claims and incentive payments are included to the extent that they have been agreed with the customer. The stage of completion method relies on estimates of total expected contract revenue and costs, as well as dependable measurement of the progress made towards completing a particular project. Recognised revenues and prots are subject to revisions during the project in the event that the assumptions regarding the overall project outcome are revised. The cumulative impact of a revision in estimates is recorded in the period such revisions become likely and estimable. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately. The work-in-progress projects have operating cycles longer than one year. The management includes in current assets amounts relating to the contracts realisable over a period in excess of one year. Employee Benets Contributions to dened contribution retirement benet plans are recorded as an expense as they fall due. The entitys legal or constructive obligation is limited to the amount that it agrees to contribute to an independently administered fund which is the Central Provident Fund in Singapore (a government managed retirement benet plan). For employee leave entitlement the expected cost of short-term employee benets in the form of compensated absences is recognised in the case of accumulating compensated absences, when the employees render service that increases their entitlement to future compensated absences; and in the case of nonaccumulating compensated absences, when the absences occur. A liability for bonuses is recognised where the entity is contractually obliged or where there is constructive obligation based on past practice.
42

Income Tax The income taxes are accounted using the asset and liability method that requires the recognition of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequence of events that have been recognised in the nancial statements or tax returns. The measurements of current and deferred tax liabilities and assets are based on provisions of the enacted or substantially enacted tax laws; the effects of future changes in tax laws or rates are not anticipated. Income tax expense represents the sum of the tax currently payable and deferred tax. Current and deferred income taxes are recognised as income or as an expense in prot or loss unless the tax relates to items that are recognised in the same or a different period outside prot or loss. For such items recognised outside prot or loss the current tax and deferred tax are recognised (a) in other comprehensive income if the tax is related to an item recognised in other comprehensive income and (b) directly in equity if the tax is related to an item recognised directly in equity. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same income tax authority. The carrying amount of deferred tax assets is reviewed at each end of the reporting year and is reduced, if necessary, by the amount of any tax benets that, based on available evidence, are not expected to be realised. A deferred tax amount is recognised for all temporary differences, unless the deferred tax amount arises from the initial recognition of an asset or liability in a transaction which (i) is not a business combination; and (ii) at the time of the transaction, affects neither accounting prot nor taxable prot (tax loss). A deferred tax liability or asset is recognised for all taxable temporary differences associated with investments in subsidiaries, branches and associates, except where the reporting entity is able to control the timing of the reversal of the taxable temporary difference and it is probable that the taxable temporary difference will not reverse in the foreseeable future or for deductible temporary differences, they will not reverse in the foreseeable future and they cannot be utilised against taxable prots. Foreign Currency Transactions The functional currency is the Singapore dollar as it reects the primary economic environment in which the entity operates. Transactions in foreign currencies are recorded in the functional currency at the rates ruling at the dates of the transactions. At each end of the reporting year, recorded monetary balances and balances measured at fair value that are denominated in non-functional currencies are reported at the rates ruling at the end of the reporting year and fair value dates respectively. All realised and unrealised exchange adjustment gains and losses are dealt with in prot or loss except when recognised in other comprehensive income and if applicable deferred in equity such as for qualifying cash ow hedges. The presentation is in the functional currency. Translation of Financial Statements of Other Entities Each entity in the group determines the appropriate functional currency as it reects the primary economic environment in which the entity operates. In translating the nancial statements of an investee for incorporation in the consolidated nancial statements in the presentation currency the assets and liabilities denominated in other currencies are translated at end of the reporting year rates of exchange and the prot and loss items are translated at average rates of exchange for the reporting year. The resulting translation adjustments (if any) are recognised in other comprehensive income and accumulated in a separate component of equity until the disposal of that investee.
43

Borrowing Costs All borrowing costs that are interest and other costs incurred in connection with the borrowing of funds that are directly attributable to the acquisition, construction or production of a qualifying asset that necessarily take a substantial period of time to get ready for their intended use or sale are capitalised as part of the cost of that asset until substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete. Other borrowing costs are recognised as an expense in the period in which they are incurred. The interest expense is calculated using the effective interest rate method. Property, Plant and Equipment Depreciation is provided on a straight-line basis to allocate the gross carrying amounts of the assets less their residual values over their estimated useful lives of each part of an item of these assets. The annual rates of depreciation are as follows: Leasehold property and improvements Plant and equipment Construction in progress Over the terms of lease from 5.88% to 8.33% 5.88% to 33.3% Not depreciated
An asset is depreciated when it is available for use until it is derecognised even if during that period the item is idle. Fully depreciated assets still in use are retained in the nancial statements. Property, plant and equipment are carried at cost on initial recognition and after initial recognition at cost less any accumulated depreciation and any accumulated impairment losses. The gain or loss arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item and is recognised in prot or loss. The residual value and the useful life of an asset is reviewed at least at each end of the reporting year and, if expectations differ signicantly from previous estimates, the changes are accounted for as a change in an accounting estimate, and the depreciation charge for the current and future periods are adjusted. Cost also includes acquisition cost, borrowing cost capitalised and any cost directly attributable to bringing the asset or component to the location and condition necessary for it to be capable of operating in the manner intended by management. Subsequent costs are recognised as an asset only when it is probable that future economic benets associated with the item will ow to the entity and the cost of the item can be measured reliably. All other repairs and maintenance are charged to prot or loss when they are incurred. Segment Reporting The group discloses nancial and descriptive information about its reportable segments. Reportable segments are operating segments or aggregations of operating segments that meet specied criteria. Operating segments are components about which separate nancial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Generally, nancial information is reported on the same basis as is used internally for evaluating operating segment performance and deciding how to allocate resources to operating segments.
44

Leases Whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date, that is, whether (a) fullment of the arrangement is dependent on the use of a specic asset or assets (the asset); and (b) the arrangement conveys a right to use the asset. Leases are classied as nance leases if substantially all the risks and rewards of ownership are transferred to the lessee. All other leases are classied as operating leases. At the commencement of the lease term, a nance lease is recognised as an asset and as a liability in the statement of nancial position at amounts equal to the fair value of the leased asset or, if lower, the present value of the minimum lease payments, each determined at the inception of the lease. The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease, if this is practicable to determine, the lessees incremental borrowing rate is used. Any initial direct costs of the lessee are added to the amount recognised as an asset. The excess of the lease payments over the recorded lease liability are treated as nance charges which are allocated to each reporting year during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent rents are charged as expenses in the reporting years in which they are incurred. The assets are depreciated as owned depreciable assets. Leases where the lessor effectively retains substantially all the risks and benets of ownership of the leased assets are classied as operating leases. For operating leases, lease payments are recognised as an expense in prot or loss on a straight-line basis over the term of the relevant lease unless another systematic basis is representative of the time pattern of the users benet, even if the payments are not on that basis. Lease incentives received are recognised in prot or loss as an integral part of the total lease expense. Rental income from operating leases is recognised in prot or loss on a straight-line basis over the term of the relevant lease unless another systematic basis is representative of the time pattern of the users benet, even if the payments are not on that basis. Initial direct cost incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term. Subsidiaries A subsidiary is an entity including unincorporated and special purpose entity that is controlled by the group. Control is the power to govern the nancial and operating policies of an entity so as to obtain benets from its activities accompanying a shareholding of more than one half of the voting rights or the ability to appoint or remove the majority of the members of the board of directors or to cast the majority of votes at meetings of the board of directors. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the group controls another entity. In the companys own separate nancial statements, an investment in a subsidiary is stated at cost adjusted for any value in the contingent consideration less any allowance for impairment in value. Impairment loss recognised in prot or loss for a subsidiary 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. The net book value of a subsidiary is not necessarily indicative of the amounts that would be realised in a current market exchange.
45

Associates An associate is an entity including an unincorporated entity in which the investor has a substantial nancial interest (usually not less than 20% of the voting power), signicant inuence and that is neither a subsidiary nor a joint venture of the investor. Signicant inuence is the power to participate in the nancial and operating policy decisions of the investee but is not control or joint control over those policies. The accounting for investments in an associate is on the equity method. The investment in an associate is carried in the statement of nancial position at cost adjusted for any value in the contingent consideration plus post-acquisition changes in the share of net assets of the associate, less any impairment. The prot or loss reects the investors share of the results of operations of the associate. Losses of an associate in excess of the groups interest in the relevant entity are not recognised except to the extent that the group has an obligation. An investment in an associate includes goodwill on acquisition, which is accounted for in accordance with FRS 103 Business Combinations. However the entire carrying amount of the investment is tested under FRS 36 for impairment, by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount, whenever application of the requirements in FRS 39 indicates that the investment may be impaired. Prots and losses resulting from transactions between the group and an associate are recognised in the nancial statements only to the extent of unrelated investors interests in the associate. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of an associate are changed where necessary to ensure consistency with the policies adopted by the group. The net book value of an associate is not necessarily indicative of the amounts that would be realised in a current market exchange. The investor discontinues the use of the equity method from the date that it ceases to have signicant inuence over the associate and accounts for the investment in accordance with FRS 39 from that date. Any gain or loss is recognised in prot or loss. Any investment retained in the former associate is measured at its fair value at the date that it ceases to be an associate. In the companys own separate nancial statements, an investment in an associate is stated at cost adjusted for any value in the contingent consideration less any allowance for impairment in value. Impairment loss recognised in prot or loss for an associate 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. The net book value of an associate is not necessarily indicative of the amount that would be realised in a current market exchange. Business Combinations Business combinations are accounted for by applying the acquisition method. There were none during the reporting year. Non-controlling interests The non-controlling interests in the net assets and net results of a consolidated subsidiary are shown separately in the appropriate components of the consolidated nancial statements. For each business combination, any non-controlling interest in the acquiree (subsidiary) is initially measured either at fair value or at the non-controlling interests proportionate share of the acquirees identiable net assets. Where the non-controlling interest is measured at fair value, the valuation techniques and key model inputs used are disclosed in the relevant note. Prot or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the noncontrolling interests even if this results in the non-controlling interests having a decit balance. Goodwill Goodwill is recognised as of the acquisition date measured as the excess of (a) over (b); (a) being the aggregate of: (i) the consideration transferred which generally requires acquisition-date fair value; (ii) the amount of any noncontrolling interest in the acquiree measured in accordance with FRS 103 (measured either at fair value or as the non-controlling interests proportionate share of the acquirees net identiable assets); and (iii) in a business combination achieved in stages, the acquisition-date fair value of the acquirers previously held equity interest in the acquiree; and (b) being the net of the acquisition-date amounts of the identiable assets acquired and the liabilities assumed measured in accordance with this FRS 103.
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Goodwill (Contd) After initial recognition, goodwill acquired in a business combination is measured at cost less any accumulated impairment losses. Goodwill is not amortised. Irrespective of whether there is any indication of impairment, goodwill (and also an intangible asset with an indenite useful life or an intangible asset not yet available for use) are tested for impairment, at least annually. Goodwill impairment is not reversed in any circumstances. For the purpose of impairment testing and since the acquisition date of the business combination, goodwill is allocated to each cash-generating unit, or groups of cash-generating units that are expected to benet from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree were assigned to those units or groups of units. Each unit or group of units to which the goodwill is so allocated represent the lowest level within the entity at which the goodwill is monitored for internal management purposes and is not larger than a segment. Impairment of Non-Financial Assets Irrespective of whether there is any indication of impairment, an annual impairment test is performed at the same time every year on an intangible asset with an indenite useful life or an intangible asset not yet available for use. The carrying amount of other non-nancial assets is reviewed at each end of the reporting year for indications of impairment and where an asset is impaired, it is written down through prot or loss to its estimated recoverable amount. The impairment loss is the excess of the carrying amount over the recoverable amount and is recognised in prot or loss. The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash ows are discounted to their present value using a pre-tax discount rate that reects current market assessments of the time value of money and the risks specic to the asset. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identiable cash ows (cash-generating units). At each end of the reporting year non-nancial assets other than goodwill with impairment loss recognised in prior periods are assessed for possible reversal of the impairment. An impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Inventories Inventories are measured at the lower of cost (rst in rst out method) and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. A write down on cost is made for where the cost is not recoverable or if the selling prices have declined. Cost includes all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Financial Assets Initial recognition and measurement and derecognition of nancial assets: A nancial asset is recognised on the statement of nancial position when, and only when, the entity becomes a party to the contractual provisions of the instrument. The initial recognition of nancial assets is at fair value normally represented by the transaction price. The transaction price for nancial asset not classied at fair value through prot or loss includes the transaction costs that are directly attributable to the acquisition or issue of the nancial asset. Transaction costs incurred on the acquisition or issue of nancial assets classied at fair value through prot or loss are expensed immediately. The transactions are recorded at the trade date method. Irrespective of the legal form of the transactions performed, nancial assets are derecognised when they pass the substance over form based on the derecognition test prescribed by FRS 39 relating to the transfer of risks and rewards of ownership and the transfer of control.
47

Financial Assets (Contd) Subsequent measurement: Subsequent measurement based on the classication of the nancial assets in one of the following four categories under FRS 39 is as follows: 1. Financial assets at fair value through prot or loss: As at end of the reporting year date there were no nancial assets classied in this category. Loans and receivables: Loans and receivables are non-derivative nancial assets with xed or determinable payments that are not quoted in an active market. Assets that are for sale immediately or in the near term are not classied in this category. These assets are carried at amortised costs using the effective interest method (except that short-duration receivables with no stated interest rate are normally measured at original invoice amount unless the effect of imputing interest would be signicant) minus any reduction (directly or through the use of an allowance account) for impairment or uncollectibility. Impairment charges are provided only when there is objective evidence that an impairment loss has been incurred as a result of one or more events that occurred after the initial recognition of the asset (a loss event) and that loss event (or events) has an impact on the estimated future cash ows of the nancial asset or group of nancial assets that can be reliably estimated. The methodology ensures that an impairment loss is not recognised on the initial recognition of an asset. Losses expected as a result of future events, no matter how likely, are not recognised. For impairment, the carrying amount of the asset is reduced through use of an allowance account. The amount of the loss is recognised in prot or loss. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. Typically the trade and other receivables are classied in this category. Held-to-maturity nancial assets: As at end of the reporting year date there were no nancial assets classied in this category. Available-for-sale nancial assets: As at end of the reporting year date there were no nancial assets classied in this category.
2.
3.
4.
Cash and Cash Equivalents Cash and cash equivalents include bank and cash balances, on demand deposits and any highly liquid debt instruments purchased with an original maturity of three months or less. For the statement of cash ows the item includes cash and cash equivalents less cash subject to restriction and bank overdrafts payable on demand that form an integral part of cash management. Derivatives Derivatives: All derivatives are initially recognised and subsequently carried at fair value. Certain derivatives are entered into in order to hedge some transactions and all the strict hedging criteria prescribed by FRS 39 are not met. In those cases, even though the transaction has its economic and business rationale, hedge accounting cannot be applied. As a result, changes in the fair value of those derivatives are recognised directly in prot or loss and the hedged item follows normal accounting policies.
48

Financial Liabilities Initial recognition and measurement: A nancial liability is recognised on the statement of nancial position when, and only when, the entity becomes a party to the contractual provisions of the instrument and it is derecognised when the obligation specied in the contract is discharged or cancelled or expires. The initial recognition of nancial liability is at fair value normally represented by the transaction price. The transaction price for nancial liability not classied at fair value through prot or loss includes the transaction costs that are directly attributable to the acquisition or issue of the nancial liability. Transaction costs incurred on the acquisition or issue of nancial liability classied at fair value through prot or loss are expensed immediately. The transactions are recorded at the trade date. Financial liabilities including bank and other borrowings are classied as current liabilities unless there is an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting year. Subsequent measurement: Subsequent measurement based on the classication of the nancial liabilities in one of the following two categories under FRS 39 is as follows: 1. Liabilities at fair value through prot or loss: As at end of the reporting year date there were no nancial liabilities classied in this category. Other nancial liabilities: All liabilities, which have not been classied as in the previous category fall into this residual category. These liabilities are carried at amortised cost using the effective interest method. Trade and other payables and borrowings are usually classied in this category. Items classied within current trade and other payables are not usually re-measured, as the obligation is usually known with a high degree of certainty and settlement is short-term.
2.
Financial Guarantees A nancial guarantee contract requires that the issuer makes specied payments to reimburse the holder for a loss when a specied debtor fails to make payment when due. Financial guarantee contracts are initially recognised at fair value and are subsequently measured at the greater of (a) the amount determined in accordance with FRS 37 and (b) the amount initially recognised less, where appropriate, cumulative amortisation recognised in accordance with FRS18. Finance Leases of Lessor An amount due from a lessee is recognised as receivables at an amount equal to the net investment in the lease. The recognition of nance income is based on a pattern reecting a constant periodic rate of return on the lessors net investment outstanding in respect of the nance leases. Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease.
49

Fair Value of Financial Instruments The carrying values of current nancial instruments approximate their fair values due to the short-term maturity of these instruments. Disclosures of fair value are not made when the carrying amount of current nancial instruments is a reasonable approximation of fair value. The fair values of non-current nancial instruments may not be disclosed separately unless there are signicant differences at the end of the reporting year and in the event the fair values are disclosed in the relevant notes. The maximum exposure to credit risk is the fair value of the nancial instruments at the end of the reporting year. The fair value of a nancial instrument is derived from an active market or by using an acceptable valuation technique. The appropriate quoted market price for an asset held or liability to be issued is usually the current bid price without any deduction for transaction costs that may be incurred on sale or other disposal and, for an asset to be acquired or for liability held, the asking price. If there is no market, or the markets available are not active, the fair value is established by using an acceptable valuation technique. The fair value measurements are classied using a fair value hierarchy of 3 levels that reects the signicance of the inputs used in making the measurements, that is, Level 1 for the use of quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 for the use of 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 for the use of inputs for the asset or liability that are not based on observable market data (unobservable inputs). The level is determined on the basis of the lowest level input that is signicant to the fair value measurement in its entirety. Where observable inputs that require signicant adjustment based on unobservable inputs, that measurement is a Level 3 measurement. Equity Equity instruments are contracts that give a residual interest in the net assets of the company. Ordinary shares are classied as equity. Equity instruments are recognised at the amount of proceeds received net of incremental costs directly attributable to the transaction. Dividends on equity are recognised as liabilities when they are declared. Interim dividends are recognised when declared by the directors. Treasury Shares Where the company reacquires its own equity instruments as treasury shares, the consideration paid, including any directly attributable incremental cost is deducted from equity attributable to the companys owners until the shares are cancelled, reissued or disposed of. Where such shares are subsequently sold or reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the companys owners and no gain or loss is recognised in prot or loss. Provisions A liability or provision is recognised when there is a present obligation (legal or constructive) as a result of a past event, it is probable that an outow of resources embodying economic benets will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are made using best estimates of the amount required in settlement and where the effect of the time value of money is material, the amount recognised is the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reects current market assessments of the time value of money and the risks specic to the obligation. The increase in the provision due to passage of time is recognised as interest expense. Changes in estimates are reected in prot or loss in the reporting year they occur. Critical Judgements, Assumptions and Estimation Uncertainties The critical judgements made in the process of applying the accounting policies that have the most signicant effect on the amounts recognised in the nancial statements and the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting year, that have a signicant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next reporting year are discussed below. These estimates and assumptions are periodically monitored to ensure they incorporate all relevant information available at the date when nancial statements are prepared. However, this does not prevent actual gures differing from estimates.
50

Critical Judgements, Assumptions and Estimation Uncertainties (Contd) Construction contracts: On construction contracts, revenues are recorded on the stage of completion basis. The stage of completion is determined by dividing the cumulative costs incurred as at end of the reporting period by the sum of incurred costs and anticipated costs for completing a contract. The stage of completion is then applied to the contract value to determine the cumulative revenue earned. This method of revenue recognition requires management to prepare cost estimates to complete contracts in progress, and in making such estimates, judgments are required to evaluate contingencies such as potential variances in scheduling, cost of materials, labour costs and productivity, the impact of change orders or liability claims. All known or anticipated losses based on these estimates are provided for in their entirety without regard to the stage of completion. Estimated revenues on contracts include future revenues from claims when such additional revenues can be reliably established. These estimates are based on managements business practices as well as its historical experience, and management regularly reviews underlying estimates of project protability. Revenue from contracts is recognised on the stage of completion method the outcome of the contract can be estimated reliably. Recognised revenues and prots are subject to revisions during the project in the event that the assumptions regarding the overall project outcome are revised. Current sales and prot estimates for projects may materially change due to the early stage of a long-term project, new technology, changes in the project scope, changes in costs, changes in timing, changes in customers plans, realisation of penalties, and other corresponding factors. Allowance for doubtful trade accounts and nance lease receivables: An allowance is made for doubtful trade accounts and nance lease receivables for estimated losses resulting from the subsequent inability of the customers to make required payments. If the nancial conditions of the customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required in future periods. Management generally analyses trade receivables and analyses historical bad debts, customer concentrations, customer creditworthiness, and changes in customer payment terms when evaluating the adequacy of the allowance for doubtful trade receivables and nance lease receivables. To the extent that it is feasible impairment and uncollectibility is determined individually for each item. In cases where that process is not feasible, a collective evaluation of impairment is performed. At the end of the reporting year, the trade and nance lease receivables carrying amount approximates the fair value and the carrying amounts might change materially within the next reporting year but these changes would not arise from assumptions or other sources of estimation uncertainty at the end of the reporting year. Net realisable value of inventories: A review is made periodically on inventory for excess inventory and declines in net realisable value below cost and an allowance is recorded against the inventory balance for any such declines. The review requires management to consider the future demand for the products. In any case the realisable value represents the best estimate of the recoverable amount and is based on the acceptable evidence available at the end of the reporting year and inherently involves estimates regarding the future expected realisable value. The usual considerations for determining the amount of allowance or write-down include ageing analysis, technical assessment and subsequent events. In general, such an evaluation process requires signicant judgement and materially affects the carrying amount of inventories at the end of the reporting year. Possible changes in these estimates could result in revisions to the stated value of the inventories. The carrying amount of inventories at the end of the reporting year was $8,690,000 (2010: $9,325,000). Income tax expense: The entity recognises tax liabilities and assets tax based on an estimation of the likely taxes due, which requires signicant judgement as to the ultimate tax determination of certain items. Where the actual amount arising from these issues differs from these estimates, such differences will have an impact on income tax and deferred tax amounts in the period when such determination is made.
51

Critical Judgements, Assumptions and Estimation Uncertainties (Contd) Deferred tax asset estimation: Management judgement is required in determining the amount of current and deferred tax recognised as income or expense and the extent to which deferred tax assets can be recognised. A deferred tax asset is recognised if it is more likely than not that sufcient taxable income will be available in the future against which the temporary differences and unused tax losses can be utilised. Management also considers future taxable income and tax planning strategies in assessing whether deferred tax assets should be recognised in order to reect changed circumstances as well as tax regulations. As a result, due to their inherent nature, it is likely that deferred tax calculation relates to complex fact patterns for which assessments of likelihood are judgmental and not susceptible to precise determination. Property, plant and equipment: There are property and group of plant and equipment stated at carrying value of $34,123,000 (2010: $31,368,000). An assessment is made at each end of the reporting year whether there is any indication that the asset may be impaired. If any such indication exists, an estimate is made of the recoverable amount of the asset. The recoverable amounts of cash-generating units if applicable is determined based on the fair value less cost to sell method. The fair value is based on an independent valuation. These calculations require the use of estimates. It is impracticable to disclose the extent of the possible effects. It is reasonably possible, based on existing knowledge, that outcomes within the next reporting year that are different from assumptions could require a material adjustment to the carrying amount of the balances affected. Useful lives of plant and equipment: The estimates for the useful lives and related depreciation charges for plant and equipment is based on commercial and other factors which could change signicantly as a result of innovations and competitor actions in response to market conditions. The depreciation charge is increased where useful lives are less than previously estimated lives, or the carrying amounts written off or written down for technically obsolete items or assets that have been abandoned. It is impracticable to disclose the extent of the possible effects. It is reasonably possible, based on existing knowledge, that outcomes within the next reporting year that are different from assumptions could require a material adjustment to the carrying amount of the balances affected. The carrying amount of the class of assets at the end of the reporting year affected by the assumption is $13,305,000 (2010: $13,783,000). Estimated impairment of subsidiary or associate: Where a subsidiary or associate is in net equity decit and has suffered losses a test is made whether the investment in the investee has suffered any impairment, in accordance with the stated accounting policy. This determination requires signicant judgement. An estimate is made of the future protability of the investee, and the nancial health of and near-term business outlook for the investee, including factors such as industry and sector performance, and operational and nancing cash ow. The amount of the relevant investment in subsidiaries and associates are $560,000, (2010: $3,991,000) and $1,741,000 (2010: $1,741,000) respectively. It is impracticable to disclose the extent of the possible effects. It is reasonably possible, based on existing knowledge, that outcomes within the next reporting year that are different from assumptions could require a material adjustment to the carrying amount of the asset or liability affected. Determination of functional currency: The group measures foreign currency transactions in the respective functional currencies of the company and its subsidiaries. In determining the functional currencies of the entities in the group, judgement is required to determine the currency that mainly inuences sales prices for goods and services and of the country whose competitive forces and regulations mainly determines the sales prices of its goods and services. The functional currencies of the entities in the group are determined based on managements assessment of the economic environment in which the entities operate and the entities process of determining sales prices.
52

3. Related Party Relationships and Transactions
FRS 24 denes a related party as a person or entity that is related to the reporting entity and it includes (a) A person or a close member of that persons family if that person: (i) has control or joint control over the reporting entity; (ii) has signicant inuence over the reporting entity; or (iii) is a member of the key management personnel of the reporting entity or of a parent of the reporting entity. (b) An entity is related to the reporting entity if any of the following conditions apply: (i) The entity and the reporting entity are members of the same group. (ii) One entity is an associate or joint venture of the other entity. (iii) Both entities are joint ventures of the same third party. (iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity. (v) The entity is a post-employment benet plan for the benet of employees of either the reporting entity or an entity related to the reporting entity. (vi) The entity is controlled or jointly controlled by a person identied in (a). (vii) A person identied in (a)(i) has signicant inuence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity). 3.1 Related companies: There are transactions and arrangements between the reporting entity and members of the group and the effects of these on the basis determined between the parties are reected in these nancial statements. The current intercompany balances are unsecured without xed repayment terms and interest unless stated otherwise. For noncurrent balances if signicant an interest is imputed unless stated otherwise based on the prevailing market interest rate for similar debt less the interest rate if any provided in the agreement for the balance. For nancial guarantees an amount is imputed and is recognised accordingly if signicant where no charge is payable. Intragroup transactions and balances that have been eliminated in these consolidated nancial statements are not disclosed as related party transactions and balances below. 3.2 Other related parties: There are transactions and arrangements between the reporting entity and related parties and the effects of these on the basis determined between the parties are reected in these nancial statements. The current related party balances are unsecured without xed repayment terms and interest unless stated otherwise. For non-current balances if signicant an interest is imputed unless stated otherwise based on the prevailing market interest rate for similar debt less the interest rate if any provided in the agreement for the balance. For nancial guarantees an amount is imputed and is recognised accordingly if signicant where no charge is payable. Signicant related party transactions: In addition to the transactions and balances disclosed elsewhere in the notes to the nancial statements, this item includes the following:Group 2011 $000 Purchase of goods and services Sales of goods and services 732 244 2010 $000 807 Company 2011 2010 $000 $000
53

3.
3.3
Related Party Relationships and Transactions (Contd)

Key management compensation: Group 2011 $000 Salaries and other short-term employee benets 3,815 2010 $000 2,940
The above amounts are included under employee benets expense. Included in the above amounts are following items: Company 2011 $000 Directors prot share Remuneration of directors of the company Fees to directors of the company 1,950 843 186 2010 $000 1,646 727 80
Further information about the remuneration of individual directors is provided in the report on corporate governance. Key management personnel are directors and those persons having authority and responsibility for planning, directing and controlling the activities of the company, directly or indirectly. The above amounts for key management compensation are for all the directors of the company. 3.4 Other receivables from and other payables to related parties: The trade transactions and the trade receivables and payables balances arising from sales and purchases of goods and services are disclosed elsewhere in the notes to the nancial statements. The movements in other receivables from and other payables to related parties are as follows: Subsidiaries Company 2011 2010 $000 $000 Other receivables/(other payables): Balance at beginning of the year net debit Amount paid out and settlement of liabilities on behalf of another party Allowance for impairment Allowance for impairment - reversal Amount reclassied from investment in subsidiaries Balance at end of the year net debit 33,286 12,140 (2,500) 3,898 46,824 1,753 12,904 139 18,490 33,286
54

3.
3.4
Related Party Relationships and Transactions (Contd)

Other receivables from and other payables to related parties: Associate Group 2011 $000 Other receivables/(other payables): Balance at beginning of the year net debit Increase in share capital Amount paid out and settlement of liabilities on behalf of another party Amount paid in and settlement of liabilities on behalf of the company Allowance for impairment Balance at end of the year net debit 2010 $000 Company 2011 2010 $000 $000
35 5,624 5,659
2,471 (941) (1,245) (250) 35 Directors Group
2,584 (941) (1,643)
2011 $000 Other receivables/(other payables): Balance at beginning of the year net credit Amount paid out and settlement of liabilities on behalf of another party Acquisition of subsidiary Balance at end of the year net credit
2010 $000
Company 2011 2010 $000 $000
(400) 400
(7) 7 (400) (400)
4.
Revenue
Group 2011 $000 Amount recognised from construction contracts Rendering of services Rental income 118,863 5,992 943 125,798 2010 $000 101,423 1,404 756 103,583
55

5. Other Credits and (Other Charges)
Group 2011 $000 Foreign exchange adjustments losses Allowance for impairment on trade receivables reversal/(loss) Allowance for impairment on other receivables Bad debt written off Negative goodwill arising from acquisition of subsidiaries Gains on disposal of plant and equipment Government grant income from jobs credit scheme Inventories written down Inventories written off Sundry income Sundry expenses Net Presented in prot or loss as: Other Charges Other Credits Net (779) 344 (5) 118 (325) (83) 990 (38) 222 2010 $000 (2,080) (467) (500) 72 6 203 474 (22) (2,314)
(1,230) 1,452 222
(3,069) 755 (2,314)
6.
Administrative Expenses
The major components include the following: Group 2011 $000 Depreciation expense Employee benets expense 2,628 13,262 2010 $000 1,646 9,823
7.
Finance Costs
Group 2011 $000 Interest expense 1,259 2010 $000 1,353
56

8. Employee Benets Expense
Group 2011 $000 Employee benets expense Contributions to dened contribution plan Total employee benets expense The employee benets expense is charged as follows: Cost of sales Administrative expenses 18,933 1,098 20,031 2010 $000 13,711 782 14,493
6,769 13,262 20,031
4,670 9,823 14,493
9.
9A.
Income Tax
Components of tax expense recognised in prot or loss include: Group 2011 $000 Current tax expense: Current tax expense Under adjustments to current tax in respect of prior periods Subtotal Deferred tax expense: Deferred tax expense Under adjustments to deferred tax in respect of prior periods Prior years tax loss carryforwards utilised Subtotal Total income tax expense 2010 $000
4,051 282 4,333
3,344 517 3,861
186 22 208 4,541
580 398 (6) 972 4,833
57

9.
9A.
Income Tax (Contd)

Components of tax expense recognised in prot or loss include: (Contd) The income tax in prot or loss varied from the amount of income tax amount determined by applying the Singapore income tax rate of 17% (2010: 17%) to prot or loss before income tax as a result of the following differences: Group 2011 $000 Prot before tax Add/(Less): Share of (prot) loss from equity-accounted associates 21,333 (16) 21,317 3,624 13 (156) 860 282 (147) 22 (7) 50 4,541 2010 $000 19,401 941 20,342 3,458 (305) (111) 625 915 (111) (6) 342 26 4,833
Income tax expense at the above rate Not deductible / (not liable to tax) items Tax exemptions Deferred tax assets not recognised Under adjustments to tax in respect of prior periods Effect of different tax rates in different countries Prior years unrecorded tax loss carryforwards utilised Change in tax rates Other minor items less than 3% each Total income tax expense There are no income tax consequences of dividends to owners of the company.
Temporary differences arising in connection with interests in subsidiaries and associates are insignicant. 9B. Deferred tax expense recognised in prot or loss include: Group 2011 $000 Excess of net book value of plant and equipment over tax values Deferred tax liabilities not recognised Tax loss carryforwards Provisions Deferred tax assets not recognised Other Total deferred tax expense recognised in prot or loss 96 (32) (845) (22) 860 151 208 2010 $000 395 398 (609) 25 625 138 972
58

9.
9C.
Income Tax (Contd)

Deferred tax balance in the statement of nancial position: Group 2011 $000 Acquisition of subsidiaries Excess of net book value of plant and equipment over tax values Deferred tax liabilities not recognised Tax loss carryforwards Provisions Deferred tax assets not recognised Other Total (919) (32) 2,996 64 (3,020) (289) (1,200) 2010 $000 (41) (859) 2,151 42 (2,160) (138) (1,005) Company 2011 2010 $000 $000 (289) (289) (138) (138)
Presented in the statement of nancial position as follows: Group 2011 $000 Deferred tax liabilities (1,200) 2010 $000 (1,005) Company 2011 2010 $000 $000 (289) (138)
It is impracticable to estimate the deferred tax amount expected to be settled or used within one year.
10.
Earnings Per Share

The following table illustrates the numerators and denominators used to calculate basic and diluted earnings per share of no par value: Group 2011 $000 A. B. C. D. Numerators: earnings attributable to equity: Continuing operations: attributable to equity holders Total basic earnings Diluted earnings Denominators: weighted average number of equity shares Basic Dilutive share warrants effect Diluted 18,709 18,709 18,709 192,620 192,620 9.71 9.71 2010 $000 16,382 16,382 16,382 138,432 24,057 162,489 11.83 10.08
E.
Basic earnings per share cents Diluted earnings per share cents
The weighted average number of equity shares refers to shares in circulation during the reporting period. The dilutive effect derives from share warrants issue.
59

10. Earnings Per Share (Contd)
Impact on EPS from the change in accounting policy in 2010: Impact on basic earnings per share 2010 Cents Arising from adoption of Revised FRS 27 1.38 Impact on diluted earnings per share 2010 Cents 1.18
The basic and diluted earnings per share for the year ended 30 September 2010 would have been 10.45 cents and 8.90 cents respectively had the Revised FRS 27 not been adopted.
11.
Liquidation of Subsidiary
During the reporting year 2009, the Groups subsidiary, Fraser Thermal Technology Pte. Ltd, commenced proceedings for incompulsory liquidation. The following table summarises the carrying value of the assets and liabilities of the subsidiary as at 30 September 2011: 2011 $000 Plant and equipment Cash and cash equivalents Trade and other payables Non-controlling interest Net assets disposed of Loss on liquidation of subsidiary Total consideration Net cash outow on disposal: Cash consideration Cash balance disposed of Net 1 161 (11) (69) 82 82 2010 $000 1 509 (274) 3
82 (161) (79)
12.
Dividends on Equity Shares Group 2011 $000 Interim tax exempt (one-tier) dividend paid of 6 cents (2010: Nil) per share and special interim tax exempt (one-tier) dividend paid of 3 cents (2010: Nil) per share Total dividends paid in the year Interim tax exempt (one-tier) dividend payable of 3 cents (2010: 10.5 cents) per share Total dividends payable in the year Total dividends paid and payable in the year 2010 $000 Company 2011 2010 $000 $000
18,099 18,099 6,182 6,182 24,281
13,745 13,745 13,745
18,099 18,099 6,182 6,182 24,281
13,745 13,745 13,745
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13. Property, Plant and Equipment
Leasehold Construction- property and in-progress improvements $000 $000
Group
Plant and equipment $000
Total $000
Cost: At 1 October 2009 Foreign exchange adjustments Additions Arising from acquisition of subsidiaries Reclassications Disposals At 30 September 2010 Foreign exchange adjustments Additions Transfer to leasehold property and improvements Reclassications Liquidation of subsidiary Disposals At 30 September 2011 Accumulated depreciation: At 1 October 2009 Foreign exchange adjustments Depreciation for the year Disposals At 30 September 2010 Foreign exchange adjustments Depreciation for the year Liquidation of subsidiary Disposals At 30 September 2011 Net book value: At 1 October 2009 At 30 September 2010 At 30 September 2011
3,801 (19) 7,331 (563) 10,550 (9,938) (612)
5,229 1,900 1,751 8,880 5,005 9,938 23,823
17,542 (682) 2,177 220 563 (46) 19,774 248 1,180 612 (4) (643) 21,167
26,572 (701) 11,408 1,971 (46) 39,204 248 6,185 (4) (643) 44,990
1,366 479 1,845 1,160 3,005
4,210 (113) 1,925 (31) 5,991 105 2,224 (3) (455) 7,862
5,576 (113) 2,404 (31) 7,836 105 3,384 (3) (455) 10,867
3,801 10,550
3,863 7,035 20,818
13,332 13,783 13,305
20,996 31,368 34,123
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13. Property, Plant and Equipment (Contd)
Plant and equipment $000
Company
Cost: At 1 October 2009 Additions At 30 September 2010 Additions At 30 September 2011 Accumulated Depreciation: At 1 October 2009 Depreciation for the year At 30 September 2010 Depreciation for the year At 30 September 2011 Net book value: At 1 October 2009 At 30 September 2010 At 30 September 2011 Certain items of plant and equipment are under nance lease agreements (see Note 25).
1 1 1
1 1 1
Leasehold property and improvements at a carrying value of $8,008,000 (2010: $7,035,000) are pledged as security for certain bank facilities (see Note 26). The depreciation expense is charged as follows: Group 2011 $000 Cost of sales Administrative expenses 756 2,628 3,384 2010 $000 758 1,646 2,404
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14. Investments in Subsidiaries
Company 2011 2010 $000 $000 Movements during the year: Cost at beginning of the year Additions Decrease in quasi-equity loans to subsidiaries Cost at the end of the year Total cost comprising: Unquoted share at cost Quasi-equity loans to subsidiary @ Less allowance for impairment Total at cost Net book value of subsidiaries
11,455 102 (3,898) 7,659 7,752 (93) 7,659 16,174
29,945 (18,490) 11,455 7,650 3,898 (93) 11,455 13,871
@ This is interest free quasi-equity loan from the company to subsidiary, Petro Process System Pte. Ltd. During the year, management has reclassied $3,898,000 of such loans to trade and other receivables.
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14. Investments in Subsidiaries (Contd)
The subsidiaries held by the company and the group are listed below: Place of Effective business percentage Cost in and of equity held books incorporation by group of company 2011 2010 2011 2010 % % $000 $000
Name of subsidiaries (and independent auditors)
Principal activities
Held by the company #a Petro Process System Pte. Ltd. #a Technics Offshore Engineering Pte Ltd Technics Offshore International Pte. Ltd. Technics Systems Solutions Pte Ltd (incorporated on 18 August 2011) AMF Tech Asia Sdn. Bhd. (SQ Morison)
Engineering and design of process modules and equipment for oil and gas exploration and production Design, fabrication, installation and commissioning of process modules and equipment for oil and gas exploration and production Dormant
Singapore
100
100
92
92
Singapore
100
100
7,507
7,507
#a
Singapore
51
51
51
51
#c
Design, engineering, integration, testing and supply of turbo machinery control (TMC) for oil and gas, power and general industries
Singapore
51
102
#b
Dormant
Malaysia
100
100
Held through Technics Offshore Engineering Pte Ltd PT. Technics Fabrication and installation of process #b Offshore Jaya modules and equipment for oil and (KAP. Riyanto, gas exploration and production SE, Ak) Fraser Thermal Technology Pte. Ltd. Manufacturers, designers, engineers of thermal technology products in the marine, offshore, oil and gas, power, renery and other related industries Provide marketing, co-ordination and administrative support services
Indonesia
100
100
Singapore
51
#c
Technics Engineering Australia Pty Ltd
Australia
100
100
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14. Investments in Subsidiaries (Contd)
Place of Effective business percentage and of equity held Cost in books incorporation by group of company 2011 2010 2011 2010 % % $000 $000
Name of subsidiaries (and independent auditors)
Principal activities
Held through Petro Process System Pte. Ltd. #a Norr Systems Manufacture of control systems and Pte. Ltd. solutions for marine, offshore, oil and gas, power, waterworks and general industries #a Wecom Manufacture and repair of marine Engineering and industrial mechanical parts and Pte Ltd engineering works, process industries construction and maintenance activities Held through Wecom Engineering Pte Ltd #a Wecom Marine Pte Ltd Repair tank cleaning and other ocean-going vessel, Non-building Construction NEC Held through Norr Systems Pte Ltd Investment holding and sales and #b M2E Corporation marketing support activities for PRC Ltd. (S. Y. Yang & operations Company) #a Norr Systems Manufacture of control systems and Hydraulics Pte Ltd solutions in marine, offshore, oil and (incorporated on gas, power, waterworks and related 18 March 2011) industries Held through Norr Systems Hydraulics Pte Ltd #a Bloomfoss Pte Ltd Manufacture and repair of pumps and (incorporated on hydraulic components 5 May 2011) Held through M2E Corporation Ltd #d M2E Corporation Oil gas supply, aerospace repair (Suzhou) Co., and OEM manufacturing, medical Limited equipment manufacturing, EMS for (RSM China Certied multi-national companies Public Accountants)
* #a #b #c #d
Singapore
51
51
Singapore
55
55
Singapore
55
55
Hong Kong
29
29
Singapore
31
Singapore
31
Peoples Republic of China
29
29
Amount is less than $500. Audited by RSM Chio Lim LLP. Other independent auditors. Audited by rms of accountants other than member rms of RSM International of which RSM Chio Lim LLP in Singapore is a member. Their names are indicated above. Not audited, as it is immaterial. Audited by member of RSM International of which RSM Chio Lim LLP in Singapore is a member.
65

15. Investments in Associates
Group 2011 $000 Movements in carrying value: At 1 October 2009 Additions Share of the prot/(loss) for the year Foreign exchange adjustments Less allowance for impairment Carrying value: Unquoted equity shares at cost Less allowance for impairment Share of post-acquisition losses, net of dividends received Movements in above allowance for impairment: Balance at beginning of the year Impairment loss charged to prot or loss included in other charges Balance at end of the year The associates are listed below: Effective percentage of equity held by the group 2011 2010 % % 2010 $000 Company 2011 2010 $000 $000
120 16 12 148 1,861 (1,713) 148
941 (941) 1,741 (1,741)
1,741 (1,741) 1,741 1,741
941 (941) 1,741 (1,741) 800 941 1,741
Name of associates, country of incorporation, place of operations, principal activities and independent auditors
Held by the company #b Hyperbaric and Occupational Medicine Pte. Ltd. Singapore Hyperbaric related and occupational medical treatment Held through Hyperbaric and Occupational Medicine Pte. Ltd. #b Flinders Practice Pte. Ltd. Singapore Hyperbaric related and occupational medical treatment Held through Norr Systems Pte. Ltd. #a First Oil Pte Ltd Singapore Fuel/oil trading and ship bunkering services
#a #b Audited by RSM Chio Lim LLP. In the process of liquidation.
40
40
40
40
20
66

15. Investments in Associates (Contd)
The summarised audited/unaudited nancial information of the associates not adjusted for the percentage ownership held by the company, is as follows: Assets $000 2011 2010 48,319 7,492 Liabilities $000 45,600 5,132 Revenue $000 181,176 142 Prot/(Loss) $000 41 (434)
16.
Finance Lease Receivables

Minimum payments $000 Finance charges $000 Present value $000
Group
2011 Minimum lease payments payable: Due within one year Due within 2 to 5 years Due after 5 years Total
4,811 15,144 616 20,571
(2,290) (4,433) (35) (6,758)
2,521 10,711 581 13,813 Group Present value 2011 $000
Presented in the statement of nancial position as: Finance lease receivables, current Finance lease receivables, non-current
2,521 11,292 13,813
There are nance leasing arrangements for certain tugboats and vessels during the year. The average term of nance leases entered into is 5 to 7 years. The interest rate inherent in the leases is xed at the contract date for the lease terms. The weighted average interest rate on nance lease receivables at end of the reporting year was 9.2% and 22.2%.
67

17. Other Assets, Non-Current
Group 2011 $000 Deposits 700 2010 $000 Company 2011 2010 $000 $000
Deposits relate to down payment for purchase of shares in Control Precision Engineering Pte Ltd.
18.
Inventories
Group 2011 $000 Raw material and consumables Raw material and consumables used, included in cost of sales 8,690 2010 $000 9,325 Company 2011 2010 $000 $000
64,469
41,296
Inventories are stated after allowance. Movements in allowance: Balance at beginning of the year Charged to prot or loss included in other charges Balance at end of the year There are no inventories pledged as security for liabilities. 325 325
19.
Contracts Work-In-Progress
Group 2011 $000 Aggregate amount of costs incurred and recognised prots (less recognised losses) to date on uncompleted contracts Less progress payments received and receivable to date Net amount due from or (to) contract customers at end of the year Included in the accompanying statement of nancial position as follows: Under other assets, current (Note 21) Under other liabilities, current (Note 28) 201,367 (192,500) 8,867 2010 $000 228,788 (232,438) (3,650)
21,063 (12,196) 8,867
12,038 (15,688) (3,650)
68

20. Trade and Other Receivables, Current
Group 2011 $000 Trade receivables: Outside parties Less allowance for impairment Associate (Note 3) Subtotal Other receivables: Subsidiaries (Note 3) Associate (Note 3) Less allowance for impairment Related parties (Note 3) Outside parties Deposits Subtotal Total trade and other receivables Movements in the above allowance: Balance at beginning of the year Charged/(reversal) for trade and other receivables to prot or loss included in other charges / (other credits) Impairment written off Balance at end of the year 2010 $000 Company 2011 2010 $000 $000
21,595 (190) 1,235 22,640
10,790 (657) 1,665 11,798
3 3
6 6
6,307 (648) 59 1,025 595 7,338 29,978
683 (648) 1,044 211 1,290 13,088
49,731 (2,907) 394 47,218 47,221
33,693 (407) 33,286 33,292
1,305
668
407
546
(344) (123) 838
967 (330) 1,305
2,500 2,907
(139) 407
21.
Other Assets, Current

Group 2011 $000 Balance on construction contract costs (Note 19) Deposits to secure services Prepayments Deferred expenses 21,063 12,578 33,641 2010 $000 12,038 300 342 298 12,978 Company 2011 2010 $000 $000 15 15 21 298 319
Prepayments mainly consist of down payment for six vessels relating to shipbuilding construction contracts.
69

22. Cash and Cash Equivalents
Group 2011 $000 Not restricted in use Cash pledged for bank facilities Cash at end of the year The interest earning balances are not signicant. 22A. Cash and Cash Equivalents in the Consolidated Statement of Cash Flows: Group 2011 $000 Amount as shown above Bank overdrafts Cash pledged for bank facilities Cash and cash equivalents for statement of cash ows purposes at end of the year 20,767 (984) (11,383) 8,400 2010 $000 45,271 (6,016) (13,181) 26,074 9,384 11,383 20,767 2010 $000 32,090 13,181 45,271 Company 2011 2010 $000 $000 40 40 212 212
23.
Share Capital
Group and Company Number Share of shares capital $000 Ordinary shares of no par value: Balance at beginning of the year 1 October 2009 Treasury Shares Purchased #a Balance at end of the year 30 September 2010 Issue of shares #b Exercise of warrants Treasury Shares Purchased #a Balance at end of the year 30 September 2011
142,029,575 (11,122,000) 130,907,575 13,000,000 70,909,131 (8,754,000) 206,062,706
14,589 (7,457) 7,132 12,718 35,155 (8,055) 46,950
The ordinary shares of no par value which are fully paid carry no right to xed income. The company is not subject to any externally imposed capital requirements.
#a. As approved by the general shareholders meeting, 8,754,000 (2010: 11,122,000) treasury shares were acquired during the year on the Singapore Stock Exchange. As at the end of the reporting year they have a market value of $7,440,900 (2010: $10,510,000). During the year, the company issued 13,000,000 ordinary shares by way of listing on the GreTai Securities Market of Taiwan of no par value were issued at $1.008 each for a consideration of $13,104,000. In connection with the listing during the reporting year the independent auditors were paid fees totalling $88,000 for their services as reporting accountants. The share issue expense of $386,000 was charged to equity.
#b.
70

23. Share Capital (Contd)
Share Warrants During year ended 2008, the company issued 71,458,287 warrants at an issue price of $0.10 for each warrant on the basis of one warrant for every two ordinary shares in the capital of the company held by shareholders as at 2 November 2007. There is no outstanding share warrants as at 30 September 2011 (2010: 71,458,287). In order to maintain its listing on the Singapore Stock Exchange it has to have share capital with at least a free oat of at least 10% of the shares. The company met the capital requirement on its initial listing and the rules limiting treasury share purchases mean it will automatically continue to satisfy that requirement, as it did throughout the reporting year. Management receives a report from the registrars frequently on substantial share interests showing the non-free oat to ensure continuing compliance with the 10% limit throughout the reporting year. The management does not set a target level of gearing but uses capital opportunistically to support its business and to add value for shareholders. The key discipline adopted is to widen the margin between the return on capital employed and the cost of that capital. Capital management: The objectives when managing capital are: to safeguard the reporting entitys ability to continue as a going concern, so that it can continue to provide returns for owners and benets for other stakeholders, and to provide an adequate return to owners by pricing the sales commensurately with the level of risk. The management sets the amount of capital to meet its requirements and the risk taken. There were no changes in the approach to capital management during the reporting year. The management manages the capital structure and makes adjustments to it where necessary or possible in the light of changes in conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the management may adjust the amount of dividends paid to owners, return capital to owners, issue new shares, or sell assets to reduce debt. The management monitors the capital on the basis of the debt-to-adjusted capital ratio. This ratio is calculated as net debt / adjusted capital (as shown below). Net debt is calculated as total borrowings less cash and cash equivalents. Adjusted capital comprises all components of equity (i.e. share capital, other reserves, non-controlling interests and retained earnings). Group 2011 $000 Net debt: All current and non-current borrowings including nance leases Less cash and cash equivalents Net debt Adjusted capital: Total equity Adjusted capital Debt-to-adjusted capital ratio N.M. : Not Meaningful 2010 $000
41,431 (20,767) 20,664
35,536 (45,271) (9,735)
49,172 49,172 0.42
23,558 23,558 N.M.
71

24. Other Reserves
The movements in the reserves are disclosed in the statements of changes in equity. The currency translation reserve accumulates all foreign exchange differences. All reserves classied on the face of the statement of nancial position as retained earnings represents past accumulated earnings and are distributable as cash dividend. The other reserves are not available for cash dividends unless realised.
25.
Finance Leases
Group 2011 Minimum payments $000 Finance charges $000
Present value $000
Minimum lease payments payable: Due within one year Due within 2 to 5 years Due after 5 years Total Net book value of plant and equipment under nance leases
25 98 40 163
(3) (11) (5) (19)
22 87 35 144 161
2010
Minimum payments $000
Finance charges $000
Present value $000
Minimum lease payments payable: Due within one year Due within 2 to 5 years Total Net book value of plant and equipment under nance leases
46 51 97
(6) (8) (14)
40 43 83 89
It is the groups policy to lease certain of its plant and equipment under nance leases. The lease terms are 4 to 7 years. The rate of interest for nance lease is 1.9% (2010: 2.8% to 3.3%) per year. Interest rates are xed at the contract date. The lease is on a xed repayment basis and no arrangements have been entered into for contingent rental payments. The lease obligation is denominated in S$. The obligation under nance lease is secured by the lessors charge over the leased asset.
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26. Other Financial Liabilities
Group 2011 $000 Non-current: Bank loan II (Note 26A) Bank loan III (secured) (Note 26A) Spring loan (Note 26A) Bank loan IV (Note 26A) Non-current, total Current: Bank overdrafts Bills payable to banks Money market loans (secured) (Note 26A) Bank loan I (Note 26A) Bank loan II (Note 26A) Bank loan III (secured) (Note 26A) Spring loan (Note 26A) Bank loan IV (Note 26A) Current, total Total The non-current portion is repayable as follows: Due within 2 to 5 years Due over 5 years Total non-current portion 2010 $000 Company 2011 2010 $000 $000
667 3,750 4,417
1,242 700 3,125 5,067
984 14,825 20,000 61 1,000 36,870 41,287
6,016 6,685 10,000 5,625 720 90 1,250 30,386 35,453
5,625 5,625 5,625
3,999 418 4,417
4,597 470 5,067
All the amounts are at oating interest rates except the following that are on xed interest rates: Group 2011 $000 Spring loan Bank loan II 2010 $000 4,375 1,962 6,337 Company 2011 2010 $000 $000
73

26. Other Financial Liabilities (Contd)
The ranges of oating rate interest rates paid were as follows: Group 2011 Bank loan I Bank loan III Bank loan IV Money market loans Bank overdrafts Bills payable 3.95% to 4.50% 3.08% 2.22% to 2.32% 6% 0.85% to 5.25% 2010 1.82% to 5.22% 3.25% to 4.50% 2.34% to 2.40% 4.48% to 5.50% 1.87% to 7.50% 2011 Company 2010 1.82% to 5.22%
The range of xed rate interest rates paid were as follows: Group 2011 Bank loan II Spring loan 2010 5.00% to 5.50% 5.00% 2011 Company 2010
26A.
Bank Loans Bank loan I is repayable in 12 quarterly instalments from 21 February 2008. The loan was fully repaid during the year. Bank loan II is repayable within 2 to 4 years from 18 August 2010. The loan was fully repaid during the year. Bank loan III (secured) is repayable in 240 monthly instalments from 31 January 2001. The loan was secured by a rst legal mortgage of the groups leasehold property at 19 Tuas Street 1, Jurong Industrial Estate, Singapore 638066. Bank loan IV is repayable in 60 monthly instalments from 20 July 2011. Certain money market loans were secured by legal mortgage of the groups leasehold property at 72 Loyang Way, Singapore 508762 and margin deposit. Spring loan is repayable in 47 monthly instalments of $104,166 each and a nal repayment of $104,198, together with the monthly interest from 8 March 2010. Spring is a government agency. The loan was fully repaid during the year. The above bank loans and the short term borrowings (bank overdrafts, bills payable and money market loans) are covered by corporate guarantees by the company.
74

27. Trade and Other Payables, Current
Group 2011 $000 Trade payables: Outside parties and accrued liabilities Other payables: Outside parties Directors (Note 3) Deposits payable Subtotal Total trade and other payables 2010 $000 Company 2011 2010 $000 $000
25,353
14,417
2,403
2,198
910 1,068 1,978 27,331
2,985 400 1,118 4,503 18,920
2,403
2,198
28.
Other Liabilities, Current

Group 2011 $000 Due to customers on construction contracts (Note 19) 12,196 2010 $000 15,688 Company 2011 2010 $000 $000
29.
Acquisition of Subsidiaries
On 9 April 2010 the group acquired 54.67% of the share capital Wecom Engineering Pte Ltd (incorporated in Singapore) and Wecom Marine Pte Ltd (incorporated in Singapore) and from that date the group gained control. These companies became subsidiaries in the contract engineering segment specialising in marine industry. The transaction was accounted for by the acquisition method of accounting. The consideration transferred is as follows: 2010 $000 Consideration transferred: Cash Contingent consideration #a Total consideration transferred
3,253 (753) 2,500
The expenses of acquisition were $68,000 and were included under administrative expenses in prot or loss. #a. There is a contingent consideration arrangement with the vendor. Should the prots exceed $1,800,000 in nancial year 2010 the additional payment expected is 3.61 times of the exceeded amount. Similarly, should the prots fall below $1,800,000 in nancial year 2010 the refund amount expected is 3.61 times of the shortfall. The above amount recognised is the estimated fair value of this arrangement.
75

29. Acquisition of Subsidiaries (Contd)
The net assets acquired and the related fair values are as follows: Pre-acquisition book value under FRS $000 2010: Group Leasehold property and improvement Plant and equipment Trade and other receivables Cash and cash equivalents Borrowings Trade and other payables Income tax Deferred tax Net assets
At fair value $000
1,390 220 3,806 1,174 (865) (1,175) (166) (40) 4,344
1,751 220 3,806 1,174 (865) (1,175) (166) (40) 4,705
The leasehold property and improvement was valued by an independent professional valuer as at the acquisition date. 2010 $000 Cash paid Less cash taken over Net cash outow on acquisition The goodwill arising on acquisition is as follows: 2010 $000 Consideration transferred Non-controlling interests at fair value Fair value of identiable net assets acquired Negative goodwill arising on acquisition 2,500 2,133 (4,705) (72) 2,500 (1,174) 1,326
The non-controlling interests of 45.33% in the acquiree at the acquisition date was measured based on the noncontrolling interests proportionate share of the acquirees net identiable assets. The excess of S$72,000 of the acquirers interest in the net fair value of the identiable assets, liabilities and contingent liabilities over the cost of business combination has been recognised in the statement of comprehensive income. The negative goodwill arising on these acquisitions is not taxable for tax purposes.
76

29. Acquisition of Subsidiaries (Contd)
The contributions from the acquired subsidiaries for the period between the date of acquisition and the end of the year were as follows: Group From date of acquisition in For the year 2010 2010 $000 $000 Revenue Prot before income tax 3,384 547 7,519 1,470
30.
30A.
Financial Instruments: Information on Financial Risks

Classication of Financial Assets and Liabilities The following table summarises the carrying amount of nancial assets and liabilities recorded at the end of the reporting year by FRS 39 categories: Group 2011 $000 Financial assets: Cash and cash equivalents Loans and receivables At end of the year Financial liabilities: Borrowings at amortised cost Trade and other payables at amortised cost Dividends payable at amortised cost At end of the year 2010 $000 Company 2011 2010 $000 $000
20,767 43,791 64,558
45,271 13,088 58,359
40 47,221 47,261
212 33,292 33,504
41,431 27,331 6,182 74,944
35,536 18,920 13,745 68,201
2,403 6,182 8,585
5,625 2,198 13,745 21,568
Further quantitative disclosures are included throughout these nancial statements. There are no signicant fair value measurements recognised in the statements of nancial position.
77

30.
30B.
Financial Instruments: Information on Financial Risks (Contd)

Financial Risk Management The main purpose for holding or issuing nancial instruments is to raise and manage the nances for the entitys operating, investing and nancing activities. There are exposures to the nancial risks on the nancial instruments such as credit risk, liquidity risk and market risk comprising interest rate, currency risk and price risk exposures. The management has certain practices for the management of nancial risks and action to be taken in order to manage the nancial risks. However these are not formally documented in written form. The guidelines include the following: 1. 2. Minimise interest rate, currency, credit and market risks for all kinds of transactions. Maximise the use of natural hedge: favouring as much as possible the natural off-setting of sales and costs and payables and receivables denominated in the same currency and therefore put in place hedging strategies only for the excess balance. The same strategy is pursued with regard to interest rate risk. All nancial risk management activities are carried out and monitored by senior management staff. All nancial risk management activities are carried out following good market practices.
3. 4.
There has been no change to the exposures to risk; the objectives, policies and processes for managing the risk and the methods used to measure the risk. The group and company are exposed to currency and interest rate risks. There is no arrangement to reduce such risk exposures through derivatives and other hedging instruments. 30C. Fair Value of Financial Instruments Fair value of nancial instruments stated at amortised cost in the statement of nancial position The nancial assets and nancial liabilities at amortised cost are at a carrying amount that is a reasonable approximation of fair value. 30D. Credit Risk on Financial Assets Financial assets that are potentially subject to concentrations of credit risk and failures by counterparties to discharge their obligations in full or in a timely manner consist principally of cash balances with banks, cash equivalents and receivables, and other nancial assets. The maximum exposure to credit risk is: the total of the fair value of the nancial instruments; the maximum amount the entity could have to pay if the guarantee is called on; and the full amount of any loan payable commitment at the end of the reporting year. Credit risk on cash balances with banks and any derivative nancial instruments is limited because the counter-parties are entities with acceptable credit ratings. Credit risk on other nancial assets is limited because the other parties are entities with acceptable credit ratings. For credit risk on receivables an ongoing credit evaluation is performed on the debtors nancial condition and a loss from impairment is recognised in prot or loss. The exposure to credit risk is controlled by setting limits on the exposure to individual customers and these are disseminated to the relevant persons concerned and compliance is monitored by management. There is no signicant concentration of credit risk, as the exposure is spread over a large number of counter-parties and customers unless otherwise disclosed in the notes to the nancial statements. Note 22 discloses the maturity of the cash and cash equivalents balances. As part of the process of setting customer credit limits, different credit terms are used. The average credit period generally granted to trade receivable customers is about 60 days (2010: 60 days). But some customers take a longer period to settle the amounts.
78

30.
30D.

Credit Risk on Financial Assets (Contd) (a) Ageing analysis of the age of trade receivable amounts that are past due as at the end of reporting year but not impaired: Group 2011 $000 Trade receivables: 61 - 90 days 91 - 180 days Over 180 days Total (b) 2010 $000 Company 2011 $000 2010 $000
1,196 4,136 3,377 8,709
1,584 1,689 1,619 4,892
Ageing analysis as at the end of reporting year of trade receivable amounts that are impaired: Group 2011 $000 Trade receivables: Over 180 days 2010 $000 Company 2011 2010 $000 $000
190
657
Other receivables are normally with no xed terms and therefore there is no maturity. Concentration of trade and nance lease receivable customers as at the end of reporting year: Group 2011 $000 Top 1 customer Top 2 customers Top 3 customers 11,402 15,887 19,606 2010 $000 1,446 2,860 3,754 Company 2011 2010 $000 $000
79

30.
30E.

Liquidity Risk The following table analyses the non-derivative nancial liabilities by remaining contractual maturity (contractual and undiscounted cash ows): Less than 1 year $000 15 years $000 More than 5 years $000
Group
Total $000
Non-derivative nancial liabilities: 2011: Gross borrowings commitments Gross nance lease obligations Trade and other payables Dividends payable At end of the year 2010: Gross borrowings commitments Gross nance lease obligations Trade and other payables Dividends payable At end of the year Company Non-derivative nancial liabilities: 2011: Gross borrowings commitments Trade and other payables Dividends payable At end of the year 2010: Gross borrowings commitments Trade and other payables Dividends payable At end of the year
36,970 25 27,331 6,182 70,508
4,563 98 4,661
521 40 561
42,054 163 27,331 6,182 75,730
30,751 46 18,920 13,745 63,462
4,991 51 5,042
547 547
36,289 97 18,920 13,745 69,051
2,403 6,182 8,585
2,403 6,182 8,585
5,651 2,198 13,745 21,594
5,651 2,198 13,745 21,594
80

30.
30E.

Liquidity Risk (Contd) Financial guarantee contracts For nancial guarantee contracts the maximum earliest period in which the guarantee could be called is used. At the end of the reporting year no claims on the nancial guarantees are expected. The following table shows the maturity analysis of the contingent liabilities: Less than 1 year $000 15 years $000 More than 5 years $000
Company
Total $000
2011 Corporate guarantees in favour of nancial institutions for facilities extended to subsidiaries 2010 Corporate guarantees in favour of nancial institutions for facilities extended to subsidiaries 38,971 8,135 470 47,576 50,075 8,324 433 58,832
The company has undertaken to provide continued nancial support to its subsidiaries with net capital decits. The extent of the exposure is not determinable. The liquidity risk refers to the difculty in meeting obligations associated with nancial liabilities that are settled by delivering cash or another nancial asset. It is expected that all the liabilities will be paid at their contractual maturity. The average credit period taken to settle trade payables is about 90 days (2010: 90 days). The other payables are with short-term durations. The classication of the nancial assets is shown in the statement of nancial position as they may be available to meet liquidity needs and no further analysis is deemed necessary. In order to meet such cash commitments the operating activity is expected to generate sufcient cash inows. Group Bank facilities: Undrawn borrowing facilities 2011 $000 123,865 2010 $000 106,817 Company 2011 $000 2010 $000
The undrawn borrowing facilities are available for operating activities and to settle other commitments. Borrowing facilities are maintained to ensure funds are available for the operations. A monthly schedule showing the maturity of nancial liabilities and unused borrowing facilities is provided to management to assist them in monitoring the liquidity risk.
81

30.
30F.

Interest Rate Risk The interest rate risk exposure is mainly from changes in xed rate and oating interest rates. The interest rate risk on nancial assets including cash balances is not signicant. The following table analyses the breakdown of the signicant nancial instruments by type of interest rate: Group 2011 $000 Financial liabilities: Fixed rate Floating rate Total at end of the year The interest rates are disclosed in the respective notes. Sensitivity analysis: The effect on pre tax prot is not signicant. 41,431 41,431 6,420 29,116 35,536 5,625 5,625 2010 $000 Company 2011 2010 $000 $000
30G.
Foreign Currency Risks Analysis of amounts denominated in non-functional currency: Loan and other receivables $000
Group
Cash $000
Total $000
Financial assets: 2011: United States dollar Euro Australian dollar Singapore dollar At end of the year 2010: United States dollar Euro Hong Kong dollar Indonesian Rupiah Singapore dollar At end of the year
1,729 340 23 2,092
26,565 82 8,073 83 34,803
28,294 422 8,073 106 36,895
39,306 30 11 42 39,389
5,176 203 5,379
44,482 30 11 42 203 44,768
82

30.
30G.

Foreign Currency Risks (Contd) Trade and other payables $000
Group
Borrowings $000
Total $000
Financial liabilities: 2011: United States dollar Euro British Pound Singapore dollar At end of the year 2010: United States dollar Euro British Pound Indonesian Rupiah At end of the year
3,874 3,874
6,913 242 16 484 7,655
10,787 242 16 484 11,529
7,445 136 7,581
1,547 207 75 6 1,835 Trade and other receivables $000
8,992 343 75 6 9,416
Company
Cash $000
Total $000
Financial assets: 2011: United States dollar At end of the year 2010: United States dollar At end of the year
30 30
395 395
425 425
33 33
33 33
83

30.
30G.

Foreign Currency Risks (Contd) Trade and other payables $000
Company
Borrowings $000
Total $000
Financial liabilities: 2011: United States dollar At end of the year 2010: United States dollar At end of the year
5,625 5,625
5,625 5,625
There is exposure to foreign currency risk as part of the Groups normal business. Sensitivity analysis: Group 2011 $000 A hypothetical 10% strengthening in the exchange rate of the functional currency $ against the United States $ with all other variables held constant would have an adverse effect on prot before tax of A hypothetical 10% strengthening in the exchange rate of the functional currency $ against the Australian $ with all other variables held constant would have an adverse effect on prot before tax of 2010 $000
(1,592)
(3,226)
(734)
The hypothetical changes in exchange rates are not based on observable market data (unobservable inputs). The sensitivity analysis is disclosed for each currency to which the entity has signicant exposure. For similar rate weakening of the functional currency against the relevant foreign currencies, there would be comparable impacts in the opposite direction on the prot or loss. The analysis above has been carried out on the basis that there are no hedged transactions. In managements opinion, the above sensitivity analysis is unrepresentative of the foreign currency risks as the historical exposure does not reect the exposure in future.
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31. Items in Prot or Loss
In addition to the charges and credits disclosed elsewhere in the notes to the nancial statements, this item includes the following charges (credits): Group 2011 $000 Audit fees to the independent auditors of the company Audit fees to the other independent auditors Other fees to the independent auditors of the company Other fees to the other independent auditors 206 26 44 14 2010 $000 241 30 48 10
32.
Capital Commitments
Estimated amounts committed at the end of the reporting year for future capital expenditure but not recognised in the nancial statements are as follows: Group 2011 $000 Commitments to purchase of plant and equipment 1,743 2010 $000 2,090 Company 2011 $000 2010 $000
Subsequent to the end of the reporting year, the Group signed a lump sum contract of $3,500,000 in relation to leasehold improvement of the groups Singapore yard.
33.
Operating Lease Payment Commitments

At the end of the reporting year the total of future minimum lease payment commitments under non-cancellable operating leases are as follows: Group 2011 $000 Not later than one year Later than one year and not later than ve years Later than ve years Rental expense for the year 1,863 4,081 10,315 1,762 2010 $000 1,344 3,190 11,340 1,899 Company 2011 2010 $000 $000
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33. Operating Lease Payment Commitments (Contd)
Operating lease payments represent rentals payable by subsidiaries for their ofces, factory properties, jetty and a crawler crane. a) The leases from Jurong Town Corporation are as follows: (i) For the period of 17 years from 23 October 2002 with an entitlement for a further lease term of 18 years, 5 months and 5 days from 16 October 2019. For the period of 30 years from 1 February 2001 and ending on 31 January 2031.
(ii) b)
The lease from Mega Technologies (Suzhou) Co., Ltd is for the period of 5.5 years from 1 July 2011 and ending on 31 December 2016. The lease from PT. Sekupang Makmur Abadi (Indonesia) is for a period of 10 years from 12 July 2006, ending on 11 June 2016 with the option to extend for another 10 years. The lease from Winston Lim Pte Ltd is for a period of approximately three years from 15 April 2011 to 28 February 2014 with an option to renew for the further term of two years from the date of expiry of the agreement. The lease for certain of ofce premise of a subsidiary is for 1 to 3 years from 2011. The lease rental terms are negotiated for an average term of 3 years.
c)
d)
e)
34.
Operating Lease Income Commitments

At the end of the reporting year the total of future minimum lease receivables committed under non-cancellable operating leases are as follows: Group 2011 $000 Not later than one year Later than one year and not later than ve years Rental income for the year 920 281 1,050 2010 $000 1,102 1,148 756 Company 2011 2010 $000 $000
Operating lease income commitments are for rental for certain ofce premises. The lease rental income terms are negotiated for an average term of three years.
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35.
35A.
Financial Information by Operating Segments

Information about Reportable Segment Prot or Loss, Assets and Liabilities Disclosure of information about operating segments, products and services, the geographical areas, and the major customers are made as required by FRS 108 Operating Segments. This disclosure standard has no impact on the reported results or nancial position of the Group. For management purposes the Group is organised in three primary strategic operating segments. The Groups principal segments relate to those of a structural steel specialists and provision of service dormitories for foreigners. The results of all other activities, mainly investment holding, which are not included within the two primary segments, are included in the other segment. Such a structural organisation is determined by the nature of risks and returns associated with each business segment and denes the management structure as well as the internal reporting system. It represents the basis on which the management reports the primary segment information. They are managed separately because each business requires different strategies. The segments and the types of products and services are as follows: (a) Engineering, procurement, construction and commissioning (EPCC) segment is the major business of the group and it is project based. This involves the design, procurement, fabrication, installation and commissioning of process modules and equipment for oil and gas production on a turnkey projects basis. These process modules and equipment form the operating system of the production and storage facility for oil and gas. Contract engineering (CE) segment includes designing, procurement and fabrication of modules, systems or equipment for the oil and gas industry. Procurement services (PS) segment provides after-sales services and supply spare parts and equipment for oil and gas exploration and production.
(b)
(c)
Inter-segment sales are measured on the basis that the entity actually used to price the transfers. Internal transfer pricing policies of the Group are as far as practicable based on market prices. The accounting policies of the operating segments are the same as those described in the summary of signicant accounting policies. The management reporting system evaluates performances based on a number of factors. However the primary protability measurement to evaluate segments operating results is the major nancial indicators: earnings from operations before depreciation, amortisation, interests and income taxes (called Recurring EBITDA). The following tables illustrate the information about the reportable segment prot or loss, assets and liabilities. The information on each product and service, or each group of similar products and services is not available and the cost to develop it would be excessive.
87

35.
35B.
Financial Information by Operating Segments (Contd)

Prot or Loss from Continuing Operations and Reconciliations 2011 CE PS $000 $000 73,954 10,606 (2,117) 8,489 6,935 1,177 1,177 2010 CE PS $000 $000 36,525 7,310 (889) 6,421 2,160 896 896
EPCC $000 External revenue Recurring EBITDA Depreciation ORBIT Unallocated interest income Unallocated nance costs Unallocated other credits Unallocated other charges Share of gain / (loss) of associates Prot before tax Income tax expense Prot from operations 35C. Assets and Reconciliations 44,909 12,047 (1,267) 10,780
Total $000 125,798 23,830 (3,384) 20,446 1,908 (1,259) 1,452 (1,230) 16 21,333 (4,541) 16,792
EPCC $000 64,898 18,105 (1,515) 16,590
Total $000 103,583 26,311 (2,404) 23,907 102 (1,353) 755 (3,069) (941) 19,401 (4,833) 14,568
EPCC $000 Total assets for reportable segment Unallocated : Property, plant and equipment Investment in associate Cash and cash equivalents Inventories Other assets Finance lease receivables Other unallocated amounts Total group assets 3,606
2011 CE PS $000 $000 13,550 2,441
Total $000 19,597
EPCC $000 3,240
2010 CE PS $000 $000 5,199 1,260
Total $000 9,699
34,123 148 20,767 8,690 34,341 13,813 10,381 141,860
31,368 45,271 9,325 12,978 3,389 112,030
88

35.
35D.

Liabilities and Reconciliations 2011 EPCC $000 Total liabilities for reportable segment Unallocated : Deferred and current tax liabilities Borrowings Other liabilities Other unallocated amounts Total group liabilities 4,373 CE $000 11,178 PS $000 972 Total $000 16,523 EPCC $000 4,285 2010 CE $000 3,019 PS $000 75 Total $000 7,379
5,548 41,431 12,196 16,990 92,688
4,583 35,536 15,688 25,286 88,472
35E.
Other Material Items 2011 $000 Unallocated capital expenditure 6,185 2010 $000 11,408
35F.
Geographical Information The following table provides an analysis of the revenue by geographical market, irrespective of the origin of the goods and services: 2011 Non-current Revenue assets $000 $000 Singapore Asean Ex Singapore Other 19,041 57,413 49,344 125,798 32,162 5,514 8,587 46,263 2010 Non-current Revenue assets $000 $000 16,027 64,975 22,581 103,583 20,090 1,738 9,540 31,368
Revenues are attributed to countries on the basis of the customers location. The non-current assets are analysed by the geographical area in which the assets are located. The non-current assets exclude any nancial instruments, deferred tax assets, post-employment benet assets, and rights arising under insurance contracts. Other comprises Australia, The Peoples Republic of China, Germany, Taiwan, United Kingdom, Sultanate of Oman and USA.
89

35.
35G.

Information About Major Customers 2011 $000 Top 1 customer Top 2 customers Top 3 customers 43,289 57,313 64,241 2010 $000 56,199 61,434 64,838
36.
Event Subsequent to the End of the Reporting Year

On 25 November 2011, the group disposed its entire 40% shareholding in the capital of First Oil Pte. Ltd. for a cash consideration of $120,000. On 18 October 2011, the Group entered into a conditional sale and purchase agreement to acquire all the shares in Control Precision Engineering Pte Ltd subject to a maximum cash consideration of $7,000,000.
37.
Contingent Liability
Included in other receivables is an amount of $420,000, owing from the vendor shareholder of Wecom Engineering Pte Ltd (Wecom). The Group through its subsidiary, Petro Process System Pte. Ltd. (PPS) has commenced litigation for partial refund of consideration paid of $3,252,500 as the prot target for FY2010 was not met. PPS is claiming a refund from the vendor shareholder of a sum of about $428,442 after offsetting certain receivables. The vendor shareholder in his defence and counterclaim has computed a different reduction of consideration and is claiming for a minimum of $258,981 from PPS instead. Management is of the view that the counterclaim from the vendor shareholder has no merit.
90

38. Changes and Adoption of Financial Reporting Standards
For the year ended 30 September 2011 the following new or revised Singapore Financial Reporting Standards were adopted. The new or revised standards did not require material modication of the measurement methods or the presentation in the nancial statements. FRS No. FRS FRS FRS FRS FRS FRS FRS 1 7 17 28 36 38 39 Title Presentation of Financial Statements (Amendments to) Statement of Cash Flows (Amendments to) Leases (Amendments to) Investments in Associates (Revised) Impairment of Assets (Amendments to) Intangible Assets (Amendments to) Financial Instruments: Recognition and Measurement Eligible Hedged Item (Amendments to) (*) Financial Instruments: Recognition and Measurement (Amendments to) Non-current Assets Held for Sale and Discontinued Operations (Amendments to) (*)
(*) Not relevant to the entity.
FRS 39 FRS 105
The revised FRS 27 Consolidated and Separate Financial Statements adapted in 2010 requires Total Comprehensive Income to be attributed to the owners of the parent and to the non-controlling interest even if this results in the non-controlling interest having a decit balance. Arising from the adoption of the revised FRS 27, non-controlling interests share of loss is no longer capped at its cost of investment. Loss of $1,814,000 in excess of non-controlling interests cost of investment was attributed to non-controlling interest for the nancial year ended 30 September 2010 and accumulated losses of $1,304,000 was adjusted to the beginning balance of the non-controlling interest from retained earnings.
39.
Future Changes in Financial Reporting Standards

The following new or revised Singapore Financial Reporting Standards that have been issued will be effective in future. The transfer to the new or revised standards from the effective dates is not expected to result in material adjustments to the nancial position, results of operations, or cash ows for the following year. Effective date for periods beginning on or after 1 Jan 2011 1 Jan 2011 1 Jul 2011 1 Jan 1 Jan 1 Jul 1 Jan 1 Jan 1 Jan 1 Jan 2012 2011 2011 2011 2011 2011 2011
FRS No. FRS 1 FRS 107 FRS 107 FRS 12 FRS 24 FRS 27 FRS 34 INT FRS 113 INT FRS 114 INT FRS 115
Title Presentation of Financial Statements Disclosures (Amendments to) Financial Instruments: Disclosures (Amendments to) Financial Instruments: Disclosures (Amendments to) - Transfers of Financial Assets (*) Deferred Tax (Amendments to) Recovery of Underlying Assets (*) Related Party Disclosures (Revised) Consolidated and Separate Financial Statements (Amendments to) Interim Financial Reporting (Amendments to) Customer Loyalty Programmes (Amendments to) (*) Prepayments of a Minimum Funding Requirement (Revised) (*) Agreements for the Construction of Real Estate (*)
(*) Not relevant to the entity.
91
Additional Information Required for Disclosures

Approximate Land Areas (in sqm) 27,110
Location 72 Loyang Way Singapore 508762
Description 3-storey ofce building Double-storey ofce building adjoining factory space 2 covered workshops Blasting & Painting Chamber Jetty capacity of 1,000 tons Dormitory capacity of 160 pax. Single-storey ofce building with adjoining factory space 2 covered workshops Jetty capacity of 1,000 tons Two-storey house
Tenure Leasehold 12 + 5 years from 23 October 2002 Further term 18 years 5 months 5 days from 16 October 2019
Sekupang Logistics Base Block G Jl. R. E. Martadinata Sekupang Batam 29422 Indonesia
22,500
Leasehold 10 years from 12 July 2006, ending on 11 June 2016 with the option to extend for another 10 years Leasehold 1 year from 1 October 2011 Leasehold 5.5 years from 1 July 2011 Leasehold 30 years from 1 February 2001 Leasehold from 15 April 2011 to 28 February 2014 with an option to renew for a further term of 2 years Leasehold 1 year from 1 April 2011
24A / 29D Le Phung Hieu Street, Ward 8, Vungtau City, Ba Ria Vung Tau Province, S.R. Vietnam 88 Ling Long Street Suzhou Industrial Park No. 19 Tuas South Street 1 Jurong Industrial Estate Singapore 638066 9A Lok Yang Way Singapore 628628
30
Ready-built factory Double-storey ofce building and production space Single-storey ofce building and production space
12,900 2,427
2,643
Suite 2, Riseley Corporate Centre 135 Riseley Street Booragoon WA 6154
Ofce space
41
92
Shareholdings Statistics
as at 1 December 2011
Number of Issued Shares Number of Issued Shares (excluding Treasury Shares) Class of Shares Voting Rights 213,825,706 206,062,706 Ordinary Shares 1 vote per share
As at 1 December 2011, the total number of ordinary shares held in treasury is 7,763,000. The percentage of such holding against the total number of issued ordinary shares (excluding ordinary shares held in treasury) is 3.77%
DISTRIBUTION OF SHAREHOLDINGS
No. of Shares (excluding treasury shares) 10,342 8,911,094 42,556,172 154,585,098 206,062,706
Size of Shareholdings 1 - 999 1,000 - 10,000 10,001 - 1,000,000 1,000,001 and above Total :
No. of Shareholders 119 1,400 768 24 2,311
% 5.15 60.58 33.23 1.04 100.00
%* 0.01 4.32 20.65 75.02 100.00
93
Shareholdings Statistics
as at 1 December 2011
SHAREHOLDING HELD IN HANDS OF PUBLIC
As at 1 December 2011, approximately 68.71% of the issued ordinary shares of the Company is held by the public and therefore, Rule 723 of the Listing Manual is complied with.
TWENTY LARGEST SHAREHOLDERS

Name 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. CITIBANK NOMINEES SINGAPORE PTE LTD PHILLIP SECURITIES PTE LTD OCBC SECURITIES PRIVATE LTD KELVIN TING TIONG CHAU TING TIONG CHING MAYBAN NOMINEES (S) PTE LTD KIM ENG SECURITIES PTE. LTD. HSBC (SINGAPORE) NOMINEES PTE LTD UNITED OVERSEAS BANK NOMINEES PTE LTD TING YEW SUE WANG YUEH LAI LIM & TAN SECURITIES PTE LTD SHIE YONG FAH GLOBAL EMERGING MARKETS SPECIALIST CAPITAL PTE LTD DBS NOMINEES PTE LTD TAY MIAN CHEO TAN CHAN KWANG HONG LEONG FINANCE NOMINEES PTE LTD DMG & PARTNERS SECURITIES PTE LTD LEE CHOONG ONN Total : No. of Shares 40,716,000 11,946,456 10,280,200 10,200,000 10,000,000 9,807,010 8,672,863 7,481,500 5,499,500 5,379,662 5,000,000 3,839,020 3,748,000 2,989,000 2,980,900 2,578,012 2,400,650 2,385,000 2,010,000 1,915,500 149,829,273 %* 19.76 5.80 4.99 4.95 4.85 4.76 4.21 3.63 2.67 2.61 2.43 1.86 1.82 1.45 1.45 1.25 1.17 1.16 0.98 0.93 72.73
SUBSTANTIAL SHAREHOLDERS AS AT 1 DECEMBER 2011

as recorded in the Register of Substantial Shareholders Number of Ordinary Shares Name of Substantial Shareholder Ting Yew Sue Ting Tiong Ching Tay Mian Cheo Direct Interest 29,272,662 14,128,000 5,669,012 Deemed Interest 5,000,000 Total 29,272,662 14,128,000 10,669,012 %* 14.21 6.86 5.18
The deemed interest of Mr Tay Mian Cheo arises from shares held by his spouse.
* Percentage is calculated based on the total number of issued shares, excluding treasury shares of the Company.
94
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN that the Annual General Meeting of the Company will be held at 72 Loyang Way, Singapore 508762 on Monday, 16 January 2012 at 10.00 a.m. to transact the following businesses:
ORDINARY BUSINESS:
1. To receive and consider the Directors Report and Audited Accounts for the nancial year ended 30 September 2011 and the Auditors Report thereon. To re-elect Mr Tay Mian Cheo, a Director retiring by rotation pursuant to Article 107 of the Articles of Association of the Company. To re-elect Dr Liew Jat Yuen Richard, a Director retiring by rotation pursuant to Article 107 of the Articles of Association of the Company. [Dr Liew Jat Yuen Richard will, upon re-election as a Director of the Company, remain as Chairman of the Nominating Committee and Remuneration Committee and as a member of the Audit Committee. He will be considered independent for the purpose of Rule 704(8) of the Listing Manual of The Singapore Exchange Securities Trading Limited.] 4. To approve the payment of Directors fees of S$96,000 for the nancial year ended 30 September 2011 (2010: S$90,000). To re-appoint Messrs RSM Chio Lim LLP as Auditors and to authorise the Directors to x their remuneration. To consider and, if thought t, to pass with or without any modications, the following resolutions as Ordinary Resolutions: Resolution 4 Resolution 1
2.
Resolution 2
3.
Resolution 3
5.
Resolution 5
SPECIAL BUSINESS :
6. General Share Issue Mandate That pursuant to Section 161 of the Companies Act, Cap. 50. and subject to Rule 806 of the Listing Manual of the Singapore Exchange Securities Trading Limited (SGX-ST), authority be and is hereby given to the Directors of the Company to allot and issue shares and convertible securities in the capital of the Company (whether by way of rights, bonus or otherwise) at any time and upon such terms and conditions and for such purposes and to such persons as the Directors may in their absolute discretion deem t provided that:(i) the aggregate number of shares and convertible securities to be issued pursuant to this Resolution does not exceed 50 per cent (50%) of the total number of issued shares excluding treasury shares of the Company (as calculated in accordance with sub-paragraph (ii) below), of which the aggregate number of shares and convertible securities to be issued other than on a pro rata basis to existing shareholders of the Company does not exceed twenty per cent (20%) of the total number of issued shares excluding treasury shares of the Company (as calculated in accordance with sub-paragraph (ii) below); (subject to such manner of calculations as may be prescribed by the SGX-ST), for the purpose of determining the aggregate number of shares that may be issued under subparagraph (i) above, the total number of issued shares excluding treasury shares shall be based on the total number of issued shares excluding treasury shares of the Company at the time this Resolution is passed after adjusting for:(a) new shares arising from the conversion or exercise of any convertible securities; Resolution 6
(ii)
95
(b)
new shares arising from exercising share options or vesting of share awards outstanding or subsisting at the time of the passing of the resolution approving the mandate, provided the options or awards were granted in compliance with Part VIII of Chapter 8 of the Listing Manual of SGX-ST; and any subsequent bonus issue, consolidation or sub-division of shares
(c) (iii)
unless revoked or varied by the Company in general meeting, the authority conferred by this Resolution shall continue in force until the conclusion of the next Annual General Meeting or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is the earlier.
[See Explanatory Note (i)] 7. Technics Performance Share Plan That approval be and is hereby given to the Directors of the Company to: (a) offer and grant awards in accordance with the provisions of the Technics Performance Share Plan (the Plan); and allot and issue from time to time such number of fully paid-up shares in the capital of the Company as may be required to be allotted and issued pursuant to the vesting of awards under the Plan provided that the aggregate number of shares to be allotted and issued pursuant to the Plan shall not exceed 15% of the total number of issued shares in the capital of the Company from time to time. Resolution 7
(b)
[See Explanatory Note (ii)] 8. To transact any other business which may be properly transacted at an Annual General Meeting.
96
Explanatory Notes: (i) The proposed Resolution 6, if passed, will empower the Directors from the date of the above Meeting until the date of the next Annual General Meeting, to allot and issue shares and convertible securities in the Company. The number of shares and convertible securities, which the Directors may allot and issue under this Resolution shall not exceed 50% of the total number of issued shares excluding treasury shares of the Company at the time of passing this Resolution. For allotment and issue of shares and convertible securities other than on a pro-rata basis to all shareholders of the Company, the aggregate number of shares and convertible securities to be allotted and issued shall not exceed 20% of the total number of issued shares excluding treasury shares of the Company. This authority will, unless previously revoked or varied at a general meeting, expire at the next Annual General Meeting. The proposed Resolution 7, if passed, will empower the Directors of the Company to offer and grant awards and to issue and allot shares in the capital of the Company pursuant to the Technics Performance Share Plan (the Plan). The grant of awards under the Plan will be made in accordance with the provisions of the Plan. The aggregate number of shares which may be issued pursuant to the Plan is limited to 15% of the total number of issued shares in the capital of the Company.
(ii)
BY ORDER OF THE BOARD
Seah Kim Swee Company Secretary Date: 22 December 2011
Proxies: 1. A member of the Company is entitled to attend and vote at the above Meeting and may appoint not more than two proxies to attend and vote instead of him. Where a member appoints two proxies, he shall specify the proportion of this shareholding to be represented by each proxy in the instrument appointing the proxies. A proxy need not be a member of the Company. If the member is a corporation, the instrument appointing the proxy must be under seal of the hand of an ofcer or attorney duly authorised. The instrument appointing a proxy must be deposited at the Registered Ofce of the Company at 8 Wilkie Road, #03-01 Wilkie Edge, Singapore 228095 not less than 48 hours before the time appointed for holding the above Meeting.
2.
3.
4.
97
TECHNICS OIL & GAS LIMITED

Registration No. 200205249E (Incorporated in Singapore)
IMPORTANT 1. For investors who have used their CPF monies to buy the Companys shares, this Annual Report is forwarded to them at the request of their CPF Approved Nominees 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.
PROXY FORM
I/We* of being a member/members* of Technics Oil & Gas Limited (the Company) hereby appoint: Name Address NRIC/Passport Number Proportion of Shareholdings (%) (name) NRIC/Passport No. (address)
and/or (delete as appropriate) Name Address NRIC/Passport Number Proportion of Shareholdings (%)
or failing him/her/them, the Chairman of the Annual General Meeting or such other person the Chairman may designate, 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 to be held at 72 Loyang Way, Singapore 508762 on Monday, 16 January 2012 at 10.00 a.m. and at any adjournment thereof. (Please indicate with an X in the spaces provided whether you wish your vote(s) to be cast for or against the Resolutions as set out in the Notice of Annual General Meeting. In the absence of specic directions, the proxy/proxies will vote or abstain as he/they may think t, as he/they will on any other matter arising at the Annual General Meeting.) To be used on a show of hands To be used in the event of a poll Number of Votes For** Number of Votes Against**
No.
Resolutions
For
Against
ORDINARY BUSINESS 1 2 3 4 5 To receive and consider Directors and Auditors Reports and Audited Accounts To re-elect Mr Tay Mian Cheo (Retiring under Article 107) To re-elect Dr Liew Jat Yuen Richard (Retiring under Article 107) To approve payment of Directors fees To re-appoint Auditors
SPECIAL BUSINESS 6 7 To authorise the Directors to allot and issue shares To authorise the Directors to grant awards and to allot and issue shares in accordance with the provisions of the Technics Performance Share Plan
Delete Accordingly If you wish to exercise all your votes For or Aganist, please indicate an X within the box provided. Alternatively, please indicate the number of votes as appropriate.
* **
Dated this
day of
2012 Total number of Shares held
Signature(s) of member(s) or common seal IMPORTANT: PLEASE READ NOTES OVERLEAF
NOTES : 1. Please insert the total number of shares held by you. If you have shares entered against your name in the Depository Register (as dened in Section 130A of the Companies Act, Chapter 50), you should insert that number of shares. If you have shares registered in your name in the Register of Members, you should insert that number of shares. If you have shares entered against your name in the Depository Register and shares registered in your name in the Register of Members, you should insert the aggregate number of shares. If no number is inserted, this form of proxy will be deemed to relate to all the shares held by you. A member of the Company entitled to attend and vote at a meeting of the Company 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. Where a member appoints more than one proxy, he shall specify the proportion of his shareholding to be represented by each proxy. The instrument appointing a proxy or proxies must be under the hand of the appointor or his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its common seal or under the hand of its attorney or duly authorised ofcer. A corporation which is a member of the Company may authorise by resolution of its directors or other governing body such person as it thinks t to act as its representative at the Annual General Meeting, in accordance with its Articles of Association and Section 179 of the Companies Act, Chapter 50. The instrument appointing a proxy or proxies, together with the power of attorney or other authority (if any) under which it is signed, or notarially certied copy thereof, must be deposited at the registered ofce of the Company at 8 Wilkie Road, #03-01 Wilkie Edge, Singapore 228095 not less than 48 hours before the time appointed for the Annual General Meeting. The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specied in the instrument appointing a proxy or proxies. In addition, in the case of members of the Company whose shares are entered against their names in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if such members are not shown to have shares entered against their names in the Depository Register at least 48 hours before the time appointed for holding the Annual General Meeting as certied by The Central Depository (Pte) Limited to the Company.
2.
3. 4.
5.
6.
7.
CORPORATE INFORMATION
BOARD OF DIRECTORS Ting Yew Sue Executive Chairman and Group Managing Director Tay Mian Cheo Executive Director Ting Tiong Ching Executive Director Ong Siew Peng Independent Director Dr Liew Jat Yuen Richard Independent Director AUDIT COMMITTEE Ong Siew Peng (Chairman) Tay Mian Cheo Dr Liew Jat Yuen Richard NOMINATING COMMITTEE Dr Liew Jat Yuen Richard (Chairman) Ong Siew Peng Ting Yew Sue REMUNERATION COMMITTEE Dr Liew Jat Yuen Richard (Chairman) Ong Siew Peng Tay Mian Cheo COMPANY SECRETARY Seah Kim Swee, FCIS
REGISTERED OFFICE 8 Wilkie Road #03-01 Wilkie Edge Singapore 228095 Tel: (65) 6533 7600 Fax: (65) 6538 7600 SHARE REGISTRAR & SHARE TRANSFER OFFICE Boardroom Corporate & Advisory Services Pte. Ltd. 50 Raffles Place #32-01 Singapore Land Tower Singapore 048623 Tel: (65) 6536 5355 AUDITORS RSM Chio Lim LLP Certified Public Accountants 8 Wilkie Road #04-08 Wilkie Edge Singapore 228095 Partner-in-charge: Derek How Beng Tiong PRINCIPAL BANKERS The Hongkong and Shanghai Banking Corporation Ltd 21 Collyer Quay Level 1 HSBC Building Singapore 049320 United Overseas Bank Limited 80 Raffles Place UOB Plaza Singapore 048624
Technics Oil & Gas Limited (Reg No. 200205249E)

Singapore Head Office
72 Loyang Way, Singapore 508762 T : (65) 6545 9968 F : (65) 6545 0668 Email: technicsoffshore@toepl.com.sg Website: www.technicsgrp.com
Subsidiaries
AMF Tech Asia Sdn. Bhd. Bloomfoss Pte Ltd M2E Corporation Limited M2E Corp (Suzhou) Co., Ltd Norr Systems Pte. Ltd. Norr Systems Hydraulics Pte Ltd Petro Process System Pte. Ltd. PT Technics Offshore Jaya Technics Engineering Australia Pty Ltd Technics Offshore Engineering Pte. Ltd. Technics Offshore International Pte. Ltd. Technics Systems Solutions Pte Ltd Wecom Engineering Pte Ltd Wecom Marine Pte Ltd
Vietnam Representative Office

24A /29D Le Phung Hieu Street Ward 8, Vung Tau City Ba Ria - Vung Tau Province S.R. Vietnam T : (84) 64 358 4418 F : (84) 64 358 4419
Associate
First Oil Pte Ltd

Technics AR11 A4

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Growing our

RETURNS PRESENCE FUTURE

TECHNICS OIL & GAS LIMITED

TECHNICS OIL & GAS LIMITED | Annual Report 2011 |

Glycol Dehydration Unit

Flash Gas Compressor Package

Contract Engineering (CE)

Procurement and Other Services (PS)

LP & HP Flare Scrubber Skid

| TECHNICS OIL & GAS LIMITED | Annual Report 2011

KEY FINANCIAL RATIOS FY2010

NET PROFIT For the years ended 30 September S$ million

16.38 16 12 8 4 0 2.97 3.81 6.18

| TECHNICS OIL & GAS LIMITED | Annual Report 2011

TECHNICS OIL & GAS LIMITED | Annual Report 2011 |

| TECHNICS OIL & GAS LIMITED | Annual Report 2011

TECHNICS OIL & GAS LIMITED | Annual Report 2011 |

| TECHNICS OIL & GAS LIMITED | Annual Report 2011

TECHNICS OIL & GAS LIMITED | Annual Report 2011 |

Ting Yew Sue Executive Chairman and Group Managing Director

| TECHNICS OIL & GAS LIMITED | Annual Report 2011

Business Location Business & Office Location

TECHNICS OIL & GAS LIMITED | Annual Report 2011 |

| TECHNICS OIL & GAS LIMITED | Annual Report 2011

TECHNICS OIL & GAS LIMITED | Annual Report 2011 |

| TECHNICS OIL & GAS LIMITED | Annual Report 2011

TECHNICS OIL & GAS LIMITED | Annual Report 2011 |

Ting Yew Sue Executive Chairman and Group Managing Director

Tay Mian Cheo, David Executive Director and a co-founder of Technics

Ting Tiong Ching Executive Director

| TECHNICS OIL & GAS LIMITED | Annual Report 2011

Ong Siew Peng Independent Director

Dr Liew Jat Yuen Richard Independent Director

TECHNICS OIL & GAS LIMITED | Annual Report 2011 |

| TECHNICS OIL & GAS LIMITED | Annual Report 2011

TECHNICS OFFSHORE ENGINEERING PTE LTD (TOE)

TECHNICS SYSTEMS SOLUTIONS PTE LTD (TSS) 99% 56%

M2E CORPORATION LTD (HONG KONG)

AMF TECH ASIA SDN BHD (AMF TECH)

PT. TECHNICS OFFSHORE JAYA (PT. TOJ)

BLOOMFOSS PTE LTD

TECHNICS OIL & GAS LIMITED | Annual Report 2011 |

Corporate Governance Report

TECHNICS OIL & GAS LIMITED | Annual Report 2011 |

Corporate Governance Report

| TECHNICS OIL & GAS LIMITED | Annual Report 2011

Corporate Governance Report

TECHNICS OIL & GAS LIMITED | Annual Report 2011 |

Corporate Governance Report

| TECHNICS OIL & GAS LIMITED | Annual Report 2011

Corporate Governance Report

30% 26% 24%

70% 74% 76%

100% 100% 100%

79% 84% 92% 93% 89% 91% 93%

21% 16% 8% 7% 11% 9% 7%

100% 100% 100% 100% 100% 100% 100%

Corporate Governance Report

| TECHNICS OIL & GAS LIMITED | Annual Report 2011

Corporate Governance Report

COMMUNICATION WITH SHAREHOLDERS

TECHNICS OIL & GAS LIMITED | Annual Report 2011 |