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SHAPing our future a n n u a l r e p o r t 2 0 1 2

United Engineers Limited

ABOUTUNITED ENGINEERSLIMITED

VISION

MISSION

CONTENTS02 Group Major Activities03 Corporate Highlights04 Letter to Shareholders10 Key Property Portfolio 14 Board of Directors16 Key Executives17 Corporate Information20 Operations Review 23 Corporate Social Responsibility 24 Group Occupational

Safety & Health Report 28 Investor Relations30 Key Financial Highlights32 5-Year Financial Profile33 Corporate Governance Report44 Financial Statements

To be the company of choice, recognised worldwide, for unparalleled first-class solutions

To be the leader in our chosen markets, delivering one-stop solutions to customers

COrpOraTE prOfIlE

United Engineers Limited (“the Group”), founded in 1912, is one of Singapore’s pioneer companies and has played an integral role in the physical and economic transformation of Singapore. Building on its strong engineering foundation, the Group has evolved into a dynamic corporation today with key activities in integrated property services as well as engineering and construction. The Integrated Property Services division comprises two main segments: Property Development and Property Rental and Services. UE E&C Ltd., the Group’s 68%-owned SGX-listed subsidiary, provides a range of construction as well as mechanical and electrical engineering services. The Group’s environmental engineering division is engaged in water treatment, supply, recovery and desalination projects as well as waste-to-energy projects.

Supertrees at Gardens by the Bay

UnITED EnGInEERS LIMITED AnnUAL REPORT 2012 1

The Group’s flagship building, UE Square, was designated as a historic site in 2002 by the Singapore National Heritage Board. The Group has played an instrumental role in numerous iconic buildings and landmarks in Singapore which define our cityscape today, including Marina Bay Sands Integrated Resort, ION Orchard and the upcoming orchardgateway. The Group’s extensive track record includes commercial buildings such as the new National Library Building, Ngee Ann City and OCBC Centre; residential developments such as Paterson Suites, Sui Generis and Park Central @ AMK; as well as mixed-use developments such as UE Square, the mixed-use development in one-north comprising The Rochester, Rochester Mall and Park Avenue Rochester, and UE BizHub EAST in Changi Business Park.

UE BizHub EAST in Changi Business Park

2

GROUP MAJOR ACTIVITIES

INTEGRATED PROPERTY SERVICES ENGINEERING & CONSTRUCTION

UNITEd ENgINEErS lIMITEd

property development

› Residential › Commercial› Industrial› Mixed-use › Build-to-suit

property rental & Services

› Project management › Asset management › Hospitality management › Facility management

M&E Engineering

› High and low-voltage electrical distribution systems

› Air-conditioning and mechanical ventilation systems

› Fire protection systems

Environmental Engineering

Provision of Engineering, Procurement and Construction (“EPC”) services for:› Water related (treatment, supply, recovery, desalination etc.) projects› Waste-to-energy projects

Build, Operate & Transfer (BOT) assets in China

› Medical waste treatment› Waste water treatment

Construction

› Design-and-build› Civil works› Residential, industrial and commercial projects

Operations of UE E&C, the Group’s 68%-owned SGX-listed subsidiary


CORPORATE HIGHLIGHTS

MONTH DEVElOPMENTS

Jan 2012 » Awarded tender for land parcel at Sengkang West Avenue/Fernvale Road (the proposed Seletar Mall), together with a wholly-owned subsidiary of SPH

» Issued first series of Fixed Rate Notes priced at 4.2%, due 2017, as part of the $500 million Multicurrency Medium Term Note Programme

» Official opening of Rochester Mall and Park Avenue Rochester

Feb 2012 » Announcement of FY 2011 Results

Mar 2012 » Released detailed plans for orchardgateway – an integrated retail, office and hotel landmark at Orchard Road

Apr 2012 » 98th Annual General Meeting » Secured $54.6 million joint venture contract for project at Jurong Water Reclamation

Plant

May 2012 » Announcement of Q1 2012 Results» Launched Eight Riversuites, a 99-year leasehold condominium at Bendemeer

Road/Whampoa East

Jul 2012 » Launched a year-long celebration of the Group’s 100th anniversary » Secured three environmental engineering contracts worth over $70.0 million» Won the Silver Award for Best Managed Board for companies with market

capitalisation between $300 million to $1billion at the Singapore Corporate Awards 2012

Aug 2012 » Announcement of Q2 2012 Results

Sep 2012 » Achieved Certificate of Statutory Completion for mixed-use development UE BizHub EAST

Oct 2012 » Won the Singapore Corporate Governance Award for the mid-cap category at the Investors’ Choice Awards 2012 organised by the Securities Investors Association (Singapore)

Nov 2012 » Announcement of Q3 2012 Results

Dec 2012 » Acquisition of commercial development at 79 Anson Road for purchase consideration of $410.0 million

» Launched orchardgateway bridge, the first overhead bridge across Orchard Road

4

dEar SharEhOldErS,

We are pleased to present you the annual report of United Engineers Limited and its group of companies (the “Group”) for the financial year ended 31 December 2012.

In the last few years, we have made concerted efforts to streamline our operations, and sharpen the Group’s business focus on property and environmental engineering. The disposal of our shareholding in a power plant in Anhui, China in 2009, and the listing of our mechanical and electrical (M&E) engineering and construction subsidiary UE E&C Ltd. (“UE E&C”) in 2011 are some of the major moves in this direction. During the year, we acquired a commercial development at 79 Anson Road and completed the mixed-use development UE BizHub EAST in Changi Business Park – further broadening our portfolio of property assets to establish a more sustainable stream of recurrent rental and services income.

With a more focused business scope and stable recurrent income base, the Group is poised for a new phase of development after a century of continuous growth and transformations.

In the last few years, we have made concerted efforts to streamline our operations, and sharpen the Group’s business focus on property and environmental engineering.

LETTER TO SHAREHOLDERS

Mr Jackson Chevalier Yap Kit SiongGroup Managing Director & Chief Executive Officer

Mr Tan Ngiap JooChairman


STEady grOwTh IN rECUrrENT rENTal aNd SErVICES INCOME

For the year ended 31 December 2012, the Group recorded revenue of $595.7 million, a 50% decrease from $1.2 billion in the previous year which was mainly contributed by the completion of residential development projects, The Rochester and Park Central @ AMK. No revenue was recorded during the year for on-going property development projects, and as such, net profit was 73% lower at $72.2 million.

Excluding development profit and revaluation gains, the Group performed better for the year by posting profit before interest and tax of $89.0 million, a 39% increase from $64.0 million in the previous year. Noteworthy is the Group’s recurrent rental and services income which grew 27% to $180.8 million in the year mainly due to maiden contributions from Rochester Mall and Park Avenue Rochester. With the completion of UE BizHub EAST, Park Avenue Changi will bring the Group’s total number of serviced and hotel suites to 708. This, together with the newly-acquired commercial development at 79 Anson Road, will further boost our rental income in 2013.

ExpaNSION Of ThE grOUp’S prOpErTy pOrTfOlIO

In December, the Group announced the acquisition of a freehold, 23-storey commercial development at 79 Anson Road. Strategically located within the Central Business District (CBD), it has a mix of office and retail space across 202,092 sq ft of total net lettable area. With a strong tenant base, including anchor tenant Kellogg Brown & Root Asia Pacific Pte Ltd, the development is well positioned to benefit from the upcoming Tanjong Pagar Waterfront City project.

In May, the Group’s mixed-use development UE BizHub EAST attained temporary occupation permit (TOP). With this, it will boost the Group’s strategy of offering prime commercial, industrial and retail space with easy accessibility to MRT stations in four key business nodes of Singapore: UE Square in the south, UE BizHub CENTRAL in north central, UE BizHub EAST in the east, Rochester Mall in the west, and the newly-acquired development at 79 Anson Road in the CBD. In this way, the Group can effectively cross-market business space, as well as help its tenants to expand throughout Singapore.

On the residential property front, the Group launched Eight Riversuites, a 99-year leasehold, 862-unit condominium at Bendemeer Road/Whampoa East. Despite intense competition in the mass-market segment and the introduction of property cooling measures by the Singapore Government, Eight Riversuites sold more than 50% of total units as at 31 December 2012. The Group’s other residential project, Austville Residences, a 540-unit executive condominium (EC) at Sengkang East Avenue/Buangkok Drive launched in 2011, sold all of its remaining units during the year.

The Group’s key development project, orchardgateway, in Orchard Road, made good progress during the year, and attained a major construction milestone by erecting the 53-metre glass tubular bridge, the first of its kind across the bustling shopping belt. To date, mall space in orchardgateway has been pre-committed by American furnishings retailer Crate & Barrel, Swatch Megastore and library@orchard, among others.

hEalThy OrdEr BOOkS fOr ENgINEErINg & CONSTrUCTION

The Group’s M&E engineering and construction operations performed well, riding on strong construction demand in Singapore in 2012. The Group’s 68%-owned M&E engineering and construction subsidiary UE E&C focuses on large-scale projects that are notable landmarks and with a higher level of project complexity. During the year, UE E&C clinched a number of such projects, including the installation of air-conditioning and mechanical ventilation systems in the academic buildings of Singapore University of Technology and Design for $43.3 million. UE E&C also won M&E engineering contracts for the proposed National Continuing Education and Training East Campus, Fusionopolis Phase 2A (Towers A & B), a proposed shopping mall in Sengkang, and Watertown, a mixed-use development in Punggol.

For construction, UE E&C was appointed as the main contractor for a condominium project it also has a development stake in. The condominium will be developed on a 23,785.4 sqm land parcel at Prince Charles Crescent. UE E&C will also be appointed as the main contractor for another residential property project at Punggol Field Walk/Punggol East, which has a gross floor area of 42,921 sqm and will be developed into an EC.

6

alwayS playINg SafE IN all wOrkplaCES

The Group has a diversity of workplaces, ranging from worksites to offices. However, our commitment to ensure a safe and healthy work environment is universally uncompromising. Through continuous efforts to improve workplace safety and health (WSH), the number of incidents was reduced from 10 in 2011 to 5 in 2012. The accident frequency rate is 0.53 as at 31 December 2012. Our exemplary WSH performance has garnered a total of 12 WSH Awards during the year, comprising four WSH Performance (Silver) Awards and eight SHARP (Safety and Health Award Recognition for Projects) Awards.

dIVIdENd

Based on the above financial performance, the Group’s Directors are pleased to propose a first and final dividend of 5 cents per ordinary stock, a special dividend of 5 cents per ordinary stock, and a preference dividend of 7.5 cents per preference share. The proposed first and final, special and preference dividends, if approved by the members at the forthcoming Annual General Meeting, will be paid on 23 May 2013. aCkNOwlEdgEMENTS

On behalf of the Board of Directors and management, we express our sincerest gratitude to our Independent Director Dr Tan Eng Liang for his leadership and contributions to the Group. Dr Tan was appointed to the Board in 1988, and had served in various board committees over the years. Although he will not be offering himself for re-election at the upcoming Annual General Meeting, we are happy that he will still be sharing his extensive expertise in the role of Chairman of the Board of Directors for UE E&C. We wish him all the best in the new role, as well as his other endeavours outside of the Group.

Last but not least, we would like to convey our appreciation to all staff, shareholders, business partners and associates for their dedication and steadfast support to the Group. Thank you.

Tan Ngiap Joo Chairman

Jackson Chevalier Yap Kit Siong Group Managing Director &Chief Executive Officer

The Group also secured over $70 million worth of environmental engineering contracts. They comprise a proposed expansion to digesters and effluent pumping station at Changi Water Reclamation Plant for $27.6 million, a proposed membrane plant at Changi Water Reclamation Plant for $28.7 million, and a waste-to-energy project at a poultry farm for $14 million.

UphOldINg hIgh STaNdardS IN COrpOraTE gOVErNaNCE

The Group and its Board of Directors recognise the importance of maintaining accountability to shareholders, and its adherence to the highest corporate governance standards has won industry accolades. At the Singapore Corporate Awards 2012 organised by The Business Times and supported by SGX, the Group won the Silver Award for Best Managed Board for companies with market capitalisation of $300 million to less than $1 billion. In addition, the Group also won the Singapore Corporate Governance Award for the mid-cap category at the Investors’ Choice Awards 2012 organised by the Securities Investors Association (Singapore).

LETTER TO SHAREHOLDERS

Silver Award for Best Managed Board for companies with market capitalisation of $300 million to $1 billion

NUMBER OF ROOM KEYS

708TOTAL COMMERCIAL SPACE (NLA)

518,136*

TOTAL RETAIL SPACE (NLA)

245,406TOTAL INDUSTRIAL SPACE (NLA)

700,058

BROADENING OUR ASSET BASE

NLA: Net Lettable Area (sq ft)

* Including net lettable area of 202,092 sq ft in development at 79 Anson Road

10

KEY PROPERTY PORTFOLIO

TYPE OF DEVELOPMENT Mixed-use

ADDRESS Changi Business Park, Singapore

DESCRIPTION Integrated development comprising exhibition and convention halls, an auditorium, seminar rooms, a business hotel and business park & retail space

TENuRE OF LAND 30 years leasehold from 1/2/2008 with 30 years extension option.Remaining lease of 26 years

LAND AREA (SQ FT) 313,983

VALuATION AS AT 31 DEC 2012

$293 million

NO. OF ROOMS 251 (Park Avenue Changi)

NET LETTAbLE AREA (SQ FT) Business Park: 413,495; Retail: 91,627

SELECTED TENANTS Cisco Systems, British Telecom, NTUC FairPrice Xtra

GROuP’S EFFECTIVEINTEREST (HELD bY) 100% (United Engineers Developments Pte Ltd)

UE BIzHUB EAST >

TYPE OF DEVELOPMENT Mixed-use

ADDRESS 81 and 83 Clemenceau Avenue, Singapore

DESCRIPTION An 18-storey office building with 2 basement carpark levels,15-storey block comprising serviced apartments and a 4-storey shopping podium

TENuRE OF LAND 929 years leasehold from 1/1/1953. Remaining lease of 869 years



$675 million

NO. OF ROOMS 150 serviced apartments (Park Avenue Clemenceau)

NET LETTAbLE AREA (SQ FT) 316,044 (commercial) 78,734 (retail)

SELECTED TENANTS Shell, Research in Motion, Kao Corporation Cold Storage

GROuP’S EFFECTIVEINTEREST (HELD bY)

100% (United Engineers Limited)

< UE SqUARE

COMMERCIAl, RETAIl & HOSPITAlITY PROPERTIES


TYPE OF DEVELOPMENT Commercial

ADDRESS 79 Anson Road, Singapore

DESCRIPTION 23-storey freehold commercial development located at the junction of Anson Road and Palmer Street

TENuRE OF LAND Freehold

PuRCHASE CONSIDERATION $410 million

NET LETTAbLE AREA (SQ FT) 202,092

SELECTED TENANTS Kellogg Brown & Root Asia Pacific Pte Ltd, Japan Travel Bureau Pte Ltd


100% (UE Development (Anson) Pte Ltd)

<79 ANSON ROAD a

Notes:

a The Group entered into Sale & Purchase agreements with vendors in December 2012, and the acquisition has been completed on 21 February 2013. The building will be renamed UE BizHub TOWER.

TYPE OF DEVELOPMENT Retail Hospitality

ADDRESS Buona Vista Road/North Buona Vista Road, Singapore

DESCRIPTION Rochester Mall: Commercial development at Vista Xchange, one-north

Park Avenue Rochester: Business hotel development at Vista Xchange, one-north

TENuRE OF LAND 98 years 9 months less 1 day leasehold from 22/6/2005. Remaining lease of 91 years

99 years less 1 day leasehold from 2/2/2005. Remaining lease of 91 years

LAND AREA (SQ FT) 95,940 (inclusive of residential development)

43,242


$122 million $165 million

NO. OF ROOMS NA 271

NET LETTAbLE AREA (SQ FT) 75,045 NA

SELECTED TENANTS Rochester Market, Julia Gabriel Centre for Learning, Buttercup Montessori Kindergarten

NA


100% (UE One-North Developments Pte Ltd)

MIxED-USE DEVElOPMENT AT ONE-NORTH >

12

KEY PROPERTY PORTFOLIO

TYPE OF DEVELOPMENT Industrial

ADDRESS 12 Ang Mo Kio Street 64, Singapore

DESCRIPTION 4-storey high-tech facility with ancillary office and a 7-storey high-tech facility with ancillary office and basement carpark

TENuRE OF LAND 30+30 years leasehold from 1/4/1984 and 23+30 years leasehold from 1/2/1991. Remaining lease of 32 years



$32.5 million

NET LETTAbLE AREA (SQ FT) 286,563

SELECTED TENANTS Apple, Motorola


100% (United Engineers Limited)

< UE BIzHUB CENTRAl b

Notes:

b Classified under Property, Plant & Equipment (PPE) and carried at cost ($31.3 m)

INDUSTRIAl PROPERTIES

TYPE OF DEVELOPMENT Hospitality

ADDRESS 80 Kim Yam Road, Singapore

DESCRIPTION 10-storey block with 2/3-storey conserved building. A total of 31 apartments and 5 townhouses with basement car parks

TENuRE OF LAND 99 years leasehold from 12/12/1996. Remaining lease of 83 years



$28.5 million

NO. OF ROOMS 36 serviced apartments


100% (UE Ville Developments Pte Ltd)

PARK AVENUE ROBERTSON >

COMMERCIAl, RETAIl & HOSPITAlITY PROPERTIES


Notes:

# Construction has not commenced as at 31 December 2012

TYPE OF DEVELOPMENT Residential

ADDRESS Bendemeer Road/Whampoa East, Singapore

DESCRIPTION 862-unit condominium

TENuRE OF LAND 99 years leasehold from 11/7/2010


GROSS FLOOR AREA (SQ FT) 701,416

STAGE OF COMPLETION(ExPECTED YEAR OF COMPLETION)

NA# (2016)


$628 million


100% (UE Development (Bendemeer) Pte Ltd)

EIGHT RIVERSUITES >

TYPE OF DEVELOPMENT Residential

ADDRESS Sengkang East Avenue/Buangkok Drive,Singapore

DESCRIPTION 540-unit executive condominium

TENuRE OF LAND 99 years leasehold from 24/8/2010


GROSS FLOOR AREA (SQ FT) 578,989

STAGE OF COMPLETION(ExPECTED YEAR OF COMPLETION)

27% (2014)


55.5% (MaxLee Development Pte Ltd)

< AUSTVIllE RESIDENCES

RESIDENTIAl PROPERTIES

14

BOARD OF DIRECTORS

Mr TaN NgIap JOOIndependent, non-Executive Director non-Executive Chairman

B.A., University of Western Australia, Australia

Mr Tan Ngiap Joo joined the Board in October 2006 and was appointed Chairman in April 2007. Mr Tan was last re-elected as director of UEL in 2012 and serves as Chairman of the Executive Committee and member of the Nominating, Remuneration and Development Committees.

Mr Tan was the Deputy President of Oversea-Chinese Banking Corporation Limited and Chief Executive Officer (CEO) of the Bank of Singapore (Australia) Limited.

Currently, Mr Tan is a director of China Fishery Group Limited, Mapletree Logistics Trust Management Ltd and Tan Chong International Limited. He also serves on the Investment Committee of the Mapletree India China Funds Ltd.

Mr JaCkSON ChEValIEr yap kIT SIONgnon-Independent, Executive DirectorGroup Managing Director and CEO

B.E. (Chemical & Materials Engineering), University of Auckland, new Zealand

Mr Jackson Chevalier Yap Kit Siong joined the Board in 1999 and was last re-elected as director of UEL in 2012. Mr Yap serves as member of the Executive and Development Committees. He joined UEL as Chief Operating Officer in 1997 and was appointed as Group Managing Director and CEO in 2001.

As CEO, Mr Yap is responsible for leading the management team to implement strategic goals and directions set by the Board. Prior to joining UEL, he spent many years working in the oil and petrochemicals industry and his last position was Planning Manager in Exxon Chemical Singapore.

Currently, Mr Yap is a director of Apex Healthcare Berhad, UE E&C Ltd. and United Wearnes Technology Pte Ltd.

Mr ChEw lENg SENgIndependent, non-Executive Director

Dip. In Mechanical Engineering, Singapore Polytechnic

Mr Chew Leng Seng joined the Board in October 2006 and was last re-elected as director of UEL in 2012. Mr Chew serves as Chairman of the Nominating Committee and member of the Executive Committee.

Mr Chew was the CEO of SIA Engineering Company Limited before he retired to be a consultant to the company. Prior to that, he was an Executive Vice President (Technical) of Singapore Airlines Limited.

Mr NOrMaN Ip ka ChEUNgIndependent, non-Executive Director

B.Sc (Econs), London School of Economics & Political Science, United Kingdom Fellow of The Institute of Chartered Accountants in England and WalesCPA Singapore

Mr Norman Ip Ka Cheung joined the Board in 2009 and was last re-elected as director of UEL in 2010. Mr Ip serves as Chairman of the Development Committee and member of the Executive Committee.

Mr Ip retired as the President and Group CEO of The Straits Trading Company Limited (“STC”), in October 2009. Prior to joining STC in 1983, he was with Ernst & Whinney (now known as Ernst & Young LLP).

Currently, Mr Ip is the Chairman of the board of WBL Corporation Limited and Malaysia Smelting Corporation Berhad. He is an independent non-executive director of UE E&C Ltd., Great Eastern Holdings Limited and AIMS AMP Capital Industrial REIT Management Limited. He is also a member of the Building and Construction Authority Board.

Mr Tan Ngiap Joo Mr Jackson Chevalier yap kit Siong Mr Chew leng Seng Mr Norman Ip ka Cheung


dr TaN ENg lIaNgIndependent, non-Executive Director

D.Phil., University of Oxford, United Kingdom

Dr Tan Eng Liang joined the Board in 1988 and was last re-elected as director of UEL in 2012. Dr Tan serves as Chairman of the Audit & Risk Committee and member of the Remuneration Committee.

Currently, Dr Tan is the Chairman of UE E&C Ltd.. He serves on several listed companies including Tung Lok Restaurants (2000) Ltd, Progen Holdings Ltd, Sunmoon Food Company Limited, Sapphire Corporation Limited, Hartawan Holdings Limited and HG Metal Manufacturing Limited.

In addition, Dr Tan also sits on several public committees including the Singapore National Olympic Council.

Mr daVId wONg ChEONg fOOkIndependent, non-Executive Director

B.A. (Hons) and Master of Arts, University of Cambridge, United Kingdom

Mr David Wong Cheong Fook joined the Board in 2011 and was last re-elected as director of UEL in 2011. Mr Wong serves as member of the Audit & Risk and Nominating Committees.

Currently, Mr Wong serves on the Boards of the Energy Market Company Pte Ltd and the Casino Regulatory Authority of Singapore.

Mr Wong was a Partner with Ernst & Young and the Managing Director of Wearnes Technology Pte Ltd.

Mr kOh pOh TIONgIndependent, non-Executive Director

B.Sc, University of Singapore

Mr Koh Poh Tiong joined the Board on 1 December 2011 and was last re-elected as director of UEL in 2012. Mr Koh has more than 41 years of corporate experience in sectors ranging from the maritime to food and beverages (F&B) industries. He was CEO of Asia Pacific Breweries Limited for 15 years and last retired as CEO of the F&B division of Fraser and Neave Limited in September 2011.

Currently, Mr Koh is the non-executive Chairman of Ezra Holdings Limited and serves as a director of The Great Eastern Life Assurance Company Limited, Raffles Medical Group Ltd, SATS Ltd, PSA Corporation Limited and Petra Foods Limited. He is also Chairman of both the Singapore Kindness Movement and the National Kidney Foundation.

dr MIChaEl lIM ChUN lENgIndependent, non-Executive Director

MBBS, MMED (Int Med), FAMS, SingaporeMRCP, United Kingdom, FRCP, Edinburgh, United Kingdom

Dr Michael Lim Chun Leng joined the Board in 2000 and was last re-elected as director of UEL in 2011. Dr Lim serves as Chairman of the Remuneration Committee and member of the Audit & Risk Committee.

Currently, Dr Lim is the Chairman of EPI Mobile Health Solutions (S) Pte Ltd and has served on the boards of several public listed and private companies. He has also sat on various Government committees as a Member of Parliament. He is also Chairman of the Scientific Advisory Board in the Asian Pacific Heart Association, Editor-in-Chief of Heart Asia, an Honorary Professor of Peking University Heart Centre and Chairman of the Singapore Heart, Stroke and Cancer Centre.

dr Michael lim Chun leng dr Tan Eng liang Mr david wong Cheong fookMr koh poh Tiong

16

KEY EXECUTIVES

Mr wONg hEIN JEE (lESTEr)Chief Financial Officer

Mr Wong was appointed Chief Financial Officer of the Company on 1 October 2011. Mr Wong brings with him more than 20 years of experience in corporate finance and accounting and was formerly the Group Chief Financial Officer of Tat Hong Holdings Ltd and WBL Corporation Limited. He is a member of the Institute of Certified Public Accountants of Singapore and obtained his MBA from the University of Chicago. As Chief Financial Officer, Mr Wong is responsible for the Group’s financial and accounting and investor relations functions.

Mr ChaNg ChEw kIENT Executive Vice President (Operations), Corporate Planning and Coordination Department

Mr Chang joined the Group in 1989 as an Operations Manager before his current role as Executive Vice President (Operations) in charge of several overseas operations and environmental engineering services. He also heads the Corporate Planning and Coordination Department. He has more than 20 years of experience in regional operations, strategic planning and business management across Asia. Prior to joining the Group, he was a lecturer at Saint Mary’s University, and a business consultant. He holds a Bachelor’s degree in Applied Science Engineering from University of Toronto, Canada as well as a Master of Business Administration from Saint Mary’s University, Canada. He is active in volunteer work and serves on a number of not-for-profit committees.

Mr lIEw kah BOON (daVId)Managing Director, Integrated Property Services Division

Mr Liew joined the Group in 1994 as Development Manager, and is now the Managing Director of the enlarged Integrated Property Services Division. Prior to joining the Group, he

was a Senior Project Architect with RSP Architects, Planners and Engineers Ltd, and an Architect with the Housing and Development Board. He has more than 20 years post-graduate experience in project and property management including the development of a variety of large-scale public and private projects. Mr Liew holds a Bachelor of Architecture (Hons) degree from the National University of Singapore. Mr ChUa hOCk TONg CEO, UE E&C Ltd.

Mr Chua is the founder of Greatearth Construction Pte Ltd and has over 30 years of experience in the construction industry. He held various senior positions in the Group’s construction division in Singapore, East Malaysia and Brunei and last served as Divisional Managing Director before he became the CEO of UE E&C Ltd.. Mr Chua graduated from the Royal Melbourne Institute of Technology University, Australia, with an Associate Diploma in Quantity Surveying. Mr ChaN TUCk lEE Deputy CEO, UE E&C Ltd.

Mr Chan joined the Group in 1991 as a Project Manager and had since held various senior positions in the Engineering Department before assuming his last position as Divisional Managing Director before he became the Deputy CEO of UE E&C Ltd.. Prior to joining the Group, he had worked in several property development, contracting and consultancy firms in Malaysia, Indonesia and Singapore. Mr Chan holds a Bachelor of Science (Hons) degree in Electronic and Electrical Engineering from the Loughborough University of Technology, England. He is also a registered Professional Engineer in Singapore and Malaysia since 1995 and a council member of the Singapore Electrical Contractors and Licensed Electrical Workers Association.

The management team is led by Mr Jackson Chevalier Yap Kit Siong, Group Managing Director and CEO. Brief particulars of his qualifications and work experience were set out earlier in this report.

Assisting Mr Yap are 5 other key executives. Brief particulars of their qualifications and work experience are set out below:


CORPORATE INFORMATION

BOARD OF DIRECTORSMr Tan Ngiap Joo (Chairman)Mr Jackson Chevalier Yap Kit Siong (Group Managing Director and Chief Executive Officer)Mr Chew Leng SengMr Norman Ip Ka CheungMr Koh Poh TiongDr Michael Lim Chun LengDr Tan Eng LiangMr David Wong Cheong Fook

AUDIT & RISK COMMITTEEDr Tan Eng Liang (Chairman)Dr Michael Lim Chun LengMr David Wong Cheong Fook

ExECUTIVE COMMITTEEMr Tan Ngiap Joo (Chairman)Mr Jackson Chevalier Yap Kit SiongMr Chew Leng SengMr Norman Ip Ka Cheung

NOMINATING COMMITTEEMr Chew Leng Seng (Chairman)Mr Tan Ngiap JooMr David Wong Cheong Fook

REMUNERATION COMMITTEEDr Michael Lim Chun Leng (Chairman)Mr Tan Ngiap Joo Dr Tan Eng Liang

DEVElOPMENT COMMITTEEMr Norman Ip Ka Cheung (Chairman)Mr Tan Ngiap JooMr Jackson Chevalier Yap Kit Siong

COMPANY SECRETARYMs Heng Fook Pyng, Jeslyn

REGISTERED OFFICE12 Ang Mo Kio Street 64#01-01 UE BizHub CENTRALSingapore 569088Facsimile: 6818 8398Telephone: 6818 8383Website: www.uel.sg

REGISTRARTricor Barbinder Share Registration Services(A division of Tricor Singapore Pte. Ltd.)80 Robinson Road#02-00, Singapore 068898Facsimile: 6236 3405Telephone: 6236 3333

AUDITOR Ernst & Young LLPPublic Accountants and Certified Public AccountantsPartner in charge: Michael Sim Juat Quee (with effect from financial year ended 31 December 2008)

PRINCIPAl BANKERSDBS Bank LtdMalayan Banking BerhadOversea-Chinese Banking Corporation LimitedThe Hongkong and Shanghai Banking Corporation LimitedUnited Overseas Bank Limited

FINANCIAL CALENDARAnnouncement of Q1 2012 Results 15 May 2012

Announcement of Q2 2012 Results 10 August 2012

Announcement of Q3 2012 Results 9 November 2012

Announcement of Full-Year 2012 Results 28 February 2013

Notice of Annual General Meeting 9 April 2013

Annual General Meeting 26 April 2013

Ex-dividend Date 2 May 2013

Last Date for Registration of Transfers 6 May 2013

Books Closure Dates 7 to 8 May 2013

Dividend Payment Date 23 May 2013

GROWINGOUR REACH

NUMBER OF COUNTRIES IN wHICH THE GROUP HAS A PRESENCE

9GEOGRAPHICAL DISTRIBUTION OF REVENUE (%)

ASEAN (excluding Singapore) 37.4

Asia (excluding ASEAN)8.2

Singapore54.4

20

OPERATIONSREVIEw

In December, the Group announced the acquisition of a freehold, 23-storey commercial development at 79 Anson Road. Strategically located within the CBD, it has 202,092 sq ft of net lettable area and comprises 19 floors of office and retail space on the ground floor

From left:Eight Riversuites at Bendemeer Road/Whampoa East sold out 450 units in phase one

The Manhattan at Jalan Raja Chulan, Kuala Lumpur, boasting a city-centre location

INTEGRATED PROPERTY SERVICES

prOpErTy dEVElOpMENT For the Property Development segment, revenue was recorded for resale of apartment units of The Rochester and Park Central @ AMK. No revenue was recorded for ongoing projects during the year based on the Completion of Construction accounting method where revenue is only recognised upon completion of project. As such, operating profit before interest decreased 99% to $2.0 million. In May, the Group launched Eight Riversuites, a 99-year leasehold, 862-unit condominium at Bendemeer Road/Whampoa East. As at 31 December 2012, 450 units in phase one were fully sold. Towards the end of the year, the Group also launched The Manhattan, a 129-unit condominium in Jalan Raja Chulan, Kuala Lumpur, Malaysia. Boasting a city-centre location, The Manhattan is easily accessible to the vibrant commercial, shopping and entertainment district. The Group’s other residential project Austville Residences, a 540-unit EC at Sengkang East Avenue/Buangkok Drive launched in 2011, sold all of its remaining units during the year.This project is expected to obtain TOP in the first half of 2014.


Reception area at Park Avenue Changi

prOpErTy rENTal & SErVICESFor the Property Rental & Services segment, revenue increased 27% to $180.8 million mainly due to maiden contributions from Rochester Mall and Park Avenue Rochester, both of which form part of the mixed-use development in one-north which also includes The Rochester condominium. Operating profit before interest decreased 15% to $66.6 million in 2012 mainly due to lower properties revaluation gain which was offset by contributions from Rochester Mall and Park Avenue Rochester.

Commercial & IndustrialIn December, the Group announced the acquisition of a freehold, 23-storey commercial development at 79 Anson Road. Strategically located within the CBD, it has 202,092 sq ft of net lettable area and comprises 19 floors of office and retail space on the ground floor. The Group plans to leverage on its “UE BizHub” brand and rename it UE BizHub Tower. The property is currently fully-leased, with Kellogg Brown & Root as the anchor tenant. The Group’s other property assets performed well, with Shell House, UE Square Shopping Mall and Rochester Mall fully leased throughout the year. Changi Link, the retail mall in UE BizHub EAST, was fully pre-leased by NTUC FairPrice Xtra and other food-and-beverage tenants even before UE BizHub EAST attained TOP in May. HospitalityThe Group’s hotel and serviced suites maintained healthy overall occupancy levels throughout the year, and saw two new hospitality assets in its portfolio: Park Avenue Rochester, which officially commenced operations in January, achieved close to 80% occupancy towards the end of the year; while Park Avenue Changi soft-launched in December.

As at 31 December 2012, the Group has a total number of 708 hotel rooms and serviced suites across four locations: Park Avenue Clemenceau at Clemenceau Avenue, Park Avenue Robertson at Kim Yam Road, Park Avenue Rochester in one-north, and Park Avenue Changi in Changi Business Park. The Group is exploring other opportunities to expand its hospitality business in Singapore and overseas in a bid to establish a more sustainable stream of recurrent income.

ENGINEERING AND CONSTRUCTION

In the Engineering and Construction division, revenue increased 9% to $452.8 million in 2012 mainly due to higher revenue contribution from new and ongoing projects undertaken by UE E&C that was partially offset by lower revenue contribution from Environmental Engineering. Operating profit before interest decreased 28% to $39.5 million in 2012 mainly due to the completion of several major projects with higher profit margin in 2011.

M&E ENgINEErINgUnited Engineers (Singapore) Private Limited (“UES”), the Group’s principal M&E engineering subsidiary, completed works at UE BizHub EAST and The Rochester and continued works in orchardgateway.

The year also saw UES being awarded a number of contracts. In August, UES won a tender for the installation of air-conditioning and mechanical ventilation systems in Phase 1 of Singapore University of Technology and Design. Other awarded contracts include the proposed National Continuing Education and Training East Campus, Fusionopolis Phase 2A (Towers A & B), a proposed shopping mall in Sengkang, and Watertown mixed-use development in Punggol.

22

OPERATIONSREVIEw

During the year, our wholly-owned subsidiary United Engineers (Vietnam) Limited completed M&E works at MGM Grand Ho Tram, a large-scale integrated resort at Vung Tau, Vietnam.

CONSTrUCTIONGreatearth Construction Pte Ltd (“Greatearth”), the Group’s principal construction subsidiary, completed the construction of UE BizHub EAST during the year and in January 2013, Greatearth also completed condominium Ascentia Sky at Alexandra Road.

Construction works at Austville Residences and the National Continuing Education and Training East Campus at Paya Lebar Road/Eunos Road 8 are on-going.

For new projects, Greatearth was appointed the main contractor for a condominium project at Prince Charles Crescent in which it has a development stake in. Greatearth will also be appointed as the main contractor for an EC project at Punggol Field Walk/Punggol East in which it also has a development stake in.

Overseas, the Group’s construction subsidiary in Brunei United Engineers (B) Sdn Bhd (“UEB”) completed the construction of 334 houses and infrastructure for the National Housing Scheme in Seria, 300 houses at Kampong Meragang, as well as the Surau at Prime Minister’s Office Complex during the year. UEB was also awarded a contract by Shell Aviation for the construction of a hangar and associated works during the year.

ENVIrONMENTal ENgINEErINgThe Group’s environmental engineering business is principally managed by UES Holdings Pte Ltd (“UES Holdings”), which completed three projects during the year – modifications works to Chestnut Avenue Waterworks, provision of life support systems in Marine Life Park, Resorts World Sentosa, as well as co-generation system in Gardens by the Bay at Marina South.

The Group also secured over $70 million worth of environmental engineering contracts. They comprise a proposed expansion to digesters and effluent pumping station at Changi Water Reclamation Plant for $27.6 million, a proposed membrane plant at Changi Water Reclamation Plant for $28.7 million, and a waste-to-energy project at a poultry farm for $14.0 million. Another contract win was a proposed Used Water Lift Station at Jurong Water Reclamation Plant for $55.0 Million with a JV partner.

The Singapore poultry farm project involves employing state-of-the-art technology to convert poultry, garden and other horticulture waste into energy. This project win demonstrates the Group’s capabilities in sustainable energy development projects, following the successful completion of the co-generation system in Gardens by the Bay that utilises biomass to generate electricity and useful heat energy.

On-going construction works at the National Continuing Education and Training East Campus

Sand filters at Marine Life Park, Resorts World Sentosa


CORPORATESOCIAL RESPONSIBILITY

The Group strives to be a corporate citizen who operates responsibly with respect to the environment and the interests of stakeholders, including customers, employees and shareholders.

During the year, two of the Group’s ongoing projects, orchardgateway and Eight Riversuites, received the Green Mark Platinum (the highest accolade) and Green Mark Gold awards respectively from the Building and Construction Authority for incorporating green features which promote energy and water efficiency, enhance environmental protection and improve indoor environmental quality etc.

As an environmentally-conscious property developer, the Group introduces green features into developments as early as in the design phase all the way to adopting environmentally-friendly practices in the operation of the completed development. For example, Eight Riversuites is designed with an elevated landscape deck with high thermal insulation to minimise solar heat gain, and recycling bins will also be installed to encourage residents to reduce wastage. This all-encompassing approach shows the Group’s commitment to ensure environmental sustainability for the benefit of future generations.

The Group’s environmental engineering division engages in water-related (treatment, supply, recovery, desalination etc.), medical waste treatment as well as waste-to-energy projects. Through these businesses, the Group seeks to enhance the quality of life by providing clean and potable water and reducing pollution to the environment.

Apart from conserving the environment, the Group also makes humanitarian contributions to the communities it operates within. The Group’s facilities management subsidiary, UE Managed Solutions Pte Ltd (“UEMS”), provides property management, facilities engineering, facilities management, energy management, corporate real estate, agency, environmental, project management and technology optimisation, learning and development and specialised services in Singapore, Malaysia and Taiwan. For several years, UEMS in Singapore has been providing employment opportunities for the handicapped to help them integrate into society as well as give them a sense of independence. UEMS was given the Enabling Employers Award 2012 by the Enabling Employers Network in recognition of its continuing efforts to provide opportunities for the disabled. In addition, one of UEMS’ handicapped employees, Mr Daniel Leong, was awarded the Exemplary Employee 2012 Award for his extraordinary performance in the workplace.

As part of its centennial celebrations, the Group also made a donation to the Singapore Chinese Orchestra to do its part in supporting the development of Singapore’s arts and cultural scene.

As the Group grows its businesses and expands its geographical footprint, it will continue to play its part as a socially-responsible corporate citizen by giving back to the environment and community that have enabled it to perform its businesses and operations.

From left:Happy 100th Birthday, United Engineers Limited

Daniel Leong receiving the Exemplary Employee 2012 Award from President Tony Tan

24

The Group is committed to provide a safe and healthy work environment for all employees. For the year ended 31 December 2012, the Group’s Accident Frequency Rate (AFR) dropped 35% to 0.53 (number of workplace accidents reported per 1,000,000 man hours) and the total number of accidents decreased 50% to five cases.

During the year, Goodman Medical Supplies Limited (Hong Kong), one of the Group’s overseas subsidiaries, obtained the OHSAS 18001 certification, increasing the total number of OSHSAS 18001 and S5506 certified subsidiaries to 27 as at the end of 2012.

The Group’s Occupational Safety & Health (OSH) Department launched the Workplace Health Program @ UE in August, a health programme funded by the Health Promotion Board (HPB). The department organised various programmes and activities to raise awareness and improve occupational health amongst staff. These include mental well-being talks, a monthly ‘Fruit Day’, exercise sessions, a healthy eating tour at a supermarket and a healthy cooking demonstration.

The Group’s OSH Department organised the SmeSAFE@UE Convention 2012, which was attended by representatives from 200 small and medium enterprises. It also rolled out the UE Kindness @ workplace which is a collaboration between the Group and the Singapore Kindness Movement. The launch aims to raise consciousness about kindness at work as the Group believes that kindness and graciousness will translate into invaluable benefits for the organisation.

The Group’s efforts in the OSH area were acknowledged by the Workplace Safety and Health Council, where it achieved a record number of 12 awards in 2012 as compared to seven in 2011: four WSH Performance (Silver) Awards and eight Safety and Health Award Recognition for Projects (SHARP) Awards.

The Group’s efforts in the Occupational Safety & Health area were acknowledged by the Workplace Safety and Health Council, where it achieved a record number of 12 awards in 2012

GROUP OCCUPATIONALSAFETY & HEALTH REPORT

The Group is committed to provide continuous Workplace, Safety & Health training


The WSH Performance (Silver) Awards were presented to United Engineers Limited, United Engineers Developments Pte Ltd, United Engineers (Singapore) Private Limited and UE Power & Resources Pte Ltd for their level of commitment

and exemplary WSH standards. In addition, the Group was also awarded the SHARP Awards for the following projects and worksites:

Entity projectGreatearth Corporation Pte Ltd UE BizHub EAST

Park Avenue Suites Park Avenue Suites

UE ServiceCorp Singapore UE Square and UE BizHub CENTRAL

UES Holdings Pte Ltd Life Support System Project at Marine Life Park, Resorts World Sentosa

UE Managed Solutions (Singapore) Pte Ltd Support management program for central express services, Changi General Hospital

Support management services (Housekeeping),Mount Alvernia Hospital

United Engineers (Singapore) Private Limited UE BizHub EAST

Participants getting into the groove during a mass exercise on UE Safety Day

ENHANCINGOUR CAPABIlITIES

The Group constantly upgrades and expands it capabilities in order to develop an edge in the marketplace and enhance productivity. To that end, we fervently leverage on technology and creativity in our projects and operations, and below are some examples of our Group-wide efforts:

Deployment of vertical metal formworkThese structures are being used to erect walls in superstructure works. They replace conventional scaffoldings and give rise to significant economies in manpower and time taken in building structures.

2D barcode systemThis is where technology is used to replace manual check-in systems for the large numbers of construction workers at sites. This significantly increases productivity as it takes less than 3 seconds to scan a worker as compared with 30 seconds in manual systems. Saltwater treatment capabilitiesWe champion latest technologies in our projects. For the life support systems in Marine Life Park, Resorts World Sentosa, we further strengthen our suite of environmental engineering capabilities by implementing saltwater treatment. waste-to-energy capabilitiesWe embarked on our first waste-to-energy project for the co-generation system in Gardens by the Bay that utilises horticultural waste to produce electricity and useful heat energy.

UE TrackUE Track, our very own suite of modular applications software designed for use across various facilities management service offerings. An all-in-one platform, it helps to optimise mobile workforce utilisation and improve productivity.

28

The Group is committed to delivering timely, transparent and consistent disclosure to its stakeholders. The investor relations team facilitates and ensures regular interaction and communication between the management & stakeholders.

TIMEly aNd TraNSparENT dISClOSUrEIn keeping with best corporate governance practices, the Group’s latest developments are made available on SGXNET as well as its corporate website (www.uel.com.sg). The information is also disseminated via email to stakeholders who have subscribed to our email alert service. The Group continues to hold in utmost importance the cultivation of long-term relationships with shareholders and the wider financial community, through timely updates of corporate developments via accessible communication channels.

Our commitment to corporate governance and transparency was affirmed at the Investors’ Choice Awards 2012, organised by the Securities Investors Association (Singapore), when the Group won the Singapore Corporate Governance Award 2012 for the mid-cap category.

ENgagINg OUr aNalySTS/INVESTOrSThroughout the year, senior management actively engaged analysts as well as existing and potential investors through one-on-one meetings, conference calls and roadshows. In January, management held a presentation for the potential investors of the Group’s first $150 million tranche of Medium

Term Notes, which was eventually oversubscribed. During the year, the Group also met with institutional investors from Singapore, Hong Kong, Japan, Australia, USA and Europe. Visits to our properties were also arranged.

Currently, the Group has two research houses covering it, namely Maybank Kim Eng and CIMB. The Group will continue to be proactive and open to communicating with the various stakeholders, and also tap into a wider range of platforms to broaden its engagement with the investment community.

STrONg SharE prICE pErfOrMaNCE The Group’s share price performed well in FY2012, achieving a 4-year high of $3.50 in December, before finally ending the year at $3.37 (see chart 1). The volume of shares traded for the year also increased by 115% as compared to FY20111.

The Group’s share price chalked up a 77% increase from the beginning of 2012, outpacing the 18% increase in the Straits Times Index (see chart 2) for the same period. Market capitalisation was approximately $1.0 billion as at 31 December 2012.

As part of the FTSE ST Advisory Committee’s semi-annual review changes to the FTSE ST Index Series, UEL was added as a constituent stock of the FTSE STI Mid Cap Index. This change was effective on Monday, 18 March 2013.

1 Source: Data from Bloomberg L.P.

INVESTOR RELATIONS

Our commitment to corporate governance and transparency was affirmed at the Investors’ Choice Awards 2012, organised by the Securities Investors Association (Singapore), when the Group won the Singapore Corporate Governance Award 2012 for the mid-cap category.


Closing price on 3 Jan 2012: $1.90

Highest price (2012) : $3.50

Closing price on 31 Dec 2012: $3.37

Lowest price (2012) : $1.89 Source: Data from Bloomberg L.P.

Source: Data from Bloomberg L.P.

190

170

150

130

110

90

31/01 02/02 03/03 02/04 02/05 01/06 01/07 31/07 30/08 29/09 29/10 28/11 28/12

UEL

STI

Chart 2: Relative performance of uEL against the Straits Times Index (STI)

Chart 1: Performance of uEL shares in 2012

4.0

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0Jan’12 Jun’12 Dec’12

30

KEY FINANCIAL HIGHLIGHTS

Group Revenue ($000)

FY

08

09

10

11

12

FY

08

09

10

11

12

FY

08

09

10

11

12

FY

08

09

10

11

12

Earnings/(Loss) per Stock unit (¢)

Group Profit/(Loss) after Tax ($000)

Net Debt-to-Equity (excluding stand-alone projects)

(4.3)

10.4

41.7

97.3

24.3

0.38

0.14

0.20

0.07

(0.01)1

578,316

574,071

569,366

1,187,112

595,744

(10,162)

21,037

108,556

290,356

87,750

1 In net cash position


ASEAN (excluding Singapore) 222,510

Revenue by business Segments ($000)

Property Development150

Asia (excluding ASEAN)49,132

Corporate Services & Others254

Property Rental and Services179,033

Singapore324,102

Engineering & Construction416,307

Revenue by Geographical Segments ($000)

FY

08

09

10

11

12

FY

08

09

10

11

12

Dividend per Ordinary Stock unit (¢)Net Tangible Assets per Stock unit ($)

8

9

10

15

10

3.31

3.16

3.42

4.08

3.98

32

5-YEARFINANCIAL PROFILE

2012 2011 2010* 2009* 2008*Income Statement ($000)Revenue 595,744 1,187,112 569,366 574,071 578,316

Profit/(Loss) before Tax 102,094 348,863 142,435 33,940 (5,040)

Income Tax Expense (14,344) (58,507) (33,879) (12,903) (5,122)

Profit/(Loss) Net of Tax 87,750 290,356 108,556 21,037 (10,162)

Profit/(Loss) Attributable to Owners of the Company, Net of Tax 72,164 269,459 108,205 24,550 (9,441)

Statement of financial position ($000)

Property, Plant and Equipment 164,394 81,202 72,434 42,350 43,417

Investment Properties 1,203,765 1,242,806 1,057,395 912,978 870,358

Other Non-Current Assets 428,758 202,910 146,169 170,137 122,470

Net Current Assets1 1,088,870 1,080,405 624,038 516,828 567,004

2,885,787 2,607,323 1,900,036 1,642,293 1,603,249

Stockholders' Equity 1,238,851 1,184,323 922,063 834,409 749,867

Non-Controlling Interests 67,088 54,724 (1,090) 5,047 71,029

Short and Long-Term Borrowings 1,539,518 1,333,827 940,384 763,642 757,598

Other Non-Current Liabilities 40,330 34,449 38,679 39,195 24,755

2,885,787 2,607,323 1,900,036 1,642,293 1,603,249

Net Borrowings ($000) 1,087,517 880,549 673,759 445,450 579,328

Net Debt to Equity (times)(Including Stand-alone Project2) 0.88 0.74 0.73 0.53 0.77

Net Debt to Equity (times)(Excluding Stand-alone Project2) 0.07 (0.01)3 0.20 0.14 0.38

per Stock UnitEarnings (cents)– Profit/(Loss) Attributable to Ordinary Stockholders

after Preference Dividend 24.3 97.3 41.7 10.4 (4.3)

Ordinary Dividends (cents)

– First and final 5.0 5.0 5.0 5.0 5.0

– Special 5.0 10.0 5.0 4.0 3.0

– Cover (times) 2.43 6.49 4.17 1.16 NM

Net Tangible Assets ($) 3.98 4.08 3.42 3.16 3.31

NM: Not Meaningful

* The comparative figures have been restated in FY2011 to take into account the retrospective adjustments arising from the adoption of INT FRS115 – Agreements for the Construction of Real Estate.1 In arriving at net current assets, short-term borrowings have been excluded.2 Debts on stand-alone project refers to debt secured against specific assets of a project.3 In net cash position.

United engineers Limited AnnUAL report 2012 33

REPORT ON CORPORATE GOVERNANCE

The Board of Directors is committed to maintaining high standards of corporate governance and transparency within the Company and its subsidiaries (“the Group”). The Group has adopted and complied with, wherever feasible, the recommendations of the Code of Corporate Governance 2005 (“Code 2005”). Pursuant to Rule 710 of the Listing Manual, we set out below the details of our governance processes, including explanations where deviations from Code 2005 were adopted in the interest of the Group.

SGX 710

Board Matters

Board of Directors

The Board comprises 8 directors, 7 of whom are independent, i.e., they and their immediate family members have no relationship with the Company, its related corporations, its 10% shareholders or its officers that could interfere, or be reasonably perceived to interfere, with the exercise of the director’s independent business judgment with a view to the best interests of the Group.

Code 2005Guideline 2.1

The independence of each director is reviewed annually by the Nominating Committee (“NC”). There is a strong independent element on the Board, with independent Directors making up more than one third of the Board, the Company is complied with Code 2005.

The profiles of the Directors are found on pages 14 and 15.

Board Composition and Balance

The Group considers the present Board composition to be appropriate and adequate, given the background, qualifications and experience of its directors. The directors, coming from diverse backgrounds in the banking, accounting, engineering, business and public sectors are able to provide core competencies and skills that best contribute to the Board’s decision making.


Role of the Board

The Board is entrusted with the responsibility for an effective oversight of the management of the Group’s business and affairs. The Board works closely with Management to promote the success of the Group. Apart from its statutory responsibilities, the principal functions of the Board include, but are not limited to the following:

(i) setting the overall strategic directions and long-term goals of the Group, and ensuring that the financial and human resources procedures are in place for the Group to meet its objectives;

(ii) approving major projects, policy decisions, annual budgets, major investment funding and major restructuring of core businesses;

(iii) establishing a framework of prudent and effective controls which enables risk to be assessed and managed;

(iv) monitoring and reviewing Management performance, and the financial performance of the Group; and

(v) setting the Group’s values and standards, and ensuring that obligations to shareholders and other stakeholders are understood and met.


Separation of Chairman and Chief Executive Officer Roles

There is a clear division of responsibilities, insofar as the workings of the Board and the executive responsibility of the Group’s businesses are concerned. The role of the Chairman and the CEO are assumed by different persons. The division of responsibilities between the Chairman and the CEO has been established, set out in writing and agreed to by the Board. The Chairman and the CEO are not related to each other.


34

Chairman’s Role

The Chairman’s position is independent and non-executive in nature, and relates to the workings of the Board as a whole. In particular, he focuses on:

(i) leading the Board to ensure its effectiveness on all aspects of its role and setting its agenda and ensuring that adequate time is available for discussion of all agenda items, in particular strategic issues;

(ii) promoting a culture of openness and debate at the Board;

(iii) ensuring that the directors receive complete, adequate and timely information;

(iv) ensuring effective communication with shareholders;

(v) encouraging constructive relations among Board members and their interaction with Management;

(vi) facilitating the effective contribution of non-executive directors; and

(vii) maintaining high standards of corporate governance.


Management and CEO’s Role

The CEO is tasked with leading the Management team in the execution and implementation of the Board’s decisions, and is overall in charge of day-to-day operations. Management remains accountable to the Board, and its performance is reviewed and monitored by the Board regularly.

Non-Executive Directors

Apart from the CEO, all the other Board members are non-executive directors. The non-executive directors actively participate in discussions and decision-making at Board and sub-Board Committee levels, as well as in open and candid discussions with Management. The non-executive directors review the performance of Management in meeting agreed goals and objectives, and monitor the reporting of performance.


Access to Information/Company Secretary

All Board members have direct and independent access to the Company Secretary and other senior management staff. The Company Secretary, under the direction of the Chairman, is responsible for ensuring good information flows within the Board and its Committees and between senior management and non-executive directors, as well as facilitating orientation and assisting with professional development of directors as required. The Company Secretary attends all Board meetings and is also responsible for ensuring that Board procedures and applicable rules and regulations are complied with. The appointment and removal of the Company Secretary is deliberated on by the Board as a whole.

Code 2005Guideline 6.1Guideline 6.3

Guideline 6.4

Generally, Management prepares and submits its proposals for the Board’s consideration by way of internal memos or papers providing the background or explanatory information relating to matters to be brought before the Board, copies of disclosure documents, budgets, forecasts and monthly internal financial statements. In respect of budgets, any material variance between the projections and actual results is disclosed and explained to the Board.


In respect of scheduled meetings and as a matter of best practices, Board papers and briefing notes including management accounts and commentaries on the Group’s performance, are usually submitted at least 3 working days in advance.




Management provides to members of the Board, management accounts which present a balanced and understandable assessment of the Group’s performance, position and prospects on a monthly basis.


Internal guidelines have been adopted to ensure that Board members may consult with such professional advisers, costs of which are borne by the Company, as may be necessary to assist them in the discharge of their duties.


Meetings

The Board is accountable to its shareholders. It meets at least 4 times a year for regular scheduled meetings, and as often as may be required to deal with ad hoc matters. In FY2012, there were 4 scheduled, 1 off-site and 1 ad hoc Board Meetings. The attendance of directors at Board and sub-Board Committee meetings during the year are set out below:

Board and Committee Meetings In FY2012

directors’ Meeting

audit & risk Committee

(arC)

executive Committee

(exco)

Nominating Committee

(NC)

remuneration Committee

(rC)

development Committee

(dC)Board of directors Held attended Held attended Held attended Held attended Held attended Held attendedTan Ngiap Joo 6 6 6 4* 3 3 1 1 1 1 2 2Jackson Chevalier Yap Kit Siong 6 6 6 6 ^ # 3 2 1 1^ 1 1^ 2 2

Chew Leng Seng 6 6 6 4* 3 3 1 1 1 1* – –Norman Ip Ka Cheung 6 5 6 4* 3 3 – – – – 2 2Koh Poh Tiong 6 6 6 4* – – – – – – – –Dr Michael Lim Chun Leng 6 6 6 6 # – – – – 1 1 – –Dr Tan Eng Liang 6 4 6 6 # – – – – 1 1 – –David Wong Cheong Fook 6 6 6 6 # – – 1 1 – – – –


Notes:

* Observer by Invitation.

^ In Attendance.

# The Enterprise Risk Management (ERM) forms part of the ARC’s scope and responsibilities. During the year, the ARC held two separate meetings to discuss ERM matters specifically.

Matters Requiring Board Approval

The Group has adopted internal guidelines on matters that require Board approval. These principally include broad policy decisions, annual budgets, material acquisitions and disposals of assets, significant legal and financial issues, announceable matters, interested person transactions, appointment and termination of directors and key management staff and other matters as may be considered by the Board from time to time.


Articles of Association

The Company’s Articles of Association allow for telephonic and conference meetings. The Articles do provide for one-third of its directors to retire by rotation every year, and this has been consistently adhered to.


36

Training

Whenever a new member joins the Board, he is provided with an information package and a formal letter which sets out his duties and obligations as a director under the various regulations and how these are to be discharged. An in-house orientation programme, incorporating briefings from various business and corporate units will be arranged for the directors to better familiarise themselves with the Group’s businesses and governance practices. In the course of the year various ongoing training programmes in areas such as accounting, legal and industry matters were also made available to and arranged for the directors. The Company Secretary will bring to directors’ attention, information on any seminars that may be of relevance or use to them.


suB-Board CoMMittees

To assist in the execution of its duties, the Board has set up various sub-Board Committees, and these are detailed in the pages that follow. Each of these Committees has been tasked by the Board to make decisions on specific matters. These Committees have been formed and guided by specific terms of reference. The Committees are:


(a) Executive Committee (“Exco”)

The Exco comprises Mr Tan Ngiap Joo (Chairman), Mr Jackson Chevalier Yap Kit Siong, Mr Chew Leng Seng and Mr Norman Ip Ka Cheung.

Exco shall consist of not less than three and not more than four members, one of whom shall be the CEO and joined by at least two independent directors. The main role of Exco is to carry out the Board functions and to exercise oversight over the Management as well as evaluate in more depth the proposals set out by Management and in turn recommend to the Board for approval if necessary.

In FY2012, the Exco met 3 times, additional meetings are convened when circumstances required. The Exco’s principal functions include the following :

(i) to review, evaluate and approve the Company’s policies, principles, strategies, values, objectives and performance targets within parameters set by the Board;

(ii) to review, evaluate and approve investments and divestments and related policies within parameters set by the Board; and

(iii) to review, evaluate, approve and endorse such other matters and initiate any special reviews and actions as appropriate for the prudent management of the Company.

(b) Nominating Committee (“NC”)

The NC is chaired by Mr Chew Leng Seng and the other members comprise Messrs Tan Ngiap Joo and David Wong Cheong Fook. All the members of the NC, including the Chairman, are independent non-executive directors who are not, and are not directly associated with a substantial shareholder.

The NC meets at least once a year and more often if required. In FY2012, the NC had 1 meeting and the NC’s main roles are to:


(i) review and make recommendations to the Board for the appointment of directors and members to the sub-Board Committees. The process involves identifying, reviewing and recommending potential candidates to the Board for consideration.




The NC has put in place a formal and transparent process for the appointment of new directors to the Board. Members who have identified suitable candidates submit the bio-data of such persons to the Committee for discussion and review. Generally, candidates are identified through the business network of Board Members, and would be skilled in core competencies such as strategic planning, business or management expertise, finance and industry knowledge.


If the NC considers the candidate is suitable, the NC will then recommend its choice to the Board of Directors. Meetings with such candidates may be arranged to facilitate open discussions firstly with Board Members, and subsequently with key executives of the management team. Upon appointment, the Company will send out a formal letter setting out the Director’s roles and responsibilities and the new director will then attend various briefings with the management team.


In respect of re-nomination of directors, the NC has considered and evaluated criteria such as the contributions and performance of the retiring directors, their attendance, preparedness, participation and candour, and whether they would be able to adequately discharge their duties.


(ii) determine annually the independence of each director and recommend the re-election of directors to the Board or sub-Board Committee as may be appropriate.

The NC also promotes transparency in the periodic re-election. All the directors are required to retire at least once every three years in accordance with its Articles of Association. In the event of any vacancy arising, where the number of members is reduced below three, the Company shall endeavour to fill the vacancy, not later than three months of such event.

In the course of the year, the NC reviewed the composition of the Board and was satisfied that 7 non-executive independent directors, Mr Tan Ngiap Joo, Mr Chew Leng Seng, Mr Norman Ip Ka Cheung, Mr Koh Poh Tiong, Dr Michael Lim Chun Leng, Dr Tan Eng Liang and Mr David Wong Cheong Fook be regarded as independent directors.

The NC noted that Mr Jackson Chevalier Yap Kit Siong is non-independent as he is an executive director of the Company.

The NC has recommended the following:

(i) the re-appointment of Mr Chew Leng Seng pursuant to Section 153(6) of the Companies Act, Chapter 50; and

(ii) the re-election of Messrs Norman Ip Ka Cheung and David Wong Cheong Fook who will retire at the forthcoming AGM pursuant to Article 99 of the Articles of Association of the Company.

All the aforesaid retiring Directors, being eligible, have offered themselves for re-election. The NC recommends their continued appointments at the various sub-Board Committees.

Dr Tan Eng Liang who will have served the Company for a period exceeding nine years is retiring and will not be standing for re-election at the AGM. Upon his retirement, Dr Tan will cease to be the Chairman of the Audit and Risk Committee.


(iii) assess the effectiveness of the Board as a whole and the contribution by each individual director to the effectiveness of the Board.


The NC has implemented a formal Board and Individual Director Evaluation exercise, taking into account various criteria, including attendance, adequacy of preparation, performance at meetings, specialist knowledge, quality of decision making, share price performance and profitability (including a comparison against comparable listed peers).



38

As the Company is classified as being multi-industry, there are no directly relevant comparisons that it can undertake vis-à-vis its industry peers. The individual evaluations take into account the contributions of each director and their commitment in terms of time and effort spent on the Company’s matters.

The NC is satisfied that sufficient time and attention are being given by the directors to the affairs of the Group, notwithstanding that some of the directors have multiple Board representations. The NC is therefore of the view that the multiple Board representations held presently by the directors are acceptable and do not hinder their performance in the discharge of their duties to the Company. The evaluation exercise is conducted on an annual basis, and enables areas for improvement to be identified so that feedback may be provided to the Board.


The NC is satisfied that no individual member of the Board dominates the Board’s decision making and that there is sufficient accountability and capacity for independent decision-making. The NC, taking into account the scope and nature of operations of the Group, considers its current size to be adequate for effective decision-making.


(c) Audit & Risk Committee (“ARC”)

The ARC comprises Dr Tan Eng Liang (Chairman), Dr Michael Lim Chun Leng and Mr David Wong Cheong Fook, all of whom, are non-executive and independent directors. Most of the ARC members are actively involved with various commercial organisations, and have related financial management experience. The NC is of the view that the ARC members have sufficient financial management expertise and experience to discharge ARC’s functions.


During the year under review, the ARC met to: Code 2005Guideline 11.4

(i) review the scope and results of the audit and its cost effectiveness and the independence and objectivity of the external auditor;

(ii) review the nature and extent of the external auditor’s non-audit services to the Group, seeking to balance the maintenance of objectivity and value for money;

(iii) review the quarterly, half-yearly and full-year financial statements of the Group prior to their submission to the Board;

(iv) review the significant financial reporting issues and judgements so as to ensure the integrity of the financial statements of the Group and any formal announcements relating to the Group’s financial performance;

(v) review interested person transactions to ensure compliance with the SGX-ST Listing Manual and the shareholders mandate renewed at the last Annual General Meeting;

SGX 907

(vi) review the adequacy of the Group’s internal financial controls, operational and compliance controls, and risk management policies and systems (collectively, “internal controls”);


(vii) review the effectiveness of the Group’s internal controls, internal audit plan and function; Code 2005Guideline 12.2

(viii) make recommendations to the Board on the appointment, and re-appointment of both the external and internal auditors, and approve the remuneration and terms of engagement thereof;

(ix) review of – the assessment and monitoring of all risks associated with the investments and operations

of the Group; and – the effectiveness of internal compliance and control systems and procedures to manage

risk;



(x) recommend to the Board in relation to risk management strategy and policy framework; and

(xi) consider and reporting to the Board on any material changes to the risk profile of the Group.

The ARC has full access to and co-operation from Management, and has the discretion to invite any director or executive officer to attend its meetings where necessary. The ARC also has explicit power to investigate any matter brought to its attention within its terms of reference, and will be granted reasonable resources to enable it to discharge its function properly including seeking external professional advice.


The Group has put in place, and the ARC has endorsed, arrangements by which staff of the Group may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters. The objective for such arrangements is to ensure independent investigation and appropriate follow-up actions on such matters. The arrangements provide for investigation to be undertaken by the Whistle Blowing Committee, whose Chairman reports directly to the ARC.


The Group has outsourced the internal audit function to PriceWaterhouseCoopers LLP. Their mandate is to review amongst other areas, the Group’s material internal controls and risk management measures. The ARC is satisfied that there are adequate controls and measures within the Group, and will continue to review the same on an annual basis.

In performing its duties, the ARC also met with the Company’s internal and external auditors, without the presence of Management. The ARC confirms that it has reviewed the non-audit services undertaken by Ernst & Young LLP and these would not, in its opinion, affect the independence of Ernst & Young LLP as auditor. The breakdown of their fees for audit and non-audit services is found on note 8 to the financial statements on page 89. Accordingly, the ARC has also recommended the re-appointment of Ernst & Young LLP as external auditor of the Company. The ARC is satisfied that the Group has complied with Rule 712 and Rule 715 of the Listing Manual in relation to the appointment of auditing firms.


SGX 1207(6)(a)

SGX 1207(6)(c)

The ARC shall also have the authority to seek any information it requires from any staff of the Group. The ARC shall make recommendations to the Board but shall have no executive powers in relation to the findings and recommendations. ARC shall make recommendations to take such independent professional advice as it deems necessary.

(d) Remuneration Committee (“RC”)

Dr Michael Lim Chun Leng, a non-executive and an independent director, is the Chairman of the RC. Mr Tan Ngiap Joo and Dr Tan Eng Liang, both of whom are non-executive and independent directors serve as members. The RC is thus made up entirely of independent and non-executive directors. All RC members have adequate knowledge of compensation matters.


The RC meets at least once a year and more often if required. In FY2012, the RC met once. Its primary functions are to:

(i) evaluate and propose payment of directors’ fees for the approval of members in general meeting, and


(ii) recommend to the Board a framework of remuneration and specific remuneration packages for directors and senior management, including the CEO. For the sole executive director (who is the CEO) and senior management, the framework takes into account all aspects of executive remuneration including salaries, allowances, bonuses, options and benefits in kind. The RC benchmarks the framework against pay and employment conditions within the industry and structures the same so as to link rewards to corporate and individual performance.



40

Directors’ fees are proposed in accordance with a framework comprising basic fees and additional fees for other duties or serving on specialised committees. The Chairman of the Board or the Committee is paid twice the fee of a member. Executive directors do not receive directors’ fees. Directors’ fees are subject to the approval of members at the Annual General Meeting.


The remuneration of directors and key executives is set out below: Code 2005Guideline 9.1

Directors’ Remuneration

remunerationdirectors’

Fees (1) salary Bonusother

Benefits total$ $ $ $ $

Non-Executive Directors

Tan Ngiap Joo 153,000 – – 10,651 163,651Chew Leng Seng 85,000 – – – 85,000Norman Ip Ka Cheung 85,000 – – – 85,000Koh Poh Tiong 46,000 – – – 46,000Dr Michael Lim Chun Leng 88,000 – – – 88,000Dr Tan Eng Liang 91,000 – – – 91,000David Wong Cheong Fook 78,000 – – – 78,000

Executive Director

Jackson Chevalier Yap Kit Siong – 570,000 1,400,000 194,897 2,164,897

(1) The Directors’ Fees will only be paid upon approval by the shareholders at the forthcoming Annual General Meeting of the Company.


The Company does not employ any immediate family member of the directors of the Company. Code 2005Guideline 9.3

Key Executives Remuneration

In the interest of maintaining good morale and a strong spirit of teamwork within the Group, the disclosure relating to the top 5 key executives (who are not Directors) of the Group have been made within bands of $250,000. Their profiles are found on page 16.

Remuneration Bands No. of Executives

$250,000 – $500,000 2$500,001 – $750,000 1$1,000,000 – $1,500,000 2




(e) Development Committee (“DC”)

The DC comprises Mr Norman Ip Ka Cheung (Chairman), Mr Tan Ngiap Joo and Mr Jackson Chevalier Yap Kit Siong. The DC has been formed with an objective to specifically focus on monitoring the progress of one of the Group’s major property development projects.

There were 2 meetings being held in FY2012. The duties of DC shall include:

(i) review, evaluate and approve annual work plans, budgets and agreements of project proposed by the Management; and

(ii) review and monitor the progress of development and its execution.

risK MaNaGeMeNt aNd iNterNaL CoNtroL ProCedures

The Board of Directors, assisted by the ARC, has oversight of the internal control and risk management system in the Group.

The Group promotes the standardisation of policies, processes and internal control procedures throughout its operations. This is achieved in part through the Group’s long established Group Operations Manual which provides a framework for quality management systems and assurance processes.

The ARC is supported by the Management Committee, comprising the CEO and other senior executives of the Company.

The ARC examines the effectiveness of the Group’s internal control systems. The many assurance mechanisms operating are supplemented by the Company’s internal auditor’s reviews of the effectiveness of the Company’s material internal controls, including financial, operational and compliance controls. Any material non-compliance or failures in internal controls and recommendations for improvements are reported to the ARC. The external auditor also reports to the ARC on matters relating to internal financial controls which came to their attention during the course of their normal audit and related recommendations for improvements. ARC reviews the effectiveness of the actions taken by Management on the recommendations made by the internal and external auditors in this respect.

The Group had established an Enterprise Risk Management (“ERM”) system in FY2009 in line with international best practices.

Code 2005Guideline 12

The Group has a comprehensive set of management systems, organisational structures, policies, processes and group standards to conduct its business and deliver returns for shareholders.

The Group’s clear structures and transparent business practices are closely integrated with risk management system in the normal business processes. Key risks are reported and managed upstream in a consistent manner to assist with business planning, appropriate intervention and knowledge sharing.

The ERM system is based on ISO 31000:2009 that focuses on 4 dimensions of (i) commit and mandate, (ii) structure and accountable, (iii) communicate and train, (iv) review and improve. This is to ensure that strategic and operational objectives are achieved; reporting is reliable; compliance with all relevant laws and regulations; responsible corporate governance through an informed approach by the Board and its committees to consider any form of risks and internal control being operated for managing risks, including strategic, risk dashboard, risks assessment, risk heat maps, safety and health, business continuity plan, operational and compliance throughout the year.


42

In considering the risk management system, the Board noted that the Group’s ERM are designed to identify, mitigate, manage, reduce, rather than totally eliminate, the risk of failure to achieve business objectives and can provide reasonable assurance. The effectiveness of the risk management and internal control systems are reviewed by Management Committee and the ARC. The Board also received and reviewed reports from the Exco.

The Board is of the opinion that risks are managed responsibly in the Group and information it received was sufficient to enable it to review the effectiveness of the risk management and internal control systems.

Based on the ERM system in place, the internal controls established and maintained by the Group, work performed by the internal auditor, the statutory audit conducted by the external auditor, and reviews performed by management, various Board Committees and the Board, the Board is of the opinion with the concurrence of the ARC, that the Group’s internal controls, addressing financial, operational and compliance risks are adequate.

Code 2005Guideline 12.2SGX 1207(10)

The system of internal controls and ERM established by the Group provides reasonable, but not absolute, assurance that the Group will not be adversely affected by any event that can be reasonably foreseen as it strives to achieve its business objectives. The Board, however, notes that no system of internal controls and ERM can provide absolute assurance in this regard, or absolute assurance against the occurrence of material errors, poor judgment in decision-making, human errors, losses, fraud or other irregularities.

The initiatives and performance of the Group Occupational Safety and Health Report in FY 2012 can be found on pages 24 and 25.

CoMMuNiCatioN WitH sHareHoLders

The Group strives for timeliness and transparency in its disclosures to the shareholders and the public. It does not practise selective disclosure as all price-sensitive information is released through SGXNET for market dissemination. The Group strives to provide a balanced and understandable assessment of its performance and financial effects when disseminating financial and other price-sensitive public reports and reports to regulators (if required).


In 2012, the Group has announced its financial results together with the requisite commentaries, on a quarterly basis via SGXNET and has also posted the same on its website. A summary of the Group’s activities and performance is captured each year in the Annual Report which is distributed to all shareholders as well as business associates of the Group. In addition, major events such as the award of large or significant contracts, major acquisition or divestment of assets and other newsworthy events, had been featured in various press releases and other publications. Investors and members of the public may also access our website for more information on the Group.

All directors, including the chairpersons of each Board Committee are present and available to address questions at general meetings. The external auditor is also present to address shareholders’ queries about the conduct of audit and the preparation and content of the auditor’s report.


Separate resolutions are proposed for substantially separate issues at the meetings. Code 2005Guideline 15.2

The Company’s Articles of Association provides appropriate provisions to allow the shareholders to vote in person or in absentia through proxies.




iNterested PersoN traNsaCtioNs

The Company has renewed the Interested Person Transactions (“IPT”) Mandate at the Annual General Meeting held on 27 April 2012. The IPT Mandate defines the levels and procedures to obtain approval for such transactions. The Company maintains a register of the Group’s IPT in accordance with the reporting requirements stipulated by Chapter 9 of the SGX-ST Listing Manual. Details of the IPT Mandate are disclosed in the letter to members.

SGX 907

There were no Interested Person Transactions in FY 2012.

Code oF BusiNess etHiCs

The Group has in place an internal Code of Business Ethics prescribing conduct to be adopted by its employees to prevent situations such as conflicts of interests, undue influence, abuse of power, fraud, misuse of company information and other malpractices.

deaLiNGs iN seCurities

The Group’s internal code of Best Practices for Dealings in Securities has been issued to its directors and officers for compliance. Under the code, directors and officers of the Group are not permitted to deal with the listed securities of the Group one month before the release of any financial results of the Group or if they are in possession of unpublished price-sensitive information. Officers of the Group are reminded from time to time to adhere to and comply with the same.

Overall, the Board is satisfied with the Group’s internal code of Best Practices, and with the adequacy of internal controls within the Group.

SGX 1207(19)


44

FiNANCiAl STATEmENTSDirectors’ Report 45

Statement by Directors 50

Independent Auditor’s Report 51

Consolidated Income Statement 52

Consolidated Statement of Comprehensive Income 53

Statement of Financial Position 54

Statements of Changes in Equity 56

Consolidated Statement of Cash Flows 59

Notes to the Financial Statements 61


DiRECTORS’ REPORT

The directors are pleased to present their report to the members together with the audited consolidated financial statements of United Engineers Limited (the “Company”) and its subsidiaries (collectively, the “Group”) and the statement of financial position and statement of changes in equity of the Company for the financial year ended 31 December 2012.

direCtors

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

Tan Ngiap Joo (Chairman)Jackson Chevalier Yap Kit Siong (Group Managing Director and Chief Executive Officer)Chew Leng SengNorman Ip Ka CheungKoh Poh TiongDr Michael Lim Chun LengDr Tan Eng LiangDavid Wong Cheong Fook

arraNGeMeNts to eNaBLe direCtors to aCQuire sHares aNd deBeNtures

Except as disclosed in this report, neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose objects are, or one of whose objects is, to enable the directors of the Company to acquire benefits by means of the acquisition of shares or debentures of the Company or any other body corporate.

direCtors’ iNterests iN sHares aNd deBeNtures

The following directors, who held office at the end of the financial year, had, according to the register of directors’ shareholdings required to be kept under Section 164 of the Singapore Companies Act, Chapter 50, an interest in the ordinary stock units and share options of the Company and ordinary shares in its related corporations as stated below:

Held in the name of director deemed interestthe Company

Name of director

at the beginning of

financial year

at the end of

financial year

at the beginning of

financial year

at the end of

financial year

Ordinary Stock Units

Tan Ngiap Joo 44,925 44,925 — —Jackson Chevalier Yap Kit Siong 543,000 668,000 — —Chew Leng Seng 32,686 32,686 — —Dr Michael Lim Chun Leng 72,388 72,388 — —

No. of Unissued Ordinary Shares Under Option

Jackson Chevalier Yap Kit Siong 677,000 552,000 — —

46

DiRECTORS’ REPORT

direCtors’ iNterests iN sHares aNd deBeNtures (continued)

Held in the name of director deemed interestrelated Corporation

Name of director

at the beginning of

financial year

at the end of

financial year

at the beginning of

financial year

at the end of

financial year

UE E&C Ltd.Ordinary Shares

Jackson Chevalier Yap Kit Siong 100,000 100,000 — —Chew Leng Seng 50,000 50,000 — —Norman Ip Ka Cheung 50,000 50,000 — —Dr Tan Eng Liang 100,000 100,000 — —David Wong Cheong Fook 50,000 50,000 — —

There was no change in any of the above-mentioned interests between the end of the financial year and 21 January 2013.

Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares, share options, warrants or debentures of the Company or of its subsidiaries or related corporations, either at the beginning of the financial year or date of appointment, if later, or at the end of the financial year and on 21 January 2013.

direCtors’ CoNtraCtuaL BeNeFits

Since the end of the previous financial year, no director of the Company has received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporation with the director, or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest except as disclosed in the notes to the financial statements.

oPtioNs

United Engineers Share Option Scheme 2000 (Scheme 2000)

The United Engineers Share Option Scheme 2000 was approved by the members of the Company at an Extraordinary General Meeting held on 21 June 2000. The duration of Scheme 2000 is for 10 financial years commencing from the financial year 2000. Scheme 2000 incorporated features designed to enhance the efficacy of share options as incentive tools, and to reinforce the use of a share option scheme as a means to encourage long-term staff retention. The existing Scheme 2000 expired in financial year 2009.


DiRECTORS’ REPORT

oPtioNs (continued)

United Engineers Share Option Scheme 2000 (Scheme 2000) (continued)

As at 31 December 2012, unissued shares granted under Scheme 2000 were as follows:

date of Grantexercise

Periodexercise

Price

Balanceas at

31.12.11

No. of sharesunder option

exercisedduring the

financial year


forfeitedduring the

financial year

Balanceas at

31.12.12

4.10.02 4.10.03 to3.10.12

$1.07 363,300 363,000 300 –

12.12.03 12.12.04 to11.12.13

$1.61 460,900 98,800 – 362,100

25.11.04 25.11.05 to24.11.14

$1.59 496,400 98,400 – 398,000

30.11.05 30.11.06 to29.11.15

$1.81 611,500 108,200 – 503,300

27.11.06 27.11.07 to26.11.16

$2.11 993,000 154,000 32,000 807,000

6.12.07 6.12.08 to5.12.17

$3.68 1,800,000 – 146,350 1,653,650

20.05.09 20.05.10 to19.05.19

$1.51 435,000 103,000 27,000 305,000

5,160,100 925,400 205,650 4,029,050

The aggregate number of options granted since the commencement of the Scheme 2000 in year 2000 is 20,812,300.

48

DiRECTORS’ REPORT

oPtioNs (continued)

United Engineers Share Option Scheme 2000 (Scheme 2000) (continued)

As at 31 December 2012, the status of the options granted under Scheme 2000 to the executive director of the Company was as follows:

Name of Participant

aggregate optionsgranted since

commencementof scheme 2000 to

end of financial year

aggregate optionsexercised since

commencement of scheme 2000 to

end of financial year

aggregate optionsoutstanding as at end of

financial year

Jackson Chevalier Yap Kit Siong(Group Managing Director)

927,000 375,000 552,000

Controlling shareholders of the Company and their associates are not eligible to participate in Scheme 2000. No participant has received 5% or more of the total number of options available under Scheme 2000. No options were granted at a discount since the commencement of Scheme 2000.

The options granted by the Company do not entitle the holders of the options, by virtue of such options, any right to participate in any share issue of any other company. The exercise price in respect of which an option is exercisable shall be equal to the average of the last dealt price for a stock unit of the Company for the 3 consecutive days immediately preceding the date of grant of that option.

During the financial year, no options were granted to take up unissued ordinary shares of the subsidiaries and no ordinary shares of the subsidiaries were issued by virtue of the exercise of an option to take up unissued ordinary shares. At the end of the financial year, there were no unissued ordinary shares of the subsidiaries under option.

audit & risK CoMMittee

The members of the Audit & Risk Committee (ARC) during the financial year and at the date of this report are:

Dr Tan Eng Liang Chairman, independent, non-executive director Dr Michael Lim Chun Leng Independent, non-executive directorDavid Wong Cheong Fook Independent, non-executive director

The ARC carried out its functions in accordance with Section 201B (5) of the Singapore Companies Act, Chapter 50. The ARC reviewed the Company’s accounting policies and internal controls on behalf of the Board of Directors and performed the functions specified in the Singapore Companies Act and Singapore Exchange Listing Manual. In performing its functions, the Committee reviewed the overall scope of both internal and external audits. It met with the Company’s internal auditor and external auditor to discuss the results of their examinations and their evaluation of the Company’s system of internal accounting controls.

The ARC also reviewed the financial statements of the Company and the consolidated financial statements of the Group as well as the auditor’s report thereon.

The ARC recommended to the Board of Directors that Ernst & Young LLP be nominated for re-appointment as the external auditor of the Company for the financial year ending 31 December 2012 at the forthcoming Annual General Meeting of the Company.

Further details regarding the ARC are disclosed in the Report on Corporate Governance of the Company’s Annual Report for the financial year ended 31 December 2012.


DiRECTORS’ REPORT

auditor

Ernst & Young LLP has expressed its willingness to accept re-appointment as auditor.

On behalf of the board of directors,

TAN NGIAP JOO JACKSON CHEVALIER YAP KIT SIONGDirector Director

18 March 2013Singapore

50

STATEmENT by DiRECTORS

We, TAN NGIAP JOO and JACKSON CHEVALIER YAP KIT SIONG, being two of the directors of UNITED ENGINEERS LIMITED, do hereby state that, in the opinion of the directors,

(i) the accompanying statements of financial position, consolidated income statement, consolidated statement of comprehensive income, statements of changes in equity and consolidated statement of cash flows together with notes thereto are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2012 and the results of the business, changes in equity and cash flows of the Group and the changes in equity of the Company for the financial year ended on that date, and

(ii) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.

On behalf of the board of directors,

TAN NGIAP JOO JACKSON CHEVALIER YAP KIT SIONGDirector Director

18 March 2013Singapore


iNDEPENDENT AuDiTOR’S REPORTto the members of United engineers Limited

rePort oN tHe FiNaNCiaL stateMeNts

We have audited the accompanying financial statements of United Engineers Limited (the “Company”) and its subsidiaries (collectively, the “Group”) set out on pages 52 to 140, which comprise the statements of financial position of the Group and the Company as at 31 December 2012, the statements of changes in equity of the Group and the Company and the consolidated income statement, consolidated statement of comprehensive income and consolidated statement of cash flows of the Group for the year then ended, and a summary of significant accounting policies and other explanatory information.

MaNaGeMeNt’s resPoNsiBiLitY For tHe FiNaNCiaL stateMeNts

Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act, Chapter 50 (the “Act”) and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets.

auditor’s resPoNsiBiLitY

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

oPiNioN

In our opinion, the consolidated financial statements of the Group and the statement of financial position and statement of changes in equity of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2012 and the results, changes in equity and cash flows of the Group and the changes in equity of the Company for the year ended on that date.

rePort oN otHer LeGaL aNd reGuLatorY reQuireMeNts

In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.

ERNST & YOUNG LLPPublic Accountants and Certified Public Accountants Singapore

18 March 2013

52

CONSOliDATED iNCOmE STATEmENTFor the financial year ended 31 december 2012

GrouPNote 2012

$0002011$000

Revenue 4 595,744 1,187,112

Cost of sales (401,539) (770,136)

Gross profit 194,205 416,976

Other items of incomeInterest income 5 4,016 2,634Other income 6 21,269 63,111

Other items of expense 8Distribution costs (12,215) (12,262)Administrative expenses (84,926) (88,477)Finance costs 7 (16,788) (10,189)Other expenses (13,718) (29,549)Share of profit from equity-accounted associates 4,470 3,714Share of profit from equity-accounted joint ventures 5,781 2,905

Profit before tax 102,094 348,863

Income tax expense 9 (14,344) (58,507)

Profit net of tax 87,750 290,356

Profit attributable to:Owners of the Company 72,164 269,459Non-controlling interests 15,586 20,897

87,750 290,356

Earnings per stock unit (cents)

Basic 11 24.3 97.3Diluted 11 23.3 86.1

The accompanying accounting policies and explanatory notes form an integral part of these financial statements.


CONSOliDATED STATEmENT OF COmPREhENSiVE iNCOmEFor the financial year ended 31 december 2012

GrouP2012$000

2011$000

Profit net of tax 87,750 290,356

Other comprehensive incomeGains on exchange differences on translation, net of tax 559 3,729Gains on remeasuring available-for-sale financial assets, net of tax 2,131 568Gains on cash flow hedges, net of tax – 808Share of other comprehensive income from equity-accounted associate, net of tax (2,603) (8,942)Other comprehensive income, net of tax 87 (3,837)

Total comprehensive income 87,837 286,519

Attributable to:Owners of the Company 72,425 265,274Non-controlling interests 15,412 21,245

87,837 286,519


54

STATEmENT OF FiNANCiAl POSiTiONAs at 31 december 2012

GrouP CoMPaNYNote 2012

$0002011$000

2012$000

2011$000

ASSETS

Non-current assetsProperty, plant and equipment 12 164,394 81,202 26,300 27,800Properties development costs 13 156,253 45,167 – –Investment properties 14 1,203,765 1,242,806 675,000 669,000Intangible assets 15 24,581 26,170 – –Investments in subsidiaries 16 – – 657,403 448,374Investments in associates 17 148,510 48,424 315 315Investments in joint ventures 18 64,206 51,743 – –Deferred tax assets 19 3,395 1,391 – –Trade and other receivables 22 24,653 23,045 – –Other investments 20 7,160 6,970 7,077 6,871Total non-current assets 1,796,917 1,526,918 1,366,095 1,152,360

Current assetsInventories 21 4,660 7,516 – –Income tax receivables 85 51 – –Trade and other receivables 22 341,086 301,915 42,191 26,743Other investments 20 11,652 9,703 – –Gross amount due from customers for contract work 23 18,649 16,252 – –Prepayments 3,259 4,286 2,279 3,032Properties held for sale 24 819,671 807,321 – –Bank balances and deposits 25 452,001 453,278 17,950 20,252

1,651,063 1,600,322 62,420 50,027Assets of disposal group classified as held for sale 10 3,198 – – –Total current assets 1,654,261 1,600,322 62,420 50,027Total assets 3,451,178 3,127,240 1,428,515 1,202,387



STATEmENT OF FiNANCiAl POSiTiONAs at 31 december 2012

GrouP CoMPaNYNote 2012

$0002011$000

2012$000

2011$000

EQUITY AND LIABILITIES

EquityShare capital 26 327,989 300,898 327,989 300,898Retained earnings 854,713 828,294 517,118 480,234Other reserves 27 56,149 55,131 24,427 23,939Equity attributable to owners of the Company 1,238,851 1,184,323 869,534 805,071Non-controlling interests 67,088 54,724 – –Total equity 1,305,939 1,239,047 869,534 805,071

Non-current liabilitiesDeferred tax liabilities 19 25,825 24,614 205 660Trade and other payables 31 14,505 9,835 – –Borrowings 28 1,091,350 1,157,433 350,829 285,618Total non-current liabilities 1,131,680 1,191,882 351,034 286,278

Current liabilitiesProvisions 30 – 790 – –Income tax payable 30,010 66,707 6,382 7,191Trade and other payables 31 502,621 427,571 16,030 20,480Borrowings 28 448,168 176,394 185,535 83,367Gross amount due to customers for contract work 23 29,562 24,849 – –

1,010,361 696,311 207,947 111,038Liabilities of disposal group classified as held for sale 10 3,198 – – –Total current liabilities 1,013,559 696,311 207,947 111,038Total liabilities 2,145,239 1,888,193 558,981 397,316Total equity and liabilities 3,451,178 3,127,240 1,428,515 1,202,387


56

STATEmENTS OF ChANGES iN EquiTyFor the financial year ended 31 december 2012

GROUP

attributable to owners of the Company

total equity

equityattributable

to ownersof the

Company

share capital

(Note 26)retainedearnings

aFs reserve

(Note 27)

share option

reserve(Note 27)

translationreserve

(Note 27)

other reserves(Note 27)

Non-controlling

interests$000 $000 $000 $000 $000 $000 $000 $000 $000

Opening balance at 01/01/2012 1,239,047 1,184,323 300,898 828,294 33,980 4,081 (4,875) 21,945 54,724

Profit for the year 87,750 72,164 – 72,164 – – – – 15,586Gains/(losses) on exchange

differences on translation, net of tax 559 733 – – – – 733 – (174)

Gains on remeasuring available-for-sale financial assets, net of tax 2,131 2,131 – – 2,131 – – – –

Share of other comprehensive income from equity-accounted associate, net of tax (2,603) (2,603) – – (2,603) – – – –

Other comprehensive income for the year 87 261 – – (472) – 733 – (174)

Total comprehensive income for the year 87,837 72,425 – 72,164 (472) – 733 – 15,412

Contributions by and distributions to owners

Ordinary shares issued on conversion of convertible bonds converted into ordinary stocks 25,711 25,711 25,711 – – – – – –

Ordinary shares issued on exercise of share options converted into ordinary stocks 1,380 1,380 1,380 – – – – – –

Equity portion of convertible bonds 128 128 – – – – – 128 –Dividends paid (Note 32) (49,327) (44,175) – (44,175) – – – – (5,152)Total contributions by and

distributions to owners (22,108) (16,956) 27,091 (44,175) – – – 128 (5,152)

Changes in ownership interests in subsidiaries

Contribution from non-controlling interests 2,485 – – – – – – – 2,485

Movement in non-controlling interests arising from an increase in shareholding in subsidiaries (1,322) 629 – – – – – 629 (1,951)

Reallocation of losses assumed by owners of the Company – (1,570) – (1,570) – – – – 1,570

Total changes in ownership interests in subsidiaries 1,163 (941) – (1,570) – – – 629 2,104

Total transactions with owners in their capacity as owners (20,945) (17,897) 27,091 (45,745) – – – 757 (3,048)

Closing balance at 31/12/2012 1,305,939 1,238,851 327,989 854,713 33,508 4,081 (4,142) 22,702 67,088




GROUP

attributable to owners of the Company

total equity

equityattributable

to ownersof the

Company

share capital


aFs reserve

(Note 27)

share option

reserve(Note 27)

translationreserve

(Note 27)


Non-controlling

interests$000 $000 $000 $000 $000 $000 $000 $000 $000

Opening balance at 01/01/2011 920,973 922,063 273,902 592,944 42,354 4,081 (8,317) 17,099 (1,090)

Profit for the year 290,356 269,459 – 269,459 – – – – 20,897Gains on exchange differences on

translation, net of tax 3,729 3,442 – – – – 3,442 – 287Gains on remeasuring available-for-

sale financial assets, net of tax 568 568 – – 568 – – – –Gains on cash flow hedges,

net of tax 808 747 – – – – – 747 61Share of other comprehensive

income from equity-accounted associate, net of tax (8,942) (8,942) – – (8,942) – – – –

Other comprehensive income for the year (3,837) (4,185) – – (8,374) – 3,442 747 348

Total comprehensive income for the year 286,519 265,274 – 269,459 (8,374) – 3,442 747 21,245

Contributions by and distributions to owners

Ordinary shares issued on conversion of convertible bonds converted into ordinary stocks 26,252 26,252 26,252 – – – – – –

Ordinary shares issued on exercise of share options converted into ordinary stocks 744 744 744 – – – – – –

Equity portion of convertible bonds 284 284 – – – – – 284 –Dividends paid (Note 32) (27,648) (27,648) – (27,648) – – – – –Total contributions by and

distributions to owners (368) (368) 26,996 (27,648) – – – 284 –

Changes in ownership interests in subsidiaries

Dilution of interests in subsidiaries 31,923 3,815 – – – – – 3,815 28,108Reallocation of losses assumed by

owners of the Company – (6,461) – (6,461) – – – – 6,461Total changes in ownership

interests in subsidiaries 31,923 (2,646) – (6,461) – – – 3,815 34,569Total transactions with owners in

their capacity as owners 31,555 (3,014) 26,996 (34,109) – – – 4,099 34,569

Closing balance at 31/12/2011 1,239,047 1,184,323 300,898 828,294 33,980 4,081 (4,875) 21,945 54,724


58


COmPANY

total equity

share capital


aFs reserve

(Note 27)

share option

reserve(Note 27)


$000 $000 $000 $000 $000 $000

Opening balance at 01/01/2012 805,071 300,898 480,234 5,349 4,081 14,509

Profit for the year 81,059 – 81,059 – – –Other comprehensive income for the year 360 – – 360 – –Total comprehensive income for the year 81,419 – 81,059 360 – –

Contributions by and distributions to ownersOrdinary shares issued on conversion of

convertible bonds converted into ordinary stocks 25,711 25,711 – – – –

Ordinary shares issued on exercise of share options converted into ordinary stocks 1,380 1,380 – – – –

Equity portion of convertible bonds 128 – – – – 128Dividends paid (Note 32) (44,175) – (44,175) – – –Total transactions with owners in

their capacity as owners (16,956) 27,091 (44,175) – – 128

Closing balance at 31/12/2012 869,534 327,989 517,118 5,709 4,081 14,637

Opening balance at 01/01/2011 750,879 273,902 453,580 5,091 4,081 14,225

Profit for the year 54,302 – 54,302 – – –Other comprehensive income for the year 258 – – 258 – –Total comprehensive income for the year 54,560 – 54,302 258 – –

Contributions by and distributions to ownersOrdinary shares issued on conversion of

convertible bonds converted into ordinary stocks 26,252 26,252 – – – –

Ordinary shares issued on exercise of share options converted into ordinary stocks 744 744 – – – –

Equity portion of convertible bonds 284 – – – – 284Dividends paid (Note 32) (27,648) – (27,648) – – –Total transactions with owners in their

capacity as owners (368) 26,996 (27,648) – – 284

Closing balance at 31/12/2011 805,071 300,898 480,234 5,349 4,081 14,509



CONSOliDATED STATEmENT OF CASh FlOwSFor the financial year ended 31 december 2012

GrouP2012$000

2011$000

Cash flows from operating activitiesProfit before tax 102,094 348,863

Depreciation of property, plant and equipment 11,677 9,797Interest income (4,016) (2,634)Finance costs 16,788 10,189Amortisation of intangible assets 1,025 884Currency realignment (93) (2,396)Dividend income from other investments (404) (529)Gain on disposal of investment properties – (2,500)(Gain)/loss on disposal of property, plant and equipment (243) 92(Gain)/loss on fair value adjustment on held for trading investments (195) 2,377Impairment loss on available-for-sale financial assets – 3,138Impairment loss on intangible assets – 338Impairment loss on property, plant and equipment – 103Impairment of property held for sale 1,532 550Inventories (written back)/written-down (30) 932Net surplus on revaluation of investment properties (14,915) (56,657)(Reversal of impairment)/impairment of associate (3,001) 51Share of profit from equity-accounted associates and joint ventures (10,251) (6,619)Unrealised exchange loss 4,478 2,613Operating cash flows before changes in working capital 104,446 308,592

Properties held for sale– Development expenditure (70,167) (895,941)– Proceeds from progress billings 132,283 669,201Increase in trade and other payables and provisions 19,196 62,833Increase in trade and other receivables (41,253) (150,365)(Increase)/decrease in gross amount due from customers for contract work (8,016) 18,687Increase/(decrease) in gross amount due to customers for contract work 5,161 (1,735)Decrease/(increase) in inventories 2,345 (1,440)Cash flows from operations 143,995 9,832Income taxes paid (51,221) (18,988)Interest paid (28,147) (23,145)Interest received 3,562 2,660Net cash flows from/(used in) operating activities 68,189 (29,641)


60

CONSOliDATED STATEmENT OF CASh FlOwSFor the financial year ended 31 december 2012

GrouP2012$000

2011$000

Cash flows from investing activitiesAcquisition of intangible assets (398) (2,772)Acquisition of non-controlling interests (1,322) –Dividends received from associates 428 434Dividends received from other investments 404 529Increase in amounts due from associates and joint ventures (3,810) (892)Investments in associates (3,322) –Investments in joint ventures – (300)Increase in loans to associates (92,488) –Increase in loans to joint ventures (3,239) (10,263)Proceeds from disposal of investment properties – 11,103Proceeds from disposal of property, plant and equipment 2,380 3,165Proceeds from liquidation of an associate – 545Purchase of property, plant & equipment (17,704) (23,036)Subsequent expenditure on development of properties (138,026) (188,181)Net cash flows used in investing activities (257,097) (209,668)

Cash flows from financing activitiesContribution from non-controlling interests 2,485 –(Decrease)/increase in short-term loans (25,007) 32,330(Decrease)/increase in trust receipts and bills payable (3,289) 750Dividends paid (44,175) (27,648)Dividends paid to non-controlling interests of a subsidiary (5,152) –Issuance of shares upon exercise of share options 1,380 744Net proceeds from dilution of interests in subsidiaries – 31,923Proceeds from issuance of medium term notes 150,000 –Proceeds from long-term loans 228,913 916,099Repayment of long-term loans (109,799) (528,712)Net cash flows from financing activities 195,356 425,486

Net increase in cash and cash equivalents 6,448 186,177Cash and cash equivalents, beginning balance 439,166 252,989Cash and cash equivalents, ending balance 445,614 439,166

Cash and cash equivalents comprise:Bank balances and deposits (Note 25) 452,001 453,278Bank overdrafts (Note 28) (6,387) (14,112)Cash and cash equivalents 445,614 439,166



NOTES TO ThE FiNANCiAl STATEmENTSFor the financial year ended 31 december 2012

1 GeNeraL

The Company is a limited liability company domiciled and incorporated in Singapore and is listed on the Singapore Exchange Securities Trading Limited (SGX-ST).

The Company operates in Singapore and its principal activities are those of a holding company and property owner and the provision of management services to related companies and deriving income therefrom. The principal activities and place of business of the subsidiaries are set out in Note 16 to the financial statements.

The registered office of the Company is located at:

12 Ang Mo Kio Street 64#01-01 UE BizHub CENTRALSingapore 569088

The principal place of business of the Company is located at:

12 Ang Mo Kio Street 64#03A-01 UE BizHub CENTRALSingapore 569088

2 suMMarY oF siGNiFiCaNt aCCouNtiNG PoLiCies

2.1 Basis of preparation

The consolidated financial statements of the Group and the statement of financial position and statement of changes in equity of the Company have been prepared in accordance with Singapore Financial Reporting Standards (FRS).

The financial statements have been prepared on the historical cost basis except as disclosed in the accounting policies below.

The financial statements are presented in Singapore Dollars (SGD or $) and all values in the tables are rounded to the nearest thousand ($000) except when otherwise indicated.

2.2 Changes in accounting policies

The accounting policies adopted are consistent with those of the previous financial year except in the current financial year, the Group has adopted all the new and revised standards and Interpretations of Financial Reporting Standards (INT FRS) that are effective for annual periods beginning on or after 1 January 2012. The adoption of these standards and interpretations did not have any effect on the financial performance or position of the Group and the Company.

62


2 suMMarY oF siGNiFiCaNt aCCouNtiNG PoLiCies (continued)

2.3 Standards issued but not yet effective

The Group has not adopted the following standards and interpretations that are relevant to the Group that have been issued but not yet effective:

effective date (annual periods

beginning on or after)

Amendments to FRS 1 – Presentation of Items of Other Comprehensive Income 1 July 2012Revised FRS 19 Employee Benefits 1 January 2013FRS 113 Fair Value Measurement 1 January 2013Amendments to FRS 107: Disclosures – Offsetting Financial Assets and Financial Liabilities 1 January 2013Improvements to FRSs 2012– Amendment to FRS 1 Presentation of Financial Statements 1 January 2013– Amendment to FRS 16 Property, Plant and Equipment 1 January 2013– Amendment to FRS 32 Financial Instruments: Presentation 1 January 2013Revised FRS 27 Separate Financial Statements 1 January 2014Revised FRS 28 Investments in Associates and Joint Ventures 1 January 2014FRS 110 Consolidated Financial Statements 1 January 2014FRS 111 Joint Arrangements 1 January 2014FRS 112 Disclosure of Interests in Other Entities 1 January 2014Amendments to FRS 32: Offsetting Financial Assets and Financial Liabilities 1 January 2014

Except for the Amendments to FRS 1, FRS 111, Revised FRS 28 and FRS 112, the directors expect that the adoption of the standards and interpretations above will have no material impact on the financial statements in the period of initial application. The nature of the impending changes in accounting policy on adoption of the Amendments to FRS 1, FRS 111, Revised FRS 28 and FRS 112 are described below.

Amendments to FRS 1 – Presentation of Items of Other Comprehensive Income

The Amendments to FRS 1 Presentation of Items of Other Comprehensive Income (“OCI”) is effective for financial periods beginning on or after 1 July 2012.

The Amendments to FRS 1 changes the grouping of items presented in OCI. Items that could be reclassified to income statement at a future point in time would be presented separately from items which will never be reclassified. As the Amendments only affect the presentations of items that are already recognised in OCI, the Group does not expect any impact on its financial position or performance upon adoption of this standard.




2.3 Standards issued but not yet effective (continued)

FRS 111 Joint Arrangements and Revised FRS 28 Investments in Associates and Joint Ventures

FRS 111 Joint Arrangements and Revised FRS 28 Investments in Associates and Joint Ventures are effective for financial periods beginning on or after 1 January 2014.

FRS 111 classifies joint arrangements either as joint operations or joint ventures. Joint operation is a joint arrangement whereby the parties that have rights to the assets and obligations for liabilities whereas joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.

FRS 111 requires the determination of joint arrangement’s classification to be based on the parties’ right and obligations under the arrangement, with the existence of a separate legal vehicle no longer being the key factors. FRS 111 disallows proportionate consolidation and requires joint ventures to be accounted using the equity method. The revised FRS 28 was amended to describe the application of equity method to investments in joint ventures in addition to associates.

FRS 112 Disclosure of Interests in Other Entities

FRS 112 is effective for financial periods beginning on or after 1 January 2014.

FRS 112 is a new and comprehensive standard on disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. FRS 112 requires an entity to disclose information that helps users of its financial statements to evaluate the nature and risks associated with its interests in other entities and the effects of those interests on its financial statements. The Group is currently determining the impact of the disclosure requirements. As this is a disclosure standard, it will not have any impact to the financial position and financial performance of the Group when implemented in 2014.

2.4 Basis of consolidation and business combinations

Basis of consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the end of the reporting period. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances.

All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions and dividends are eliminated in full.

Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.

Losses within a subsidiary are attributed to the non-controlling interests even if that results in a deficit balance.

64



2.4 Basis of consolidation and business combinations (continued)

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group losses control over a subsidiary, it:

– De-recognises the assets (including goodwill) and liabilities of the subsidiary at their carrying amounts at the date when control is lost;

– De-recognises the carrying amount of any non-controlling interest; – De-recognises the cumulative translation differences recorded in equity; – Recognises the fair value of the consideration received; – Recognises the fair value of any investment retained; – Recognises any surplus or deficit in profit or loss; – Re-classifies the Group’s share of components previously recognised in other comprehensive income to

profit or loss or retained earnings, as appropriate.

Business combinationsBusiness combinations (other than combinations involving entities or businesses under common control which are accounted for by applying the pooling of interest method) are accounted for by applying the acquisition method. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are recognised as expenses in the periods in which the costs are incurred and the services are received.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognised in accordance with FRS 39 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it is not remeasured until it is finally settled within equity.

In business combinations achieved in stages, previously held equity interests in the acquiree are re-measured to fair value at the acquisition date and any corresponding gain or loss is recognised in profit or loss.

The Group elects for each individual business combination, whether non-controlling interest in the acquiree (if any) is recognised on the acquisition date at fair value, or at the non-controlling interest’s proportionate share of the acquiree net identifiable assets.

Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interest in the acquiree (if any), and the fair value of the Group’s previously held equity interest in the acquiree (if any), over the net fair value of the acquiree’s identifiable assets and liabilities is recorded as goodwill. The accounting policy for goodwill is set out in Note 2.12(a). In instances where the latter amount exceeds the former, the excess is recognised as a gain on bargain purchase in profit or loss on the acquisition date.




2.4 Basis of consolidation and business combinations (continued)

Business combinations (continued)Business combinations involving entities or businesses under common control are accounted for by applying the pooling of interest method. The assets and liabilities of the combining entities or businesses are reflected at their existing carrying amounts in the combined financial statements. The retained earnings and other reserves recognised in the combined financial statements are the retained earnings and other reserves of the combining entities or businesses immediately before the combination.

Any difference between the consideration paid and the share capital of the acquired entity or the net tangible asset amount of the acquired business is reflected within equity as merger reserve or deficit. The combined profit and loss account reflects the results of the combining entities or businesses for the full year, irrespective of when the combination takes place. Comparatives are presented as if the entities or businesses had always been combined since the date the entities or businesses had come under common control.

2.5 Transactions with non-controlling interests

Non-controlling interests represent the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company, and are presented separately in the consolidated statement of comprehensive income and within equity in the consolidated statement of financial position, separately from equity attributable to owners of the Company.

Changes in the Company’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any differences between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received are recognised directly in equity and attributed to owners of the Company.

2.6 Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of consideration received or receivable, net of discounts, rebates, and sales taxes or duty. The Group assesses its revenue arrangements to determine if it is acting as principal or agent. The Group has concluded that it is acting as a principal in all of its revenue arrangements. The following specific criteria must also be met before revenue is recognised:

Sale of goods Revenue from sale of goods is recognised upon the transfer of significant risk and rewards of ownership of the goods to the customer. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.

Rental incomeRental income arising from operating leases on investment properties is accounted for on a straight-line basis over the lease terms. The aggregate costs of incentives provided to lessees are recognised as a reduction of rental income over the lease term on a straight-line basis.

Revenue from rental of machinery, equipment and metal products are recognised on a straight-line basis over the lease term as they become receivable according to the provision of the lease agreement.

66



2.6 Revenue recognition (continued)

Revenue from construction contractsRevenue from construction contracts is recognised on the percentage of completion method. Further details can be found in Note 2.19.

Rendering of servicesRevenue from services rendered is recognised upon services performed.

Sale of development property held for saleA development property held for sale is regarded as sold when the significant risks and rewards have been transferred to the buyer, which is normally on unconditional exchange of contracts. For conditional exchanges, sales are recognised only when all the significant conditions are satisfied.

Where development property is under construction and agreement has been reached to sell such property when construction is complete, the Directors consider whether the contract comprises:

– A contract to construct a property; or – A contract for the sale of completed property.

a) Where a contract is judged to be for the construction of a property, revenue is recognised using the percentage of completion method as construction progresses.

b) Where the contract is judged to be for the sale of a completed property, revenue is recognised when the significant risks and rewards of ownership of the real estate have been transferred to the buyer (i.e. revenue is recognised using the completed contract method).

(i) If, however, the legal terms of the contract are such that the construction represents the continuous transfer of work in progress to the purchaser, the percentage of completion method of revenue recognition is applied and revenue is recognised as work progresses.

(ii) In Singapore context, INT FRS 115 includes an accompanying note on application of INT FRS 115 in Singapore which requires the percentage of completion method of revenue recognition to be applied to sale of private residential properties in Singapore prior to completion of the properties that are regulated under the Singapore Housing Developers (Control and Licensing) Act (Chapter 130) and uses the standard form of sale and purchase agreements (SPAs) prescribed in the Housing Developers Rules. The accompanying note to INT FRS 115 does not address the accounting treatment for other SPAs, including SPAs with a Deferred Payment Scheme (DPS) feature in Singapore. The Group’s policy is to recognise property sold under DPS under completed contract method.

In the above situations (i) and (ii), the percentage of work completed is measured based on the costs incurred up until the end of the reporting periods as a proportion of total costs expected to be incurred.

Service concession arrangementRevenue relating to construction services under a service concession arrangement is recognised based on the stage of completion of the work performed, consistent with the Group’s accounting policy on recognising revenue on construction contracts (refer to Note 2.19). Operation or service revenue is recognised in the period in which the services are provided by the Group. When the Group provides more than one service in a service concession arrangement, the consideration received is allocated by reference to the relative fair values of the services delivered.




2.6 Revenue recognition (continued)

Service concession arrangement (continued)Revenues from services rendered in respect of water and medical waste treatment concession arrangements are recognised by reference to the unit price and quantity of water and medical waste treated respectively. Unit price is stated in each contract. Quantity of water and medical waste treated is measured according to the contract. Any losses are provided for as and when they become known.

Dividend and interest incomeDividend income is recognised when the Group’s right to receive payment is established. Interest income is recognised using the effective interest method.

2.7 Employee benefits

Defined contribution plans The Group participates in the national pension schemes as defined by the laws of the countries in which it has operations. As required by law, the Group’s companies in Singapore make contributions to the Central Provident Fund (CPF) scheme in Singapore, a defined contribution pension scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed.

Equity compensation benefitsThe Company also operates the United Engineers Share Option Scheme 2000 (Scheme 2000) to grant non-transferable options to certain employees of the Company as consideration for services rendered. When the options are exercised, the proceeds received net of any transaction costs are credited to share capital of the Company accordingly.

The compensation cost of these equity-settled transactions with employees is measured by reference to the fair value of the options at the date on which the share options are granted which takes into account market conditions and non-vesting conditions.

The compensation cost is recognised in the income statement with a corresponding increase in the employee share option reserve, over the vesting period that is the period which the service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the “vesting date”). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of options that will ultimately vest. The charge or credit to the income statement for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

No expense is recognised for options that do not ultimately vest, except for options where vesting is conditional upon a market or non-vesting condition, which are treated as vested irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied. In the case where the option does not vest as the result of a failure to meet a non-vesting condition that is within the control of the Group or the employee, it is accounted for as a cancellation. In such case, the amount of the compensation cost that otherwise would be recognised over the remainder of the vesting period is recognised immediately in profit or loss upon cancellation. The employee share option reserve is transferred to retained earnings upon expiry of the share options.

Where the terms of an equity-settled transaction award are modified, the minimum expense recognised is the expense as if the terms had not been modified, if the original terms of the award are met. Additional expense is recognised for any increase in the total fair value of the share options due to the modification, as measured at the date of the modification.

68



2.7 Employee benefits (continued)

Equity compensation benefits (continued)Where the employee share option plan is cancelled, it is treated as if it had vested on the date of cancellation, and any expense that otherwise would have been recognised for services received over the remaining vesting period is recognised immediately. This includes any award where non-vesting conditions within the control of either the Group or the employee are not met. However, if a new employee share option plan is substituted for the cancelled employee share option plan, and designated as a replacement employee share option plan on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph. All cancellations of equity-settled transactions are treated equally.

Employee leave entitlementEmployee entitlements to annual leave are recognised as a liability when they accrue to the employees. The estimated liability for leave is recognised for services rendered by employees up to the end of the reporting period.

2.8 Foreign currencies

The Group’s consolidated financial statements are presented in Singapore Dollars, which is also the Company’s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.

(a) Transactions and balancesTransactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates.

Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the end of the reporting period. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at the end of the reporting period are recognised in the income statement except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to income statement of the Group on disposal of the foreign operation.

(b) Consolidated financial statementsFor consolidation purpose, the assets and liabilities of foreign operations are translated into Singapore Dollars at the rate of exchange ruling at the end of the reporting period and their income statements are translated at the weighted average exchange rates for the year. The exchange differences arising on the translation are taken directly to other comprehensive income. On disposal of a foreign operation, the cumulative amount recognised in foreign currency translation reserve relating to that particular foreign operation is recognised in the income statement.

In the case of a partial disposal without loss of control of a subsidiary that includes a foreign operation, the proportionate share of the cumulative amount of the exchange differences are re-attributed to non-controlling interest and are not recognised in the income statement. For partial disposals of associates or jointly controlled entities that are foreign operations, the proportionate share of the accumulated exchange differences is reclassified to the income statement.




2.9 Income taxes

Current taxationCurrent tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the end of the reporting period, in the countries where the Group operates and generates taxable income.

Current taxes are recognised in the income statement except to the extent that the tax relates to items recognised outside income statement, either in other comprehensive income or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate. Deferred taxationDeferred tax is provided using the liability method on temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all temporary differences, except:

• Wherethedeferredtax liabilityarisesfromthe initialrecognitionofgoodwillorofanassetor liability ina transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• Inrespectoftaxabletemporarydifferencesassociatedwithinvestmentsinsubsidiaries,associatesandinterests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except:

• Wherethedeferredtaxassetrelatingtothedeductibletemporarydifferencearisesfromtheinitialrecognitionof an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• Inrespectofdeductibletemporarydifferencesassociatedwithinvestmentsinsubsidiaries,associatesandinterests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets are reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at the end of each reporting period and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the end of each reporting period.

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2.9 Income taxes (continued)

Deferred taxation (continued)Deferred tax relating to items recognised outside income statement is recognised outside income statement. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Goods and services taxation/sales taxRevenues, expenses and assets are recognised net of the amount of goods and services taxation/sales tax except:

• Wherethegoodsandservicestaxation/salestaxincurredinapurchaseofassetsorservicesisnotrecoverablefrom the taxation authority, in which case the goods and services taxation/sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

• Receivablesandpayablesthatarestatedwiththeamountofgoodsandservicestaxation/salestaxincluded.

The net amount of goods and services taxation/sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

2.10 Property, plant and equipment

All items of property, plant and equipment are initially recorded at cost. Such cost includes the cost of replacing part of the property, plant and equipment and borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying property, plant and equipment.

For self-constructed assets, the cost includes materials, direct labour and any other costs directly attributable to bringing the asset to a working condition for its intended use, and the cost of dismantling and removing the items and restoring the site on which they are located, and capitalised borrowing costs.

The accounting policy for borrowing costs is set out in Note 2.26. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

Subsequent to recognition, property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Freehold land and buildings are measured at fair value less accumulated depreciation on buildings and impairment losses recognised after the date of the revaluation. Valuations are performed with sufficient regularity to ensure that the carrying amount does not differ materially from the fair value of the freehold land and buildings at the end of the reporting period.

Any revaluation surplus is recognised in other comprehensive income and accumulated in equity under the asset revaluation reserve, except to the extent that it reverses a revaluation decrease of the same asset previously recognised in the income statement, in which case the increase is recognised in the income statement. A revaluation deficit is recognised in income statement, except to the extent that it offsets an existing surplus on the same asset carried in the asset revaluation reserve.




2.10 Property, plant and equipment (continued)

Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. The revaluation surplus included in the asset revaluation reserve in respect of an asset is transferred directly to retained earnings on retirement or disposal of the asset.

Leases with unexpired terms of over 100 years are classified as long leaseholds; those under 100 years are classified as leaseholds.

No depreciation is provided on freehold/long leasehold land as it has an unlimited and long useful life respectively.

Assets under construction are not depreciated as these assets are not yet available for use.

Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as follows:

Leasehold land – over terms of lease ranging from 8 to 99 yearsLeasehold buildings – lower of term of lease and 50 yearsFreehold/long leasehold buildings – 50 yearsLight plant and machinery – 2 to 10 yearsHeavy plant and machinery – 11 to 15 yearsMotor vehicles and other assets – 2 to 5 years

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

The residual value, useful life and depreciation method are reviewed at each financial year-end, and adjusted prospectively, if appropriate.

Residual value ascribed to the core component of hotel buildings depend on the nature, location and tenure of each hotel property.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in the income statement in the year the asset is derecognised.

2.11 Investment properties

Investment properties comprise completed properties and properties under construction or re-development held on a long-term basis for their investment potential and income.

Investment properties are initially recorded at cost, including transaction costs. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met.

Subsequent to initial recognition, investment properties are measured at fair value, which reflects market conditions at the end of the reporting period. Gains or losses arising from changes in the fair values of investment properties are included in the income statement in the year in which they arise.

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2.11 Investment properties (continued)

Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in the income statement in the year of retirement or disposal.

Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to owner occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. For a transfer from owner occupied property to investment property, the property is accounted for in accordance with the accounting policy for property, plant and equipment set out in Note 2.10 up to the date of change in use.

Investment properties under construction (IPUC)IPUC is measured at fair value when the fair value is reliably determinable in accordance with amended FRS 40, Investment Property. When assessing whether the fair value of IPUC can be determined reliably the Company considers, among other things:

– Is the asset being constructed in a developed liquid market? – Has a construction contract with the contractor been signed? – Are the required building and letting permits obtained? – What percentage of rentable area has been pre-leased to tenants?

IPUC for which fair value cannot be determined reliably is measured at cost less impairment.

The fair value of IPUC was determined at the end of the reporting period based on valuation by a qualified independent valuer. The valuation was performed based on open market value in existing state of construction, as deemed appropriate by the valuer. Each IPUC is individually assessed.

2.12 Intangibles

a) GoodwillGoodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less accumulated impairment losses.

For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

The cash-generating unit to which goodwill has been allocated is tested for impairment annually and whenever there is an indication that the cash-generating unit may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each cash-generating unit (or group of cash-generating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in the income statement. Impairment losses recognised for goodwill are not reversed in subsequent periods.

Where goodwill forms part of a cash-generating unit and part of the operation within that cash-generating unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on the disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative fair values of the operations disposed of and the portion of the cash-generating unit retained.




2.12 Intangibles (continued)

a) Goodwill (continued)Goodwill and fair value adjustments arising on the acquisition of foreign operations on or after 1 January 2005 are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated in accordance with the accounting policy set out in Note 2.8.

Goodwill and fair value adjustments which arose on acquisitions of foreign operations before 1 January 2005 are deemed to be assets and liabilities of the Company and are recorded in SGD at the rates prevailing at the date of acquisition.

b) Other intangible assetsIntangible assets acquired separately are measured initially at cost. The cost of intangible assets acquired in a business combination is their fair value as at the date of acquisition. Following initial recognition, they are carried at cost less any accumulated amortisation and any accumulated impairment losses.

The useful lives of intangible assets are assessed as either finite or infinite.

Intangible assets with finite useful lives are amortised over their estimated useful lives. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates.

Intangible assets with infinite useful lives are tested for impairment annually. Such intangible assets are not amortised.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised.

(i) Trademark and licencesThe licence fees for trademark and marketing rights are amortised on a straight-line basis over the respective licence periods. Software licence fee is amortised on a straight-line basis over its economic useful life.

(ii) Concession rightsThe Group recognises an intangible asset arising from a service concession arrangement when it has a right to charge for usage of the concession infrastructure whether acquired or self-constructed by the Group. Intangible assets received as consideration for providing construction services in a service concession arrangement are measured at fair value upon initial recognition, estimated by reference to the fair value of the construction services provided. When the Group receives an intangible asset and a financial asset as consideration for providing construction services in a service concession arrangement, the Group estimates the fair value of intangible assets as the difference between the fair value of the construction services provided and the fair value of the financial asset received.

The estimated useful life of an intangible asset in a service concession arrangement is the period when it is available for use to the end of the concession period.

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2.13 Subsidiaries, associates and joint ventures

SubsidiaryA subsidiary is an entity controlled by the Group.

The financial statements of the subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

AssociateAn associate is an entity, not being a subsidiary or a joint venture, in which the Group has significant influence. An associate is equity accounted for from the date the Group obtains significant influence until the date the Group ceases to have significant influence over the associate.

The Group’s investments in associates are accounted for using the equity method. Under the equity method, the investment in associates is measured in the statement of financial position at cost plus post-acquisition changes in the Group’s share of net assets of the associates.

Goodwill relating to an associate is included in the carrying amount of the investment and is neither amortised nor tested individually for impairment.

Any excess of the Group’s share of the net fair value of the associate’s identifiable assets, liabilities and contingent liabilities over the cost of the investment is included as income in the determination of the Group’s share of results of the associate in the period in which the investment is acquired.

The Group’s share of the profit or loss of its associates is its effective share of the profit attributable to equity holders of the associates. Where there has been a change recognised in other comprehensive income by the associates, the Group recognises its share of such changes in other comprehensive income. Unrealised gains and losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the associates.

The Group’s share of the profit or loss of its associates is shown on the face of income statement, net of tax and non-controlling interests in the associates.

When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

After application of the equity method, the Group determines whether it is necessary to recognise an impairment loss on the Group’s investment in its associates. The Group determines at the end of each reporting period whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in the income statement.

The financial years of some of the associates are not co-terminous with that of the Company. In the case of the associates whose financial years are not co-terminous, the share of profits or losses is arrived at from the last audited financial statements available and unaudited management accounts to the end of the Company’s financial year. Where necessary, adjustments are made for the effects of significant transactions or events that occur between that date and reporting date of the Company, and to bring the accounting policies in line with those of the Group.

Upon loss of significant influence over the associate, the Group measures any retained investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the aggregate of the retained investment and proceeds from disposal is recognised in the income statement.




2.13 Subsidiaries, associates and joint ventures (continued)

Joint ventureA joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control, where the strategic, financial and operating decisions relating to the activity require the unanimous consent of the parties sharing control. The Group’s investments in joint ventures are accounted for using the equity method. Under the equity method, the investment in joint venture is carried in the statement of financial position at cost plus post-acquisition changes in the Group’s share of net assets of the joint venture. The Group’s share of the profit or loss of the joint venture is recognised in the consolidated income statement. Where there has been a change recognised directly in the equity of the joint venture, the Group recognises its share of such changes. After application of the equity method, the Group determines whether it is necessary to recognise an impairment loss with respect to the Group’s net investment in the joint ventures. The Group determines at the end of each reporting period whether there is any objective evidence that the investment in the joint venture is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the joint venture and its carrying value and recognises the amount in the income statement. In the Group’s consolidated financial statements, the Group’s share of results and reserves of joint ventures acquired or disposed of are included in the consolidated financial statements from the date the Group obtains joint control until the date the Group ceases to have joint control over the joint venture.

The financial statements of the joint venture are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.

The income statement reflects the share of the results of operations of the joint ventures. Where there has been a change recognised in other comprehensive income by the joint ventures, the Group recognises its share of such changes in other comprehensive income. Unrealised gains and losses resulting from transactions between the Group and the joint venture are eliminated to the extent of the interest in the joint ventures.

When the Group’s share of losses in a joint venture equals or exceeds its interest in the joint venture, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint venture.

Upon loss of joint control, the Group measures any retained investment at its fair value. Any difference between the carrying amount of the former joint venture upon loss of joint venture control and the aggregate of the fair value of the retained investment and proceeds from disposal is recognised in profit or loss.

Accounting for subsidiaries, associates and joint ventures by the CompanyIn the Company’s separate financial statements, investments in subsidiaries, associates and joint ventures are accounted for at cost less impairment losses. Loans and amounts due from or to subsidiaries, associates and joint ventures are classified and accounted for as loans and receivables under FRS 39. The accounting policy for this category of financial asset is stated in Note 2.16.

2.14 Investments

Investments are classified as financial assets at fair value through profit or loss, held-to-maturity investments or available-for-sale financial assets, as appropriate.

The accounting policies for the aforementioned categories of financial assets are stated in Note 2.16.

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2.15 Inventories

Inventories are stated at the lower of cost and net realisable value. The costs incurred in bringing the inventories to their present location and condition are determined on a weighted average basis. Where necessary, allowance is provided for damaged, obsolete and slow moving items to adjust the carrying value of inventories to the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs to completion and the estimated costs necessary to make the sale.

2.16 Financial assets

Initial recognition and measurementFinancial assets are recognised when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. The Group determines the classification of its financial assets at initial recognition.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.

Subsequent measurementThe subsequent measurement of financial assets depends on their classifications as follows:

a) Financial assets at fair value through profit or lossFinancial assets held for trading are classified as financial assets at fair value through profit or loss. Financial assets held for trading are derivatives (including separated embedded derivatives) or financial assets acquired principally for the purpose of selling in the near term.

Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gain or loss arising from changes in fair value of the financial assets (including exchange differences, interest and dividend income) are recognised in the income statement.

b) Held-to-maturity investmentsNon-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Group has the positive intention and ability to hold the investment to maturity. Investments intended to be held for an undefined period are not included in this classification. Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest method, less impairment. Gains and losses are recognised in the income statement when the held-to-maturity investments are derecognised or impaired, as well as through the amortisation process.

c) Loans and receivables Non-derivative financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less impairment. Gains and losses are recognised in the income statement when the loans and receivables are derecognised or impaired, as well as through the amortisation process.




2.16 Financial assets (continued)

d) Available-for-sale financial assetsAvailable-for-sale financial assets are financial assets that are not classified in any of the three preceding categories. After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial asset are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in the income statement. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to the income statement as a reclassification adjustment when the financial asset is derecognised.

Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss.

DerecognitionA financial asset is derecognised where the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that has been recognised in other comprehensive income is recognised in the income statement.

Regular way purchase or sale of a financial assetAll regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned.

2.17 Impairment of financial assets

The Group assesses at each reporting period whether there is any objective evidence that a financial asset is impaired.

Assets carried at amortised costIf there is objective evidence that an impairment loss on loans and receivables or held-to-maturity investments carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. The impairment loss is recognised in the income statement.

When the asset becomes uncollectible, the carrying amount of impaired financial assets is reduced directly in the income statement or if an amount was charged to the allowance account, the amounts charged to the allowance account are written off against the carrying value of the financial asset.

To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in the income statement.

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2.17 Impairment of financial assets (continued)

Assets carried at costIf there is objective evidence (such as significant adverse changes in the business environment where the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on financial assets carried at cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods.

Available-for-sale financial assetsSignificant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and the disappearance of an active trading market are considerations to determine whether there is objective evidence that investment securities classified as available-for-sale financial assets are impaired.

If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in the income statement, is transferred from other comprehensive income and recognised in the income statement. Reversals of impairment losses in respect of equity instruments classified as available-for-sale are recognised in other comprehensive income. Reversals of impairment losses on debt instruments are recognised in the income statement, if the increase in fair value of the debt instrument can be objectively related to an event occurring after the impairment loss was recognised in the income statement.

2.18 Impairment of non-financial assets

The carrying amounts of the Group’s non-financial assets are reviewed at each reporting period to determine whether there is any indication of impairment. If any such indication exists, or when annual impairment assessment for an asset is required, the Group makes an estimate of the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is written down to its recoverable amount. In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples or other available fair value indicators.

Impairment losses of continuing operations are recognised in the income statement in those expense categories consistent with the function of the impaired asset, except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in the income statement unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase.




2.19 Construction contracts

Contract revenue and contract costs are recognised as revenue and expenses respectively by reference to the stage of completion of the contract activity at the end of the reporting period, when the outcome of a construction contract can be estimated reliably. When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that are likely to be recoverable and contract costs are recognised as expense in the period in which they are incurred. An expected loss on the construction contract is recognised as an expense immediately when it is probable that total contract costs will exceed total contract revenue.

Contract revenue comprises the initial amount of revenue agreed in the contract and variations in contract work, claims and incentive payments to the extent that it is probable that they will result in revenue and they are capable of being reliably measured.

Revenue arising from fixed price contracts is recognised in accordance with the percentage of completion method. The stage of completion is measured by reference to professional surveys of work performed.

Revenue from cost plus contracts is recognised by reference to the recoverable costs incurred plus a percentage of the contract fee earned during the year. Percentage of the contract fee earned is measured by the proportion that the costs incurred to date bear to the estimated total costs of the contract. Only costs that reflect services performed are included in the estimated total costs of the contract. Where the contract outcome cannot be measured reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable.

2.20 Properties held for sale

Development properties held for saleDevelopment projects for which revenue is recognised using the percentage of completion method is stated at cost plus estimated profits to-date less progress billings. Progress claims from purchasers of residential units for sale are shown as a deduction from the cost of the development properties held for sale.

Development projects for which revenue is recognised using the completed contract method is stated at cost. Progress claims from purchasers of residential units for sale are included in “trade and other payables” as “progress billings relating to development projects”.

Allowance for foreseeable losses is made when it is anticipated that the net realisable value has fallen below cost.

Costs include cost of land and construction, related overhead expenditure and financing charges incurred up to the completion of construction. Financing charges incurred to finance the development of such properties are capitalised during the period that is required to complete and prepare each property for its sale. Net realisable value represents the estimated selling price less costs to be incurred in selling the property.

Developments are considered completed upon the issue of Temporary Occupation Permit. When completed, development properties held for sale are transferred to completed properties held for sale.

Profit on development properties held for sale using the percentage of completion method is recognised on partly completed projects which have been sold and is based on the accounting policy in Note 2.6. The expected profit is assessed having regard to the sales procured less attributable total costs including the cost of land, construction and interest and after making due allowance for known potential costs over-runs and allowance for contingencies.

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2.20 Properties held for sale (continued)

Development properties held for sale (continued)Progress claims from purchasers of residential units for sale are shown as a deduction from the cost of the development properties held for sale.

Progress billings not yet paid by customers are included in trade and other receivables.

Completed properties held for saleCompleted properties held for sale are stated at the lower of cost and net realisable value. Cost includes cost of land and construction, related overhead expenditure, and financing charges and other net costs incurred during the period of development. The costs are assigned by using specific identification. Net realisable value represents the estimated selling price less costs to be incurred in selling the property.

Allowance for impairment is made when it is anticipated that the net realisable value has fallen below cost.

Revenue from completed properties held for sale is recognised upon execution of Sale and Purchase Agreements and issue of Notice of Vacant Possession.

2.21 Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and at bank, demand deposits and short-term, highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. These also include bank overdrafts which form an integral part of the Group’s cash management.

2.22 Borrowings

Borrowings are presented as current liabilities unless the Group has an unconditional right to defer settlement for at least 12 months after the end of the reporting period.

BorrowingsBorrowings are initially recognised at fair value (net of transaction costs) and subsequently carried at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in income statement over the period of the borrowings using the effective interest method.

Convertible bondsWhen convertible bonds are issued, the total proceeds are allocated to the liability component and the equity component, which are separately presented on the statement of financial position.

The liability component is recognised initially at its fair value, determined using a market interest rate for equivalent non-convertible bonds. It is subsequently carried at amortised cost using the effective interest method until the liability is extinguished on conversion or redemption of the bonds.

The difference between the total proceeds and the liability component is allocated to the conversion option (equity component), which is presented in equity net of deferred tax effect. The carrying amount of the conversion option is not adjusted in subsequent periods. When the conversion option is exercised, its carrying amount will be transferred to the share capital account. When the conversion option lapses, its carrying amount will be transferred to retained profits.




2.23 Financial liabilities

Initial recognition and measurementFinancial liabilities are recognised when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. The Group determines the classification of its financial liabilities at initial recognition.

Financial liabilities are recognised initially at fair value, plus, in the case of financial liabilities other than derivatives, directly attributable transaction costs.

Subsequent measurementSubsequent to initial recognition, derivatives are measured at fair value. Other financial liabilities (except for financial guarantee) are measured at amortised cost using the effective interest method.

For financial liabilities other than derivatives, gains and losses are recognised in the income statement when the liabilities are derecognised, and through the amortisation process. Any gains or losses arising from changes in fair value of derivatives are recognised in the income statement. Net gains or losses on derivatives include exchange differences.

DerecognitionA financial liability is derecognised when the obligation under the liability is discharged, cancelled or has expired. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the income statement.

2.24 Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic resources will be required to settle the obligation, and the amount of the obligation can be estimated reliably.

Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

A provision for warranty is recognised for all products under warranty at the end of the reporting period. The provision is calculated based on service history.

82



2.25 Leases

The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date: whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset. For arrangements entered into prior to 1 January 2005, the date of inception is deemed to be 1 January 2005 in accordance with the transitional requirements of INT FRS 104.

As lessorLeases where the Group retains substantially all the risks and rewards of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income. The accounting policy for rental income is set out in Note 2.6. Contingent rents are recognised as revenue in the period in which they are earned.

As lesseeFinance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to the income statement. Contingent rents, if any, are charged as expenses in the periods in which they are incurred.

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term.

Operating lease payments are recognised as expense in the income statement on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.

When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place.

2.26 Borrowing costs

Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.




2.27 Derivative financial instruments

The Group uses derivative financial instruments such as interest rate swaps and foreign currency forward contracts to hedge its risks associated primarily with interest rate and foreign currency fluctuations. It is the Group’s policy not to trade in derivative financial instruments.

Derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivative financial instruments are carried as assets when the fair value is positive and as liabilities when the fair value is negative. Any gain or loss arising from changes in fair value on derivative financial instruments are taken to the income statement for the year.

The fair value of foreign currency forward contracts is calculated by reference to current forward exchange rates for contracts with similar maturity profiles. The fair value of interest rate swap contracts is determined by reference to market values for similar instruments.

Details of the Group’s financial risk management objectives and policies are set out in Note 37.

2.28 Financial guarantees

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due.

Financial guarantees are recognised initially at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequent to initial recognition, financial guarantees are recognised as income in the income statement over the period of the guarantee. If it is probable that the liability will be higher than the amount initially recognised less amortisation, the liability is recorded at the higher amount with the difference charged to the income statement.

2.29 Contingencies

A contingent liability is:

(a) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of uncertain future event(s) not wholly within the control of the Group; or

(b) a present obligation that arises from past events but is not recognised because:

(i) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

(ii) the amount of the obligation cannot be measured with sufficient reliability.

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of uncertain future event(s) not wholly within the control of the Group.

Contingent liabilities and assets are not recognised on the statement of financial position of the Group, except for contingent liabilities assumed in a business combination that are present obligations and which the fair values can be reliably determined.

84



2.30 Government grants

Government grants are recognised at their fair value when there is reasonable assurance that the grant will be received and all attaching conditions will be complied with.

Government grants are recognised in the income statement on a systematic basis over the periods in which the Group recognises as expenses the related costs for which the grants are intended to compensate. Grants related to income are deducted in reporting the related expenses.

2.31 Segment reporting

For management purposes, the Group is organised into operating segments based on their products and services which are independently managed by the respective segment Managing Directors responsible for the performance of the respective segments under their charge. The segment Managing Directors report directly to the management of the Company who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 40.

2.32 Share capital and share issuance expenses

Proceeds from issuance of ordinary shares are recognised as share capital in equity. Costs directly attributable to the issuance of ordinary shares are deducted against share capital.

2.33 Related parties

A related party is defined as follows:

(a) A person or a close member of that person’s family is related to the Group and Company if that person:

(i) Has control or joint control over the Company; (ii) Has significant influence over the Company; or (iii) Is a member of the key management personnel of the Group or Company or of a parent of the

Company.

(b) An entity is related to the Group and the Company if any of the following conditions applies:

(i) The entity and the Company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).

(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 benefit plan for the benefit of employees of either the Company or

an entity related to the Company. If the Company is itself such a plan, the sponsoring employers are also related to the Company.

(vi) The entity is controlled or jointly controlled by a person identified in (a). (vii) A person identified in (a) (i) has significant influence over the entity or is a member of the key

management personnel of the entity (or of a parent of the entity).




2.34 Non-current assets and disposal group held for sale and discontinued operations

Non-current assets and disposal group are classified as assets held for sale and carried at the lower of carrying amount and fair value less costs to sell if their carrying amount is recovered principally through a sale transaction rather than through continuing use. The assets are not depreciated or amortised while they are classified as held for sale. Any impairment loss on initial classification and subsequent measurement is recognised as an expense. Any subsequent increase in fair value less costs to sell (not exceeding the accumulated impairment loss that has been previously recognised) is recognised in the income statement.

A discontinued operation is a component of an entity that either has been disposed of, or that is classified as held for sale and:

(a) represents a separate major line of business or geographical area of operations; or (b) is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area

of operations; or (c) is a subsidiary acquired exclusively with a view to resale.

3 siGNiFiCaNt aCCouNtiNG JudGeMeNts aNd estiMates

The preparation of the Group’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the end of each reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in the future periods.

3.1 Judgements made in applying accounting policies

The following are the judgements, apart from those involving estimations, made by management in the process of applying the Group’s accounting policies that have the most significant effect on the amounts recognised in the financial statements.

Assessment of operating lease commitments – as lessorThe Group has entered into commercial property leases on its investment property portfolio. The Group has determined, based on an evaluation of the terms and conditions of the arrangements, that it retains all the significant risks and rewards of ownership of these properties and so accounts for the contracts as operating leases.

Assessment of allowance for doubtful receivablesTrade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less allowance for doubtful receivables. In assessing the allowance for receivables, the Group takes into account the duration of the settlement agreement and whether any subsequent payments were in default.

Income taxThe Group has exposure to income taxes in numerous jurisdictions. Significant judgement is involved in determining the Group-wide provision for income taxes. Tax is computed in accordance with taxation rules in each jurisdiction. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. The carrying amount of the Group’s income tax payable, deferred tax liabilities and deferred tax assets as at 31 December 2012 are $30,010,000 (2011: $66,707,000), $25,825,000 (2011: $24,614,000) and $3,395,000 (2011: $1,391,000) respectively.

86


3 siGNiFiCaNt aCCouNtiNG JudGeMeNts aNd estiMates (continued)

3.2 Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of each reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. The Group based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

Useful lives of plant and machineryThe cost of plant and machinery is depreciated on a straight-line basis over the useful lives estimated to be within 2 to 15 years. The carrying amount of the plant and machinery as at 31 December 2012 was $38,379,000 (2011: $35,016,000). Changes in the expected level of usage could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. Based on management’s estimates, a 5% difference in the expected useful lives of these assets would result in less than 2% (2011: 1%) variance in the Group’s profit for the financial year.

Construction contractsThe Group recognises contract revenue to the extent of contract costs incurred where it is probable those costs will be recoverable or based on the percentage of completion method. The stage of completion is measured by reference to professional surveys of work performed.

Significant assumptions are required in determining the stage of completion, the extent of the contract costs incurred, the estimated total contract revenue and contract costs and liquidated damage claims, as well as the recoverability of the contract costs incurred. Total contract revenue also includes an estimation of the uncertified recoverable variation works that are recoverable from the customers. In making the estimation, the Group evaluates by relying on past experience and knowledge of the project engineers and/or the work of specialists. No estimation of uncertified recoverable variation works for current year (2011: $276,000) was taken into consideration in arriving at the estimated revenue of construction contracts. Any shortfall in recovery of this estimation will impact the results of the Group by the same quantum. The gross amount due from customers for contract work was $18,649,000 (2011: $16,252,000). The gross amount due to customers for contract work was $29,562,000 (2011: $24,849,000).

Impairment of non-financial assetsThe Group assesses whether there are any indicators of impairment for all non-financial assets at each reporting date. Goodwill and other indefinite life intangibles are tested for impairment annually and at other times when such indicators exist. Other non-financial assets are tested for impairment when there are indicators that the carrying amounts may not be recoverable. When value in use calculations are undertaken, management must estimate the expected future cash flows from the asset or cash-generating unit and choose a suitable discount rate in order to calculate the present value of those cash flows. Further details of the key assumptions applied in the impairment assessment of goodwill are given in Note 15 to the financial statements.

Impairment of loans and receivablesThe Group assesses at the end of each reporting period whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Group’s loans and receivables with impairment indicators at the end of the reporting period is disclosed in Note 22 to the financial statements. If the present value of estimated future cash flows of receivables that are past due but not impaired and those that are impaired, varies by 5% from management’s estimates, the Group’s allowance for impairment will increase by $2,408,000 (2011: $3,105,000).



3 suMMarY oF siGNiFiCaNt aCCouNtiNG JudGeMeNts aNd estiMates (continued)

3.2 Key sources of estimation uncertainty (continued)

Estimation of net realisable value of properties held for saleProperties held for sale are stated at the lower of cost and net realisable value.

Net realisable value of the properties represents the estimated selling price in the ordinary course of the business, based on market prices at the end of the reporting period and discounted for the time value of money if material, less estimated costs to be incurred in selling the property.

Revaluation of investment property and investment property under construction (IPUC)Investment property includes: (i) completed investment property; and (ii) IPUC. Investment property comprises real estate (land or building, or both) held by the Group in order to earn rentals or for capital appreciation, or both, rather than for use in the production or supply of goods or services, or for administrative purposes.

The Group carries its investment properties at fair value, with changes in fair values being recognised in the income statement. The Group engaged independent valuation specialists to determine fair value as at 31 December 2012. The valuers used a valuation technique based on discounted cash flow models as there is a lack of comparable market data because of the nature of the properties.

The Group has adopted the amendments to FRS 40. Consequently, IPUC is valued at fair value if it can be reliably determined. If a fair value cannot be reliably determined, then IPUC is measured at cost. The fair value of IPUC is determined based on open market value in existing state of construction. This requires considering the significant risks which are relevant to the development process, including but not limited to construction and letting risks.

The key methodology used for valuing investment property and IPUC are set out in Note 14.

88


4 reVeNue

GrouP2012$000

2011$000

Sale of goods 31,298 24,674Sale of properties held for sale (recognised on percentage of completion basis) – 83,610Sale of properties held for sale (recognised on completed contract basis) 150 682,852Rendering of services 100,991 88,392Revenue from construction contracts 372,065 234,823Rental income 90,836 72,232Dividend income 404 529

595,744 1,187,112

5 iNterest iNCoMe

Interest income from loans and receivables 4,016 2,634

6 otHer iNCoMe

Other income includes the following items:

Gain on fair value adjustment on held for trading investments 195 –Gain on disposal of investment properties – 2,500Surplus on revaluation of investment properties (Note 14) 14,915 56,657

7 FiNaNCe Costs

Interest expense on:– Bank loans and bank overdrafts 33,237 21,231– Convertible bonds (Note 29) 1,415 2,462

34,652 23,693

Less: Interest expense capitalised in:– Investment properties under construction (Note 14) (1,104) (2,733)– Properties held for sale (Note 24) (16,760) (10,771)Total finance costs 16,788 10,189



8 otHer iteMs oF eXPeNse

GrouP2012$000

2011$000

Other items of expense include the following items:

Allowance for inventory obsolescence (63) (975)Amortisation of intangible assets (Note 15) (1,025) (884)Depreciation of property, plant and equipment (Note 12) (11,677) (9,797)Direct operating expenses arising from investment properties (Note 14) (25,781) (16,731)Impairment loss on financial assets:– Available-for-sale financial assets – (3,138)– Trade receivables (Note 22) (651) (1,007)– Other receivables (Note 22) (103) (3,490)Impairment loss on intangible assets (Note 15) – (338)Impairment of property held for sale (1,532) (550)Legal fees (788) (898)Loss on fair value adjustment on held for trading investments – (2,377)Net impairment loss on property, plant and equipment (Note 12) – (103)Reversal of impairment/(impairment) of associate 3,001 (51)Staff costs (including director’s remuneration)– Salaries, wages, bonuses and other costs (107,877) (115,179)– Central Provident Fund and other defined contribution plans (8,818) (7,878)Unrealised exchange loss (4,478) (2,613)

Audit fees:– Auditor of the Company (584) (577)– Other auditors (286) (372)

Non-audit fees:– Auditor of the Company (827) (487)– Other auditors (76) (108)

Total audit and non-audit fees (1,773) (1,544)

90


9 iNCoMe taX eXPeNse

Major components of income tax expense for the financial years ended 31 December are:

GrouP2012$000

2011$000

Income Statement

Current income tax:– Current income taxation 20,465 58,467– (Over)/under provision in respect of prior years (6,043) 1,217

14,422 59,684

Deferred tax (Note 19):– Origination and reversal of temporary difference (78) (1,177)Income tax expense recognised in the income statement 14,344 58,507

The income tax expense on the results for the financial year varies from the amount of income tax determined by applying the Singapore standard rate of income tax to profit before tax due to the following factors:

GrouP2012

%2011

%

Applicable tax rate 17.0 17.0Expenses not deductible for tax purposes 5.9 2.9Income not subject to tax (3.2) (3.6)Utilisation of previously unrecognised deferred tax assets (0.3) (0.5)Writeback/(utilisation) of tax losses/capital allowances under group relief 0.5 (0.1)Losses of subsidiaries not utilised and not available under group relief 0.7 1.2(Over)/under provision of income tax in respect of prior years (5.9) 0.4Effect of differences in tax rates in other countries where the Group operates 1.1 (0.2)Share of profit from equity-accounted associates and joint ventures (1.7) (0.3)Effective tax rate 14.1 16.8

Tax losses and capital allowances of $1,025,000 (2011: $4,363,000) and $1,271,000 (2011: $1,009,000) respectively for the Group have been utilised during the financial year.



10 disPosaL GrouP CLassiFied as HeLd For saLe

On 28 December 2012, the Company’s wholly-owned subsidiary, McAlister and Company Limited (McA) entered into a conditional sale and purchase agreement for the sale by McA of its entire 70% shareholding interest in its subsidiary, PT Infratech Indonesia (PTI) to Babel Investments Pte Ltd for a consideration of IDR 1,000,000. As a result of this transaction, the entire assets and liabilities related to PTI are classified as a disposal group held for sale on the statement of financial position. As at the date of the financial statement, the Group has not completed the transaction.

GrouP2012$000

Details of the assets of disposal group classified as held for sale are as follows:

Property, plant and equipment 404Inventories 447Trade and other receivables 1,071Gross amount due from customers for contract work 1,276

3,198

Details of the liabilities of disposal group classified as held for sale are as follows:

Borrowings 1,000Trade and other payables 2,198

3,198

92


11 earNiNGs Per stoCK uNit

Basic earnings per stock unit (EPS) is calculated by dividing net profit attributable to owners of the Company of $72,164,000 (2011: $269,459,000) and after deducting preference dividends of $66,000 (2011: $66,000) by the weighted average number of ordinary stock units in issue during the financial year of 296,230,773 (2011: 276,739,078).

Diluted EPS is calculated by dividing the net profit attributable to owners of the Company and after deducting preference dividends by the weighted average number of ordinary stock units outstanding during the financial year plus the weighted average number of ordinary stock units that would be issued on the conversion of all the dilutive potential ordinary stock units into ordinary stock units.

GrouP2012$000

2011$000

Net profit attributable to owners of the Company used in computation of basic and diluted EPS

72,164 269,459

Less: Preference dividends (66) (66)Add: Interest expense on convertible bonds, net of tax 1,174 2,044

73,272 271,437

No. of shares000

No. of Shares000

Existing weighted average number of ordinary stock units applicable to basic EPS 296,231 276,739Effect of dilutive securities: Convertible bonds 17,309 37,608Effect of dilutive securities: Share options 676 792Adjusted number of ordinary stock units applicable to diluted EPS 314,216 315,139

1,653,650 (2011: 1,800,000) of share options granted to the employees under the existing employee share option plans have not been included in the calculation of diluted EPS because they are anti-dilutive for the current and previous financial years presented.



12 ProPertY, PLaNt aNd eQuiPMeNt

Freehold/long

leaseholdland$000

Freehold/long

leaseholdbuildings

$000

Leaseholdland and

buildings$000

Capitalwork-in-progress

$000

Plant andmachinery

$000

Motorvehicles

and otherassets

$000total$000

GROUP

CostAt 1 January 2011 834 949 44,408 1,961 77,775 25,269 151,196Currency realignment (21) (28) (42) (59) 99 (174) (225)Transfer from/(to) intangible

assets (Note 15) – – – – 6 (68) (62)Additions – – 23 5,509 14,008 3,496 23,036Disposals (52) (58) (8,420) – (8,276) (5,103) (21,909)Reclassification – – 4,230 (4,230) – – –At 31 December 2011 and

1 January 2012 761 863 40,199 3,181 83,612 23,420 152,036Currency realignment (67) (98) (247) (155) (1,005) (383) (1,955)Transfer from IPUC (Note 14) – – 82,000 – – – 82,000Additions – – – 5,154 6,586 5,964 17,704Disposals – – (30) (1,865) (798) (3,346) (6,039)Reclassification – – – (4,712) 4,712 – –At 31 December 2012 694 765 121,922 1,603 93,107 25,655 243,746

Accumulated depreciation and impairment loss

At 1 January 2011 – (432) (11,714) (359) (47,339) (18,918) (78,762)Currency realignment – 12 27 10 116 186 351Charge for the financial year – (15) (1,446) – (6,455) (3,057) (10,973)Impairment loss written back/

(provided) – 37 – – (140) – (103)Disposals – 12 8,420 – 5,222 4,999 18,653At 31 December 2011 and

1 January 2012 – (386) (4,713) (349) (48,596) (16,790) (70,834)Currency realignment – 43 57 – 428 292 820Charge for the financial year – (14) (1,820) – (7,337) (3,663) (12,834)Disposals – – 30 – 777 2,689 3,496At 31 December 2012 – (357) (6,446) (349) (54,728) (17,472) (79,352)

Net book valueAt 31 December 2011 761 477 35,486 2,832 35,016 6,630 81,202

At 31 December 2012 694 408 115,476 1,254 38,379 8,183 164,394

Certain property, plant and equipment with a total book value of $82,016,000 (2011: $989,000) have been mortgaged to secure the Group’s banking facilities of certain subsidiaries (Note 28).

94


12 ProPertY, PLaNt aNd eQuiPMeNt (continued)

Leasehold land andbuilding

Motor vehicles

and otherassets total

$000 $000 $000

COmPANY

CostAt 1 January 2011 34,358 8,506 42,864Additions – 1,385 1,385Disposals (8,420) (2,974) (11,394)At 31 December 2011 and 1 January 2012 25,938 6,917 32,855Additions – 1,063 1,063Disposals – (118) (118)At 31 December 2012 25,938 7,862 33,800

Accumulated depreciationAt 1 January 2011 (9,010) (5,045) (14,055)Charge for the financial year (786) (1,608) (2,394)Disposals 8,420 2,974 11,394At 31 December 2011 and 1 January 2012 (1,376) (3,679) (5,055)Charge for the financial year (786) (1,774) (2,560)Disposals – 115 115At 31 December 2012 (2,162) (5,338) (7,500)

Net book valueAt 31 December 2011 24,562 3,238 27,800

At 31 December 2012 23,776 2,524 26,300

GrouP2012$000

2011$000

The depreciation charge for the financial year in the income statement is as follows:

Depreciation for the financial year 12,834 10,973Current financial year’s depreciation capitalised (1,157) (1,176)Charged to the income statement 11,677 9,797



13 ProPerties deVeLoPMeNt Costs

The properties development costs relate to a project awarded under a turnkey arrangement with Oversea-Chinese Banking Corporation Limited (OCBC). These comprise two phases of redevelopment works, Phase 1 being the development and construction of a hotel cum retail mall and a pedestrian bridge, and Phase 2 being the construction of an underpass (Project).

Under the turnkey arrangement, the Company entered into a Licence and Development Agreement with OCBC, pursuant to which, the Company incorporated two wholly-owned special purpose vehicles (SPVs), namely, UE Orchard Pte Ltd and UE Somerset Pte Ltd to undertake Phase 1 and Phase 2 of the redevelopment works respectively.

Upon the Project’s completion, the SPVs will be sold to OCBC under a Sale and Purchase Agreement for OCBC to purchase the issued shares. The consideration for the sale will be based on the respective SPV’s net tangible assets. Accordingly, these assets are stated at cost.

Under the Licence and Development Agreement, the Group is entitled to development fees payable in accordance to the phases of the development.

GrouP2012$000

2011$000

At 1 January 45,167 –Transfer from IPUC (Note 14) – 8,585Additions 111,086 36,582At 31 December 156,253 45,167

A term loan facility of the Company was secured by a first fixed charge of 100% shareholding in UE Orchard Pte Ltd as well as assignments of the shareholder’s loans, insurances, development documents, project documents and bank accounts (Note 28).

96


14 iNVestMeNt ProPerties

Investment properties owned by the Group include office, hospitality and commercial space and comprise both completed investment properties and investment properties under construction (IPUC).

GrouP CoMPaNY2012$000

2011$000

2012$000

2011$000

Statement of financial position:

(a) Long leasehold land and buildings At 1 January 669,000 665,000 669,000 665,000 Revaluation surplus recognised in the income

statement (Note 6) 2,183 – 2,183 – Subsequent expenditure 3,817 4,000 3,817 4,000 At 31 December 675,000 669,000 675,000 669,000

(b) Leasehold land and buildingsAt 1 January 320,918 49,623 – –Currency realignment (153) (320) – –

Transfer to property, plant and equipment (Note 12) (82,000) – – –

Transfer to properties held for sale – (8,070) – –Transfer from IPUC 281,623 287,000 – –Additions – 74 – –Adjustment to construction costs (4,355) – – –Disposals – (8,603) – –

Revaluation surplus recognised in the income statement (Note 6) 12,732 1,214 – –

At 31 December 528,765 320,918 – –

(c) IPUCAt 1 January 252,888 342,772 – –

Transfer to investment properties-leasehold land and buildings (281,623) (287,000) – –

Transfer to properties development costs (Note 13) – (8,585) – –

Revaluation surplus recognised in the income statement (Note 6) – 55,443 – –

Subsequent expenditure 28,735 150,258 – –At 31 December – 252,888 – –

At valuation 1,203,765 1,242,806 675,000 669,000



14 iNVestMeNt ProPerties (continued)


2011$000

2012$000

2011$000

Income statement:Rental income from investment properties:– Minimum lease payments 49,798 38,639 37,208 35,792

Direct operating expenses (including repairs and maintenance) (Note 8) arising from:

– Rental generating properties 25,781 16,722 19,471 15,954– Non-rental generating properties – 9 – –

25,781 16,731 19,471 15,954

Investment properties were stated at their fair values as at the end of the financial year based on independent professional valuations carried out by DTZ Debenham Tie Leung (SEA) Pte Ltd (DTZ) and Colliers International Consultancy & Valuation (Singapore) Pte Ltd (Colliers) at 31 December 2012 for the long leasehold land and buildings and the leasehold land and buildings. The valuations are based on the income method that makes reference to estimated market rental values and equivalent yields and discount rate. In relying on the valuation reports, management has exercised its judgement and is satisfied that the valuation methods and estimates are reflective of current market conditions.

Breakdown of IPUCIPUC can be analysed as follows:

GrouP2012$000

2011$000

IPUC measured at fair value – 252,888– 252,888

The integrated business centre development in Changi Business Park known as UE Bizhub EAST which was completed during the year was valued at $293,000,000 (2011: $252,888,000) based on independent professional valuation at 31 December 2012 carried out by Colliers based on open market value.

In 2011, the hotel and serviced suites which were under development as part of the UE Bizhub EAST in Changi Business Park together with the business centre were classified as IPUC. During the year, the Group re-evaluated the classification of the hotel and serviced suites by reference to their usage and the ancillary services provided to the tenants. It was determined that the portion of the development occupied by the hotel and serviced suites amounting to $82,000,000 be reclassified to property, plant and equipment.

Borrowing costs of $1,104,000 (2011: $2,733,000) arising from financing specifically entered into for the construction of IPUC were capitalised in 2012 and included in IPUC.

Investment properties amounting to $495,000,000 after revaluation (2011: $539,888,000) have been mortgaged to secure term loan facilities of certain subsidiaries (Note 28).

98


15 iNtaNGiBLe assets

trademarksoftware

licence Marketing

rightsConcession

rights Goodwill others total$000 $000 $000 $000 $000 $000 $000

GROUP

CostAt 1 January 2011 1,947 1,003 599 20,317 2,570 5,969 32,405Currency realignment – 1 – 793 – 262 1,056Transfer from property, plant

and equipment (Note 12) – – – 62 – – 62Additions – – – 4 – 2,768 2,772Disposals – – – (3,922) – – (3,922)At 31 December 2011 and

1 January 2012 1,947 1,004 599 17,254 2,570 8,999 32,373Currency realignment – – – (667) – (369) (1,036)Additions – – – – – 401 401Reclassification – – – 8,864 – (8,864) –At 31 December 2012 1,947 1,004 599 25,451 2,570 167 31,738

Accumulated amortisation and impairment losses

At 1 January 2011 (1,849) (984) (599) (2,376) (300) (27) (6,135)Currency realignment (2) – – (97) – (1) (100)Amortisation (18) (10) – (767) – (89) (884)Disposals – – – 1,254 – – 1,254Impairment loss – – – – (338) – (338)At 31 December 2011 and

1 January 2012 (1,869) (994) (599) (1,986) (638) (117) (6,203)Currency realignment (2) – – 67 – 6 71Amortisation (18) (8) – (667) – (332) (1,025)Reclassification – – – (405) – 405 –At 31 December 2012 (1,889) (1,002) (599) (2,991) (638) (38) (7,157)

Net carrying amountAt 31 December 2011 78 10 – 15,268 1,932 8,882 26,170

At 31 December 2012 58 2 – 22,460 1,932 129 24,581



15 iNtaNGiBLe assets (continued)

(a) Trademark

Trademark expenditure relates to a licence fee paid to ServiceMaster Company Limited Partnership for the use of the word and trademark “ServiceMaster” in all marketing and performance of the support management services. The trademark is amortised evenly over their economic useful lives of 18 to 20 years. As at 31 December 2012, the trademark has a remaining amortisation period of 4 years (2011: 1 to 5 years).

(b) Software licence

Software licence expenditure relates to licence fees paid to International Environmental Management, Inc for the use of an on-line routing and dispatching software for medical waste and licence fees paid to Sage Software Asia Pte Ltd. The software licence paid to International Environmental Management is amortised evenly over its economic useful life of 3 years and has been fully amortised in 2007. The licence fees paid to Sage Software Asia Pte Ltd is amortised evenly over its economic useful life of 3 years and it’s remaining amortisation period is less than 1 year.

(c) marketing rights

Marketing rights expenditure relates to licence fees paid to Simanco Pyrolytic Engineering, Inc for the exclusive rights to distribute patented medical waste processing systems in the People’s Republic of China. The licence fees were amortised evenly over their economic useful lives of 10 years. Impairment loss has been recognised to write down the carrying amount of the licence fees in 2008.

(d) Concession rights

The Group has service concession arrangements with various government bodies and agencies of the government of the People’s Republic of China (“the grantors”). Under these concession arrangements, the Group will typically construct and operate the water and medical waste treatment plants to collect and treat water and medical waste at the tariffs which are determined by the grantors for concession periods of between 20 to 30 years. The plants are transferred to the grantors at the end of the concession periods. The concession rights are amortised evenly over their economic useful lives of 20 to 30 years.

No revenue and profits has been recognised during the current and previous financial years for the construction services provided under the arrangement.

(e) Goodwill

Goodwill is tested for impairment annually where material. The goodwill relates mainly to a subsidiary group which holds medical waste treatment service concession rights in the People’s Republic of China. The recoverable amount of goodwill is based on the value in use by reference to approved management budgets, business plans and estimated future cash flows, reflecting the economic useful life of the service concession arrangements (Note 15(d)). The estimated future cash flows are discounted to their present value using pre-tax discount rates of 10% (2011: 12.5%) that reflect management’s assessment of the risks specific to the cash-generating units and an annual growth rate of 3% (2011: 3%).

Amortisation of intangible assets is included in the line “Other items of expense” in the income statement.

100


16 iNVestMeNts iN suBsidiaries

CoMPaNY2012$000

2011$000

Unquoted equity shares at cost 288,095 288,095Impairment losses (62,163) (65,142)Carrying amount of investments 225,932 222,953

Loans receivable 475,089 260,994Allowance for doubtful loans receivable (43,618) (35,573)

431,471 225,421

657,403 448,374

Included in loans receivable are non-interest bearing unsecured loans of $154,758,000 (2011: $59,741,000) which form part of the Company’s net investment in the subsidiaries. The other loans receivable are unsecured and bear interest ranging from 1.0% to 6.5% (2011: 0.9% to 6.5%) per annum. All loans receivable are expected to be repayable within one to two years except for the unsecured loans of $32,778,000 (2011: $28,172,000), which are not expected to be repayable in the foreseeable future.

The subsidiaries as at 31 December are as follows:

Name of companyPrincipal activities (Place of business) 1

effective equity interest held by the Group

2012%

2011%

Incorporated in Singapore

Delichem Pte Ltd Specialty chemical products 100 100

Greatearth Construction Pte Ltd # Building contractors 68.2 68.2

Greatearth Corporation Pte Ltd # Building contractors 68.2 68.2

Greatearth Developments Pte Ltd Real estate development and investment holding 84.1 84.1

Greatearth Holding Pte Ltd # Investment holding 68.2 68.2

Maxdin Pte Ltd # Property investment 68.2 68.2

MaxLee Development Pte Ltd Property development and investment 55.5 55.5

McAlister and Company, Limited Supply of industrial equipment, general trading and general engineering (Singapore and Malaysia)

100 100



16 iNVestMeNts iN suBsidiaries (continued)



2012%

2011%

Incorporated in Singapore (continued)

Medical Hall (1996) Pte Ltd 4 Dormant 100 100

MPL Pte Ltd 10 In members’ voluntary liquidation 100 100

Quality Engineering Pte Ltd # General building contractor 47.7 –

UED Capital Venture Pte Ltd Dormant 100 100

UE Development (Anson) Pte Ltd Property development and leasing 100 –

UE Development (Bendemeer) Pte Ltd Property development 100 100

UE E&C Ltd. @ Investment holding 68.2 68.2

UE Envirotech Pte Ltd Investment holding and trading of specialised waste disposal equipment

100 100

UE-IBP Building Materials Pte Ltd # Bulk supply of building materials 47.7 47.7

UE Managed Solutions Pte Ltd Investment holding 70 70

UE NEWater Pte Ltd 4 Dormant 100 100

UE One-North Developments Pte Ltd Property development and leasing 100 100

UE Orchard Pte Ltd Property development 100 100

UE Power & Resources Pte Ltd # Supply of machinery, equipment and metal products 68.2 68.2

UES Holdings Pte Ltd Environmental engineering and investment holding 100 100

UES (Middle East) Pte Ltd 4 Dormant 100 100

UE Somerset Pte Ltd Property development 100 100

UE Support Services Pte Ltd Management services 100 100

UE Trade Corporation Pte Ltd General traders 100 100

102





2012%

2011%

Incorporated in Singapore (continued)

UE UMC Pte Ltd Investment holding 100 100

UE Ville Developments Pte Ltd Property development and leasing 100 100

UMC ServiceMaster Pte Ltd Provision of facilities management services 70 70

United Air Pte Ltd # Air-conditioning supply 68.2 68.2

United Engineers Developments Pte Ltd Property facilities management and leasing 100 100

United Engineers (Singapore) Private Limited #

Mechanical and electrical engineering 68.2 68.2

United Infrastructure Pte Ltd Dormant 100 100

United Tech Park Pte Ltd Warehouse leasing business 90 90

Incorporated in malaysia

APG Geo-Systems Sdn Bhd 2, # Specialists geo-technical foundation engineering 61.4 60

APG Systems (E.M.) Sdn Bhd 2, # Specialists construction, sub-contractor for other geo-technical works

61.4 60

UED Developments (M) Sdn Bhd 2

(formerly known as Applied Construction & Engineering (M) Sdn Bhd)

Civil, electrical, mechanical engineers and contractors

100 100

Delichem Sdn Bhd 2 Provision of turnkey cleaning services 100 100

GE Construction Sdn Bhd 2, # Building contractors and property developer 68.2 68.2

McAlister Engineering Sdn Bhd 2 Freight tank containers and other steel products 100 100

McAlister Holdings (Malaysia) Sdn Bhd 2 Project and business manager of property and buildings, general contractors

100 100






2012%

2011%

Incorporated in malaysia (continued)

McAlister Trading (Malaysia) Sdn Bhd 2 Dormant 100 100

Peninsular Smart Sdn Bhd 2 Property owner and property developer 100 100

Quality Edition Sdn Bhd 2, # Property investment 68.2 68.2

UE ServiceCorp (Malaysia) Sdn Bhd 2 Investment holding 100 100

UMC ServiceMaster Sdn Bhd 2 Provision of facilities management services 70 70

Incorporated in Brunei

United Engineers (B) Sdn Bhd 2,# Civil, electrical, mechanical engineers and contractors 61.4 61.4

Incorporated in Hong Kong

Goodman Medical Supplies Limited 3 Supply of medical equipment and accessories(Hong Kong and Macau)

100 100

ServiceMaster Hong Kong Limited 3 Dormant 70 70

Uniteers (Hong Kong) Limited 3 Dormant 100 100

Incorporated in Indonesia

PT Infratech Indonesia 11 Broadcasting and telecommunication facilities 70 70

PT UE Developments 5 Development and management of apartment (condominium) buildings and office buildings

100 100

PT UE Power Engineering Services 2,# Trading of machinery equipment related to power industry and parts and consumables, service and maintenance of equipment management & engineering consultancy services

68.2 –

PT UE Sentosa 2 Engineering and construction projects 60 60

PT United Engineers Indonesia 5 Fabrication of steel structures 100 100

104





2012%

2011%

Incorporated in Taiwan

UE Managed Solutions Taiwan Ltd 2 Provision of facilities management services 70 70

UE ServiceCorp (Taiwan) Limited 2 Provision of facilities management services 100 100

Incorporated in myanmar

UE Myanmar Limited 4 Dormant 100 100

Incorporated in India

UE Trade Corporation (India) Private Limited 8

Dormant 100 100

Incorporated in Thailand

UE Precision Cleaning Company Limited 6 Supply of specialty chemical solvents and cleaning machines

100 100

UES (Thailand) Company Limited 10 In members’ voluntary liquidation 90 90

Incorporated in Cambodia

Media Services Limited 4 Dormant 100 100

United Media Limited 4 Dormant 100 100

Incorporated in Vietnam

UE Newater (Vietnam) Limited 9 Environmental engineering 100 100

United Engineers (Vietnam) Limited 2, # Engineering and construction 68.2 68.2






2012%

2011%

Incorporated in The People’s Republic of China

Anhui Anxin Energy Co., Ltd 2,# Leasing of generator sets 68.2 68.2

Hengyang City UE Songmu Water Co., Ltd 2

(formerly known as Hengyang City UE Meiya Songmu Water Co., Ltd)

Industrial water supply 100 90

Jiaozuo UE Environmental Protection Technology Co., Ltd 2

Treatment of medical waste and related activities 90 90

Liaocheng UE Environmental Protection Technology Co., Ltd 2


Park Avenue Management Services (Shanghai) Co., Ltd 7

Provision of services as project and business managers of buildings apartments, hotels and shopping centres

100 100

Shaoyang UE Environmental Protection Technology Co., Ltd 2


Tangshan UE Shengxing Renewable Resources Co., Ltd

Treatment of industrial waste oil 60 –

UE Asia Pacific (Beijing) Co., Ltd 2 General activities 100 100

UE (Liaocheng) Water Co., Ltd 2 Treatment of waste water and related activities 100 100

UE Aton Environment (Shanghai) Co., Ltd 10

In the process of de-registration 70 70

UE China (Shanghai) Co., Ltd 10 In the process of de-registration 100 100

UE Envirotech (Beijing) Co., Ltd 2 Treatment of medical waste and related activities 100 100

UE Envirotech (Chenzhou) Co., Ltd 2 Treatment of medical waste and related activities 100 100

106





2012%

2011%

Incorporated in The People’s Republic of China (continued)

UE Envirotech (Ji’an) Co., Ltd 2 Treatment of medical waste and related activities 100 100

UE Envirotech (Weifang) Co., Ltd 2 Treatment of medical waste and related activities 100 100

UE Envirotech (Xinxiang) Co., Ltd 2 Treatment of medical waste and related activities 100 100

All the Singapore incorporated subsidiaries are audited by Ernst & Young LLP unless otherwise stated.

1 Place of business in the respective countries of incorporation unless otherwise stated. 2 Audited by member firms of Ernst & Young Global in the respective countries. 3 Audited by BDO Limited. 4 Not statutorily required to be audited. 5 Audited by Paul Hadiwinata, Hidajat, Arsono & Rekan, Indonesia. 6 Audited by A.A.C. Audit Firm, Thailand. 7 Audited by Pan-China Certified Public Accountants Ltd. 8 Audited by Mohinder Puri & Company. 9 Audited by DTL Auditing Company. 10 Not subject to audit as the subsidiary is in members’ voluntary liquidation or in the process of de-registration. 11 During the financial year, the subsidiary was reclassified as disposal group classified as held for sale (Note 10). @ Listed on SGX-ST. # Subsidiaries of UE E&C Ltd.



17 iNVestMeNts iN assoCiates


2011$000

2012$000

2011$000

Unquoted equity sharesAt cost 18,806 15,484 317 317Impairment losses (1) (801) (2) (2)

Goodwill on acquisition (1,023) (1,023) – –Currency realignment (6,896) (6,369) – –Share of net gain on fair value changes recognised directly

in other comprehensive income 25,160 27,763 – –Share of net post acquisition reserves 41,276 35,036 – –

77,322 70,090 315 315

Loans receivable 92,617 130 – –Amounts receivable 453 86 86 86Amount payable (21,667) (21,667) – –

71,403 (21,451) 86 86Allowance for doubtful receivables (215) (215) (86) (86)

71,188 (21,666) – –

148,510 48,424 315 315

Included in loans receivable are interest bearing unsecured loans of $55,588,000 (2011: Nil) which bear interest at 5.0%. The other loans, amounts receivable and amount payable are mainly non-trade in nature, unsecured, interest-free, to be settled in cash and are not expected to be repayable within the next 12 months. The amount payable forms part of the Group’s net investment in an associate.

The associates as at 31 December are as follows:



2012%

2011%


Asia Infrastructure Project Development Pte Ltd

Liquidated – 35

Lycorpipe Investment Pte Ltd β Investment holding 11 11

The Seletar Mall Pte Ltd(formerly known as Earth Holding Pte Ltd)

Property development and investment 30 –

United Wearnes Technology Pte Ltd 2 Investment holding 40 40

Wingcrown Investment Pte Ltd #,β Property development and investment 13.6 –

108


17 iNVestMeNts iN assoCiates (continued)



2012%

2011%

Incorporated in malaysia

Apex Pharmacy Holdings Sendirian Berhad

Investment holding 30 30

Asia Travel Service (Malaysia) Sdn Bhd Dormant 30 30

Bluescope Lysaght (Malaysia) Sdn Bhd Steel roofings 40 40

UE E&C Sanjia (M) Sdn Bhd # Property development and construction and/or project management

20.5 –

1 Place of business in the respective countries of incorporation unless otherwise stated. 2 Audited by PricewaterhouseCoopers. β Accounted for as associates as the Group has significant influence over the financial and operating policy decisions of the investees. # Associates of UE E&C Ltd.

The summarised financial information of the associates not adjusted for the proportion of ownership interest held by the Group is as follows:

GrouP2012$000

2011$000

Assets and liabilities:Current assets 82,090 65,747Non-current assets 1,028,765 144,171Total assets 1,110,855 209,918

Current liabilities (353,777) (15,092)Non-current liabilities (547,110) (3,380)Total liabilities (900,887) (18,472)

Results:Revenue 36,324 53,622Profit for the financial year 14,178 8,358



18 iNVestMeNts iN JoiNt VeNtures

GrouP2012$000

2011$000

Unquoted equity shares, at cost 1,000 1,000Share of net post acquisition reserves 15,464 9,683

16,464 10,683

Subordinated loans receivable 39,015 35,776Subordinated amounts receivable 8,727 5,284

47,742 41,060

64,206 51,743

The joint ventures as at 31 December are as follows:



2012%

2011%


Balmoral Development Pte Ltd Property development 50 50

HUGE Development Pte Ltd # Real estate developers 20.5 20.5

Winpride Investment Pte Ltd Property development and investment 16.8 16.8

1 Place of business in respective countries of incorporation unless otherwise stated.

# Joint venture of UE E&C Ltd.

Subordinated loans to joint ventures of $39,015,000 (2011: $35,776,000) are unsecured and bear interest of 6.5% (2011: 6.5%) per annum and are to be settled in cash. These loans are subordinated to the repayment of bank loans.

110


18 iNVestMeNts iN JoiNt VeNtures (continued)

The aggregate amounts of each of current assets, non-current assets, current liabilities, non-current liabilities, income and expenses related to the Group’s interest in the joint ventures are as follows:

GrouP2012$000

2011$000

Assets and liabilities:Current assets 24,216 20,620Non-current assets 101,868 54,579Total assets 126,084 75,199

Current liabilities (16,062) (9,058)Non-current liabilities (93,558) (55,231)Total liabilities (109,620) (64,289)

Income and expenses:Income 62,698 17,763Expense (56,935) (15,907)

19 deFerred taX

Balance at beginning of the financial year 23,223 24,385Currency realignment 39 (37)(Credited)/charged to the equity (754) 52Credited to the income statement (Note 9)– current year (78) (1,364)– under provision in respect of prior year – 187Balance at end of the financial year 22,430 23,223

The deferred taxation arises as result of:

Deferred tax liabilitiesAccrued income on completed project 19,246 11,591Convertible bonds 205 660Excess of net book value over the tax written down value of property, plant and equipment 5,653 3,624Fair value change of investment properties 340 8,464Provisions 381 275

25,825 24,614

Deferred tax assetsProvisions (3,395) (1,391)

(3,395) (1,391)

22,430 23,223



19 deFerred taX (continued)

Unrecognised tax losses and capital allowancesAs at 31 December 2012, the Group has unabsorbed tax losses and unutilised capital allowances of approximately $23,757,000 (2011: $22,410,000) and $4,237,000 (2011: $4,395,000) respectively, available for set-off against future assessable income subject to agreement with the tax authorities and compliance with certain provisions of the tax legislation of the respective countries in which the companies operate. The potential deferred tax asset arising from these unabsorbed tax losses and unutilised capital allowances has not been recognised in the financial statements due to the uncertainty of its utilisation against future taxable profits.

Unrecognised temporary differences relating to investments in subsidiaries and joint ventures No deferred tax liability has been recognised for the current and previous financial years for taxes that would be payable on the undistributed earnings of certain of the Group’s overseas subsidiaries as the Group has determined that undistributed profits of its subsidiaries will not be distributed in the foreseeable future.

Such temporary differences for which no deferred tax liability has been recognised aggregate to $2,866,000 (2011: $4,587,000). The deferred tax liability is estimated to be $287,000 (2011: $459,000).

Tax consequences of dividends to shareholders There are no income tax consequences attached to the dividends proposed by the Company but not recognised as a liability in the financial statements in the current and previous financial years (Note 32).

20 otHer iNVestMeNts


2011$000

2012$000

2011$000

Non-current:Available-for-sale financial assets

Unquoted equity shares, at fair value 7,061 6,871 7,077 6,871Unquoted equity shares, at cost 99 99 – –

7,160 6,970 7,077 6,871

Current:Held for trading investments

Quoted equity shares 7,427 7,248 – –

Available-for-sale financial assetsQuoted equity shares 4,225 2,455 – –

11,652 9,703 – –

112


21 iNVeNtories

GrouP2012$000

2011$000

Statement of financial position:Inventories, at lower of cost and net realisable valueEngineering supplies and raw materials 844 428Trading inventories 3,816 7,088Total inventories at 31 December 4,660 7,516

Inventories are stated after deducting allowance of 1,166 1,259

Income statement:Inventories recognised as an expense in cost of sales 14,479 9,515 Inclusive of the following charge: – Inventories written-down 6 932

22 trade aNd otHer reCeiVaBLes


2011$000

2012$000

2011$000

Total trade and other receivables (current):Trade receivable 265,241 290,356 4,198 2,972Allowance for doubtful receivables (6,731) (7,817) (7) (7)

258,510 282,539 4,191 2,965Other receivables:

Claims/expenses recoverable 17,252 10,557 212 60Deposits 60,870 5,760 540 510Due from subsidiaries – – 41,052 23,156Project advance 1,009 548 – –Sundry receivables 9,947 10,083 123 105

89,078 26,948 41,927 23,831Allowance for doubtful receivables (6,502) (7,572) (3,927) (53)

82,576 19,376 38,000 23,778341,086 301,915 42,191 26,743



22 trade aNd otHer reCeiVaBLes (continued)


2011$000

2012$000

2011$000

Total trade receivables (non-current):Retention sums 24,653 23,045 – –Total trade and other receivables (current and

non-current) 365,739 324,960 42,191 26,743

Add:Loans and amounts receivables:– Subsidiaries (Note 16) – – 431,471 225,421– Associates (Note 17) 92,855 1 – –– Joint ventures (Note 18) 47,742 41,060 – –Total trade and other receivables (current and

non-current) 506,336 366,021 473,662 252,164Bank balances and deposits (Note 25) 452,001 453,278 17,950 20,252Total loans and receivables 958,337 819,299 491,612 272,416

Trade receivablesMajority of the trade receivables are non-interest bearing and are generally on 30 to 90 day terms. They are recognised at their original invoiced amounts which represent their fair values on initial recognition.

There is no outstanding interest bearing trade receivables in 2012. In 2011, there were trade receivables amounting to $8,298,000 which were payable on 14 day terms and bear interest of 6.8% per annum.

Included in the trade receivables are $46,688,000 (2011: $40,734,000) of retention sums relating to construction contracts.

The Group’s trade receivables denominated in foreign currencies (with reference to the respective functional currencies of the Company and the respective subsidiaries) as at 31 December 2012 are as follows:

• $5,092,000(2011:$1,960,000)denominatedinUnitedStatesDollarsand • $660,000(2011:$584,000)denominatedinotherforeigncurrencies.

Due from subsidiariesAmounts receivable from subsidiaries are mainly non-trade in nature, unsecured, to be settled in cash and bear interest of 2.0% to 6.5% (2011: 6.5%) per annum except for $1,995,000 (2011: $3,575,000) which are interest-free and are payable on demand. Interest rates are repriced at intervals of 1, 2, 3 or 6 months.

114


22 trade aNd otHer reCeiVaBLes (continued)

Receivables that are past due but not impaired The Group has trade and other receivables amounting to $39,770,000 (2011: $39,674,000) that are past due at the end of the reporting period but not impaired. These receivables are unsecured and the analysis of their aging at the end of the reporting period is as follows:

GrouP2012$000

2011$000

Trade and other receivables past due:Less than 30 days 15,163 7,22730 to 60 days 4,554 3,88561 to 90 days 1,940 2,76591 to 120 days 5,744 2,450More than 120 days 12,369 23,347

39,770 39,674

Receivables that are impaired The Group’s trade and other receivables that are impaired at the end of the reporting period and the movement of the allowance accounts used to record the impairment are as follows:

GrouPindividually impaired2012$000

2011$000

Trade and other receivables – nominal amounts 21,613 37,817Less: Allowance for impairment (13,233) (15,389)

8,380 22,428

trade receivables other receivables2012$000

2011$000

2012$000

2011$000

Movement in allowance accounts:At 1 January (7,817) (7,877) (7,572) (4,188)Charge for the year (651) (1,007) (103) (3,490)Written off 528 42 1,076 –Written back 460 817 26 –Exchange differences 749 208 71 106At 31 December (6,731) (7,817) (6,502) (7,572)

Trade receivables that are individually determined to be impaired at the end of the reporting period relate to debtors that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.



23 Gross aMouNt due FroM/(to) CustoMers For CoNtraCt WorK

GrouP2012$000

2011$000

Costs incurred and attributable profits less recognised losses to-date 765,265 765,451Less: Progress billings (776,178) (774,048)Amounts due from customers for contract work, net (10,913) (8,597)

Presented as:Gross amount due from customers for contract work 18,649 16,252Gross amount due to customers for contract work (29,562) (24,849)

(10,913) (8,597)

Included in progress billings are retention sums of 28,382 46,944

24 ProPerties HeLd For saLe

GrouP2012$000

2011$000

Land cost 730,837 730,837Development expenditure 127,981 64,468Interest costs 28,776 12,016

887,594 807,321Add: Attributable profits – –

887,594 807,321Less: Progress billings (67,923) –

819,671 807,321

Interest capitalised during the year was $16,760,000 (2011: $10,771,000) at rates ranging from 1.6% to 3.0% (2011: 0.9% to 2.9%) per annum.

Properties held for sale amounting to $883,066,000 (2011: $795,090,000) have been mortgaged to secure term loan facilities of certain subsidiaries (Note 28).

The projects included in properties held for sale are expected to be recovered more than twelve months after the reporting period in the current and previous financial year.

116


24 ProPerties HeLd For saLe (continued)

The following table provides information about agreements that are in progress at the reporting date whose revenue is recognised on a percentage of completion method:

GrouP2012$000

2011$000

Aggregate costs incurred and recognised to date, including attributable profits 626,574 573,270Less: Progress billings (67,923) –

558,651 573,270

There is no cost of sales relating to development properties recognised based on a percentage of completion method during the current and previous financial years.

25 BaNK BaLaNCes aNd dePosits


2011$000

2012$000

2011$000

Cash at banks and in hand 230,567 144,070 17,950 15,814Fixed deposits 42,220 142,029 – 4,438Project accounts 179,214 167,179 – –

452,001 453,278 17,950 20,252

The Group’s bank balances and deposits denominated in foreign currencies (with reference to the respective functional currencies of the Company and the respective subsidiaries) as at 31 December 2012 are as follows:

• $10,880,000(2011:$10,693,000)denominatedinUnitedStatesDollars; • $5,674,000(2011:$430,000)denominatedinSingaporeDollarsand • $2,160,000(2011:$2,795,000)denominatedinotherforeigncurrencies.

Bank balances and deposits earn interest at effective interest rates ranging from 0.01% to 13.5% (2011: 0.02% to 7.75%) per annum. Short-term deposits are made for varying periods of between one day and three months depending on the cash requirements of the Group, and earn interests at the respective short-term deposit rates.

The project account is maintained in accordance with the Project Account Rules – 1997 Ed. Withdrawals are restricted to payments for expenditure incurred on development projects. A sum of $52,000,000 (2011: $113,000,000) of the project accounts has been placed in fixed deposits as at year end.



26 sHare CaPitaL

GrouP aNd CoMPaNY2012 2011

No. of shares No. of shares000 $000 000 $000

(a) Issued and fully paid:7.5 cents cumulative preference shares 875 875 875 875

Ordinary shares issued for cashBalance at 1 January 284,183 300,023 262,048 273,027Share options exercised 926 1,380 570 744Conversion of convertible bonds (Note 29) 20,299 25,711 21,565 26,252Balance at 31 December 305,408 327,114 284,183 300,023

306,283 327,989 285,058 300,898

The holders of ordinary and preference shares are entitled to receive dividends as and when declared by the Company. The ordinary shares have no par value. The voting rights of the shares are as follows:

Preference Share – One vote for every member present in person or by proxy or attorney; upon a poll, one vote for each share held by every member present in person or by proxy or attorney.

Ordinary Stock – One vote for every member present in person or by proxy or attorney; upon a poll, one vote for each stock unit held by every member present in person or by proxy or attorney.

118


26 sHare CaPitaL (continued)

(b) Outstanding options

As at 31 December 2012, unissued shares granted under Scheme 2000 were as follows:

date of Grantexercise

Periodexercise

Price

Balanceas at

31.12.11


exercisedduring the

financial year


forfeitedduring the

financial year

Balanceas at

31.12.12

4.10.02 4.10.03 to3.10.12

$1.07 363,300 363,000 300 –

12.12.03 12.12.04 to11.12.13

$1.61 460,900 98,800 – 362,100

25.11.04 25.11.05 to24.11.14

$1.59 496,400 98,400 – 398,000

30.11.05 30.11.06 to29.11.15

$1.81 611,500 108,200 – 503,300

27.11.06 27.11.07 to26.11.16

$2.11 993,000 154,000 32,000 807,000

6.12.07 6.12.08 to5.12.17

$3.68 1,800,000 – 146,350 1,653,650

20.05.09 20.05.10 to19.05.19

$1.51 435,000 103,000 27,000 305,000

5,160,100 925,400 205,650 4,029,050



27 otHer reserVes


2011$000

2012$000

2011$000

Available-for-sale (AFS) reserve 33,508 33,980 5,709 5,349Share option reserve 4,081 4,081 4,081 4,081Translation reserve (4,142) (4,875) – –Equity component of convertible bonds 14,637 14,509 14,637 14,509Capital reserve on change in non-controlling interests 8,065 7,436 – –

56,149 55,131 24,427 23,939

AFS reserve records the cumulative fair value changes, net of tax, of available-for-sale financial assets until they are derecognised or impaired.

Share option reserve represents the equity-settled share options granted to employees (Note 35). The reserve is made up of the cumulative value of services received from employees recorded on grant of equity-settled share options.

Translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency.

Equity component of convertible bonds reserve represents the residual amount of convertible bonds after deducting the fair value of the liability component. This amount is presented net of transaction costs and deferred tax liability arising from convertible bonds.

Capital reserve on change in non-controlling interests is used to record the differences arising from the movement in non-controlling interests resulting from the restructuring of the Group.

120


28 BorroWiNGs


2011$000

2012$000

2011$000

CurrentBank overdrafts:– secured – 89 – –– unsecured 6,387 14,023 – –

6,387 14,112 – –

Trust receipts and bills payable:– secured 116 200 – –– unsecured 2,222 5,427 – –

2,338 5,627 – –

Terms loans:– secured 192,128 12,276 – –– unsecured 247,315 144,379 185,535 83,367

439,443 156,655 185,535 83,367448,168 176,394 185,535 83,367

Non-currentConvertible bonds (Note 29) 21,986 46,512 21,986 46,512

Unsecured borrowings under MTN Programme 150,000 – 150,000 –

Term loans– secured – Repayable within 2 years 401,563 174,139 86,873 23,177 – Repayable within 3 to 5 years 419,074 714,826 – –

820,637 888,965 86,873 23,177

– unsecured – Repayable within 2 years 98,529 138,826 91,970 137,629 – Repayable within 3 to 5 years 198 83,130 – 78,300

98,727 221,956 91,970 215,9291,091,350 1,157,433 350,829 285,618

Total borrowings 1,539,518 1,333,827 536,364 368,985

As at 31 December 2012, the Group has borrowings denominated in United States Dollars amounting to $2,187,000 (2011: $3,165,000).

Bank overdrafts, trust receipts and bills payable bear effective interest rates ranging from 1.41% to 14.0% (2011: 1.79% to 9.1%) per annum.

Bank overdrafts are repayable on demand. Trust receipts and bills payable are repriced at intervals of 3 to 6 months.



28 BorroWiNGs (continued)

The banking facilities (which include overdrafts and trust receipts) of certain subsidiaries are secured by mortgages on their respective properties (Note 12), debentures over their other assets, assignment of rental proceeds in respect of investment properties and covered by corporate guarantees given by their respective holding companies.

Unsecured borrowings under the MTN Programme comprise fixed rate notes with interest at 4.2% per annum. The notes are expected to be repayable five years from the date of issue.

The Group’s floating rate term loans comprise:

2012 2011effective

interest rate% p.a. Maturity

total$000

Effectiveinterest rate

% p.a. maturityTotal$000

Singapore Dollars 1.5 – 3.5 2013 – 2016 1,327,082 0.9 – 3.0 2012 – 2016 1,237,347Indonesian Rupiah 9.0 – 12.5 2013 10,521 10.5 – 12.0 2012 7,429Malaysian Ringgit 4.0 – 8.6 2013 – 2014 9,756 4.8 – 8.6 2012 – 2013 12,165United States Dollars 2.3 – 5.9 2013 1,049 2.9 – 3.2 2012 1,113Other currencies 3.1 – 8.3 2013 – 2015 10,399 3.1 – 7.6 2012 – 2015 9,522

1,358,807 1,267,576

Term loans of $925,892,000 (2011: $878,064,000) of the subsidiaries are secured by mortgages on their respective properties and debentures over their assets (Notes 12, 14 and 24).

Term loan of $86,873,000 (2011: $23,177,000) of the Company was secured by a first fixed charge of 100% shareholding in a wholly owned subsidiary, UE Orchard Pte Ltd, as well as assignments of the shareholder’s loans, insurances, development documents, project documents and bank accounts (Note 13).

29 CoNVertiBLe BoNds

On 3 March 2009, the Company issued 1% coupon-rate convertible bonds denominated in Singapore Dollars with a nominal value of $132,974,599. The bonds are due for repayment five years from the issue date at their nominal value of $132,974,599 or conversion into shares of the Company at the holder’s option at the rate of $1.34 per conversion share.

The fair value of the liability component, included in non-current borrowings, is calculated using a market interest rate for an equivalent non-convertible bond at the date of issue. The residual amount, representing the value of the equity conversion component, is included in shareholders’ equity in other reserves (Note 27), net of deferred taxes.

122


29 CoNVertiBLe BoNds (continued)

The carrying amount of the liability component of the convertible bonds at the end of the reporting period is arrived at as follows:

GrouP aNd CoMPaNY2012$000

2011$000

Liability component at 1 January 46,512 70,813Conversion into share capital (Note 26) (25,711) (26,252)Interest expense (Note 7) 1,415 2,462Interest accrual (230) (511)Liability component at 31 December (Note 28) 21,986 46,512

30 ProVisioNs

Provisions relate to provision for rental top-up and warranties, as follows:

GrouP2012$000

2011$000

At 1 January 790 3,110Additions during the year – 290Unused amounts reversed (425) (2,278)Utilised during the year (365) (333)Exchange differences – 1At 31 December – 790

Provision for rental top-up relates to top-up for shortfalls on the guaranteed rentals over the five-year leaseback period commencing from 19 April 2007 in respect of a sale and leaseback arrangement entered into with MacarthurCook Property Investment Pte Ltd. The lease had expired on 19 April 2012.



31 trade aNd otHer PaYaBLes


2011$000

2012$000

2011$000

Total trade and other payables (current):Trade payables 97,928 94,878 992 515

Other payables:Accrued property development cost 52,734 41,780 – –Accrued staff cost 22,451 29,258 2,445 6,491Accrued job cost 155,837 151,313 – –Other accruals 20,635 19,606 2,327 2,968Deposits 16,640 23,837 5,670 6,722Due to subsidiaries – – 405 2,002Interest payable 5,473 4,186 1,997 1,176Progress billing relating to development projects 112,057 47,697 – –Sundry payables 18,866 15,016 2,194 606

404,693 332,693 15,038 19,965502,621 427,571 16,030 20,480

Total trade and other payables (non-current):Other payables 82 – – –Retention sums 14,423 9,835 – –

14,505 9,835 – –Total trade and other payables (current and non-current) 517,126 437,406 16,030 20,480

Add:Amount due to an associate (Note 17) 21,667 21,667 – –Borrowings (Note 28) 1,539,518 1,333,827 536,364 368,985Total financial liabilities carried at amortised cost 2,078,311 1,792,900 552,394 389,465

Trade payables / Other payablesTrade payables are non-interest bearing and are normally settled on 30 to 60 day terms.

The Group’s payables denominated in foreign currencies (with reference to the respective functional currencies of the Company and the respective subsidiaries) as at 31 December 2012 are as follows:

$28,000 (2011: $892,000) denominated in United States Dollars, $23,000 (2011: $239,000) denominated in Vietnamese Dong, and$38,000 (2011: $40,000) denominated in other foreign currencies.

Other payables are non-interest bearing and have an average term of six months.

Due to subsidiariesAmounts payable to subsidiaries are mainly non-trade in nature, unsecured, interest-free, repayable on demand and to be settled in cash.

Progress billing relating to development projectsThis relates to progress billing received/receivable in advance for development projects which revenue is recognised using the completed contract method. (Note 2.20)

124


32 diVideNds Paid

The following dividends were paid:

GrouP aNd CoMPaNY2012$000

2011$000

Declared and paid during the financial year:Cumulative Preference Shares:Tax exempt (one-tier) dividend of 7.5 cents (2011: 7.5 cents) 66 66

Ordinary Stock: – First and final tax exempt (one-tier) dividend of 5 cents (2011: 5 cents) 14,703 13,791 – Special tax exempt (one-tier) dividend of 10 cents (2011: 5 cents) 29,406 13,791

44,175 27,648

Proposed but not recognised as a liability as at 31 december:The directors have proposed a first and final tax exempt (one-tier) dividend of 5 cents per ordinary stock and a special tax exempt (one-tier) dividend of 5 cents per ordinary stock, amounting to a total of $30,541,000 and a tax exempt (one-tier) dividend of 7.5 cents on the cumulative preference shares, amounting to $66,000. The dividends are subject to shareholders’ approval at the upcoming Annual General Meeting.

33 Future CaPitaL CoMMitMeNts

GrouP2012$000

2011$000

Capital commitments contracted for not recognised in the financial statements 325,365 466,275



34 oPeratiNG Lease CoMMitMeNts

(a) Lessees’ lease commitments

The Group leases certain properties and office equipment under lease agreements that are non-cancellable within a year. The leases expire at various dates until 2015 and contain provisions for rental adjustments. There are no renewal options or contingent rent provision included in the lease agreements. There are no restrictions placed upon the lessee by entering into these leases. Operating lease payments recognised in the income statement during the financial year amounted to $13,772,000 (2011: $14,576,000). The Group is restricted from subleasing leased equipment to third parties.

Future minimum lease payments payable under non-cancellable operating leases with initial or remaining term of one year or more at the end of the reporting period are as follows:


2011$000

2012$000

2011$000

Within one year 5,105 7,765 1,057 1,005After one year but not more than five years 4,574 5,486 341 1,340

9,679 13,251 1,398 2,345

(b) Lessors’ lease commitments

The Group has entered into commercial property leases on its investment properties. These non-cancellable leases have remaining lease terms of between 1 and 15 years. All leases include a clause to enable revision of the rental charge on an annual basis based on prevailing market conditions.

Future minimum lease payments receivable in respect of significant non-cancellable operating leases are as follows:


2011$000

2012$000

2011$000

Within one year 57,430 41,267 36,732 36,661After one year but not more than five years 78,347 31,566 31,018 26,389After five years 35,436 – – –

171,213 72,833 67,750 63,050

126


35 eMPLoYee sHare oPtioN sCHeMe

Share options are granted to senior executives with more than 12 months’ service. The exercise price of the options is equal to the average of the last dealt prices of the shares for the three (3) consecutive trading days immediately preceding the grant. The options vest if the employee remains in service for a period of one year from the date of grant. The option period commences 1 year after the date of the grant and expires on the day immediately before the 10th anniversary of the date of the grant. There are no cash settlement alternatives.

The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of, and movements in, share options during the financial year:

2012No.

2012WaeP($)

2011No.

2011wAEP($)

Outstanding at beginning of the financial year 1 5,160,100 2.40 5,991,150 2.34Granted during the financial year 4 – – – –Exercised during the financial year 2 (925,400) 1.49 (569,700) 1.31Forfeited during the financial year (205,650) 3.15 (261,350) 3.23Outstanding at the end of the financial year 1,3 4,029,050 2.58 5,160,100 2.40

Exercisable at end of the financial year 4,029,050 2.58 5,160,100 2.40

1 Included within these balances are equity-settled options that have not been recognised in accordance with FRS 102 as these equity-settled options were granted on or before 22 November 2002. These options have not been subsequently modified and therefore do not need to be accounted for in accordance with FRS 102.

2 The weighted average share price during the financial year was $2.52 (2011: $2.25).

3 The range of exercise prices for options outstanding at the end of the year was $1.51 to $3.68 (2011: $1.07 to $3.68). The weighted average remaining contractual life for these options is 4.05 years (2011: 4.74 years).

4 During the financial year, the Company did not grant any employee share option.

The fair value of share options as at the date of grant, is estimated by an external valuer using the Binomial model, taking into account the terms and conditions upon which the options were granted. The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. No other features of the option grant were incorporated into the measurement of fair value.



36 reLated PartY traNsaCtioNs

The following significant transactions between the Group and related parties took place at terms agreed between the parties during the financial year.

Compensation of key management executives

GrouP2012$000

2011$000

Short term employee benefits 5,905 6,469Central Provident Fund 57 48Share-based payment 385 287Total compensation paid to key management executives 6,347 6,804

Comprising amounts paid to:Director of the Company 2,165 1,376Other key management executives 4,182 5,428

6,347 6,804

Key Management Executives’ Interests in Employee Share Option SchemeNo share options were granted to the Directors of the Company and other key management executives during the current and previous financial year. During the current financial year, 125,000 options were exercised by the Directors (2011: 150,000). Other key management executives exercised options for 148,000 (2011: 128,000) ordinary stock units of the Company at a price of $1.07 (2011:$1.01 to $1.81), with a total cash consideration of $292,110 (2011: $316,380) paid to the Company. The outstanding number of share options granted to a Director of the Company and other key management executives at the end of the financial year were 552,000 and 911,800 (2011: 677,000 and 1,059,800) respectively. No share options have been granted to the Company’s non-executive directors.

Directors’ fees amount to $626,000 (2011: $626,069).

37 FiNaNCiaL risK MaNaGeMeNt oBJeCtiVes aNd PoLiCies

The Group’s principal financial instruments, other than derivative financial instruments, comprise bank loans and overdraft, cash and term deposits. The main purpose of these financial instruments is to raise finance for the Group’s operations. The Group has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations.

The Group and the Company are exposed to financial risks arising from its operations and the use of financial instruments. The main risks arising from the Group’s financial instruments are credit risk, market price risk, foreign currency risk, interest rate risk and liquidity risk. The Board of directors reviews and agrees policies and procedures for the management of these risks, which are executed by the Management Committee. The Audit & Risk Committee provides independent oversight to the effectiveness of the risk management systems and practices for effective risk identification and management, and compliance with internal guidelines and external requirements. The Group does not hold or issue derivative financial instruments for trading purposes. Derivative transactions, including principally interest rate swaps and foreign currency forward contracts are entered into for the purpose of managing the interest rate and currency risks arising from the Group’s operations and its sources of financing.

The following sections provide details regarding the Group’s and Company’s exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks.

There has been no change to the Group’s exposure to these financial risks or the manner in which it manages and measures the risks.

128


37 FiNaNCiaL risK MaNaGeMeNt oBJeCtiVes aNd PoLiCies (continued)

Credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. Credit risk arising from the inability of a customer to meet the terms of the Group’s financial instrument contracts is generally limited to the amounts, if any, by which the customer’s obligations exceed the obligations of the Group. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including investment securities and bank balances and deposits), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties.

It is the Group’s policy to sell to a diverse group of customers who have been assessed for their credit worthiness to reduce credit risk. The Group has a formal Group Credit Committee to oversee the management of the Group’s debts.

Exposure to credit riskAt the end of the reporting period, the Group’s and the Company’s maximum exposure to credit risk is represented by the carrying amount of trade and other receivables recognised in the statements of financial position. No other financial assets carry a significant exposure to credit risk.

Credit risk concentration profileThe Group determines concentrations of credit risk by monitoring the country and industry sector profile of its trade and other receivables on an on-going basis. The credit risk concentration profile of the Group’s trade and other receivables at the end of the reporting period is as follows:

GrouP2012 2011

$000 % of total $000 % of total

By country:Singapore 421,996 83 295,153 81Malaysia 14,291 3 15,899 4Brunei 49,855 10 33,184 9Indonesia 1,771 – 1 3,830 1Other countries 18,437 4 17,955 5

506,350 100 366,021 100

1 Less than 1%

GrouP2012 2011

$000 % of total $000 % of total

By industry sector:Engineering and Construction 263,754 52 132,911 36Property Rental & Services 39,827 8 28,481 8Property Development 196,027 39 199,320 55Corporate Services & Others 6,742 1 5,309 1

506,350 100 366,021 100

The Group does not have credit risk concentration in any customers.




Credit risk (continued)

Financial assets that are neither past due nor impaired Trade and other receivables that are neither past due nor impaired are creditworthy debtors with good payment record with the Group. Bank balances and deposits, investment securities and derivatives that are neither past due nor impaired are placed with or entered into with reputable financial institutions or companies with high credit ratings and no history of default.

Financial assets that are either past due or impaired Information regarding financial assets that are either past due or impaired is disclosed in Note 22 (Trade and other receivables).

market price risk

Market price risk is the risk that the fair value or future cash flows of the Group’s financial instruments will fluctuate because of changes in market prices (other than interest or exchange rates). The Group is exposed to equity price risk arising from its investment in quoted equity instruments. These instruments are quoted on the SGX-ST in Singapore and are classified as held for trading or available-for-sale financial assets.

It is not the Group’s policy to actively trade in quoted equity instruments. The Group’s holdings of the quoted equity instruments arose from settlement of trade debts and the restructuring of an associate.

Sensitivity analysis for equity price riskAt the end of the reporting period, had the held for trading quoted equity instruments listed on the SGX-ST held by the Group been 5% (2011: 5%) higher/lower with all other variables held constant, the Group’s profit net of tax would have been $359,000 (2011: $344,000) higher/lower, arising as a result of higher/lower fair value gains or losses recognised in the income statement on held for trading investments in equity instruments.

Had the available-for-sale quoted equity instruments listed on the SGX-ST held by the Group been 5% (2011: 5%) higher/lower with all other variables held constant, the Group’s AFS reserve would have been $211,000 (2011: $123,000 higher/lower) higher/lower arising as a result of an increase/decrease in the fair value of equity instruments classified as available-for-sale.

Foreign currency risk

The Group has exposure to foreign exchange risk as a result of transactions denominated in a currency other than the respective functional currencies of Group entities, arising from normal trading activities. Less than 1% (2011: 1%) of the Group’s sales are denominated in currencies other than the respective functional currencies of Group entities.

As at 31 December 2012, the Group has foreign currencies exposure mainly in United States Dollars in its bank balances and deposits, trade receivables, trade payables, trust receipts and bills payable as disclosed in the respective notes.

It is the Group’s policy to hedge these risks through foreign currency forward contracts. The primary purpose of the Group’s foreign currency hedging activities is to protect against volatility associated with foreign currency purchases of materials and other assets and liabilities created in the normal course of business. The Group does not use foreign currency forward contracts for trading purposes. As at 31 December 2012 and 2011, the Group has no outstanding foreign currency forward exchange contracts.

In addition to transactional exposure, the Group is also exposed to currency translation risk arising from its net investments in foreign operations. The Group’s net investments in foreign subsidiaries are not hedged as currency positions are considered to be long-term in nature.

130



Foreign currency risk (continued)

Sensitivity analysis for foreign currency riskThe following table demonstrates the sensitivity of the Group’s profit net of tax to a reasonably possible change in the USD exchange rate against SGD, with all other variables held constant.

GrouP2012$000

2011$000

Profit net of tax Profit net of tax

USD/SGD – strengthened 5 % (2011: 5%) +688 +138 – weakened 5 % (2011: 5%) –688 –138

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments will fluctuate because of changes in market interest rates. The Group’s and the Company’s interest rate exposure relates primarily to its investment portfolio in fixed deposits and the Company’s long-term debt obligations. Majority of the Group’s and the Company’s financial assets and liabilities are at floating rates and are contractually repriced at intervals of 1, 2, 3 or 6 months (2011: 1, 2, 3 or 6 months) from the end of the reporting period.

The Group’s policy is to manage interest costs using combination of fixed and floating rate debts taking into consideration the funding requirements of the Group. It is also the Group’s policy to hedge its interest rate risk through interest rate cap and swap contracts. As at 31 December 2012 and 2011, the Group has no outstanding interest rate cap and swap contracts.

Sensitivity analysis for interest rate risk At the end of the reporting period, if SGD interest rates had been 75 (2011: 75) basis points lower/higher with all other variables held constant, the Group’s profit net of tax would have been $11,243,000 (2011: $9,604,000) higher/lower, arising mainly as a result of lower/higher interest expense on floating rate term loans and bank borrowings.

Liquidity risk

Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group’s and the Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities.

The Group’s and the Company’s liquidity risk management policy is to monitor its net operating cash flows and maintain an adequate level of committed banking facilities through regular review of its working capital requirements. At the end of the reporting period, approximately 29% (2011: 13%) of the Group’s borrowings (Note 28) will mature in less than one year based on the carrying amount reflected in the financial statements. 35% (2011: 23%) of the Company’s borrowings will mature in less than one year at the end of the reporting period.

The Group assessed the risk with respect to refinancing its debt and concluded it to be low. Access to sources of funding is sufficiently available and debt maturing within 12 months can be rolled over with existing lenders.




Liquidity risk (continued)

Analysis of financial instruments by remaining contractual maturitiesThe table below summarises the maturity profile of the Group’s and the Company’s financial liabilities at the end of the reporting period based on contractual undiscounted payments obligations.

2012 20111 year

or less$000

1 to 5 years$000

total$000

1 year or less

$000

1 to 5 years$000

Total$000

GroupTrade and other payables 502,621 14,505 517,126 427,571 9,835 437,406Borrowings 481,459 1,155,672 1,637,131 204,744 1,219,789 1,424,533

984,080 1,170,177 2,154,257 632,315 1,229,624 1,861,939

CompanyTrade and other payables 16,030 – 16,030 20,480 – 20,480Borrowings 198,592 378,015 576,607 89,852 292,705 382,557

214,622 378,015 592,637 110,332 292,705 403,037

38 CaPitaL MaNaGeMeNt

The primary objective of the Group’s capital management is to maintain healthy capital ratios to sustain growth, maximise shareholder value and fulfill all borrowing covenants.

The Group manages its capital structure and may make adjustments to it, in light of changes in economic conditions. In order to manage or adjust the capital structure, the Group may obtain new borrowings or reduce its borrowings. No changes were made in the objectives, policies and processes during the years ended 31 December 2012 and 31 December 2011.

The Group monitors capital using a net debt to equity ratio, which is net borrowings divided by shareholders equity. The Group endeavours to keep its net debt to equity ratio to below 1.1 times but will manage the ratio taking into consideration business and liquidity conditions. Net borrowings include interest-bearing borrowings less bank balances and deposits. Equity includes equity attributable to the owners of the Company.

GrouP2012$000

2011$000

Borrowings 1,539,518 1,333,827Less: Bank balances and deposits (452,001) (453,278)Net borrowings 1,087,517 880,549

Equity attributable to owners of the Company 1,238,851 1,184,323

Net debt to equity (times) 0.88 0.74

132


39 Fair VaLue oF FiNaNCiaL iNstruMeNts

(A) Fair value of financial instruments that are carried at fair value

The following table shows an analysis of financial instruments carried at fair value by level of fair value hierarchy:

GrouP2012$000

Quoted pricesin active

markets foridentical

instruments

significantother

observableinputs

significantunobservable

inputs total(Level 1) (Level 2) (Level 3)

Financial assets:Held for trading investments (Note 20) – Equity instruments (quoted) 7,427 – – 7,427Available-for-sale financial assets (Note 20) – Equity instruments (quoted) 4,225 – – 4,225 – Equity instruments (unquoted) – – 7,061 7,061At 31 December 2012 11,652 – 7,061 18,713

GrouP2011$000

quoted pricesin active

markets foridentical

instruments

Significantother

observableinputs

Significantunobservable

inputs Total(level 1) (level 2) (level 3)

Financial assets:Held for trading investments (Note 20) – Equity instruments (quoted) 7,248 – – 7,248Available-for-sale financial assets (Note 20) – Equity instruments (quoted) 2,455 – – 2,455 – Equity instruments (unquoted) – – 6,871 6,871At 31 December 2011 9,703 – 6,871 16,574



39 Fair VaLue oF FiNaNCiaL iNstruMeNts (continued)

(A) Fair value of financial instruments that are carried at fair value (continued)

Fair value hierarchyThe Group classify fair value measurement using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy have the following levels:

• Level1 – Quotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilities

• Level2 – InputsotherthanquotedpricesincludedwithinLevel1thatareobservablefortheassetorliability,either directly (i.e., as prices) or indirectly (i.e., derived from prices), and

• Level3 – Inputsfortheassetorliabilitythatarenotbasedonobservablemarketdata(unobservableinputs)

Movements in level 3 financial instruments measured at fair valueThe following table presents the reconciliation for all financial instruments measured at fair value based on significant unobservable inputs (level 3).

GrouP2012$000

2011$000

available-for-salefinancial assets

Available-for-salefinancial assets

equity instruments

(unquoted)

Equityinstruments

(unquoted)

Opening balance 6,871 6,687Total gains or losses: – in other comprehensive income 190 184Closing balance 7,061 6,871

There has been no transfer from Level 1 and Level 2 to Level 3 during the financial years ended 31 December 2011 and 2012.

(B) Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value

Management has determined that the carrying amounts of cash and short term deposits, trade and other receivables, trade and other payables and borrowings, based on their notional amounts, reasonably approximate their fair values because these are mostly short-term in nature or that they are floating rate instruments that are repriced to market interest rates on or near the end of the reporting period.

134


39 Fair VaLue oF FiNaNCiaL iNstruMeNts (continued)

(C) Financial instruments whose fair values have not been disclosed

The loans and amounts receivable/payable from/to subsidiaries, associates and joint ventures have no fixed terms of repayment. Accordingly, their fair values cannot be measured reliably as the timing of the future cash flows cannot be determined.

The aggregate of these financial assets for the Group and Company amounted to $140,597,000 (2011: $41,061,000) and $431,471,000 (2011: $225,421,000) respectively. The aggregate of these financial liabilities for the Group amounted to $21,667,000 (2011: $21,667,000).

Fair value information has not been disclosed for the Group’s investment in unquoted equity instrument that are carried at cost amounting to $99,000 (2011: $99,000) (Note 20) because fair value cannot be measured reliably. The Group does not intend to dispose of the investment in the foreseeable future.

(D) Methods and assumptions used to determine fair values

The methods and assumptions used by management to determine fair values of financial instruments other than those whose carrying amounts reasonably approximate their fair values as mentioned earlier, are as follows:

Financial assets and liabilities Methods and assumptions• Quotedshares Fair value has been determined by reference to published prices at the end

of the reporting period without factoring in transaction costs.• Unquotedshares Fair value of these unquoted shares has been determined using the fair values

of underlying assets of investments. Management believes the estimated fair values recorded in the statement of financial position and the related changes in fair values recorded in the fair value adjustment reserve are reasonable and the most appropriate at the end of the reporting period.

During the financial year, a gain of $195,000 (2011: loss of $5,515,000) has been recognised in the income statement in relation to the change in fair value of financial assets.



40 seGMeNt iNForMatioN

For management purposes, the Group is organised into business units based on their products and services, and the reportable operating segments are as follows:

1. The Engineering and Construction segment is in the business of mechanical & electrical engineering, water and medical waste environmental engineering, general and specialised construction, rental of construction equipment and related services.

2. The Property Development segment encompasses activities such as bidding for land, project financing, design and construction to project management, property marketing and sales, and the overall coordination of all these activities.

3. The Property Rental and Services segment is in the business of providing services for asset management and hospitality management.

4. Corporate Services & Others segment comprises investment management and corporate activities, neither of which constitutes a separately reportable segment.

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss. Group financing (including finance costs) and income taxes are managed on a group basis and are not allocated to operating segments.

Allocation basis and transfer pricingSegment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items mainly comprise corporate revenue, assets, expenses and liabilities, income tax and deferred tax assets and liabilities.

Segment accounting policies are the same as the policies described in Note 2. The Group generally accounts for inter-segment sales and transfers as if the sales or transfers were to third parties at current market prices. Segment revenue, expenses and results include transfers between business segments. These transfers are eliminated on consolidation.

136


40 seGMeNt iNForMatioN (continued)

(a) Business segments

The following tables present revenue and profit information regarding industry segments for the years ended 31 December 2012 and 2011 and certain asset and liability information regarding industry segments at 31 December 2012 and 2011.

engineeringand

ConstructionProperty

development

Propertyrental and

services

Corporateservices &

others elimination total$000 $000 $000 $000 $000 $000

Year ended 31 December 2012Segment revenueSales to external customers 416,307 150 179,033 254 – 595,744Inter-segment sales 36,459 – 1,750 8,037 (46,246) –Total revenue 452,766 150 180,783 8,291 (46,246) 595,744

Segment results 39,545 2,005 66,612 (3,547) – 104,615Finance costs (16,788)Interest income 4,016Share of profit from equity-

accounted associates 857 2,038 1,575 – – 4,470Share of profit from equity-

accounted joint ventures 14 5,767 – – – 5,781Profit before tax 102,094Income tax expense (14,344)Profit net of tax 87,750

Segment assets 405,252 1,463,347 1,328,575 36,945 – 3,234,119Investments in associates 95,279 41,938 11,126 167 – 148,510Investments in joint ventures 15,797 48,409 – – – 64,206Unallocated assets 4,343Total assets 3,451,178

Segment liabilities 238,829 188,892 100,336 4,126 – 532,183Unallocated liabilities 1,613,056Total liabilities 2,145,239

Other segment information:Allowance for doubtful trade

receivables 630 – 4 17 – 651Capital expenditure 12,941 – 4,531 232 – 17,704Depreciation and amortisation 9,218 – 3,260 224 – 12,702Gain on fair value adjustment on

held for trading investments 195 – – – – 195Surplus on revaluation of

investment properties – – 14,915 – – 14,915




(a) Business segments (continued)

engineeringand

ConstructionProperty

development

Propertyrental and

services

Corporateservices &

others elimination total$000 $000 $000 $000 $000 $000

Year ended 31 December 2011Segment revenueSales to external customers 278,970 767,498 140,409 235 – 1,187,112Inter-segment sales 136,529 – 2,175 8,041 (146,745) –Total revenue 415,499 767,498 142,584 8,276 (146,745) 1,187,112

Segment results 55,022 228,886 78,314 (12,423) – 349,799Finance costs (10,189)Interest income 2,634Share of profit from equity-

accounted associates 1,027 – 2,687 – – 3,714Share of (loss)/profit from equity-

accounted joint ventures (6) 2,911 – – – 2,905Profit before tax 348,863Income tax expense (58,507)Profit net of tax 290,356

Segment assets 409,518 1,179,847 1,403,200 31,566 – 3,024,131Investments in associates 37,963 – 10,295 166 – 48,424Investments in joint ventures 10,674 41,069 – – – 51,743Unallocated assets 2,942Total assets 3,127,240

Segment liabilities 235,730 109,690 101,208 6,581 – 453,209Unallocated liabilities 1,434,984Total liabilities 1,888,193

Other segment information:Allowance for doubtful trade

receivables 645 – 362 – – 1,007Capital expenditure 20,363 – 2,541 132 – 23,036Depreciation and amortisation 7,777 11 2,631 262 – 10,681Loss on fair value adjustment on

held for trading investments 2,377 – – – – 2,377Impairment loss on available-

for-sale financial assets – – – 3,138 – 3,138Impairment loss on property,

plant and equipment 103 – – – – 103Surplus on revaluation of

investment properties 1,214 – 55,443 – – 56,657

138



(b) Geographical information

Revenue and non-current assets information based on the geographical location of customers and assets respectively are as follows:

revenue Non-current assets2012$000

2011$000

2012$000

2011$000

Singapore 324,102 1,001,714 1,511,921 1,359,045Brunei 128,272 60,558 10,710 6,314Malaysia 48,146 33,520 14,609 15,600ASEAN (excluding Singapore, Brunei and Malaysia) * 46,092 28,264 2,065 4,907Taiwan 34,877 33,838 165 210Asia (excluding ASEAN and Taiwan) * 14,255 29,218 34,176 32,314

595,744 1,187,112 1,573,646 1,418,390

Non-current assets information presented above consist of property, plant and equipment, investment properties, properties development costs, intangible assets and trade and other receivables as presented in the statement of financial position.

* This includes countries which individually contribute less than 5% of revenue / non-current assets to the Group.

41 CoMParatiVe FiGures

For comparison purposes, the following have been re-presented to be consistent with the current year’s presentation and to better reflect the nature of the Group’s operations.

GrouPRe-presented Previous

2011$000

2011$000

Presented in the Statement of Financial Position

Current assetsProperties held for sale 807,321 759,624

Current liabilitiesTrade and other payables (427,571) (379,874)

379,750 379,750

Presented in the Notes to the Financial Statements

31 Trade and other payables Trade payable 94,878 228,291

Accrued job cost 151,313 17,900246,191 246,191



41 CoMParatiVe FiGures (continued)

GrouPRe-presented Previous

2011$000

2011$000

Presented in the Notes to the Financial Statements (continued)

24 Properties held for sale Less: Progress billings − (47,697)

31 Trade and other payables Progress billings relating to development projects (47,697) −

40 Segment Information (a) Business Segments

Property Development Segment assets 1,179,847 1,132,150Segment liabilities (109,690) (61,993)

1,070,157 1,070,157

A statement of financial position as at the beginning of the earliest comparative period was not presented as it is a reclassification between assets and liabilities and there is no impact to total equity, cashflows or the financial position of the Group.

42 suBseQueNt eVeNts

(a) On 17 December 2012, the Group entered into respective sale and purchase agreements with Central Provident Fund Board and 79 Anson Pte Ltd to purchase the commercial property known as 79 Anson Road (Property) at a purchase consideration of $410 million. Further to the announcement, the Group entered into a $300 million secured term loan agreement with Oversea-Chinese Banking Corporation Limited, United Overseas Bank Limited and DBS Bank Ltd to partially finance the purchase and renovation work for the Property. The transaction was completed on 21 February 2013.

140


42 suBseQueNt eVeNts (continued)

(b) On 30 January 2013, J.P. Morgan (S.E.A.) Limited (J.P. Morgan) made an announcement for and on behalf of UE Centennial Venture Pte. Ltd. (the Offeror), a wholly owned subsidiary of the Company, in relation to the pre-conditional voluntary offers by the Offeror to acquire all the issued ordinary stock units and outstanding convertible bonds of WBL Corporation Limited (WBL), other than those already owned, controlled or agreed to be acquired by the Offeror and parties acting in concert with it (Offer Stock Units and Offer Convertible Bonds respectively) for $4.00 in cash per WBL ordinary stock unit (the Offers).

The Offers were approved by the Company’s shareholders at the extraordinary general meeting convened on 12 March 2013. As a result of the conversion of WBL convertible bonds into new WBL stock units by some concert parties on 12 March 2013, the Offeror announced, through J.P. Morgan, the Offeror’s firm intention to make a mandatory conditional cash offers to acquire the Offer Stock Units and Offer Convertible Bonds; and revised the offer price to $4.15 per WBL ordinary stock unit, as required under The Singapore Code of Take-overs and Mergers. The Group is unable to quantify the financial impact of the transaction as at the date of this report.

Copies of the pre-conditional offers and mandatory conditional cash offers announcements are available on the website of the SGX-ST at www.sgx.com.

43 autHorisatioN oF FiNaNCiaL stateMeNts For issue

The financial statements for the year ended 31 December 2012 were authorised for issue in accordance with a resolution of the directors on 18 March 2013.


STOCkhOlDiNG STATiSTiCSAs at 11 march 2013

totaL NuMBer oF CLass oF sHares:

7.5 cents Cumulative Preference Shares – 875,000

Ordinary Shares each converted into Stock Units – 306,839,382

VotiNG riGHts:

Preference Share – One vote for every member present in person or by proxy or attorney; upon a poll, one vote for each share held by every member present in person or by proxy or attorney.

Stock Unit – One vote for every member present in person or by proxy or attorney; upon a poll, one vote for each stock unit held by every member present in person or by proxy or attorney.

distriButioN oF sHareHoLdiNGs:

size of shareholdings

No. ofPreference

shareholders %No. of

shareholdings %

1 – 999 13 26.53 4,970 0.57

1,000 – 10,000 26 53.06 83,546 9.55

10,001 – 1,000,000 10 20.41 786,484 89.88

1,000,001 and above – – – –

Total 49 100.00 875,000 100.00

teN LarGest PreFereNCe sHareHoLders:

Name of Preference shareholders

No. ofPreference

shares held %

1. Great Eastern Life Assurance Co Ltd – Participating Fund 535,207 61.17

2. Kambau Pte Ltd 69,000 7.89

3. The Great Eastern Trust Private Limited 41,357 4.73

4. The Shaw Foundation Pte 40,000 4.57

5. Lui Hwee Keng 21,000 2.40

6. Oversea Chinese Bank Nominees Pte Ltd 20,500 2.34

7. William Tan Cheng Ju 18,420 2.11

8. Thia Cheng Song 17,000 1.94

9. Ng Lee Kiang 13,000 1.49

10. Ng Ing Liang 11,000 1.26

Total 786,484 89.90

142

STOCkhOlDiNG STATiSTiCSAs at 11 march 2013

distriButioN oF stoCKHoLdiNGs:

size of stockholdingsNo. of ordinary

stockholders %No. of

stock units %

1 – 999 487 6.99 190,832 0.06

1,000 – 10,000 4,899 70.32 20,407,376 6.65

10,001 – 1,000,000 1,552 22.28 85,973,998 28.02

1,000,001 and above 29 0.41 200,267,176 65.27

Total 6,967 100.00 306,839,382 100.00

tWeNtY LarGest ordiNarY stoCKHoLders:

Name of ordinary stockholdersNo. of

stock units held %

1. Great Eastern Life Assurance Co Ltd – Participating Fund 38,054,663 12.40

2. Lee Foundation States Of Malaya 26,336,558 8.58

3. WBL Corporation Limited 21,712,000 7.08

4. Citibank Nominees Singapore Pte Ltd 17,655,307 5.75

5. Oversea Chinese Bank Nominees Pte Ltd 11,487,456 3.74

6. Capital Intelligence Limited 11,196,000 3.65

7. DBS Nominees Pte Ltd 9,331,055 3.04

8. The Overseas Assurance Corporation Ltd 8,110,208 2.64

9. HSBC (Singapore) Nominees Pte Ltd 5,515,695 1.80

10. Morph Investments Ltd 4,916,648 1.60

11. Morgan Stanley Asia (Singapore) Securities Pte Ltd 4,536,959 1.48

12. United Overseas Bank Nominees Pte Ltd 3,888,756 1.27

13. Singapore Investments Pte Ltd 3,846,055 1.25

14. Kota Trading Company Sendirian Berhad 3,734,400 1.22

15. The Great Eastern Trust Private Limited 3,235,852 1.05

16. Lee Foundation 3,148,295 1.03

17. BNP Paribas Securities Services 2,835,000 0.92

18. Meco Pte Ltd 2,500,333 0.81

19. Tropical Produce Company Pte Ltd 2,480,820 0.81

20. DBSN Services Pte Ltd 2,387,034 0.78

Total 186,909,094 60.90


bONDhOlDiNG STATiSTiCSAs at 11 march 2013

1% CoNVertiBLe BoNds due 2014:

Total amount of Bonds Issued – $132,974,599Amount of Bonds Converted to date – $111,424,550Amount of Bonds Outstanding – $ 21,550,049Maturity Date – 3 March 2014Initial Conversion Price – $1.34 for each Conversion Share (subject to adjustment in the manner provided

in the terms and conditions of the Convertible Bonds)Final Redemption Price – 100% of principal amount on maturity dateConversion Period – At any time on or after 3 March 2009 to 24 February 2014

distriButioN oF BoNdHoLdiNGs:

size of BondholdingsNo. of

Bondholders %

No. of Convertible

Bonds %

1 – 999 41 7.75 24,400 0.11

1,000 – 10,000 436 82.42 1,402,659 6.51

10,001 – 1,000,000 50 9.45 2,315,293 10.74

1,000,001 and above 2 0.38 17,807,697 82.64

Total 529 100.00 21,550,049 100.00

144

bONDhOlDiNG STATiSTiCSAs at 11 march 2013

tWeNtY LarGest CoNVertiBLe BoNdHoLders:

Name of Bondholders

No. ofConvertibleBonds held %

1. Oversea Chinese Bank Nominees Pte Ltd 13,599,000 63.10

2. Great Eastern Life Assurance Co Ltd – Participating Fund 4,208,697 19.53

3. The Overseas Assurance Corporation Ltd – Singapore Life Insurance Fund 600,137 2.78

4. The Great Eastern Trust Private Limited 356,976 1.66

5. The Overseas Assurance Corporation Ltd – Shareholder’s Fund 295,076 1.37

6. Wong Shee Fun & Company (Private) Limited 87,000 0.40

7. Swee Kum (Pte) Ltd 60,799 0.28

8. Project Engineers Pte Ltd 60,000 0.28

9. DBS Nominees Pte Ltd 40,800 0.19

10. Lo Ping 35,000 0.16

11. United Overseas Bank Nominees Pte Ltd 34,400 0.16

12. Maybank Kim Eng Securities Pte Ltd 32,400 0.15

13. Chong Lai Keng 30,000 0.14

14. Loke Yuen Kin Ruby Mrs Tan Kia Meng 30,000 0.14

15. Tan Woi @ Tan Siew Hwa 30,000 0.14

16. Ong Gim Kuan 27,003 0.13

17. Bank of Singapore Nominees Pte Ltd 25,599 0.12

18. Liana Widjaja @ Wong Bie Lian 24,000 0.11

19. Mavis Seo Geok Kim 24,000 0.11

20. Morgan Stanley Asia (Singapore) Securities Pte Ltd 24,000 0.11

Total 19,624,887 91.06


OThER iNFORmATiON REquiRED uNDER ThE SGX-ST liSTiNG mANuAlPuBLiC FLoatDisclosure pursuant to Rule1207(9)(e) of the SGX-ST Listing Manual

As at 11 March 2013, approximately 72% of the total number of issued shares of the Company was held by the public and accordingly, Rule 723 of the SGX-ST Listing Manual has been complied with. As at that date, there were no treasury shares.

iNterested PersoN traNsaCtioNsDisclosure pursuant to Rule 907 of the SGX-ST Listing Manual

There were no Interested Person Transactions in FY2012.

MateriaL CoNtraCtsDisclosure pursuant to Rule 1207(8) of the SGX-ST Listing Manual

On 16 April 2012, The Seletar Mall Pte Ltd, an associate company has entered into 2 separate loan agreements with Oversea-Chinese Banking Corporation Limited and Singapore Press Holdings Limited for a term loan facility of S$138 million and S$230 million respectively.

146

iNFORmATiON ON SubSTANTiAl ShAREhOlDERSAs at 11 march 2013

stock units Preference sharesdirect interest deemed interest direct interest deemed interest

Name of substantial shareholders

No. of stockunits %

No. of stock units %

No. ofPreference

shares %

No. ofPreference

shares %

Oversea-Chinese Banking Corporation Limited (1)

1,150,000 0.37 59,449,514 19.37 9,500 1.08 602,800 68.89

Great Eastern Holdings Limited (2)

– – 49,408,723 16.10 – – 591,800 67.63

The Great Eastern Life Assurance Company Limited

38,056,663 12.40 – – 537,207 61.40 – –

WBL Corporation Limited 21,712,000 7.08 – – – – – –Lee Foundation States Of

Malaya26,336,558 8.58 – – – – – –

Kambau Pte Ltd – – – – 69,000 7.89 – –Dr Tan Kheng Lian (3) 10,066 0.003 – – – – 69,000 7.89The Tan Chin Tuan

Foundation (3) (4)– – – – – – 76,700 8.77

Grange Investment Holdings Pte Ltd (BVI Company) (3)

– – – – – – 69,000 7.89

Notes:

(1) Oversea-Chinese Banking Corporation Limited is deemed to have an interest in:

(a) 59,449,514 Stock Units, of which 38,054,663 Stock Units were held by The Great Eastern Life Assurance Company Limited, 10,040,791 Stock Units were held by Oversea-Chinese Bank Nominees Pte Ltd, 8,110,208 Stock Units were held by The Overseas Assurance Corporation Limited, 3,235,852 Stock Units were held by The Great Eastern Trust Private Limited, 2,000 Stock Units were held by United Overseas Bank Nominees Pte Ltd (for the beneficial interest of The Great Eastern Life Assurance Company Limited), 2,000 Stock Units were held by United Overseas Bank Nominees Pte Ltd (for the beneficial interest of The Great Eastern Trust Private Limited) and 4,000 Stock Units were held by Citibank Nominees Singapore Pte Ltd (for the beneficial interest of The Overseas Assurance Corporation Limited); and

(b) 602,800 Preference Shares, of which 535,207 Preference Shares were held by The Great Eastern Life Assurance Company Limited, 41,357 Preference Shares were held by The Great Eastern Trust Private Limited, 11,000 Preference Shares were held by Oversea-Chinese Bank Nominees Pte Ltd, 9,236 Preference Shares were held by The Overseas Assurance Corporation Limited, 2,000 Preference Shares were held by United Overseas Bank Nominees Pte Ltd (for the beneficial interest of The Great Eastern Life Assurance Company Limited), 2,000 Preference Shares were held by United Overseas Bank Nominees Pte Ltd (for the beneficial interest of The Great Eastern Trust Private Limited) and 2,000 Preference Shares were held by Citibank Nominees Singapore Pte Ltd (for the beneficial interest of The Overseas Assurance Corporation Limited).


iNFORmATiON ON SubSTANTiAl ShAREhOlDERSAs at 11 march 2013

(2) Great Eastern Holdings Limited is deemed to have an interest in:

(a) 49,408,723 Stock Units, of which 38,054,663 Stock Units were held by The Great Eastern Life Assurance Company Limited, 8,110,208 Stock Units were held by The Overseas Assurance Corporation Limited, 3,235,852 Stock Units were held by The Great Eastern Trust Private Limited, 2,000 Stock Units were held by United Overseas Bank Nominees Pte Ltd (for the beneficial interest of The Great Eastern Life Assurance Company Limited), 2,000 Stock Units were held by United Overseas Bank Nominees Pte Ltd (for the beneficial interest of The Great Eastern Trust Private Limited) and 4,000 Stock Units were held by Citibank Nominees Singapore Pte Ltd (for the beneficial interest of The Overseas Assurance Corporation Limited); and

(b) 591,800 Preference Shares, of which 535,207 Preference Shares were held by The Great Eastern Life Assurance Company Limited, 41,357 Preference Shares were held by The Great Eastern Trust Private Limited, 9,236 Preference Shares were held by The Overseas Assurance Corporation Limited, 2,000 Preference Shares were held by United Overseas Bank Nominees Pte Ltd (for the beneficial interest of The Great Eastern Life Assurance Company Limited), 2,000 Preference Shares were held by United Overseas Bank Nominees Pte Ltd (for the beneficial interest of The Great Eastern Trust Private Limited) and 2,000 Preference Shares were held by Citibank Nominees Singapore Pte Ltd (for the beneficial interest of The Overseas Assurance Corporation Limited).

(3) Dr Tan Kheng Lian, The Tan Chin Tuan Foundation and Grange Investment Holdings Pte Ltd (BVI Company) are deemed to be interested in the Preference Shares held by Kambau Pte Ltd.

(4) The Tan Chin Tuan Foundation is the beneficial owner of the 7,700 Preference Shares held by Tecity Management Pte Ltd.

148

NOTICE IS HEREBY GIVEN that the Ninety-Ninth Annual General Meeting of United Engineers Limited (the “Company”) will be held at The Auditorium, 12 Ang Mo Kio Street 64, UE BizHub CENTRAL, Singapore 569088 on Friday, 26 April 2013 at 2.30 p.m. to transact the following business:

ordiNarY BusiNess

1. To receive and adopt the Directors’ Report and Audited Financial Statements for the year ended 31 December 2012 and the Auditor’s Report thereon.

2(a). To declare a first and final dividend of 7.5 cents (one-tier tax exempt) per cumulative preference share for the year ended 31 December 2012, as recommended by the Directors.

2(b). To declare a first and final dividend of 5 cents (one-tier tax exempt) per ordinary stock unit for the year ended 31 December 2012, as recommended by the Directors.

2(c). To declare a special dividend of 5 cents (one-tier tax exempt) per ordinary stock unit for the year ended 31 December 2012, as recommended by the Directors.

3. To re-elect Mr Norman Ip Ka Cheung, a Director retiring pursuant to Article 99 of the Articles of Association of the Company and who, being eligible, offers himself for re-election.

4. To re-elect Mr David Wong Cheong Fook, a Director retiring pursuant to Article 99 of the Articles of Association of the Company and who, being eligible, offers himself for re-election.

5. To re-appoint Mr Chew Leng Seng as a Director of the Company to hold such office from the date of this Annual General Meeting until the next Annual General Meeting of the Company, pursuant to Section 153(6) of the Companies Act, Chapter 50 of Singapore.

6. To approve Directors’ Fees of $626,000 for the year ended 31 December 2012. (2011: $626,069)

7. To re-appoint Ernst & Young LLP as Auditor and to authorise the Directors to fix their remuneration.

8. To transact any other ordinary business as may properly be transacted at an Annual General Meeting.

NOTiCE OF ANNuAl GENERAl mEETiNG


sPeCiaL BusiNess

To consider and, if thought fit, to pass the following resolution as an Ordinary Resolution:

9. That:

(a) approval be and is hereby given, for the purposes of Chapter 9 of the Listing Manual (“Chapter 9”) of the Singapore Exchange Securities Trading Limited, for the Company, its subsidiaries and associated companies that are considered to be “entities at risk” under Chapter 9, or any of them, to enter into any of the transactions falling within the types of Interested Person Transactions described in Appendix A of the Company’s letter to members dated 9 April 2013 (the “Letter”), with any party who is of the classes of Interested Persons described in Appendix A of the Letter, provided that such transactions are made on normal commercial terms and in accordance with the review procedures for Interested Person Transactions (the “IPT mandate”);

(b) the IPT Mandate shall, unless revoked or varied by the Company in general meeting, continue in force until the conclusion of the next Annual General Meeting of the Company; and

(c) the Directors of the Company be and are hereby authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary or in the interests of the Company to give effect to the IPT Mandate and/or this Resolution.

By Order of the Board

Heng Fook Pyng, JeslynCompany Secretary

Singapore9 April 2013


150

Notes:

1) A member of the Company entitled to attend and vote at the Annual General Meeting is entitled to appoint not more than two proxies to attend and vote on his behalf. A proxy need not be a member of the Company.

2) If the appointer is a corporation, the instrument appointing a proxy must be under seal or the hand of its duly authorised officer or attorney.

3) The instrument appointing a proxy must be deposited at the Company’s registered office not less than 48 hours before the time set for the Annual General Meeting or any adjournment thereof.

Additional Information on items of Ordinary and Special Business:

Item no. 4 – Mr David Wong Cheong Fook is a member of the Audit & Risk Committee, and is considered an independent Director for the purposes of Rule 704(8) of the Listing Manual. Another Director, Dr Tan Eng Liang, is also due to retire pursuant to Section 153(6) of the Companies Act, Chapter 50 of Singapore, but is not seeking re-election.

Item no. 9 – This is an Ordinary Resolution to renew, effective until the conclusion of the next Annual General Meeting, the IPT Mandate to enable the Company, its subsidiaries and associated companies which are considered “entities at risk” to enter in the ordinary course of business into certain types of interested person transactions with specified classes of the Company’s interested persons. Particulars of the IPT Mandate and the Audit & Risk Committee’s confirmation in support of the renewal of the IPT Mandate are set out in the Company’s letter to members dated 9 April 2013 accompanying the Annual Report 2012.

NotiCe oF BooKs CLosure

NOTICE IS HEREBY GIVEN that the Share Transfer Books and Register of Members of the Company will be closed from 7 May 2013 to 8 May 2013 (both dates inclusive) for the purposes of ascertaining dividend entitlements. Duly completed transfers received by the Company’s Share Registrar, Tricor Barbinder Share Registration Services, 80 Robinson Road #02-00, Singapore 068898, up to 5.00 p.m. on 6 May 2013 will be registered to determine such dividend entitlements.

Members (being depositors) whose securities accounts with The Central Depository (Pte) Limited are credited with ordinary stock units or (as the case may be) preference shares as at 5.00 p.m. on 6 May 2013 will rank for the relevant proposed dividends.

The proposed dividends, if approved by members at the Ninety-Ninth Annual General Meeting, will be paid on 23 May 2013.


PROXy FORmiMPortaNt 1. For investors who have used their CPF monies to buy United Engineers Limited stock

units and/or preference shares, the Annual Report is forwarded to them at the request of their CPF Agent Banks and is sent solely FOR INFORMATION ONLY.

2. This Proxy Form is not valid for use by CPF investors and shall be ineffective for all intents and purposes if used or purported to be used by them.

3. CPF investors who wish to attend the Annual General Meeting as OBSERVERS must submit their requests through their respective Agent Banks so that their Agent Banks may register, in the required format with the Company Secretary, by the time frame specified. (Agent Banks: Please see Note 8 on required format). Any voting instructions must also be submitted to their Agent Banks within the time frame specified to enable them to vote on the CPF investor’s behalf.

(Company Registration No. 191200018G)(Incorporated in Singapore)

I/We, (Name) , NRIC/Passport No./Co. Regn No.:

of (Address)

being a member/members of UNITED ENGINEERS LIMITED (the “Company”) hereby appoint:

Name addressNriC/

Passport NumberProportion of

shareholdings (%)

and/or (delete as appropriate)

Name addressNriC/

Passport NumberProportion of

shareholdings (%)

as my/our proxy/proxies to attend and to vote for me/us on my/our behalf and, if necessary, to demand a poll, at the Ninety-Ninth Annual General Meeting (the “Meeting”) of the Company, to be held at The Auditorium, 12 Ang Mo Kio Street 64, UE BizHub CENTRAL, Singapore 569088 on Friday, 26 April 2013 at 2.30 p.m., and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for or against the resolutions to be proposed at the Meeting as indicated hereunder. If no specific direction as to voting is given, the proxy/proxies will vote or abstain from voting at his/their discretion, as he/they will on any other matter arising at the Meeting.

No. ordinary resolutions For against1. Adoption of Reports and Financial Statements2 (a). Declaration of Dividend on Preference Shares2 (b). Declaration of Dividend on Ordinary Stock Units2 (c). Declaration of Special Dividend on Ordinary Stock Units3. Re-election of Mr Norman Ip Ka Cheung4. Re-election of Mr David Wong Cheong Fook5. Re-appointment of Mr Chew Leng Seng6. Approval of Directors’ Fees7. Re-appointment of Ernst & Young LLP as Auditor 8. Any other ordinary business9. Renewal of Interested Person Transactions Mandate

Dated this day of 2013. Number of stock units held

Number of Preference shares held

Signature(s) of Member(s) / Common Seal ImPORTANT: PLEASE READ NOTES OVERLEAF

Notes:

1. Please insert the total number of Stock Units/Preference Shares held by you. If you have Stock Units/Preference Shares entered against your name in the Depository Register (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore), you should insert that number of Stock Units/Preference Shares. If you have Stock Units/Preference Shares registered in your name in the Register of Members of the Company, you should insert that number of Stock Units/Preference Shares. If you have Stock Units/Preference Shares entered against your name in the Depository Register and Stock Units/Preference Shares registered in your name in the Register of Members, you should insert the aggregate number of Stock Units/Preference Shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the Stock Units/Preference Shares held by you.

2. A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxies to attend and vote in his/her stead. A proxy need not be a member of the Company.

3. Where a member appoints two proxies, the appointments shall be invalid unless he/she specifies the proportion of his/her shareholding (expressed as a percentage of the whole) to be represented by each proxy.

4. Completion and return of this instrument appointing a proxy shall not preclude a member from attending and voting at the Meeting. Any appointment of a proxy or proxies shall be deemed to be revoked if a member attends the Meeting in person, and in such event, the Company reserves the right to refuse to admit any person or persons appointed under the instrument of proxy, to the Meeting.

5. The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 12 Ang Mo Kio Street 64, #01-01 UE BizHub CENTRAL, Singapore 569088 not less than 48 hours before the time appointed for the Meeting.

6. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its seal or under the hand of an officer or attorney duly authorised. Where the instrument appointing a proxy or proxies is executed by an attorney on behalf of the appointor, the letter or power of attorney or a duly certified copy thereof must be lodged with the instrument.

7. A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks fit to act as its representative at the Meeting, in accordance with Section 179 of the Companies Act, Chapter 50 of Singapore.

8. Agent Banks acting on the request of CPF Investors who wish to attend the Meeting as observers are requested to submit in writing, a list of details of the Investors’ names, NRIC/Passport numbers, addresses and numbers of Stock Units/Preference Shares held. The list, signed by an authorised signatory of the Agent Bank, should reach the Company Secretary, at the registered office of the Company not later than 48 hours before the time appointed for the Meeting.

General:

The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible, or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies. In addition, in the case of Stock Units/Preference Shares entered in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if the member, being the appointor, is not shown to have Stock Units/Preference Shares entered against his name in the Depository Register as at 48 hours before the time appointed for holding the Meeting, as certified by The Central Depository (Pte) Limited to the Company.

uNited eNGiNeers LiMitedCompany Registration No. 191200018G

12 Ang mo Kio street 64#03A-01 Ue BizHub CentrALsingapore 569088tel: (65) 6818 8383Fax: (65) 6818 8398www.uel.com.sg

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