CSE Global Financial 14 Global Financial 13.pdfLim Boon Kheng Director Singapore 19 March 2014 6 Independent Auditors’ Report To the Members of CSE Global limited Report on the ﬁ

General Information

Directors Company Secretaries

Lim Ming Seong - Chairman Jimmy Yap Tuck KongTan Mok Koon - Deputy Chairman Lim Boon Kheng - Group Managing Director Phillip Lee Soo Hoon Lim Boh SoonSin Boon AnnLam Kwok Chong

Bankers Registered Offi ce

Arab Bank PLC 50 Raffl es PlaceAustralia And New Zealand Banking Group Ltd Singapore Land Tower #32-01Bank of China Ltd Singapore 048623Bank of East Asia Ltd Tel : 65365355BNP Paribas Corporate & Investment Banking Fax: 65361360Citibank Singapore LtdDBS Bank LtdMalayan Banking BerhadOversea-Chinese Banking Corporation LtdRHB Bank BerhadSumitomo Mitsui Banking CorporationThe Hongkong and Shanghai Banking Corporation LtdUnited Overseas Bank Ltd

Auditors Share Registrar

Ernst & Young LLP Boardroom Corporate & Advisory Services Pte LtdOne Raffl es Quay 50 Raffl es PlaceNorth Tower, Level 18 Singapore Land Tower #32-01Singapore 048583 Singapore 048623Engagement Partner-in-charge(since fi nancial year ended 31 December 2011)Ng Boon Heng

Financial Contents

Directors’ Report 2

Statement by Directors 5

Independent Auditors’ Report 6

Balance Sheets 7

Consolidated Income Statement 8

Consolidated Statement of Comprehensive Income 9

Statements of Changes in Equity 10

Consolidated Cash Flow Statement 12

Notes to the Financial Statements 13

2 www.cse-global.com

Directors’ Report

The Directors are pleased to present their report to the members together with the audited consolidated fi nancial statements of CSE Global Limited (the “Company”) and its subsidiaries (collectively, the “Group”) and the balance sheet and statement of changes in equity of the Company for the fi nancial year ended 31 December 2013.

Directors

The Directors of the Company in offi ce at the date of this report are:

Lim Ming SeongTan Mok KoonLim Boon Kheng (appointed on 13 August 2013)Phillip Lee Soo Hoon Lim Boh SoonSin Boon AnnLam Kwok Chong

Arrangements to enable Directors to acquire shares and debentures

Except as described in the subsequent paragraphs, neither at the end of nor at any time during the fi nancial 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 benefi ts 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 offi ce at the end of the fi nancial year, had, according to the register of Directors’ shareholdings required to be kept under Section 164 of the Singapore Companies Act, Cap. 50, an interest in the shares and share options of the Company and related corporations (other than wholly-owned subsidiaries), as stated below:

Held by DirectorOther shareholdings in which the

Director is deemed to have an interest

Name of DirectorAt

1.1.2013At

31.12.2013At

21.1.2014At

1.1.2013At

31.12.2013At

21.1.2014

CSE Global LimitedNumber of ordinary sharesTan Mok Koon*** 38,700,750 27,700,750 27,700,750 28,500,000 39,500,000 39,500,000Lim Boon Kheng ** 500 500 500 10,494,500 7,094,500 7,094,500Lim Ming Seong* 3,100,000 3,100,000 3,100,000 150,000 150,000 150,000Phillip Lee Soo Hoon 450,000 450,000 450,000 – – –Lim Boh Soon 330,000 330,000 330,000 – – –

*** 39,500,000 shares are held by Citibank Nominees Singapore Pte Ltd and Maybank Nominees (Singapore) Pte Ltd for which Tan Mok Koon is deemed to have an interest.

** 7,094,500 shares are held by Citibank Nominees Singapore Pte Ltd, Maybank Nominees (Singapore) Pte Ltd and United Overseas Bank Nominees Pte Ltd for which Lim Boon Kheng is deemed to have an interest.

* 150,000 shares are held by the spouse of Lim Ming Seong.

CSE GLOBAL LIMITED - ANNUAL REPORT 2013 3

Directors’ Report

Directors’ interests in shares and debentures (cont’d)

There was no change in any of the above mentioned interests in the Company between the end of the fi nancial year and 21 January 2014.

Except as disclosed in this report, no Director who held offi ce at the end of the fi nancial year had interests in shares, share options, warrants or debentures of the Company or of related corporations, either at the beginning of the fi nancial year, or date of appointment if later, or at the end of the fi nancial year.

Directors’ contractual benefi ts

Except as disclosed in the fi nancial statements, since the end of the previous fi nancial year, no Director of the Company has received or become entitled to receive a benefi t by reason of a contract made by the Company or a related corporation with the Director, or with a fi rm of which the Director is a member, or with a company in which the Director has a substantial fi nancial interest.

Share options

There is currently no share option scheme on unissued shares of the Company.

Audit Committee

The Audit Committee was established on 22 January 1999.

The Audit Committee comprises three members, all of whom are non-executive Directors and are independent of the management of the Company.

The members of the Audit Committee at the date of this report comprise the following Directors :-

Non-executive/Independent Directors:

Phillip Lee Soo Hoon (Chairman)Lam Kwok ChongSin Boon Ann

The Audit Committee (“AC”) carried out its functions in accordance with Section 201B(5) of the Singapore Companies Act, Chapter 50, including the following:-

Reviewed the audit plans of the internal and external auditors of the Group and the Company, and reviewed the internal auditors’ evaluation of the adequacy of the Company’s system of internal accounting controls and the assistance given by the Group and the Company’s management to the external and internal auditors;

Reviewed the quarterly and annual fi nancial statements and the auditor’s report on the annual fi nancial statements of the Group and the Company before their submission to the board of directors;

Reviewed effectiveness of the Group and the Company’s material internal controls, including fi nancial, operational and compliance controls and risk management via reviews carried out by the internal auditor;

Met with the external auditors, other committees, and management in separate executive sessions to discuss any matters that these groups believe should be discussed privately with the AC;


Directors’ Report

Audit Committee (cont’d)

Reviewed legal and regulatory matters that may have a material impact on the fi nancial statements, related compliance policies and programmes and any reports received from regulators;

Reviewed the cost effectiveness and the independence and objectivity of the external auditor;

Reviewed the nature and extent of non-audit services provided by the external auditor;

Recommended to the board of directors the external auditors to be nominated, approved the compensation of the external auditors, and reviewed the scope and results of the audit;

Reported actions and minutes of the AC to the board of directors with such recommendations as the AC considers appropriate; and

Reviewed interested person transactions in accordance with the requirements of the Singapore Exchange Securities Trading Limited’s Listing Manual.

The AC, having reviewed all non-audit services provided by the external auditor to the Group, is satisfi ed that the nature and extent of such services would not affect the independence of the external auditor. The AC has also conducted a review of interested person transactions.

The AC convened four meetings during the fi nancial year with full attendance from all members. The AC has also met with internal and external auditors, without the presence of the Company’s management, at least once a year.

Further details regarding the AC are disclosed in the Report on Corporate Governance in the Annual Report of the Company.

Auditor

Ernst & Young LLP have expressed their willingness to accept reappointment as auditor.

On behalf of the Board of Directors,

Lim Ming SeongDirector

Lim Boon KhengDirector

Singapore19 March 2014


Statement by Directors

We, Lim Ming Seong and Lim Boon Kheng, being two of the Directors of CSE Global Limited, do hereby state that, in the opinion of the Directors :-

(i) the accompanying balance sheets, consolidated income statement, consolidated statement of comprehensive income, statements of changes in equity and consolidated cash fl ow statement together with the 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 2013 and the results of the business, changes in equity and cash fl ows of the Group and the changes in equity of the Company for the fi nancial 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,

Lim Ming SeongDirector

Lim Boon KhengDirector

Singapore19 March 2014


Independent Auditors’ ReportTo the Members of CSE Global limited

Report on the fi nancial statements

We have audited the accompanying fi nancial statements of CSE Global Limited (the “Company”) and its subsidiaries (collectively, the “Group”) set out on pages 8 to 79, which comprise the balance sheets of the Group and the Company as at 31 December 2013, the statements of changes in equity of the Group and the Company, and the consolidated income statement, consolidated statement of comprehensive income and consolidated cash fl ow statement of the Group for the year then ended, and a summary of signifi cant accounting policies and other explanatory information.

Management’s responsibility for the fi nancial statements

Management is responsible for the preparation of fi nancial 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 suffi cient 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 profi t and loss accounts and balance sheets and to maintain accountability of assets.

Auditor’s responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the fi nancial 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 fi nancial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the 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 fi nancial statements.

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

Opinion

In our opinion, the consolidated fi nancial statements of the Group and the balance sheet 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 2013 and the results, changes in equity and cash fl ows 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 Chartered AccountantsSingapore19 March 2014

Balance SheetsAs at 31 December 2013

The accompanying accounting policies and explanatory notes form an integral part of the fi nancial statements.


Group Company

Note2013$’000

2012$’000

2013$’000

2012$’000

Non-current assetsProperty, plant and equipment 4 20,098 27,078 57 90Investment in subsidiaries 5 − – 222,551 243,700Other investment 7 190 190 190 190Intangible assets 8 44,802 102,866 1,451 1,612Deferred tax assets 9 13,461 13,923 4,236 –

Current assetsGross amount due from customers for contract work-in-progress 10 62,737 94,615 – –Inventories 11 15,255 16,885 – –Trade and other receivables 12 112,676 139,066 1,649 1,285Prepaid operating expenses 1,656 2,988 38 12Amounts due from subsidiary companies 5 − – 6,456 48,133Short-term deposits 26 3,676 18,244 − –Cash and bank balances 26 182,910 55,953 131,950 4,457

378,910 327,751 140,093 53,887

Current liabilitiesGross amount due to customers for contract work-in-progress 10 26,954 29,148 – –Trade payables and accruals 13 217,048 77,966 162,473 6,062Finance leases 28 115 167 – –Loans and borrowings 14 1,457 28,408 1,056 28,321Amounts due to subsidiary companies 5 – – 72,688 46,775Provision for warranties 15 1,575 1,736 – –Provision for taxation 5,197 6,002 963 322

252,346 143,427 237,180 81,480

Net current assets/(liabilities) 126,564 184,324 (97,087) (27,593)Non-current liabilitiesDeferred tax liabilities 9 (4,652) (5,040) – (686)Finance leases 28 (232) (351) – –Loans and borrowings 14 (1,265) (90,267) – (90,090)Net assets 198,966 232,723 131,398 127,223

Equity attributable to owners of the CompanyShare capital 16 98,542 98,542 98,542 98,542Revenue reserve 131,337 189,005 22,980 18,805Other reserve 17 9,805 9,805 9,876 9,876Foreign currency translation reserve 18 (46,585) (66,151) – –

193,099 231,201 131,398 127,223Non-controlling interests 5,867 1,522 – –Total equity 198,966 232,723 131,398 127,223

Consolidated Income Statement For the Financial Year Ended 31 December 2013



Group

Note2013$’000

2012$’000

(Reclassifi ed)

Continuing operationsRevenue 19 416,039 448,241Cost of sales * (304,361) (338,542)Gross profi t 111,678 109,699

Other operating incomeMiscellaneous income 20 2,909 947Finance income 21 395 438

Operating expensesAdministrative expenses ** (92,892) (61,411)Selling and distribution expenses (4,069) (4,569)Other expenses 214 (748)Finance costs 22 (5,720) (5,304)Profi t before tax from continuing operations 23 12,515 39,052Income tax expense 24 (7,756) (10,256)Profi t from continuing operations, net of tax 4,759 28,796

Discontinued operationProfi t from discontinued operation, net of tax 6 105,379 27,301Profi t for the year 110,138 56,097

Attributable to:-Owners of the CompanyProfi t from continuing operations, net of tax 3,385 28,796Profi t from discontinued operation, net of tax 105,379 27,301Profi t for the year attributable to owners of the Company 108,764 56,097

Non-controlling interestsProfi t from continuing operations, net of tax 1,374 –

Earnings per share from continuing operations attributable to owners of the Company (in cents)Basic EPS 25 0.66 5.58

Diluted EPS 25 0.66 5.58

Earnings per share (in cents)Basic EPS 25 21.08 10.87

Diluted EPS 25 21.08 10.87

* Contains provision for foreseeable losses of $8,083,000 (2012:$1,870,000).

** Contains goodwill written off of $26,991,000 (2012: $Nil).

Consolidated Statement of Comprehensive Income For the Financial Year Ended 31 December 2013



Group2013$’000

2012$’000

Profi t for the year 110,138 56,097

Other comprehensive income:

Items that may be reclassifi ed subsequently to profi t or loss - Foreign currency translation 19,566 (11,202) - Hedging of net investments – 288Other comprehensive income for the year, net of tax 19,566 (10,914)Total comprehensive income for the year 129,704 45,183

Attributable to:-

Owners of the Company 128,330 45,183Non-controlling interests 1,374 –Total comprehensive income for the year 129,704 45,183

Attributable to:-

Owners of the CompanyTotal comprehensive income from continuing operations, net of tax 8,440 23,668Total comprehensive income from discontinued operation, net of tax 119,890 21,515Total comprehensive income for the year attributable to owners of the Company 128,330 45,183

Statements of Changes in EquityFor the Financial Year Ended 31 December 2013



Attributable to owners of the Company

Group

Sharecapital

(Note 16)Revenue reserve

Other reserve

(Note 17)

Foreign currency

translation reserve

(Note 18) Total

Non-controlling

interestsTotal

equity$’000 $’000 $’000 $’000 $’000 $’000 $’000

2013At 1 January 2013 98,542 189,005 9,805 (66,151) 231,201 1,522 232,723Profi t net of tax – 108,764 – – 108,764 1,374 110,138Other comprehensive income - Foreign currency translation – – – 19,566 19,566 – 19,566Total comprehensive income for the year – 108,764 – 19,566 128,330 1,374 129,704Contributions by and distributions to owners - Subsidiary’s dividend paid to non-controlling interests – – – – – (816) (816) - Dividends on ordinary shares (Note 33) – (166,432) – – (166,432) – (166,432)Total contributions by and distributions to owners – (166,432) – – (166,432) (816) (167,248)Changes in ownership interests in subsidiaries - Incorporation of subsidiary - S3 ID Pte Ltd – – – – – 3,400 3,400 - Acquisition of subsidiary - S3 ID Group Ltd (Note 5) – – – – – 387 387Total changes in ownership interests in subsidiaries – – – – – 3,787 3,787At 31 December 2013 98,542 131,337 9,805 (46,585) 193,099 5,867 198,966

2012At 1 January 2012 98,542 150,970 9,805 (55,237) 204,080 27 204,107Profi t net of tax – 56,097 – – 56,097 – 56,097Other comprehensive income - Foreign currency translation – – – (11,202) (11,202) – (11,202) - Hedging of net investments – – – 288 288 – 288Total comprehensive income for the year – 56,097 – (10,914) 45,183 – 45,183Contributions by and distributions to owners - Dividends on ordinary shares (Note 33) – (18,062) – – (18,062) – (18,062)Total contributions by and distributions to owners – (18,062) – – (18,062) – (18,062)Changes in ownership interests in subsidiaries - Acquisition of subsidiary - Power Diesel Engineering (Note 5) – – – − − 1,495 1,495Total changes in ownership interests in subsidiaries – – – − − 1,495 1,495At 31 December 2012 98,542 189,005 9,805 (66,151) 231,201 1,522 232,723

Statements of Changes in EquityFor the Financial Year Ended 31 December 2013



Company

Sharecapital

(Note 16)Revenuereserve

Otherreserve

(Note 17)Total

equity$’000 $’000 $’000 $’000

2013At 1 January 2013 98,542 18,805 9,876 127,223Total comprehensive income for the year – 170,607 – 170,607Contribution by and distribution to ownersDividends on ordinary shares (Note 33) – (166,432) – (166,432)At 31 December 2013 98,542 22,980 9,876 131,398

2012At 1 January 2012 98,542 32,385 9,876 140,803Total comprehensive income for the year – 4,482 – 4,482Contribution by and distribution to ownersDividends on ordinary shares (Note 33) – (18,062) – (18,062)At 31 December 2012 98,542 18,805 9,876 127,223

Consolidated Cash Flow Statement For the Financial Year Ended 31 December 2013



2013 2012$’000 $’000

Cash fl ows from operating activities :Profi t before tax from continuing operations 12,515 39,052Profi t before tax from discontinued operation 109,945 32,715Profi t before tax, total 122,460 71,767

Adjustments for : Depreciation of property, plant and equipment attributable to continuing operations 3,082 3,291 Depreciation of property, plant and equipment attributable to discontinued operation 675 570 Amortisation of intangible assets attributable to continuing operations 427 132 Amortisation of intangible assets attributable to discontinued operation 766 921 Intangible assets written off 26,991 – Share of results of associated companies, net of tax – (330) Gain on disposal of associated company – (9,186) Gain on divestment of subsidiary (90,379) – Interest expense 3,588 4,130 Interest income (395) (529) Loss/(gain) on disposal of property, plant and equipment 278 (171) Gain on disposal of intangible assets (1,563) – Property, plant and equipment written off 1,102 – Hedging of net investments – 288 Currency realignment 5,642 (4,892)Operating cash fl ows before changes in working capital 72,674 65,991Decrease/(increase) in trade and other receivables and prepaid operating expenses 11,856 (29,863)Decrease in gross amount due from customers for contract work-in-progress, net and inventories 534 6,523Increase in payables and accruals and provision for warranties 2,920 11,037Cash generated from operations 87,984 53,688Interest paid (3,588) (4,130)Interest received 395 529Income tax paid (12,652) (15,156)Net cash generated from operating activities 72,139 34,931Cash fl ows from investing activities :Purchase of property, plant and equipment (3,452) (5,732)Purchase of intangible assets – (1,693)Acquisition of subsidiary company, net of cash acquired (Note 5) (19,155) (1,621)Second tranche payment for the subsidiary acquired (755) –Divestment of subsidiaries (Note 6) 194,676 –Disposal of associated company (Note 6) – 20,044Proceeds from disposal of property, plant and equipment 1,704 739Proceeds from disposal of intangible assets 1,638 –Net cash generated from investing activities 174,656 11,737Cash fl ows from fi nancing activities :Repayment of short-term borrowings (26,951) (95,396)(Repayment)/proceeds from long-term borrowings (89,002) 90,267Dividends paid on ordinary shares (Note 33) (21,933) (18,062)Subsidiary’s dividend paid to non-controlling interests (816) –Repayment of fi nance lease obligations (450) (686)Proceeds from non-controlling interests during incorporation 3,400 –Net cash used in fi nancing activities (135,752) (23,877)Net increase in cash and cash equivalents 111,043 22,791Net effect of exchange rate changes on cash and cash equivalents 1,346 (2,118)Cash and cash equivalents at beginning of fi nancial year (Note 26) 74,197 53,524Cash and cash equivalents at end of fi nancial year (Note 26) 186,586 74,197

Notes to the Financial Statements For the Financial Year Ended 31 December 2013


1. General

Corporate information CSE Global Limited (the “Company”) is a limited liability company which is incorporated and domiciled

in Singapore and is listed on the Singapore Exchange Securities Trading Limited (SGX-ST).

The registered offi ce of the Company is located at 50 Raffl es Place, Singapore Land Tower, #32-01, Singapore 048623 and its principal place of business is No. 2 Ubi View, Level 5, Singapore 408556.

The principal activities of the Company are those relating to provision of total integrated industrial automation, information technology and intelligent transport solutions and investment holding. The principal activities of the subsidiary companies are disclosed in Note 3 to the fi nancial statements. There have been no signifi cant changes in the nature of these activities during the fi nancial year.

Fundamental accounting concept

As at 31 December 2013, the Company’s current liabilities exceeded its current assets by $97,087,000 (2012: $27,593,000). In the opinion of the Directors, the Company is able to continue as a going concern despite its net current liabilities position as the Company is able to deploy the available funds within the Group for the Company to pay its debts as and when they fall due. Accordingly, the Directors are of the view that the going concern assumption is appropriate for the preparation of the fi nancial statements of the Company.

2. Summary of signifi cant accounting policies

2.1 Basis of preparation

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

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

The fi nancial statements are presented in Singapore Dollars (SGD or $) and all values are rounded to the nearest thousand ($’000) except where otherwise indicated.

2.2 Changes in accounting policies

The accounting policies adopted are consistent with those of the previous fi nancial year except in the current fi nancial year, the Group has adopted all the new and revised standards which are effective for annual fi nancial periods beginning on or after 1 January 2013 and early adopted the Amendments to FRS 36 Recoverable Amount Disclosures for Non-fi nancial Assets which are effective for annual periods beginning on or after 1 January 2014. The adoption of these standards did not have any effect on the fi nancial performance or position of the Group and the Company.

Accordingly to the transition provisions of FRS 113 Fair Value Measurement, FRS 113 has been applied prospectively by the Group on 1 January 2013.



2. Summary of signifi cant accounting policies (cont’d)

2.3 Standards issued but not yet effective

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

Description

Effective for annual periods beginning

on or after

Revised 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 2014Amendments to FRS 39 Novation of Derivatives and Continuation of Hedge Accounting 1 January 2014

Except for FRS 112, the Directors expect that the adoption of the other standards above will have no material impact on the fi nancial statements in the period of initial application. The nature of the impending changes in accounting policy on adoption of FRS 112 are described below.

FRS 112 Disclosure of Interests in Other Entities

FRS 112 Disclosure of Interests in Other Entities is effective for fi nancial 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 fi nancial statements to evaluate the nature and risks associated with its interests in other entities and the effects of those interests on its fi nancial statements. As this is a disclosure standard, it will have no impact to the fi nancial position and fi nancial performance of the Group when applied in 2014.

2.4 Signifi cant accounting judgments and estimates

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




2.4 Signifi cant accounting estimates and judgments (cont’d)

(a) Judgments made in applying accounting policies

In the process of applying the Group’s accounting policies, management has made the following judgments, apart from those involving estimations, which have the most signifi cant effect on the amounts recognised in the consolidated fi nancial statements:

(i) Determination of functional currency

The Group measures foreign currency transactions in the respective functional currencies of the Company and its subsidiaries. In determining the functional currencies of the entities in the Group, judgment is required to determine the currency that mainly infl uences sales prices for goods and services and of the country whose competitive forces and regulations mainly determines the sales prices of its goods and services. The functional currencies of the entities in the Group are determined based on management’s assessment of the economic environment in which the entities operate and the entities’ process of determining sales prices.

(b) 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 are discussed below. The Group based its assumptions and estimates on parameters available when the fi nancial 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 refl ected in the assumptions when they occur.

(i) Impairment of non-fi nancial assets

An impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The fair value less costs to sell calculation is based on available data from binding sales transactions in an arm’s length transaction of similar assets or observable market prices less incremental costs for disposing the asset. The value in use calculation is based on a discounted cash fl ow model. The cash fl ows are derived from the budget for the next fi ve years and do not include restructuring activities that the Group is not yet committed to or signifi cant future investments that will enhance the asset’s performance of the cash generating unit being tested. The recoverable amount is most sensitive to the discount rate used for the discounted cash fl ow model as well as the expected future cash infl ows and the growth rate used for extrapolation purposes. Further details of the key assumptions applied in the impairment assessment of goodwill and intellectual property rights, are given in Note 8 to the fi nancial statements.

(ii) Impairment of loans and receivables

The Group assesses at each balance sheet date whether there is any objective evidence that a fi nancial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or signifi cant fi nancial diffi culties of the debtor and default or signifi cant delay in payments.

Where there is objective evidence of impairment, the amount and timing of future cash fl ows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Group’s loans and receivables at the balance sheet date is disclosed in Note 12 to the fi nancial statements.




2.4 Signifi cant accounting estimates and judgments (cont’d)

(b) Key sources of estimation uncertainty (cont’d)

(iii) Useful lives of property, plant and equipment

Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives. Management estimates the useful lives of these property, plant and equipment to be within 2 to 57 years. The carrying amount of the Group’s property, plant and equipment at 31 December 2013 approximated $20,098,000 (2012: $27,078,000). Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets. Therefore, future depreciation charges could be revised.

(iv) Income taxes

The Group has exposure to income taxes in numerous jurisdictions. Signifi cant judgment is involved in determining the Group-wide provision for income taxes. 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 fi nal 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 payables and deferred tax liabilities as at 31 December 2013 was $5,197,000 and $4,652,000 (2012: $6,002,000 and $5,040,000), respectively.

(v) Deferred tax assets

Deferred tax assets are recognised for all unused tax losses and capital allowances to the extent that it is probable that taxable profi t will be available against which the losses and capital allowances can be utilised. Signifi cant management judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profi ts together with tax planning strategies. The aggregate carrying value of recognised tax losses and capital allowances as at 31 December 2013 was $32,585,000 (2012: $41,198,000).

(vi) Provision for warranties

The Group has exposure to warranties arising from warranty obligations stated in its project contracts. Management estimates the amount of warranty to be provided based on available information and its prior experience. The carrying amount of the Group’s provision for warranties at 31 December 2013 approximated $1,575,000 (2012: $1,736,000).

(vii) Construction contracts

The Group recognises revenue arising from contracts using the percentage of completion method when the stage of contract completion can be reliably determined, cost to date can be clearly identifi ed, and the total contract revenue and costs to complete can be reliably estimated. Signifi cant judgment is involved in the recoverability of the gross amount due from customers and the adequacy of foreseeable losses, if any. The carrying amounts of assets and liabilities arising from construction contracts at the end of each reporting period are disclosed in Note 10 to the consolidated fi nancial statements.




2.5 Foreign currency

The Group’s consolidated fi nancial 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 fi nancial statements of each entity are measured using that functional currency.

(a) Transactions and balances

Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the end of the reporting period. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was measured.

Exchange differences arising on the settlement of monetary items or on translating monetary items at the end of the reporting period are recognised in profi t or loss 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 reclassifi ed from equity to profi t or loss of the Group on disposal of the foreign operation.

(b) Consolidated fi nancial statements

For consolidation purpose, the assets and liabilities of foreign operations are translated into SGD at the rate of exchange ruling at the end of the reporting period and their profi t or loss are translated at the exchange rates prevailing at the date of the transactions. The exchange differences arising on the translation are recognised in other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in profi t or loss.

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 profi t or loss. For partial disposals of associates or jointly controlled entities that are foreign operations, the proportionate share of the accumulated exchange differences is reclassifi ed to profi t or loss.

2.6 Subsidiaries

A subsidiary company is an entity over which the Group has the power to govern the fi nancial and operating policies so as to obtain benefi ts from its activities.

In the Company’s separate fi nancial statements, investments in subsidiary companies are accounted for at cost less impairment losses.




2.7 Basis of consolidation and business combinations

(a) Basis of consolidation

Basis of consolidation from 1 January 2010

The consolidated fi nancial statements comprise the fi nancial statements of the Company and its subsidiaries as at the end of the reporting period. The fi nancial statements of the subsidiaries used in the preparation of the consolidated fi nancial 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 interest even if that results in a defi cit balance.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses 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 defi cit in profi t or loss; – Re-classifies the Group’s share of components previously recognised in other

comprehensive income to profi t or loss or retained earnings, as appropriate.

Basis of consolidation prior to 1 January 2010

Certain of the above-mentioned requirements were applied on a prospective basis. The following differences, however, are carried forward in certain instances from the previous basis of consolidation:

– Acquisition of non-controlling interests, prior to 1 January 2010, were accounted for using the parent entity extension method, whereby, the difference between the consideration and the book value of the share of the net assets acquired were recognised in goodwill.

– Losses incurred by the Group were attributed to the non-controlling interest until the balance was reduced to nil. Any further losses were attributed to the Group, unless the non-controlling interest had a binding obligation to cover these. Losses prior to 1 January 2010 were not reallocated between non-controlling interest and the owners of the Company.

– Upon loss of control, the Group accounted for the investment retained at its proportionate share of net asset value at the date control was lost. The carrying value of such investments as at 1 January 2010 has not been restated.




2.7 Basis of consolidation and business combinations (cont’d)

(b) Business combinations

Business combinations from 1 January 2010

Business combinations are accounted for by applying the acquisition method. Identifi able 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 fi nancial assets and liabilities assumed for appropriate classifi cation 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 profi t or loss or as a change to other comprehensive income. If the contingent consideration is classifi ed as equity, it will not be remeasured until it is fi nally settled within equity.

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

The Group elects for each individual business combination, whether non-controlling interest in the acquiree (if any), that are present ownership interests and entitle their holders to a proportionate share of net assets in the event of liquidation, is recognised on the acquisition date at fair value, or at the non-controlling interest’s proportionate share of the acquiree’s identifi able net assets. Other components of non-controlling interests are measured at their acquisition date fair value, unless another measurement basis is required by another FRS.

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 identifi able assets and liabilities is recorded as goodwill. The accounting policy for goodwill is set out in Note 2.10. In instances where the latter amount exceeds the former, the excess is recognised as a gain on bargain purchase in profi t or loss on the acquisition date.

Business combinations prior to 1 January 2010

In comparison to the above mentioned requirements, the following differences applied:

– Business combinations were accounted for by applying the purchase method. Transaction costs directly attributable to the acquisition formed part of the acquisition costs. The non-controlling interest (formerly known as minority interest) was measured at the proportionate share of the acquiree’s identifi able net assets.

– Business combinations achieved in stages were accounted for as separate steps. Adjustments to those fair values relating to previously held interests were treated as a revaluation and recognised in equity. Any additional acquired share of interest did not affect previously recognised goodwill.




2.7 Basis of consolidation and business combinations (cont’d)

(b) Business combinations (cont’d)

Business combinations prior to 1 January 2010 (cont’d)

– When the Group acquired a business, embedded derivatives separated from the host contract by the acquiree were not reassessed on acquisition unless the business combination resulted in a change in the terms of the contract that signifi cantly modifi ed the cash fl ows that otherwise would have been required under the contract.

– Contingent consideration was recognised if, and only if, the Group had a present obligation, the economic outfl ow was more likely than not and a reliable estimate was determinable. Subsequent adjustments to the contingent consideration were recognised as part of goodwill.

Transactions with non-controlling interests Non-controlling interest represents 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 balance sheet, separately from equity attributable to owners of the Company.

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

2.8 Associates

An associate is an entity, not being a subsidiary or a joint venture, in which the Group has signifi cant infl uence. An associate is accounted for under the equity method from the date the Group obtains signifi cant infl uence until the date of the Group ceases to have signifi cant infl uence over the associate.

The Group’s investments in associates are accounted for using the equity method. Under the equity method, the investment in associate is carried in the balance sheet at cost plus post-acquisition changes in the Group’s share of net assets of the associates. Goodwill relating to associates 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 identifi able 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 profi t or loss refl ects the share of the results of operations of the associates. Where there has been a change recognised in other comprehensive income by the associates, the Group recognises its share of such changes in other comprehensive income. Unrealised gains and losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the associates.




2.8 Associates (cont’d)

The Group’s share of the profi t or loss of its associates is the profi t attributable to equity holders of the associate and, therefore is the profi t or loss after tax and non-controlling interests in the subsidiaries of 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 additional 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 profi t or loss.

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

Upon loss of signifi cant infl uence over the associate, the Group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the associate upon loss of signifi cant infl uence and the fair value of the aggregate of the retained investment and proceeds from disposal is recognised in profi t or loss.

2.9 Property, plant and equipment

All items of property, plant and equipment are initially recorded at cost. Subsequent to recognition, property, plant and equipment other than freehold land and buildings are measured at cost less accumulated depreciation and any accumulated impairment losses. The cost includes the cost of replacing parts of the property, plant and equipment and borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying property, plant and equipment. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefi ts associated with the item will fl ow to the Group and the cost of the item can be measured reliably.

When signifi cant parts of property, plant and equipment are required to be replaced in intervals, the Group recognises such parts as individual assets with specifi c useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfi ed. All other repair and maintenance costs are recognised in profi t or loss as incurred. 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 suffi cient 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 profi t or loss, in which case the increase is recognised in profi t or loss. A revaluation defi cit is recognised in profi t or loss, except to the extent that it offsets an existing surplus on the same asset carried in the asset revaluation reserve.




2.9 Property, plant and equipment (cont’d)

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.

Freehold land has an unlimited useful life and therefore is not depreciated. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as follows:

Leasehold land (over term of lease) - 57 years Buildings - 20 to 39 years Leasehold improvements - 2 to 20 years Plant and machinery - 4 to 5 years Tools and equipment - 5 years Offi ce furniture and fi ttings - 5 years Computer equipment - 2 to 5 years Motor vehicles - 5 to 7 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 fi nancial year-end, and adjusted prospectively, if appropriate.

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

2.10 Intangible assets

Goodwill

Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less any 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 benefi t 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 profi t or loss. 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 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.




2.10 Intangible assets (cont’d)

Goodwill (cont’d)

Goodwill and fair value adjustments arising on the acquisition of foreign operation 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 2.5.

Goodwill and fair value adjustments which arose on acquisitions of foreign operation 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.

Other intangible assets

Intangible 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 acquisition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is refl ected in profi t or loss in the year in which the expenditure is incurred.

The useful lives of intangible assets are assessed as either fi nite or indefi nite.

Intangible assets with fi nite useful lives are amortised over the estimated useful lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method are reviewed at least once per year at each fi nancial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefi ts embodied in the asset are accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates.

Intangible assets with indefi nite useful lives or not yet available for use are tested for impairment annually, or more frequently if the events and circumstances indicate that the carrying value may be impaired either individually or at the cash-generating unit level. Such intangible assets are not amortised. The useful life of an intangible asset with an indefi nite useful life is reviewed annually to determine whether the useful life assessment continues to be supportable. If not, the change in useful life from indefi nite to fi nite is made on a prospective basis.

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 profi t or loss when the asset is derecognised.

Licenses and intellectual property rights

Costs relating to licenses and intellectual property rights, which are acquired, are capitalised and amortised on a straight-line basis over their 10 to 15 year useful lives.




2.11 Impairment of goodwill

Goodwill acquired in a business combination is allocated, at acquisition to the cash-generating units (CGUs) that are expected to benefi t from that business combination. The carrying amount of goodwill has been described in Note 8 to the fi nancial statements. To determine whether there is an impairment of goodwill at the end of the reporting period, it is necessary to compare the carrying value of goodwill with the recoverable amount from the CGU to which the goodwill is allocated. The recoverable amount represents the present value of the estimated future cash fl ows expected to arise from the CGU. In arriving at the recoverable amount, management exercises its judgment in estimating the future cash fl ows and discount rates, as described in Note 8.

2.12 Financial assets

Initial recognition and measurement

Financial assets are recognised when, and only when, the Group becomes a party to the contractual provisions of the fi nancial instrument. The Group determines the classifi cation of its fi nancial assets at initial recognition.

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

Subsequent measurement

The subsequent measurement of fi nancial assets depends on their classifi cation as follows:

(a) Financial assets at fair value through profi t or loss

Financial assets at fair value through profi t or loss include fi nancial assets held for trading and fi nancial assets designated upon initial recognition at fair value through profi t or loss. Financial assets are classifi ed as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. This category includes derivative fi nancial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defi ned by FRS 39. Derivatives, including separated embedded derivatives are also classifi ed as held for trading unless they are designated as effective hedging instruments.

The Group has not designated any fi nancial assets upon initial recognition at fair value through profi t or loss.

Subsequent to initial recognition, fi nancial assets at fair value through profi t or loss are measured at fair value. Any gains or losses arising from changes in fair value of the fi nancial assets are recognised in profi t or loss. Net gains or net losses on fi nancial assets at fair value through profi t or loss include exchange differences, interest and dividend income.

Derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for trading or designated at fair value through profi t or loss. These embedded derivatives are measured at fair value with changes in fair value recognised in profi t or loss. Reassessment only occurs if there is a change in the terms of the contract that signifi cantly modifi es the cash fl ows that would otherwise be required.

(b) Loans and receivables

Non-derivative fi nancial assets with fi xed or determinable payments that are not quoted in an active market are classifi ed 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 profi t or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.




2.12 Financial assets (cont’d)

Subsequent measurement (cont’d)

(c) Available-for-sale fi nancial assets

Available-for-sale fi nancial assets include equity and debt securities. Equity investments classifi ed as available-for sale are those, which are neither classifi ed as held for trading nor designated at fair value through profi t or loss. Debt securities in this category are those which are intended to be held for an indefi nite period of time and which may be sold in response to needs for liquidity or in response to changes in the market conditions.

After initial recognition, available-for-sale fi nancial assets are subsequently measured at fair value. Any gains or losses from changes in fair value of the fi nancial 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 profi t or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassifi ed from equity to profi t or loss as a reclassifi cation adjustment when the fi nancial asset is derecognised.

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

Derecognition

A fi nancial asset is derecognised where the contractual right to receive cash fl ows from the asset has expired. On derecognition of a fi nancial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profi t or loss.

Regular way purchase or sale of fi nancial assets

All regular way purchases and sales of fi nancial 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 fi nancial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned.

2.13 Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and on hand, demand deposits, and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignifi cant risk of changes in value.

Cash and bank balances and short term deposits carried in the balance sheets are accounted for as loans and receivables under FRS 39. The accounting policy for this category of fi nancial assets is stated in Note 2.12.

2.14 Trade and other receivables

Trade and other receivables include prepaid operating expenses, amounts due from subsidiaries and associated companies. These are classifi ed and accounted for as loans and receivables under FRS 39. The accounting policy for this category of fi nancial assets is stated in Note 2.12.

An allowance is made for uncollectible amounts when there is objective evidence that the Group will not be able to collect the debt. Bad debts are written off when identifi ed. Further details on the accounting policy for impairment of fi nancial assets are stated in Note 2.15 below.




2.15 Impairment of fi nancial assets

The Group assesses at each end of the reporting period whether there is any objective evidence that a fi nancial asset is impaired.

(a) Financial assets carried at amortised cost

For fi nancial assets carried at amortised cost, the Group fi rst assesses individually whether objective evidence of impairment exists individually for fi nancial assets that are individually signifi cant, or collectively for fi nancial assets that are not individually signifi cant. If the Group determines that no objective evidence of impairment exists for an individually assessed fi nancial asset, whether signifi cant or not, it includes the asset in a group of fi nancial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be recognised are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss on fi nancial assets carried at amortised cost has 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 fl ows discounted at the fi nancial 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 profi t or loss.

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

To determine whether there is objective evidence that an impairment loss on fi nancial assets has incurred, the Group considers factors such as the probability of insolvency or signifi cant fi nancial diffi culties of the debtor and default or signifi cant 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 profi t or loss.

(b) Financial assets carried at cost

If there is objective evidence (such as signifi cant adverse changes in the business environment where the issuer operates, probability of insolvency or signifi cant fi nancial diffi culties of the issuer) that an impairment loss on fi nancial 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 fl ows discounted at the current market rate of return for a similar fi nancial asset. Such impairment losses are not reversed in subsequent periods.




2.15 Impairment of fi nancial assets (cont’d)

(c) Available-for-sale fi nancial assets

In the case of equity investments classified as available-for-sale, objective evidence of impairment include (i) signifi cant fi nancial diffi culty of the issuer or obligor, (ii) information about signifi cant changes with an adverse effect that have taken place in the technological, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in equity instrument may not be recovered; and (iii) a signifi cant or prolonged decline in the fair value of the investment below its costs. Signifi cant’ is to be evaluated against the original cost of the investment and ‘prolonged’ against the period in which the fair value has been below its original cost.

If an available-for-sale financial asset is impaired, an amount comprising the difference between its acquisition cost (net of any principal repayment and amortisation) and its current fair value, less any impairment loss previously recognised in profi t or loss, is transferred from other comprehensive income and recognised in profi t or loss. Reversals of impairment losses in respect of equity instruments are not recognised in profi t or loss; increases in their fair value after impairment are recognised directly in other comprehensive income.

2.16 Inventories and work-in-progress

Inventories are stated at the lower of cost and net realisable value. Costs incurred in bringing the inventories to their present location and condition are accounted for as follows:

(i) Raw materials: purchase costs on a fi rst-in fi rst-out basis.

(ii) Finished goods and work-in-progress: costs of direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. These costs are assigned on a fi rst-in fi rst-out 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 of completion and the estimated costs necessary to make the sale.

2.17 Financial liabilities

Initial recognition and measurement

Financial liabilities are recognised when, and only when, the Group becomes a party to the contractual provisions of the fi nancial instrument. The Group determines the classifi cation of its fi nancial liabilities at initial recognition.

All fi nancial liabilities are recognised initially at fair value plus in the case of fi nancial liabilities not at fair value through profi t or loss, directly attributable transaction costs.




2.17 Financial liabilities (cont’d)

Subsequent measurement

The measurement of fi nancial liabilities depends on their classifi cation as follows:

(a) Financial liabilities at fair value through profi t or loss

Financial liabilities at fair value through profi t or loss includes fi nancial liabilities held for trading and fi nancial liabilities designated upon initial recognition at fair value through profi t or loss. Financial liabilities are classifi ed as held for trading if they are acquired for the purpose of selling in the near term. This category includes derivative fi nancial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships. Separated embedded derivatives are also classifi ed as held for trading unless they are designated as effective hedging instruments.

Subsequent to initial recognition, fi nancial liabilities at fair value through profi t or loss are measured at fair value. Any gains or losses arising from changes in fair value of the fi nancial liabilities are recognised in profi t or loss.

The Group has not designated any fi nancial liabilities upon initial recognition at fair value through profi t or loss.

(b) Other fi nancial liabilities

After initial recognition, other fi nancial liabilities are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in profi t or loss when the liabilities are derecognised, and through the amortisation process.

Derecognition

A fi nancial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing fi nancial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modifi ed, such an exchange or modifi cation 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 profi t or loss.

Offsetting of fi nancial instruments

Financial assets and liabilities are offset and the net amount is presented in the balance sheets, when and only when, there is a currently enforceable legal right to set off the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

2.18 Interest bearing loans and borrowings

All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs.

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.

Gains and losses are recognised in the profi t and loss account when the liabilities are derecognised as well as through the amortisation process.




2.19 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.

2.20 Provisions

General

Provisions are recognised when the Group has a present obligation (legal or constructive) where, as a result of a past event, it is probable that an outfl ow of resources embodying economic benefi ts will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Provisions are reviewed at each balance sheet date and adjusted to refl ect the current best estimate. If it is no longer probable that an outfl ow 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 refl ects, where appropriate, the risks specifi c to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a fi nance cost.

Warranty provision

Provisions for warranty-related costs are recognised when the product is sold or service provided. Initial recognition is based on historical experience. The initial estimate of warranty-related cost is revised annually.

Provision for foreseeable losses

Provision for foreseeable losses is made when it is probable that total contract costs will exceed total contract revenue.

2.21 Employee benefi ts

(a) Defi ned contribution plans

As required by law, the Group’s companies in Singapore, Malaysia, India, Australia and New Zealand make contributions to their respective countries’ state pension schemes, being the Central Provident Fund (“CPF”) in Singapore, the Employees Provident Fund (“EPF”) in Malaysia and India, the Superannuation in Australia and the KiwiSaver in New Zealand. These state pension schemes are defi ned contribution plans that serve as the national retirement benefi ts plan for the employees of the Group working in those countries.

As required by law, the Group’s companies in the United Kingdom operate a defined contribution pension scheme. Assets of the scheme are held separately from those of the companies in the United Kingdom in an independently administered fund.

The contributions that are made towards the above mentioned contribution pension schemes are recognised as compensation expenses in the same period as the employment that gives rise to the contributions.




2.21 Employee benefi ts (cont’d)

(b) Employee leave entitlement

Employee entitlements to annual leave are recognised as a liability when they accrue to employees. The estimated liability for leave is recognised for services rendered by employees up to the balance sheet date.

(c) Employee share option scheme

The Company’s share option schemes have expired and there were no share option schemes during the fi nancial year.

2.22 Leases

The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date: whether fulfi lment of the arrangement is dependent on the use of a specifi c asset or assets or the arrangement conveys a right to use the asset, even if that right is not explicitly specifi ed in an arrangement.

(a) As lessee

Finance leases, which effectively transfer to the Group substantially all the risks and benefi ts incidental to ownership of the leased item, are capitalised at the present value of the minimum lease payments at the inception of the lease term and disclosed as leased fi xed assets. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the fi nance 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 directly to profi t or loss. Contingent rents, if any, are charged as expenses in the periods in which they are incurred.

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset or 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 an expense in profi t or loss on a straight-line basis over the lease term. The aggregate benefi t of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.

(b) As lessor

Leases where the Group retains substantially all the risks and rewards of ownership of the asset are classifi ed 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 2.23(f). Contingent rents are recognised as revenue in the period in which they are earned.

2.23 Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefi ts will fl ow to the Group and the revenue can be reliably measured, regardless of when the payment is made. Revenue is measured at the fair value of consideration received or receivable, taking into account contractually defi ned terms of payment and excluding 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 specifi c recognition criteria must also be met before revenue is recognised:




2.23 Revenue recognition (cont’d)

(a) Contract revenue

Project revenue from contracts is recognised on an individual contract basis using the percentage of completion method when the stage of contract completion can be reliably determined, cost-to-date can be clearly identifi ed, and the total contract revenue and costs to complete can be reliably estimated. The stage of completion is measured by either:

− the percentage of costs incurred to estimated total costs to complete the contracts; or

− the proportion of labour costs incurred for work to date to the total estimated labour costs to be incurred; or

− upon completion of designated phases of a contract.

(b) Sale of goods

Revenue from sale of goods and services rendered is recognised upon delivery of goods or services and acceptance by customers.

(c) Maintenance revenue

Maintenance revenue is recognised on a straight line basis over the specifi ed contract period. Maintenance revenue received in advance is deferred as unearned income and recognised as income over the life of the maintenance contracts.

(d) Interest income

Interest income is recognised using the effective interest method.

(e) Dividend income

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

(f) Rental income

Rental income arising from operating leases 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.

2.24 Income taxes

(a) Current income tax

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

Current income taxes are recognised in profi t or loss except to the extent that the tax relates to items recognised outside profi t or loss, 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.




2.24 Income taxes (cont’d)

(b) Deferred tax

Deferred 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 fi nancial reporting purposes.

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

Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profi t nor taxable profi t or loss; and

In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests 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 profi t will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except:

Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profi t nor taxable profi t or loss; and

In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests 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 profi t will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that suffi cient taxable profi t 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 profi t will allow the deferred tax asset to be recovered.

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

Deferred tax relating to items recognised outside profi t or loss is recognised outside profi t or loss. 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 income tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.

Tax benefi ts acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, would be recognised subsequently if new information about facts and circumstances changed. The adjustment would either be treated as a reduction to goodwill (as long as it does not exceed goodwill) if it is incurred during the measurement period or in profi t or loss.




2.24 Income taxes (cont’d)

(c) Sales tax

Revenues, expenses and assets are recognised net of the amount of sales tax except:

Where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

Receivables and payables that are stated with the amount of sales tax included.

The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.

2.25 Derivative fi nancial instruments and hedging activities

The Group may use derivative fi nancial instruments such as foreign currency contracts to hedge its risks associated with foreign exchange rate fl uctuations. Such derivative fi nancial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivative fi nancial instruments are carried as assets when the fair value is positive and as liabilities when the fair value is negative.

Any gains or losses arising from changes in fair value on derivative fi nancial instruments that do not qualify for hedge accounting are taken to the profi t or loss account for the year.

The fair value of forward currency contracts is calculated by reference to current forward exchange rates for contracts with similar maturity profi les.

For the purpose of hedge accounting, hedges are classifi ed as :

Fair value hedges when hedging the exposure to changes in the fair value of a recognised asset or liability or an unrecognised fi rm commitment, that is attributable to a particular risk and could affect profi t or loss;

Cash fl ow hedges when hedging exposure to variability in cash fl ows that is either attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction and could affect profi t or loss; or

Hedges of a net investment in a foreign operation.

At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which the Group wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes identifi cation of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the entity will assess the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value in offsetting the exposure to changes in the hedged item’s fair value or cash fl ows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash fl ows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the fi nancial reporting periods for which they were designated.




2.25 Derivative fi nancial instruments and hedging activities (cont’d)

Hedges which meet the strict criteria for hedge accounting are accounted for as follows:

(a) Fair value hedges

For fair value hedges, the carrying amount of the hedged item is adjusted for gains and losses attributable to the risk being hedged, the derivative is remeasured at fair value and gains and losses from both are taken to the profi t or loss account.

For fair value hedges relating to items carried at amortised cost, the adjustment to carrying value is amortised through the profi t or loss account over the remaining term to maturity. Any adjustment to the carrying amount of a hedged fi nancial instrument for which the effective interest method is used is amortised to the profi t or loss account.

Amortisation begins as soon as an adjustment exists but no later than when the hedged item ceases to be adjusted for changes in its fair value attributable to the risk being hedged.

When an unrecognised fi rm commitment is designated as a hedged item, the subsequent cumulative change in the fair value of the fi rm commitment attributable to the hedged risk is recognised as an asset or liability with a corresponding gain or loss recognised in the profi t or loss account. The changes in the fair value of the hedging instrument are also recognised in the profi t or loss account.

The Group discontinues fair value hedge accounting if the hedging instrument expires or is sold, terminated or exercised, the hedge no longer meets the criteria for hedge accounting or the Group revokes the designation. Any adjustment to the carrying amount of a hedged fi nancial instrument for which the effective interest method is used is amortised to the profi t or loss account. Amortisation begins as soon as an adjustment exists but no later than when the hedged item ceases to be adjusted for changes in its fair value attributable to the risk being hedged.

(b) Cash fl ow hedges

For cash fl ow hedges, the effective portion of the gain or loss on the hedging instrument is recognised directly in other comprehensive income, while the ineffective portion is recognised in the profi t or loss account.

Amounts taken to other comprehensive income are transferred to the profi t and loss account when the hedged transaction affects profi t or loss, such as when hedged fi nancial income or fi nancial expense is recognised or when a forecast sale or purchase occurs. Where the hedged item is the cost of a non-fi nancial asset or liability, the amounts taken to hedging reserve are transferred to the initial carrying amount of the non-fi nancial asset or liability.

If the forecast transaction is no longer expected to occur, amounts previously recognised in hedging reserve are transferred to the profi t or loss account. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked, amounts previously recognised in hedging reserve remain in equity until the forecast transaction occurs. If the related transaction is not expected to occur, the amount is taken to the profi t or loss account.




2.25 Derivative fi nancial instruments and hedging activities (cont’d)

(c) Hedges of a net investment

Hedges of a net investment in a foreign operation, including a hedge of a monetary item that is accounted for as part of the net investment, are accounted for in a way similar to cash fl ow hedges. Gains or losses on other comprehensive income under instrument relating to the effective portion of the hedge are recognised directly in the foreign currency translation reserve while any gains or losses relating to the ineffective portion are recognised in the profi t or loss account. On disposal of the foreign operation, the cumulative value of any such gains or losses recognised directly in the foreign currency translation reserve is transferred to the profi t or loss account.

2.26 Contingencies

A contingent liability is:

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

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

(i) It is not probable that an outfl ow of resources embodying economic benefi ts will be required to settle the obligation; or

(ii) The amount of the obligation cannot be measured with suffi cient reliability.

A contingent asset is a possible asset that arises from past events and whose existence will be confi rmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group.

Contingent liabilities and assets are not recognised on the balance sheet 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.

2.27 Segment reporting

For management purposes, the Group is organised into operating segments based on their products and services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management of the Company who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 27, including the factors used to identify the reportable segments and the measurement basis of segment information.

2.28 Government grants

Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. Where the grant relates to an asset, the fair value is recognised as deferred capital grant on the balance sheet and is amortised to profi t or loss over the expected useful life of the relevant asset by equal annual instalments.




2.29 Share capital and share issuance expenses

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

2.30 Related parties

A related party is defi ned 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 signifi cant infl uence 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 benefi t plan for the benefi t 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 identifi ed in (a);

(vii) A person identifi ed in (a)(i) has signifi cant infl uence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

2.31 Discontinued operation

A component of the Group is classifi ed as a discontinued operation when the criteria to be classifi ed as held-for-sale have been met or it has been disposed of and such a component represents a separate major line of business or geographical area of operations, is part of a single co-ordinated major line of business or geographical area of operations.

In the profi t or loss of the current reporting period, and of the comparative period, all income and expenses from discontinued operation are reported separately from income and expenses from continuing activities.



3. Group companies

Details of subsidiary companies of the Company at 31 December are:-

Name of Company(Country of incorporation)

Principal activities(Place of business) Cost

Percentageof equity

held by theGroup

2013 2012 2013 2012$’000 $’000 % %

iii CSE Systems & Engineering (India) Private Limited (5)

(India)

Sales and provision of computer network systems(India)

36 36 10 10

iv CSE Systems & Engineering (America), Inc.(America)

Sales and provision of computer network systems(America)

759 759 100 100

i CSE Global (Asia) Limited(Singapore)

e-business integration, research and development and investment holding(Singapore)

27,264 27,264 100 100

i CSE Semaphore Singapore Pte Ltd (Singapore)

Distribution and marketing of remote terminal units(Singapore)

11,262 11,262 100 100

iii Power Diesel Engineering Pte Ltd (14)

(Singapore)

Overhauling and spares supply for diesel engine for Marine, Oil and Gas, Industrial and construction sectors(Singapore)

6,035* 6,270 66 66

i S3 ID Pte Ltd(Singapore)

Sale and provision of safe secure solution and investment holding (Singapore)

13,600** − 80 −

i CSE (Americas) Pte Ltd(Singapore)

Sale and provision of system integration services and investment holding (Singapore)

39,556*** − 100 −

* The second tranche payment for investment in Power Diesel Engineering Pte Ltd reduced by $235,000.

** The Company invested $13,600,000 for 80% shareholding of S3-ID Pte Ltd, a newly incorporated company in Singapore.

*** The Company incorporated CSE (Americas) Pte Ltd, a newly incorporated company in Singapore. Shareholdings of CSE W-Industries, Inc. have been transferred from CSE Global Limited to CSE (Americas) Pte Ltd.



3. Group companies (cont’d)


Principal activities(Place of business) Cost

Percentageof equity

held by theGroup

2013 2012 2013 2012$’000 $’000 % %

v CSE W-Industries, Inc(America)

Sale and provision of system integration services(America)

−# 36,200 − 100

ii CSE-Global (UK) Limited(2)

(United Kingdom)Design, manufacture, installation and commissioning of control of management information systems and development, manufacture and sale of electronic and micro processor monitoring equipment(United Kingdom)

−## 57,300 − 100

iii CSE Technology (Beijing) Co., Ltd (7)

(China)

Sale and provision of computer network systems(China)

2,524 2,524 64& 100

i CSE-TransTel Pte Ltd(Singapore)

Provision of turnkey telecommunications solutions(Singapore)

75,302 75,302 100 100

iii CSE-Global (Australia) Pty Ltd (9)

(Australia)

Distribution of electrical engineering equipment and distribution and marketing of remote terminal units(Australia)

46,213&& 16,796 100 100

# Shareholding has been transferred to CSE (Americas) Pte Ltd in the fi nancial year ended 31 December 2013.

## On 2 December 2013, the Group divested its entire shares in CSE-Global (UK) Limited and its overseas business of Semaphore group through an IPO in the London stock exchange.

& The wholly owned subsidiary, CSE Global (Asia) Ltd investment $1,238,750 (USD1,000,000) in CSE Technology (Beijing) Co., Ltd in the fi nancial year ended 31 December 2013.

&& The Company raised its investment in CSE-Global (Australia) Pte Ltd by $29,417,000 (AUD23,000,000) in the fi nancial year ended 31 December 2013.





Principal activities(Place of business)

Cost Percentageof equity

held by theGroup

2013 2012 2013 2012$’000 $’000 % %

iv CSE Environment System Inc (America)

Sales and marketing of air injection technology and energy storage projects(America)

−@ 3,356 − 100

iv CSE-Hankin Inc (4)

(America)Design and install high temperature thermal process and incineration systems(America)

−@@ 6,631 − 100

Unquoted shares, at cost (Note 5)

222,551 243,700

@ Shareholding has been transferred to CSE W-Industries, Inc in the fi nancial year ended 31 December 2013.

@@ Shareholding has been transferred to CSE Hankin (Singapore) Pte Ltd in the financial year ended 31 December 2013.



Percentageof equity

held by theGroup

2013 2012% %

Held by CSE Global (Asia) Limited

i CSE-ITS Pte Ltd(Singapore)

Provision of infrastructure engineering services(Singapore)

100 100

i CSE-IAP Pte Ltd(Singapore)

Provision of computer systems integration services(Singapore)

100 100

i CSE-EIS Pte Ltd(Singapore)

Provision of computer systems integration services(Singapore)

100 100

ii CSE-EIS (Malaysia) Sdn Bhd (1)

(Malaysia)Sales and provision of computer network systems(Malaysia)

100 100

iii CSE Systems & Engineering (India) Private Limited (5)

(India)

Sales and provision of computer network systems(India)

90 90






Percentageof equity

held by theGroup

2013 2012% %

iii CSE Semaphore Belgium S.A. (11)

(Belgium)Distribution and marketing of remote terminal units and investment holding(Belgium)

−## 36

i CSE Hankin (Singapore) Pte Ltd(Singapore)

Provision of process plant and environmental engineering services(Singapore)

100 100

iii CSE Technology (Beijing) Co., Ltd (7)

(China)Sale and provision of computer network systems(China)

36& −

Held by CSE Hankin (Singapore) Pte Ltd

iii CSE-Hankin Inc (4)

(America)Design and install high temperature thermal process and incineration systems(America)

100@@ −

Held by CSE Semaphore Singapore Pte Ltd

iii CSE Semaphore Belgium S.A. (11)

(Belgium)Distribution and marketing of remote terminal units and investment holding(Belgium)

−## 64

iii CSE SemaphoreAustralia Pty Ltd (3)

(Australia)

Distribution and marketing of remote terminal units(Australia)

−## 100

Held by CSE Semaphore Belgium S.A.

iv CSE Semaphore Inc.(America)

Distribution and marketing of remote terminal units(America)

−## 100

& CSE Global (Asia) Ltd invested $1,238,750 (USD1,000,000) in CSE Technology (Beijing) Co., Ltd, CSE Technology (Beijing) Co., Ltd become 36% owned by CSE Global (Asia) Ltd and 64% owned CSE Global Ltd at the fi nancial year ended 31 December 2013.

## On 2 December 2013, the Group divested its entire shares in CSE-Global (UK) Limited and its overseas business of Semaphore group through an initial public offering (“IPO”) in the London Stock Exchange.

@@ Shareholding has been transferred from CSE Global Ltd to CSE Hankin (Singapore) Pte Ltd in the fi nancial year ended 31 December 2013.






Percentageof equity

held by theGroup

2013 2012% %

Held by CSE-Global (UK) Limited

ii CSE Healthcare Systems Limited (2)

(United Kingdom)Design, manufacture, installation and commissioning of control and management information systems(United Kingdom)

−## 100

ii CSE-Seprol Limited (2)

(United Kingdom)Development, manufacture and sale of electronic and microprocessor monitoring equipment(United Kingdom)

−## 100

iii CSE-Controls s.r.o (8)

(Slovakia)Provision of oil and gas pipeline management systems(Slovakia)

−## 100

ii CSE-Controls (Motherwell) Limited (2)

(United Kingdom)

Design, installation and commissioning of control and management information systems(United Kingdom)

−## 100

ii CSE-Servelec Limited (2)

(United Kingdom)Design, installation and commissioning of control and management information systems(United Kingdom)

−## 100

ii CSE-Controls Limited (2)

(United Kingdom)Design, manufacture, testing and commissioning of safety systems, protection systems and control systems(United Kingdom)

−## 100

## On 2 December 2013, the Group divested its entire shares in CSE-Global (UK) Limited and its overseas business of Semaphore group through an initial public offering (“IPO”) in the London Stock Exchange.






Percentageof equity

held by theGroup

2013 2012% %

Held by S3 ID Pte Ltd

iii S3 ID Group Ltd (15)

(United Kingdom)Sale and provision of safety system and automation hardware product (United Kingdom)

75^ −

Held by S3 ID Group Ltd

iii S3 ID Ltd (15)

(United Kingdom)Sale and provision of safety system and automation hardware product (United Kingdom)

75^ −

iii S3 ID AS (16)

(Norway)Sale and provision of safety system and automation hardware product (Norway)

75^ −

iv S3 ID Kazakhstan(Norway)

Sale and provision of safety system and automation hardware product (Kazakhstan)

75^ −

Held by CSE Americas Pte Ltd

v CSE W-Industries, Inc(America)


100# −

iv CSE ICON, Inc(America)


100# −

iv W-Industries of Mexico, SA de CV(Mexico)

Sale and provision of system integration services(Mexico)

100# −

# Shareholding has been transferred from CSE W-Industries, Inc to CSE (Americas) Pte Ltd in the fi nancial year ended 31 December 2013.

^ The Group acquired 75% shareholding of S3 ID Group Ltd with a call and put option for the remaining 25% shareholding in the fi nancial year ended 31 December 2013. As a result of this acquisition, S3 ID Ltd, S3 ID AS and S3 ID Kazakhstan became subsidiaries of S3 ID Pte Ltd.






Percentageof equity

held by theGroup

2013 2012% %

Held by CSE W-Industries, Inc.

v W-Industries of Texas, LLC(America)


100 100

v W-Industries of Louisiana, LLC(America)


100 100

iv CSE ICON, Inc(America)


−# 100

iv CSE Environmental LLC (America)

Sales and marketing of air injection technology and energy storage projects(America)

100@ −

iv W-Industries of Mexico, SA de CV(Mexico)

Sale and provision of system integration services(Mexico)

−# 100

# Shareholding has been transferred from CSE W-Industries, Inc to CSE (Americas) Pte Ltd in the fi nancial year ended 31 December 2013.

@ Shareholding has been transferred to CSE W-Industries, Inc in the fi nancial year ended 31 December 2013.






Percentageof equity

held by theGroup

2013 2012% %

Held by CSE-TransTel Pte Ltd

iv P.T. TransTel Engineering(Indonesia)

Provision of turnkey telecommunications solutions (Indonesia)

100 100

iv TransTel Engineering (Nigeria) Ltd(Nigeria)

Provision of turnkey telecommunications solutions (Nigeria)

80 80

iii Transtel Engineering (Tianjin) Co. Ltd (6)

(China)

Provision of turnkey telecommunications solutions (China)

100 100

iii Transtel Engineering Thailand Ltd (12)

(Thailand)

Provision of turnkey telecommunications solutions (Thailand)

100 100

iv Transtel Engineering Pty Ltd(Australia)

Provision of turnkey telecommunications solutions (Australia)

100 100

iii TransTel Engineering(M) Sdn Bhd (13)

(Malaysia)Provision of turnkey telecommunications solutions (Malaysia)

80 80

iv Transtel Engineering Arabian Limited Co.(Saudi Arabia)

Provision of turnkey telecommunications solutions(Saudi Arabia)

100 100

iv Transtel Engineering PNG Limited(Papua New Guinea)

Provision of turnkey telecommunications solutions(Papua New Guinea)

100 100

iii CSE Systems & Engineering (Thailand) Limited (12)

(Thailand)

Sales and provision of computer network systems (Thailand)

100 100






Percentageof equity

held by theGroup

2013 2012% %

Held by CSE-Global (Australia) Pty Ltd

iii CSE-Uniserve Corporation Pty Ltd (9)

(Australia)

Distribution of electrical engineering equipment and investment holding(Australia)

100 100

iii Astib Group Pty Ltd (9)

(Australia)Provision of telecommunications solutions(Australia)

100 100

Held by CSE-Uniserve Corporation Pty Ltd

iii CSE-Uniserve Pty Ltd (9)

(Australia)Distribution of electrical engineering equipment(Australia)

100 100

iii CSE-Uniserve Engineering Pty Ltd (9)

(Australia)

Dormant(Australia)

100 100

iii CSE-W Arthur Fisher Limited (10)

(New Zealand)Distribution of electrical engineering equipment and manufacture of process control and automation equipment(New Zealand)

100 100

Held by Astib Group Pty Ltdiii CSE-Transtel Pty Ltd (9)


100 100

iii CSE-CX Distribution PtyLtd (9)

(Australia)

Provision of telecommunications solutions(Australia)

100 100

iii CSE-Comsource Pty Ltd (9)


100 100




(i) Audited by Ernst & Young LLP, Singapore

(ii) Audited by associated fi rms of Ernst & Young LLP, Singapore

(1) Audited by Ernst & Young, Kuala Lumpur

(2) Audited by Ernst & Young LLP, Leeds

(iii) Audited by other auditors

(3) Audited by Foster Raffan, Certifi ed Public Accountants

(4) Audited by Flynn, Horlacher & Parker, P.C., Certifi ed Public Accountants

(5) Audited by M.V Guruprasad, Chartered Accountants

(6) Audited by Tianjin Jin Xiang, Certifi ed Public Accountants

(7) Audited by Beijing Zhong Shi, Certifi ed Public Accountants

(8) Audited by Tax Audit Consult s.r.o.

(9) Audited by BDO Australia Ltd

(10) Audited by BDO Auckland

(11) Audited by Delvaux, Fronville, Servais ET Associates

(12) Audited by Nathee Audit Offi ce, Certifi ed Public Accountants

(13) Audited by RSM Robert Teo, Kuan & Co.

(14) Audited by Goh Boon Kok & Co

(15) Audited by Baker Tilly UK Audit LLP

(16) Audited by Deloitte Norway

(iv) Not required to be audited under the laws of the country of incorporation

(v) Not required to be audited under the laws of the country of incorporation, but audited by Ernst & Young LLP, Singapore for the purpose of consolidation of the Group.

As required by Rule 716 of the Listing Manual of the Singapore Securities Trading Limited, the Audit Committee and the Board of Directors of the Company have satisfi ed themselves that the appointment of different auditors for its subsidiaries would not compromise the standard and effectiveness of the audit of the Group.



4.

Prop

erty

, pla

nt a

nd e

quip

men

t

Gro

upFr

eeho

ldla

nd

Leas

ehol

d la

nd a

nd

build

ings

Leas

ehol

dim

prov

e-m

ents

Plan

tan

dm

achi

nery

Tool

san

deq

uipm

ent

Offi

cefu

rnitu

rean

d fi t

tings

Com

pute

req

uipm

ent

Mot

orve

hicl

esTo

tal

$’00

0$’

000

$’00

0$’

000

$’00

0$’

000

$’00

0$’

000

$’00

0

Cost: At 1

Jan

uary

201

289

87,

975

2,27

410

,307

4,36

39,

280

4,41

13,

298

42,8

06C

urre

ncy

real

ignm

ent

(50)

(395

)(8

7)(2

95)

(213

)(3

89)

(147

)(1

48)

(1,7

24)

Addi

tions

462

1,67

110

81,

400

574

736

687

755

6,39

3 A

cqui

sitio

n of

a su

bsid

iary

(Not

e 5)

–67

812

3–

124

1122

881,

046

Disp

osal

s–

––

(1,0

30)

(1)

(377

)(1

0)(6

05)

(2,0

23)

Writ

e-of

f–

––

–(2

)(3

)(2

1)–

(26)

At 3

1 De

cem

ber 2

012

and

1 Ja

nuar

y 20

131,

310

9,92

92,

418

10,3

824,

845

9,25

84,

942

3,38

846

,472

Cur

renc

y re

alig

nmen

t75

318

44(1

,122

)56

(197

)(4

2)22

(846

)Ad

ditio

ns–

229

196

293

976

1,25

767

617

63,

803

Acqu

isitio

n of

a su

bsid

iary

(Not

e 5)

––

––

–75

19–

94Di

vestm

ent o

f sub

sidia

ries (

Note

6)

–(1

,359

)(3

04)

(1,2

10)

(636

)(1

,040

)(2

,418

)(3

0)(6

,997

)Di

spos

als

––

–(1

,114

)(1

28)

(1,8

28)

(40)

(355

)(3

,465

)W

rite-

off

––

(17)

(961

)–

(648

)(1

24)

(11)

(1,7

61)

At 3

1 De

cem

ber 2

013

1,38

59,

117

2,33

76,

268

5,11

36,

877

3,01

33,

190

37,3

00

Accu

mul

ated

dep

reci

atio

n a

nd im

pairm

ent l

oss:

At 1

Jan

uary

201

2–

2,17

41,

657

1,91

82,

360

5,17

23,

266

1,27

417

,821

Cur

renc

y re

alig

nmen

t–

(124

)(7

5)(5

6)(1

28)

(231

)(1

20)

(73)

(807

)C

harg

e fo

r the

yea

r- C

ontin

uing

ope

ratio

ns–

375

347

108

671

698

384

708

3,29

1- D

iscon

tinue

d op

erat

ion

–28

4112

378

4323

720

570

Disp

osal

s–

––

(747

)–

(328

)(6

)(3

74)

(1,4

55)

Writ

e-of

f–

––

––

(2)

(24)

–(2

6)

At 3

1 De

cem

ber 2

012

and

1 Ja

nuar

y 20

13–

2,45

31,

970

1,34

62,

981

5,35

23,

737

1,55

519

,394

Cur

renc

y re

alig

nmen

t–

100

39(7

0)37

(81)

(7)

3250

Cha

rge

for t

he y

ear

- Con

tinui

ng o

pera

tions

–39

615

731

840

797

331

152

03,

082

- Disc

ontin

ued

oper

atio

n–

1887

148

8884

234

1667

5Di

vestm

ent o

f sub

sidia

ries (

Note

6)

–(1

70)

(192

)(1

,014

)

(381

)(3

66)

(1,7

33)

(1)

(3,8

57)

Disp

osal

s–

––

–

(89)

(1,0

37)

(38)

(319

)(1

,483

)W

rite-

off

––

(11)

(327

)–

(303

)(7

)(1

1)(6

59)

At 3

1 De

cem

ber 2

013

–2,

797

2,05

040

13,

043

4,62

22,

497

1,79

217

,202

Net c

arry

ing

valu

e:

At 3

1 De

cem

ber 2

013

1,38

56,

320

287

5,86

72,

070

2,25

551

61,

398

20,0

98

At 3

1 De

cem

ber 2

012

1,31

07,

476

448

9,03

61,

864

3,90

61,

205

1,83

327

,078



4. Property, plant and equipment (cont’d)

Group (cont’d)

During the fi nancial year, the Group acquired property, plant and equipment with an aggregate cost of $351,000 (2012: $661,000) by means of fi nance leases. The cash outfl ow on acquisition of these property, plant and equipment amounted to $3,452,000 (2012: $5,732,000). The carrying amount of property, plant and equipment held under fi nance leases at the end of the fi nancial year was $264,000 (2012: $377,000). The depreciation charged out for the fi nancial year included $675,000 from the discontinued operation.

CompanyLeasehold

improvements

Offi cefurniture

andfi ttings

Computerequipment Total

$’000 $’000 $’000 $’000

Cost:At 1 January 2012 411 66 204 681Additions 19 2 10 31At 31 December 2012 and 1 January 2013 430 68 214 712 Additions 4 2 31 37At 31 December 2013 434 70 245 749

Accumulated depreciation:At 1 January 2012 305 57 181 543Charge for the year 57 3 19 79At 31 December 2012 and 1 January 2013 362 60 200 622Charge for the year 46 3 21 70At 31 December 2013 408 63 221 692

Net carrying value:At 31 December 2013 26 7 24 57

At 31 December 2012 68 8 14 90

5. Investment in subsidiaries and amounts due from/(to) subsidiary companies

Company2013 2012$’000 $’000

Unquoted shares, at cost 222,551 243,700

Allowance for impairment losses

At 1 January – –Written off against cost – –At 31 December – –

Details of the subsidiary companies are set out in Note 3.



5. Investment in subsidiaries and amounts due from/(to) subsidiary companies (cont’d)

Amounts due from/(to) subsidiary companies

Amounts due from subsidiary companies, current:-Trade 5,132 12,035Non-trade 160 408Short term loans 1,164 8,958Long term loans – 26,732

Amounts due from subsidiary companies, current 6,456 48,133

Amounts due from subsidiary companies denominated in foreign currencies at December are as follows:

United States Dollars 4,476 16,513Australia Dollars 128 30,300

Amounts due to subsidiary companies, current:-Trade 2,284 1,591Non-trade 386 236Short term loans 70,018 44,948

Amounts due to subsidiary companies, current 72,688 46,775

Amounts due to subsidiary companies denominated in foreign currencies at December are as follows:-

United States Dollars 36,273 7,777Malaysian Ringgit 382 235Euro – 2,418

Except for short term loans, the amounts due from/(to) subsidiary companies are unsecured, non-interest bearing, repayable on demand and are to be settled in cash. The short term loans due from subsidiary companies bear interest at 4.25% (USD) per annum (2012: 6.0% (USD), 6.7% (AUD)). The short term loans due to subsidiary companies bear interest at 4.25% (USD) per annum (2012: 4.25%(USD)).




Acquisition of a subsidiary company in 2012

On 30 November 2012 (the “acquisition date”), the Group acquired 66% of Power Diesel Engineering Pte Ltd (“Power Diesel”). Power Diesel is a private company registered in Singapore and its principal activities are to provide overhauling services and spare parts supply for diesel engines in the marine, oil and gas, industrial and construction industry. Power Diesel became a subsidiary of the Group upon acquisition.

The fair values of the identifi able assets and liabilities of Power Diesel as at the acquisition date were:

Fair valuerecognised

on acquisition$’000

Property, plant and equipment 1,046Trade and other receivables 2,896Inventories 69Cash and cash equivalent 2,339

6,350

Trade and other payables (1,498)Provision for taxation (455)

(1,953)

Total identifi able net assets acquired 4,397Non-controlling interest measured at the non-controlling interest’s proportionate share of Power Diesel’s net identifi able assets (34%) (1,495)Goodwill arising from acquisition 3,368Total purchase consideration (66%) 6,270Less: Cash received upon acquisition (2,339)Less: Contingent consideration recognised as at 31 December 2012 (2,310)Net cash outfl ow on acquisition 1,621




Acquisition of a subsidiary company in 2013

S3 ID Group Limited

On 22 July 2013 (the “acquisition date”), the Group acquired 75% of S3 ID Group Limited (“S3 ID”). S3 ID is a private company registered in United Kingdom and its principal activities is to design and build its products and solutions with safety, quality and reliability serving the on-shore and off-shore oil & gas industries. S3 ID became a subsidiary of the Group upon acquisition.

The fair values of the identifi able assets and liabilities of S3 ID upon completion of the purchase price allocation exercise as at the acquisition date were:



Property, plant and equipment 75Intangible assets 12Trade and other receivables 4,079Inventories 1,977Cash and cash equivalent (995)

5,148

Trade and other payables (2,326)Loans due to a related company (1,274)

(3,600)

Total identifi able net assets acquired 1,548Non-controlling interest measured at the non-controlling interest’s proportionate share of S3 ID’s net identifi able assets (25%) (387)Intangible assets arising from acquisition 4,235Goodwill arising from acquisition 9,300Total purchase consideration 14,696Add: Cash and cash equivalent received upon acquisition 995Net cash outfl ow on acquisition 15,691

Call and put option for the remaining 25% consideration arrangement

As part of the purchase agreement with the non-controlling interest of S3 ID, additional cash payments of £6,125,000 shall be due to the non-controlling interest of S3 ID if the following minimum conditions are met :

(a) Average EBITDA of no less than £3,500,000 over the qualifying 3 fi nancial years and;

(b) EBITDA of no less than £3,000,000 for each qualifying fi nancial period.

Transaction costs

Transactions costs related to the acquisition of $586,000 have been recognised in the “Administrative expenses” line item in the Group’s profi t or loss for the year ended 31 December 2013.




Acquisition of a subsidiary company in 2013 (cont’d)

S3 ID Group Limited (cont’d)

Trade and other receivables acquired

Trade and other receivables acquired comprised of trade receivables and others receivable of $3,544,000 and $535,000 respectively. It is expected that the full contractual amount of the trade and other receivables can be collected.

Goodwill arising from acquisition

Goodwill of $9,300,000 comprises the value of strengthening the Group’s market position in the Oil and Gas Industry. None of the goodwill recognised is expected to be deductible for tax purposes.

Impact of the acquisition on profi t or loss

From the acquisition date, S3 ID has contributed $5,676,996 of revenue and $589,024 to the Group‘s profi t for the year. If the business combination had taken place at the beginning of the year, the revenue from continuing operations would have been $11,560,000 and the Group‘s profi t from continuing operations, net of tax would have been $904,000.

Tynemarch Holdings Limited

On 13 February 2013 (the “acquisition date”), the Group acquired 100% of Tynemarch Holdings Limited (“Tynemarch”). Tynemarch is a private company registered in United Kingdom and its principal activities is to provide a wide range of software development and consultancy services including asset management, water resources and supply optimisation, leakage management and water industry research. Tynemarch became a subsidiary of the wholly-owned subsidiary CSE Global (UK) Limited upon acquisition, and was divested along with the Servelec Group PLC on 2 December 2013 (Note 6).



Property, plant and equipment 19Intangible assets 6Trade and other receivables 481Inventories 475Cash and cash equivalent 3,019

4,000Trade and other payables (502)Total identifi able net assets acquired 3,498Goodwill arising from acquisition 2,985Total purchase consideration 6,483Less: Cash received upon acquisition (3,019)Net cash outfl ow on acquisition 3,464




Acquisition of a subsidiary company in 2013 (cont’d)

Tynemarch Holdings Limited (cont’d)

Trade and other receivables acquired

Trade and other receivables acquired comprised of trade receivables and others receivable of $384,000 and $97,000 respectively. It is expected that the full contractual amount of the trade and other receivables can be collected.

Goodwill arising from acquisition

Goodwill of $2,985,000 comprises the value of strengthening the Group’s market position in the water and environmental management industry. None of the goodwill recognised is expected to be deductible for tax purposes.

Divestment

Tynemarch was divested along with the Servelec Group PLC through an initial public offering (“IPO”) on the London Stock Exchange on 2 December 2013.

6. Discontinued operation and disposal group

The Group divested its entire shareholding interest in Servelec Group PLC (formerly known as CSE Global (UK) Limited) (“Servelec”) through an initial public offering (“IPO”) on the London Stock Exchange on 2 December 2013.

The summarised fi nancial information of the discontinued operation is as follows:

Group2013 2012$’000 $’000

ResultRevenue 89,250 96,228Cost of sales (48,064) (50,520)

Gross profi t 41,186 45,708Expenses (21,620) (22,509)

Profi t before tax 19,566 23,199Taxation (4,566) (5,414)Share of profi t of associated company – 330Gain on disposal of associated company – 9,186Gain on disposal of subsidiary companies 90,379 –Profi t from discontinued operation and divestment group 105,379 27,301

Earnings per share from discontinued operation and divestment group attributable to owners of the Company (cents per share) Basic EPS 20.42 5.29

Diluted EPS 20.42 5.29



6. Discontinued operation and disposal group (cont’d)

The summarised fi nancial information of the discontinued operation is as follows:

Balance Sheet as at

GroupNovember December

2013 2012$’000 $’000

AssetsProperty, plant and equipment 3,140 3,087Intangible assets 45,232 41,464Deferred tax assets 2,765 2,255Inventories 45,216 32,044Trade and other receivables 20,576 16,145Amount due to holding / related companies – 2,571Cash and bank balances 11,118 21,769Assets of the divested group 128,047 119,335

LiabilitiesTrade and other payables 5,660 2,921Amount due from holding/related companies – 4,259Accruals and provision 6,001 9,386Provision for tax 2,885 3,439Deferred tax liabilites 464 581Advance from customers 12,132 4,500Liabilities of the divested group 27,142 25,086Net assets directly associated to the divested group 100,905 94,249

Disposal of subsidiaries company in FY2013

The Group divested its entire shareholding interest in Servelec Group PLC (formerly known as CSE Global (UK) Limited) (“Servelec”) through an initial public offering (“IPO”) on the London Stock Exchange on 2 December 2013.

2013$’000

Investment at cost 72,746Share of post-acquisition reserves as at 1 January 2013 32,211Share of post-acquisition reserves for the period ended 30 November 2013 9,076Hedging reserve 1,382Carrying amount of investments 115,415Cash and bank balances as at date of divestment (11,118)Disposal gain from sale of subsidiary companies 90,379Total cash consideration received net of cash divested 194,676



6. Discontinued operation and disposal group (cont’d)

Disposal of associated company in FY2012

The Group disposed of its shares in eBworx Berhad, an associated company held by its 100% owned subsidiary CSE-Global (Asia) Ltd in May 2012.

2012$’000

Quoted shares, at cost 168Goodwill on consolidation 1,282Share of post-acquisition reserves as at 1 January 2012 9,078Share of post-acquisition reserves for the period ended 30 April 2012 330Carrying amount of investments 10,858Disposal gain from sale of associated company 9,186Total cash consideration received 20,044

7. Other investment

Group Company2013 2012 2013 2012$’000 $’000 $’000 $’000

Available-for-sale investment- Equity instruments (unquoted) at cost 190 190 190 190



8. Intangible assets

Group Goodwill

Sales order backlog

(acquired) Licenses

Intellectualproperty

rights Total$’000 $’000 $’000 $’000 $’000

Cost:At 1 January 2012 103,928 1,062 294 7,933 113,217Currency realignment (3,190) (27) (5) (217) (3,439)Additions – – 1,693 – 1,693Due to acquisition of a subsidiary 3,368 – – – 3,368Due to disposal of an associated company (2,309) – – – (2,309)At 31 December 2012 and 1 January 2013 101,797 1,035 1,982 7,716 112,530Currency realignment (1,329) 56 8 553 (712)Additions – – 21 – 21Adjustment for contingent settlement (235) – – – (235)Written off intangible assets (26,821) (397) – (9) (27,227)Due to acquisition of a subsidiary 12,285 396 – 3,857 16,538Due to divestment of subsidiaries (42,054) (663) (253) (8,004) (50,974)At 31 December 2013 43,643 427 1,758 4,113 49,941

Accumulated amortisation and impairment loss:

At 1 January 2012 5,723 – 146 3,918 9,787Currency realignment – (42) – (107) (149)Provided during the year

- Continuing operations – 50 – 82 132- Discontinued operation – 294 48 579 921

Due to disposal of an associated company (1,027) – – – (1,027)At 31 December 2012 and 1 January 2013 4,696 302 194 4,472 9,664Currency realignment (13) 79 7 187 260Provided during the year

- Continuing operations – 43 116 268 427- Discontinued operation – 171 78 517 766

Written off intangible assets (104) (132) – – (236)Due to divestment of subsidiaries (14) (404) (88) (5,236) (5,742)At 31 December 2013 4,565 59 307 208 5,139

Net carrying valueAt 31 December 2013 39,078 368 1,451 3,905 44,802

At 31 December 2012 97,101 733 1,788 3,244 102,866

Remaining amortisation period (years) – 2013 NA 3 9 NA NA

Remaining amortisation period (years) – 2012 NA 2 3 to 10 4 to 7 NA



8. Intangible assets (cont’d)

The Group acquired Tynemarch Holdings Ltd through its 100% owned subsidiary, CSE Global UK Ltd, and CSE Global UK Ltd was divested on 2 December 2013. The intangible assets arose on the Tynemarch acquisition was $2,991,000, and the amortisation charged out for the divested business for eleven months of fi nancial year was $766,000.

Intellectual property rights

As at 1 January 2013, intellectual property rights relate to the rights and technology relating to the Kingfi sher Remote Telemetry Unit (RTU) and the technology relating to the TBOXTM brand of RTU that were acquired in business combinations and related product development costs incurred to further develop the technology and the intellectual property rights was disposed in the fi nancial year 2013. The intellectual property license is related to industrial design rights for automatic chemical resistance starters for electric motors which acquired in December 2012. Amortisation commenced in January 2013 once this intellectual property license is put to use.

Company Licenses$’000

Cost:At 1 January 2013 1,759Addition −

At 31 December 2013 1,759

Accumulated amortisation:At 1 January 2012 147Provided during the year −

At 31 December 2012 147Provided during the year 161

At 31 December 2013 308

Net carrying value:At 31 December 2013 1,451

At 31 December 2012 1,612

Amortisation of licenses and intellectual property are included in the “Other expenses” line item in profi t or loss.



8. Intangible assets (cont’d)

Impairment testing of goodwill and intellectual property rights

Goodwill acquired through business combinations and intellectual property rights have been allocated to the Group’s cash-generating units (CGU) identifi ed according to each individual business unit for impairment testing, as follows:-

Group2013 2012$’000 $’000

Power Diesel Engineering Pte Ltd 3,132 3,367W-Industries, Inc. 13,662 13,153CSE-Global (UK) Limited ## − 27,257S3 ID Group Ltd 10,024 –CSE-Global (Australia) Pty Ltd 7,208 35,364CSE-Semaphore Belgium ## − 7,419CSE-Semaphore Australia ## − 2,952CSE-Transtel Pte Ltd − 2,706CSE-EIS (Malaysia) Sdn Bhd 486 486CSE-Hankin, Inc 4,566 4,397

39,078 97,101

## The Group divested its entire shareholding interest in Servelec Group PLC (formerly known as CSE Global (UK) Limited) (“Servelec”) through an initial public offering (“IPO”) on the London Stock Exchange on 2 December 2013.

The recoverable amounts of the CGUs are determined based on value-in-use calculations. The value-in-use calculations use 5-year cash fl ow projections based on fi nancial budgets approved by management. Management have considered and determined the factors applied in these fi nancial budgets which include budgeted gross margins and average growth rates. The budgeted gross margins are based on past performance and its expectation of market development. Average growth rates of 0% - 10% (2012: 0% - 10%) used are consistent with forecasts based on existing contracts and book orders. The discount rate applied is assumed at 7.4% (2012: 7.4%) for value-in-use calculations, which approximates the Group weighted average cost of capital.

The calculations of value-in-use for the CGUs are most sensitive to the following assumptions:

Budgeted gross margins - Gross margins are based on average values achieved in the year preceding the start of the budget period. These have been forecasted to remain constant over the budget period.

Discount rate - Discount rate used refl ecting management’s estimate of the risks and the expected returns from the CGUs.

Sensitivity to changes in assumptions

With regards to the assessment of value-in-use, management believes that no reasonably possible changes in any of the above key assumptions would cause the carrying value of the unit to materially exceed its recoverable amount.



9. Deferred tax assets/(liabilities)

Group Company2013 2012 2013 2012$’000 $’000 $’000 $’000

Deferred tax assets 13,461 13,923 4,236 –Deferred tax liabilities (4,652) (5,040) – (686)

8,809 8,883 4,236 (686)

This can be analysed as follows :-Differences in depreciation and amortisation (3,485) (4,093) (35) (10)Provisions 3,327 3,171 246 –Unutilised tax losses 5,827 10,486 – 71Unutilised capital allowances – 43 – –Revenue recognised on accrual basis 4,025 (747) 4,025 (747)Other deferred tax assets/(liabilities) (885) 23 – –

8,809 8,883 4,236 (686)

Recognised tax losses and capital allowances

As at 31 December 2013, the Group has $32,585,000 tax losses (2012: $40,943,000) and $Nil capital allowances (2012: $255,000) available for offset against future taxable profi ts of the companies in which the losses and capital allowances arose. The use of the tax losses and capital allowances are subject to the agreement of the tax authorities and compliance with tax regulations of the respective countries in which the subsidiary companies operate.

Unrecognised temporary differences relating to investments in subsidiaries

At 31 December 2013, no deferred income tax liability has been recognised (2012: $Nil) for taxes that would be payable on the unremitted earnings of certain of the Group’s subsidiaries as the Group has control over the remittance and has determined that unremitted earnings will not be remitted in the foreseeable future.

Tax consequences of proposed dividends

There are no income tax consequences attached to the dividends proposed by the Company but not recognised as a liability in the fi nancial statements (Note 33).



10. Gross amount due from/(to) customers for contract work-in-progress

Group2013 $’000

2012 $’000

Aggregate amount of costs incurred and attributable profi ts less recognised losses to date 642,630 591,078Less: Progress billings (597,782) (518,049)Less: Provision for foreseeable losses (9,065) (7,562)Amounts due from customers for contract work, net 35,783 65,467

Movement in provision account:

At 1 January 7,562 19,903Currency realignment 493 (793)Provision 8,083 1,870Utilisation (7,073) (13,418)

9,065 7,562

The provision made represents management’s estimate for additional costs to be incurred to complete various projects for its telecommunication division in the Middle East.

Presented as :Gross amount due from customers for contract work 62,737 94,615Gross amount due to customers for contract work (26,954) (29,148)

35,783 65,467

Advances received included in gross amount due to customers for contract work 21,105 11,762

Retention sums on project contracts included in trade receivables 5,185 2,263

11. Inventories

Group2013 2012$’000 $’000

Balance sheet:Raw materials 4,305 5,059Work-in-progress 4,574 4,141Finished goods 6,155 5,968Inventories in transit 221 1,717Total inventories at lower of cost and net realisable value 15,255 16,885

Income statement:Inventories recognised as an expense in cost of sales is inclusive of the following charge/(credit):

Allowance made/(written back) during the year 144 (32)Inventories written off – 920Inventories written off due to divestment 801 –



12. Trade and other receivables

Group Company2013 2012 2013 2012$’000 $’000 $’000 $’000

Trade receivables 109,011 133,457 1,239 926Other receivables 1,346 2,804 326 320Refundable deposits 528 904 39 39Staff advances 74 241 – –Tax recoverable 1,326 301 45 –GST receivables 377 1,355 – –Interest receivables 14 4 – –Total trade and other receivables 112,676 139,066 1,649 1,285Add : Amounts due from subsidiary companies (Note 5) – – 6,456 48,133Cash and cash equivalents (Note 26) 186,586 74,197 131,950 4,457Total loans and receivables 299,262 213,263 140,055 53,875

Trade receivables are non-interest bearing and are generally on 30 to 120 days’ terms. They are recognised at their original amounts which represent their fair values on initial recognition.

Trade and other receivables denominated in foreign currencies at 31 December are as follows:

Group Company2013 2012 2013 2012$’000 $’000 $’000 $’000

United States Dollars 83,189 92,741 29 37British Pounds Sterling 1,192 10,991 114 –Australian Dollars 8,280 12,702 – –Euro 3,205 6,305 – –

Staff advances

Staff advances are unsecured and non-interest bearing.



12. Trade and other receivables (cont’d)

Receivables that are past due but not impaired

The Group has trade receivables amounting to $7,777,000 (2012: $7,858,000) that are past due at the balance sheet date but not impaired. These receivables are unsecured and the analysis of their aging at the balance sheet date is as follows:

Group Company2013 2012 2013 2012$’000 $’000 $’000 $’000

Trade receivables past due but not impaired: Less than 30 days 5,040 1,805 29 10 30 to 60 days 1,983 2,853 – – 61 to 90 days 113 592 – – 91 to 120 days 641 713 29 751 More than 120 days – 1,895 – –

7,777 7,858 58 761

Receivables that are impaired

The Group’s trade receivables that are impaired at the balance sheet date and the movement of the allowance account used to record the impairment are as follows:

Group CompanyIndividually impaired Individually impaired

2013 2012 2013 2012$’000 $’000 $’000 $’000

Trade receivables – nominal amounts 876 1,725 – –Less: Allowance for impairment (876) (1,725) – –

– – – –

Movement in allowance account : At 1 January 1,725 2,025 – – Currency realignment 66 (79) – – Charge for the year 461 516 – – Due to divestment (1,152) − – – Written back (147) (488) – – Written off (77) (249) – – At 31 December 876 1,725 – –

Trade receivables that are individually determined to be impaired at the balance sheet date relate to debtors that are in signifi cant fi nancial diffi culties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.



13. Trade payables and accruals

Group Company2013 2012 2013 2012$’000 $’000 $’000 $’000

Trade payables 31,261 32,974 337 42Accruals 185,787 44,992 162,136 6,020Total trade payables and accruals 217,048 77,966 162,473 6,062Add : Amounts due to subsidiaries (Note 5) – – 72,688 46,775Finance leases (Note 28) 347 518 – –Loans and borrowings (Note 14) 2,722 118,675 1,056 118,411Total fi nancial liabilities carried at amortised cost 220,117 197,159 236,217 171,248

Trade payables and accruals are non-interest bearing and are normally settled on 60-day terms. Trade payables and accruals denominated in foreign currencies at 31 December are as follows:

United States Dollars 32,091 37,374 – –British Pounds Sterlings 3,168 10,170 275 –Australian Dollars 7,951 6,648 – 38Euro 3,137 4,196 – 1

The accruals comprises special dividend of $144,499,000 which has been paid on 13 January 2014.

14. Loans and borrowings

Group Company2013 2012 2013 2012$’000 $’000 $’000 $’000

Short term loans, unsecured - Singapore Dollars 1,457 28,111 1,056 28,024 - Australian Dollars – 1,280 – 1,280Current portion of long term loans, unsecured Less: Unamortised facility fees – (983) – (983)

1,457 28,408 1,056 28,321Long term loans, unsecured - Singapore Dollars 1,265 91,215 – 91,038Less: Unamortised facility fees – (948) – (948)

1,265 90,267 – 90,090Total loans and borrowings 2,722 118,675 1,056 118,411

The unsecured short term loans of the Company and of the Group bear interest at 1.8% - 5.00% (2012: 1.72% - 6.60%) per annum, the unsecured long term loans of the Company and of the Group bear interest at 2.37% - 3.35% (2012: 2.38% - 5.25%) per annum.

On 26 December 2013, the Company redeemed its SGD120 million 3 year syndicated loan facility from DBS Bank Limited, Oversea-Chinese Banking Corporation Limited, The Hongkong and Shanghai Banking Corporation Limited and United Overseas Bank Limited.



15. Provision for warranties

Group2013 $’000

2012 $’000

At 1 January 1,736 2,220Currency realignment 20 (74)Written off due to divestment (488) −Provision during the year 633 754Provision written back (314) (1,079)Provision utilised (12) (85)At 31 December 1,575 1,736

Provision for warranties relates to estimated costs for possible rectifi cation work during the warranty period of the gross amount due from/(to) customers for contract work-in-progress. The provision for such costs is based on estimates made from historical data associated with similar projects. Upon the expiry of the warranty period, the Group would proceed to write back any unused portion of the warranty provision.

16. Share capital

Group and Company2013 2012

No ofshares

No ofshares

’000 $’000 ’000 $’000

Issued and fully paid ordinary shares

At 1 January and 31 December 516,068 98,542 516,068 98,542

The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restriction. The ordinary shares have no par value.

17. Other reserve

Other reserve comprises the surplus from the sale of the treasury shares and premium paid on acquisition of non-controlling interests from the purchase of Transtel Arabia Limited Co.

18. Foreign currency translation reserve

The foreign currency translation reserve represents exchange differences arising from the translation of the fi nancial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency.



19. Revenue

Revenue mainly represents the revenue recognised on projects-in-progress.

20. Miscellaneous income

Group2013 $’000

2012 $’000

Rental income 189 220Commission income − 2Miscellaneous income 1,890 2,007Net foreign exchange gain/(loss) 830 (1,282)

2,909 947

21. Finance income

Group2013 $’000

2012 $’000

Interest income – short-term deposits 395 438

22. Finance costs

Group2013 $’000

2012 $’000

Interest expense 3,588 4,151Bank charges 2,132 1,153

5,720 5,304



23. Profi t before tax from continuing operations

Group2013$’000

2012$’000

(Reclassifi ed)

The following items have been included in arriving at profi t before tax from continuing operations :-

Audit services paid to: -Auditors of the Company 564 383Other auditors of subsidiary companies 156 268

Non-audit services paid to: -Other auditors of subsidiary companies 14 −

Depreciation of property, plant and equipment (Note 4) 3,082 3,291Loss/(gain) on disposal of property, plant and equipment 278 (165)Intangible assets written off 26,991 −Property, plant and equipment written off 1,102 −Amortisation of intangible assets (Note 8) 427 132Allowance for inventories obsolescence made/(written back), net (Note 11) 144 (32)Gain on disposal of associated company − (9,186)Gain on divestment of subsidiaries (90,379) −Allowance for doubtful trade receivables, net (Note 12) 314 28Bad trade receivables written off 62 161Provision for foreseeable losses (Note 10) 8,083 1,870Provision for warranties made/(written back), net (Note 15) 319 (325)Personnel and related costs comprising :-

Salaries and bonuses 37,975 38,991Employees’ provident fund 2,723 2,493Other personnel and related costs 15,104 17,243

Rental expenses 4,741 4,128Directors’ fees

- Directors of the Company 735 366



24. Income tax expense

The major components of income tax expense for the years ended 31 December are :

Group2013 $’000

2012 $’000

Current taxation – continuing operations :- Singapore 3,474 2,048- Foreign 7,554 8,437

Deferred taxation – continuing operations :- Singapore (5,272) 251- Foreign 2,365 (641)

Income tax expense attributable to continuing operations 8,121 10,095Withholding tax 485 490Over provision for prior years’ taxation – current (241) (836)(Over)/Under provision for prior years’ taxation – deferred (609) 507Income tax expense attributable to continuing operations 7,756 10,256Income tax expense attributable to discontinued operation 4,566 5,414Income tax expense recognised in the statement of comprehensive income 12,322 15,670

A reconciliation between the tax expense and the product of accounting profi t before tax multiplied by the applicable tax rate for the fi nancial years ended 31 December can be analysed as follows:

Group2013 $’000

2012 $’000

Profi t before tax from continuing operations 12,515 39,052Profi t before tax from discontinued operation (excluding share of results of associated companies) 109,945 32,385Accounting profi t before tax 122,460 71,437

Taxation at statutory tax rate of 17% (2012:17%) 20,818 12,144Adjustments : Expenses not deductible for tax purposes 14,753 1,047 Income not subject to taxation (26,969) (4,052) Effect of tax deductions and reliefs (395) (574) Deferred tax assets not recognised 2,527 1,918 Utilisation of tax losses and capital allowance previously not recognised (3,991) (87) Different effective tax rates of other countries 5,477 5,568 Effect of change in tax rate 927 (100) Over provision in respect of previous year (850) (329) Withholding tax 485 490 Others (460) (355)

12,322 15,670

The above reconciliation is prepared by aggregating separate reconciliations for each national jurisdiction.



25. Earnings per share

Basic earnings per share

Basic earnings per share amounts are calculated by dividing profi t for the fi nancial year that is attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding during the fi nancial year.

Diluted earnings per share amounts are calculated by dividing profi t for the fi nancial year that is attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding during the fi nancial year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.

The following tables refl ect the profi t and share data used in the computation of basic and diluted earnings per share for the years ended 31 December:

Group2013 $’000

2012 $’000

Profi t for the year attributable to owners of the Company 108,764 56,097Less: Profi t from discontinued operation, net of tax, attributable to owners of the Company (105,379) (27,301)Profi t from continuing operation, net of tax, attributable to owners of the Company used in computation of basic and diluted earnings per share * 3,385 28,796

No. of shares2013 $’000

2012 $’000

Weighted average number of shares for basic earnings per share computation :- ** Outstanding during the year 516,068 516,068

* Contains goodwill written off of $26,991,000 (2012: $Nil) ** Rounded to the nearest thousand.

Diluted earnings per share

The weighted average number of ordinary shares adjusted for the effect of all dilutive potential ordinary shares is determined as follows :-

No. of shares2013 2012’000 ’000

Weighted average number of shares outstanding during the year, used in the computation of basic earnings per share 516,068 516,068Weighted average number of ordinary shares adjusted for the effect of dilution 516,068 516,068



26. Cash and cash equivalents

Group Company2013 2012 2013 2012$’000 $’000 $’000 $’000

Short-term deposits 3,676 18,244 − −Cash and bank balances 182,910 55,953 131,950 4,457

186,586 74,197 131,950 4,457

Cash at banks earns interest at fl oating rates based on daily bank deposit rates. Short-term deposits are made for varying periods of between one week to three months depending on the immediate cash requirements of the Group and Company, and earn interest at the respective short-term deposit rates ranging from 0 - 9.75% (2012: 0 - 9.3%) per annum.

Cash and cash equivalents denominated in foreign currencies at 31 December are as follows:

Group2013 2012$’000 $’000

United States Dollars 31,606 28,069British Pounds Sterling 2,726 17,961Australian Dollars 8,653 6,803Euro 1,364 4,097

Included in the Company’s cash and cash equivalents balance at 31 December 2013 is an amount of approximately $111,000 (2012: $348,000) denominated in United States Dollars.

27. Segment information

For management purposes, the Group is organised as one business unit with a single reportable operating segment. The Group is in the business of systems integration solution and the provision of computer network systems. The provision of these services provides the Group with similar risks and rates of returns. For this reason, the management and the Directors are of the opinion that the Group only has one operating segment.

Geographical information

The turnover by geographical segments is based on the location of customers regardless of where the goods are produced.

The following table presents revenue and non-current assets information regarding geographical segments for the year ended 31 December 2013 and 2012:

Asia-Pacifi c* America Europe/Middle East Consolidated2013 2012 2013 2012 2013 2012 2013 2012$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Sales to external customers 141,362 126,949 206,258 214,711 68,419 106,581 416,039 448,241

Non-current assets 35,495 61,722 29,405 28,558 − 39,664 64,900 129,944

* Projects in Asia-Pacifi c cover countries such as Singapore, China, Hong Kong, Korea, Japan, Thailand, Malaysia, Indonesia, Vietnam, and Australia.



27. Segment information (cont’d)

Non-current assets information presented above consists of intangible assets and fi xed assets as presented in the consolidated balance sheet.

Information about major customers

Revenue from major customers amount to approximately $16,744,000 (2012: $17,386,000).

28. Commitments

(a) Operating lease commitments – As lessee

As at the balance sheet date, the Group has the following minimum lease payments under non-cancellable operating leases on premises and equipment with initial or remaining terms of one year or more :-

Group2013 2012$’000 $’000

Payable within 1 year 4,164 4,870Payable later than 1 year but not later than 5 years 3,997 7,384Payable later than 5 years 516 3,334

8,677 15,588

The Group leases a number of offi ce premises under operating leases. These leases typically run for an initial tenure of between one to ten years. Certain leases include options to renew the leases after the expiry of the initial tenure. Lease payments under these leases are usually fi xed for the entire initial tenure.

The leases generally do not contain any escalation clauses with the exception of one lease which provides for an increase in rental at a fi xed rate of 7% over the preceding year’s rent at the commencement of the 4th and 7th year of lease term. There are no restrictions placed upon the Group or the Company by entering into these leases.

(b) Operating lease commitments – As lessor

As at the balance sheet date, the Group and Company have the following minimum lease receivables under non-cancellable operating lease on rental premises located within its leasehold buildings with a remaining term of one year or more :-

Group and Company2013 2012$’000 $’000

Receivable within 1 year 155 120Receivable later than 1 year but not later than 5 years 62 25

217 145



28. Commitments (cont’d)

(c) Finance lease commitments

The Group conducts a portion of its operations with leased offi ce equipment and motor vehicles. These leases are classifi ed as fi nance leases and expire over the next two years.

As at the balance sheet date, the Group has the following future minimum lease payments under fi nance leases together with the present value of the net minimum lease payments on equipment with initial or remaining term of one year or more :-

GroupTotal

minimum lease

payments

Present value of

payments

Total minimum

lease payments

Present value of

payments2013 2013 2012 2012$’000 $’000 $’000 $’000

Payable within 1 year 125 115 200 167Payable later than 1 year but not later than 5 years 256 232 381 351

381 347 581 518Less: Amounts representing fi nance charges (34) − (63) −Present value of minimum lease payments 347 347 518 518

Included in lease payables of the Group is an amount of approximately $335,000 (2012: $494,000) denominated in Australian dollars.

The fi nance leases do not contain any escalation clauses and do not provide for contingent rents. Lease terms do not contain restrictions on the Group’s activities concerning dividends, additional debt or entering into other lease agreements.

29. Related party transactions

(a) Related party transactions

In addition to the related party information disclosed elsewhere in the fi nancial statements, the following signifi cant transactions between the Company and related parties took place at terms agreed between the parties during the fi nancial period:

2013 2012$’000 $’000

Management fee received 6,616 7,079Royalties/licensing/agency fees received 142 –Interest received 1,079 4,293Rental income received 366 365Sales commission received 975 895Dividend received 21,584 –Interest paid (826) (402)Administrative and support service paid (1,174) (1,091)Consultancy services paid (821) (128)



29. Related party transactions (cont’d)

(a) Related party transactions (cont’d)

Related transactions with divested subsidiaries

2013 2012$’000 $’000

Management fee received 1,466 1,636Royalties/licensing/agency fees received − 327Dividend received 12,667 4,025Interest paid (56) (12)

Related companies:

These are subsidiaries and associates of the CSE Global Ltd and its subsidiaries.

(b) Compensation of directors and key management personnel

Group2013 2012$’000 $’000

Short-term employee benefi ts 16,736 8,141Central Provident Fund contribution 167 159Directors service fees 821 −Directors fees 735 366

18,459 8,666

Comprise amounts paid to: Directors of the Company 13,047 3,197 Other key management personnel 5,412 5,469

18,459 8,666

30. Financial risk management objectives and policies

The Group’s principal fi nancial instruments comprise bank loans, fi nance leases, cash and short term deposits. The main purpose of these fi nancial instruments is to fi nance the Group’s operations. All fi nancial transactions with the banks are governed by banking facilities duly accepted with Board of Directors resolutions and banking mandates which defi ne the permitted fi nancial instruments and facilities limits, approved by the Board of Directors. All fi nancial transactions require dual signatories. The Group has various other fi nancial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations.

There has been no change to the Group’s exposure to these fi nancial risks or the manner in which it manages and measures the risks.



30. Financial risk management objectives and policies (cont’d)

Foreign currency risk

The Group has transactional currency exposures arising from sales or purchases that are denominated in a currency other than the respective functional currencies of Group entities, primarily Singapore Dollar (SGD), United States Dollar (USD), British Pound (GBP), Euro (EUR), and Australia Dollar (AUD). Approximately 98% (2012: 97%) of the Group’s sales and approximately 72% (2012: 77%) of costs including taxes are denominated in the respective functional currencies of the Group entities. The Group’s trade receivables and trade payables balances at the balance sheet date have similar exposures with 93% (2012: 95%) and 22% (2012: 80%) denominated in their respective functional currencies.

The Group and the Company also hold cash and cash equivalents denominated in foreign currencies for working capital purposes. At the balance sheet date, such foreign currency balances are mainly in USD.

The Group is exposed to currency translation risk as it consolidates revenue, expenses and profi t from its foreign subsidiaries, in the United Kingdom (UK), America (US), Australia, Malaysia, Belgium, Thailand, People’s Republic of China, India and Indonesia, at average exchange rates for the year, which approximates the exchange rates on the dates of transactions.

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 the currency positions in the respective countries are considered to be long-term in nature.

Sensitivity analysis for foreign currency risk

The following table demonstrates the sensitivity of the Group’s profi t net of tax to a 1% (2012: 1%) change in the USD, GBP, AUD, EUR and SGD exchange rates against the respective functional currencies of the Group entities, with all other variables held constant.

GroupTransactional exposure

2013 2012Profi t after

tax EquityProfi t after

tax Equity$’000 $’000 $’000 $’000

USD/SGD Strengthened 24 – 34 – Weakened (24) – (34) –

GBP/SGD Strengthened (7) – 7 – Weakened 7 – (7) –

AUD/SGD Strengthened – – (10) – Weakened – – 10 –

EUR/SGD Strengthened 12 – 15 – Weakened (12) – (15) –

SGD/USD Strengthened (2) – (33) – Weakened 2 – 33 –




Credit risk

Credit risk is the risk of loss that may arise on outstanding fi nancial instruments should a counterparty default on its obligations. The Group’s exposure to credit risk arises primarily from trade receivables. For other fi nancial assets, the Group minimises credit risk by dealing exclusively with high credit rating counterparties.

In respect of credit risk arising from the inability of customers of the Group to make payments when their receivables fall due, it is the Group’s policy to provide credit terms to creditworthy and reputable customers. These receivables are monitored on an ongoing basis to ensure that issues arising from non-collectibility are minimised. Therefore, the Group does not expect material credit losses on its debts with customers.

Exposure to credit risk

The Group’s maximum exposure to credit risk, in the event that the counter-parties to the transactions with the Group fail to perform their obligations as of the balance sheet date in relation to each class of recognised fi nancial assets, is the carrying amount of those assets as indicated in the balance sheet, and is generally limited to the amounts, if any, by which the counter-parties’ obligations exceed the obligations of the Group.

The Group has no signifi cant concentration of credit risk.

Credit risk concentration profi le

The Group determines concentrations of credit risk by monitoring the geographical segments profi le of its trade receivables on an on-going basis. The credit risk concentration profi le of the Group’s trade at the balance sheet date is as follows:

Group 2013 2012

$’000 % of total $’000 % of total

By geographical segments:Asia-Pacifi c 21,705 20 27,433 21The Americas 47,464 43 46,806 35Europe/Middle East/Africa 39,842 37 59,218 44Total 109,011 100 133,457 100

Financial assets that are neither past due nor impaired

Trade and other receivables that are neither past due nor impaired are creditworthy receivables with good payment record with the Group. Cash and cash equivalents are placed with or entered into with reputable fi nancial institutions or companies with high credit ratings and no history of default.

Financial assets that are either past due or impaired

Information regarding fi nancial assets that are either past due or impaired is disclosed in Note 12.




Interest rate risk

Interest rate risk is the risk that the fair value or future cash fl ows of the Group’s and the Company’s fi nancial instruments will fl uctuate because of changes in market interest rates. The Group’s and the Company’s exposure to interest rate risk arises primarily from their loans and borrowings, interest-bearing loans given to related companies and bank deposits. The Company’s loans at fl oating rate given to related parties form a natural hedge for its current fl oating rate bank loan. All the Group’s and Company’s fi nancial assets and liabilities at fl oating rates are contractually repriced at intervals of less than 6 months (2012: less than 6 months) from the balance sheet date.

Sensitivity analysis for interest rate risk

The following table demonstrates the sensitivity to a 1% (2012: 1%) change in the interest rates with all other variables held constant on the Group’s profi t net of tax.

Group2013 2012

Profi t after tax Equity

Profi t after tax Equity

$’000 $’000 $’000 $’000

SGD Increase in 1% interest rate 995 – (965) – Decrease in 1% interest rate (995) – 965 –

USD Increase in 1% interest rate 79 – 26 – Decrease in 1% interest rate (79) – (26) –

GBP Increase in 1% interest rate 3 – 143 – Decrease in 1% interest rate (3) – (143) –

EUR Increase in 1% interest rate 8 – 25 – Decrease in 1% interest rate (8) – (25) –

AUD Increase in 1% interest rate – – (9) – Decrease in 1% interest rate – – 9 –

The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment, showing a signifi cantly higher volatility as in prior years.

Liquidity risk

Liquidity risk is the risk that the Group or the Company will encounter diffi culty in meeting fi nancial 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 fi nancial assets and liabilities. The Group’s and the Company’s objective is to maintain a balance between continuity of funding and fl exibility through the use of stand-by credit facilities.

The Group’s and the Company’s liquidity risk management policy is to maintain suffi cient liquid fi nancial assets and stand-by credit facilities with 13 different banks. At the balance sheet date, 54% (2012: 24%) of the Group’s loans and borrowings (Note 14) will mature in less than one year based on the carrying amount refl ected in the fi nancial statements. The Group and the Company have mitigated liquidity risk by restructuring their debt structure through the syndicated loan (Note 14), improving the Group’s ability to meet its obligation to its banks from its operating cash fl ow.




Liquidity risk (cont’d)

The table below summarises the maturity profi le of the Group’s and the Company’s fi nancial assets and liabilities at the balance sheet date based on contractual undiscounted payments.

Group2013 2012

1 yearor less

1 to5 years Total

1 yearor less

1 to5 years Total

$’000 $’000 $’000 $’000 $’000 $’000

Trade and other receivables 112,676 – 112,676 139,066 – 139,066Short term deposits 3,676 – 3,676 18,244 – 18,244Cash and bank balances 182,910 – 182,910 55,953 – 55,953

299,262 – 299,262 213,263 – 213,263

Trade payables and accruals 217,048 – 217,048 77,966 – 77,966

Finance leases 125 256 381 200 381 581Loans and borrowings 1,457 1,265 2,722 28,408 90,267 118,675

218,630 1,521 220,151 106,574 90,648 197,222

Total net undiscounted fi nancial assets/ (liabilities) 80,632 (1,521) 79,111 106,689 (90,648) 16,041

Company2013 2012

1 yearor less

1 to5 years Total

1 yearor less

1 to5 years Total

$’000 $’000 $’000 $’000 $’000 $’000

Trade and other receivables 1,649 – 1,649 1,285 – 1,285Cash and bank balances 131,950 – 131,950 4,457 – 4,457Amounts due from subsidiary companies 6,456 – 6,456 48,133 – 48,133

140,055 – 140,055 53,875 – 53,875

Trade payables and accruals 162,473 – 162,473 6,062 – 6,062Loans and borrowings 1,056 – 1,056 28,321 90,090 118,411Amounts due to subsidiary companies 72,688 – 72,688 46,775 – 46,775

236,217 – 236,217 81,158 90,090 171,248

Total net undiscounted fi nancial liabilities (96,162) – (96,162) (27,283) (90,090) (117,373)



31. Financial instruments

Fair value

The fair value of a fi nancial instrument is the amount at which the instrument could be exchanged or settled between knowledgeable and willing parties in an arm’s length transaction, other than in a forced or liquidation sale.

Financial instruments whose carrying amount approximate fair value

Management has determined that the carrying amounts of cash and short term deposits, trade and other receivables, trade payables and accruals, current fi nance lease and current and non-current bank loans, based on their notional amounts, reasonably approximate their fair values because these are mostly short term in nature or are repriced frequently.

Management has determined that the carrying amounts of the non-current portions of the fi nance leases amounting to $232,000 (2012: $351,000) approximate their fair values.

Financial instruments carried at cost

Fair value information has not been disclosed for the Group’s investment in the equity instrument that is carried at cost (Note 7) because the fair value cannot be measured reliably. This equity instrument represents ordinary shares in a United States company that is not quoted on any market and does not have any comparable industry peer that is listed. The Group does not intend to dispose of this investment in the foreseeable future.

32. Capital management

The primary objective of the Group’s capital management is to ensure that it maintains healthy capital ratios in order to support its business activities and maximise shareholders’ value.

The Group manages its capital structure through issuance of new shares, adjustment of the dividend payout and returning capital to the shareholders. No changes were made in the objectives, policies or processes during the years ended 31 December 2013 and 2012.

The Group monitors capital using a net gearing ratio, which is computed by dividing net debt by total equity. The Group does not have a target net gearing ratio. Net debt is defi ned as amounts due to bankers less cash and cash equivalents.

The Group and the Company are in compliance with all externally imposed capital requirements for the fi nancial years ended 31 December 2013 and 2012.

Group2013 2012$’000 $’000

Loans and borrowings (Note 14) 2,722 118,675Less: Cash and cash equivalents (Note 26) (186,586) (74,197)Net debt (183,864) 44,478

Equity attributable to the owners of the parent 193,099 231,201

Net gearing ratio − 19%



33. Dividends

Group and Company2013 2012$’000 $’000

Declared and paid during the fi nancial year:Dividends on ordinary shares:- Final exempt (one-tier) dividend for 2011: $0.020 per share − 10,321- Interim exempt (one-tier) dividend for 2012: $0.015 per share − 7,741- Final exempt (one-tier) dividend for 2012: $0.0275 per share 14,192 −- Interim exempt (one-tier) dividend for 2013: $0.015 per share 7,741 −

21,933 18,062

Proposed and recognised as a liability as at 31 December:- Special exempt (one-tier) dividend for 2013: $0.280 (2012: $Nil) per share 144,499 −

166,432 18,062

Proposed but not recognised as a liability as at 31 December:Dividends on ordinary shares, subject to shareholders’ approval at the AGM:- Final exempt (one-tier) dividend for 2013: $0.020 (2012: $0.0275) per share 10,321 14,192- Special exempt (one-tier) dividend for 2013: $0.010 (2012: $Nil) per share 5,161 −

15,482 14,192



34. Comparative fi gures

The following comparative fi gures in the fi nancial statements have been reclassifi ed as a result of the Group’s divestment of its entire share of the Servelec Group in November 2013 and the disposal of its entire share of associated company eBworx Berhad in May 2012. The results of the Servelec Group and eBworx Berhad have been reclassifi ed as discontinued operation.

Group2012 2012

As reclassifi ed

As previously reported

$’000 $’000

Continuing operationsRevenue 448,241 544,469Cost of sales (338,542) (370,920)Miscellaneous income 947 8,409Finance income 438 529Administrative expenses (61,411) (97,566)Selling and distribution expenses (4,569) (6,192)Other expenses (748) (1,959)Finance costs (5,304) (5,333)Share of results of associated companies, net of tax − 330Income tax expense (10,256) (15,670)

Profi t from continuing operations, net of tax 28,796 56,097

Discontinued operationProfi t from discontinued operation, net of tax 27,301 −

Profi t for the year 56,097 56,097

35. Authorisation of fi nancial statements

The fi nancial statements for the fi nancial year ended 31 December 2013 were authorised for issue in accordance with a resolution of the directors on 19 March 2014.

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CSE Global LimitedNo. 2 Ubi View

Singapore 408556

Tel: (65) 6512.0333Fax: (65) 6742.9179

www.cse-global.com

Documents

CSE Global Financial 14 Global Financial 13.pdfLim Boon Kheng Director Singapore 19 March 2014 6 Independent Auditors’ Report To the Members of CSE Global limited Report on the ﬁ