ROTARY ENGINEERING LIMITED

CIRCULAR DATED 26 DECEMBER 2017

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. PLEASE READ THIS CIRCULAR, IN PARTICULAR THE SECTION ENTITLED “IMPORTANT NOTICE TO SHAREHOLDERS” CAREFULLY.

If you are in any doubt in relation to this Circular or as to the action you should take, you should consult your stockbroker, bank manager, solicitor, accountant, tax adviser or other professional adviser immediately.

The Singapore Exchange Securities Trading Limited assumes no responsibility for the correctness of any of the statements made, reports contained or opinions expressed in this Circular.

If you have sold or transferred all your issued and fully-paid ordinary shares in the capital of Rotary Engineering Limited. (“Shares”) held through The Central Deposit ory (Pte) Limited (“CDP”), you need not forward this Circular to the purchaser or transferee, as arrangements will be made by CDP for a separate Circular to be sent to the purchaser or transferee. If you have sold or transferred all your Shares which are not deposited with the CDP, you should immediately forward this Circular together with the Notice of Extraordinary General Meeting and the accompanying proxy form to the purchaser, the transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for onward transmission to the purchaser or the transferee.

This Circular, the Exit Offer Letter and the Acceptance Form(s) (all as defi ned herein) shall not be construed as, and may not be used for the purpose of, and does not constitute a notice or proposal or advertisement or an offer or invitation or solicitation in any jurisdiction or in any circumstance in which such a notice or proposal or advertisement or an offer or invitation or solicitation is unlawful or not authorised, or to any person to whom it is unlawful to make such a notice or proposal or advertisement or an offer or invitation or solicitation.

ROTARY ENGINEERING LIMITED.(Incorporated in Singapore)

(Company Registration No. 198000255E)

CIRCULAR TO SHAREHOLDERS

In relation to the

PROPOSED VOLUNTARY DELISTING OF ROTARY ENGINEERING LIMITED. FROM THE OFFICIAL LIST OF THE SINGAPORE EXCHANGE SECURITIES TRADING LIMITED (“SGX-ST”)

PURSUANT TO RULES 1307 AND 1309 OF THE SGX-ST LISTING MANUAL

Independent Financial Adviser to the Independent Directors of Rotary Engineering Limited.

DELOITTE & TOUCHE CORPORATE FINANCE PTE LTD(Incorporated in the Republic of Singapore)(Company Registration No.: 200200144N)

IMPORTANT DATES AND TIMES

Last date and time for lodgement of proxy form : 8 January 2018 at 10.00 a.m.

Date and time of Extraordinary General Meeting : 10 January 2018 at 10.00 a.m.

Place of Extraordinary General Meeting : Raffl es Country Club Stamford Suite 450 Jalan Ahmad Ibrahim Singapore 639932

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CONTENTS

DEFINITIONS ...................................................................................................................................... 3

CAUTIONARY NOTE ON FORWARD LOOKING STATEMENTS ..................................................... 8

INDICATIVE TIMETABLE ................................................................................................................... 9

LETTER TO SHAREHOLDERS .......................................................................................................... 10

1. INTRODUCTION ....................................................................................................................... 10

2. THE DELISTING PROPOSAL .................................................................................................. 10

3. THE EXIT OFFER ..................................................................................................................... 12

4. IRREVOCABLE UNDERTAKINGS ........................................................................................... 15

5. INFORMATION ON THE OFFEROR AND THE PARTIES ACTING IN CONCERT WITH IT ... 16

6. INFORMATION ON THE COMPANY AND THE GROUP ......................................................... 17

7. RATIONALE FOR DELISTING AND THE OFFEROR’S INTENTIONS ................................... 18

8. IMPLICATIONS OF COMPULSORY ACQUISITION AND DELISTING FOR SHAREHOLDERS .................................................................................................................... 20

9. FINANCIAL ASPECTS OF THE EXIT OFFER ........................................................................ 22

10. CONFIRMATION OF FINANCIAL RESOURCES .................................................................... 22

11. OVERSEAS SHAREHOLDERS ............................................................................................... 23

12. INTERESTS OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS ................................ 24

13. EXEMPTION RELATING TO DIRECTORS’ RECOMMENDATION .......................................... 25

14. ADVICE OF DELOITTE TO THE INDEPENDENT DIRECTORS IN RELATION TO THE EXIT OFFER ............................................................................................................................. 25

15. INDEPENDENT DIRECTORS’ RECOMMENDATIONS............................................................ 27

16. EXTRAORDINARY GENERAL MEETING ............................................................................... 28

17. ACTION TO BE TAKEN BY SHAREHOLDERS ....................................................................... 28

18. RESPONSIBILITY STATEMENTS............................................................................................ 29

19. CONSENTS .............................................................................................................................. 29

20. DOCUMENTS AVAILABLE FOR INSPECTION ...................................................................... 30

21. ADDITIONAL INFORMATION .................................................................................................. 30

APPENDIX I – LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS ......................... I-1

APPENDIX II – ADDITIONAL INFORMATION ON THE COMPANY AND THE GROUP ............... II-1

APPENDIX III – ADDITIONAL INFORMATION ON THE OFFEROR AND PERSONS ACTING IN CONCERT WITH IT ................................................................................................ III-1

APPENDIX IV – AUDITED FINANCIAL STATEMENTS OF THE GROUP FOR FY2016 ................ IV-1

APPENDIX V – UNAUDITED THIRD QUARTER AND NINE MONTHS FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 SEPTEMBER 2017 ..................... V-1

APPENDIX VI – REVIEW REPORT FROM ERNST & YOUNG LLP ON THE UNAUDITED THIRD QUARTER AND NINE MONTHS FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 SEPTEMBER 2017....................................................... VI-1

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CONTENTS

APPENDIX VII – REVIEW REPORT FROM THE IFA ON THE UNAUDITED THIRD QUARTER AND NINE MONTHS FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 SEPTEMBER 2017 ........................................................................................... VII-1

APPENDIX VIII – RELEVANT PROVISIONS IN THE CONSTITUTION RELATING TO THE RIGHTS OF SHAREHOLDERS IN RESPECT OF CAPITAL, DIVIDENDS AND VOTING .......................................................................................................... VIII-1

APPENDIX IX – VALUATION CERTIFICATES ................................................................................. IX-1

NOTICE OF EXTRAORDINARY GENERAL MEETING ..................................................................... N-1

PROXY FORM

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DEFINITIONS

Except where the context otherwise requires, the following defi nitions apply throughout this Circular:

“9M2017” : The nine-months fi nancial period ended 30 September 2017 “Acceptance Form(s)” : FAA and/or FAT, as the case may be “Board” : The board of Directors of the Company “CDP” : The Central Depository (Pte) Limited “Chia Family Group” : Collectively, Mr. Roger Chia, Mr. Chia Kim Chua, Ms. Jenny Wong

and REL Investments “Circular” : This circular to the Shareholders issued by the Company in relation

to the proposed voluntary delisting of the Company pursuant to Rules 1307 and 1309 of the Listing Manual

“Closing Date” : 5.30 p.m. on 24 January 2018 or such later date(s) as may be

announced from time to time by or on behalf of the Offeror, being the last day for the lodgement of acceptances of the Exit Offer

“Code” : The Singapore Code on Take-overs and Mergers “Companies Act” : The Companies Act (Chapter 50) of Singapore “Company” : Rotary Engineering Limited. “Consolidated NTA per Share” : Consolidated net tangible asset value per share “Constitution” : The constitution of the Company “Control” : The capacity to dominate decision-making, directly or indirectly, in

relation to the fi nancial and operating policies of the Company “Controlling Shareholder” : A person who:

(a) holds directly or indirectly 15% or more of all voting shares in the Company (unless the SGX-ST determines that such a person is not a Controlling Shareholder); or

(b) in fact exercises Control over the Company “CPF” : Central Provident Fund “CPF Agent Banks” : The banks approved by the CPF to be its agent banks, being DBS

Bank Ltd, Oversea-Chinese Banking Corporation Limited and United Overseas Bank Limited

“CPFIS” : Central Provident Fund Investment Scheme “CPFIS Investors” : Investors who have purchased Shares using their CPF savings

under the CPFIS “DBS” : DBS Bank Ltd. “Delisting” : The voluntary delisting of the Company from the Offi cial List of the

SGX-ST pursuant to Rules 1307 and 1309 of the Listing Manual

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DEFINITIONS

“Delisting Proposal” : The proposal presented by the Offeror to the Board to seek the Delisting

“Delisting Resolution” : The resolution to be proposed at the EGM to approve the Delisting “Delisting Resolution : The approval of the Delisting Resolution by a majority of at least Approval Conditions” 75% of the total number of issued Shares excluding treasury shares

and subsidiary holdings held by Shareholders present and voting, on a poll, either in person or by proxy at the EGM, and the Delisting Resolution not being voted against by 10% or more of the total number of issued Shares excluding treasury shares and subsidiary holdings held by Shareholders present and voting, on a poll, either in person or by proxy at the EGM

“Directors” : The directors of the Company as at the Latest Practicable Date “EGM” : The extraordinary general meeting of the Company to be held on

Wednesday, 10 January 2018, notice of which is set out on page N-1 of this Circular, and any adjournment thereof

“Encumbrances” : All liens, equities, mortgages, charges, encumbrances, rights of

pre-emption and other third party rights and interests of any nature whatsoever

“EY” : Ernst & Young LLP, the independent auditors of the Group “Exit Offer” : The delisting exit offer made by DBS, for and on behalf of the

Offeror, to acquire the Offer Shares on the terms and subject to the conditions set out in the Exit Offer Letter and the Acceptance Form(s)

“Exit Offer Letter” : The letter dated 26 December 2017 setting out the terms and

conditions of the Exit Offer (including the Acceptance Form(s)), which will be despatched by the Offeror to the Shareholders on the same date as this Circular

“Exit Offer Price” : S$0.460 in cash for each Offer Share “FAA” : Form of Acceptance and Authorisation for Offer Shares to be issued

to Shareholders whose Shares are deposited with CDP “FAPI” : Funderburk Asia-Pac Investments I Limited “FAT” : Form of Acceptance and Transfer for Offer Shares to be issued to

Shareholders whose Shares are not deposited with CDP “FY” : Financial year ended or ending 31 December, as the case may be “Group” : Collectively, the Company and its subsidiaries “IFA” or “Deloitte” : Deloitte & Touche Corporate Finance Pte Ltd, the appointed

independent fi nancial adviser to the Independent Directors “IFA Letter” : The letter from Deloitte setting out its advice to the Independent

Directors as set out in Appendix I to this Circular

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DEFINITIONS

“Independent Directors” : The Directors who are considered independent for the purposes of making recommendations to the Shareholders in respect of the Delisting and the Exit Offer, namely Mr. Lam Khin Khui and Mr. Keith Tay Ah Kee

“Independent Valuers” : (1) Colliers International Consultancy & Valuation (Singapore) Pte

Ltd, (2) Colliers International Croatia, (3) PPC International Sdn Bhd, (4) American Appraisal (Thailand) Ltd, and (5) Fearnleys Asia (Singapore) Pte Ltd, the independent valuers appointed by the Company to issue the Valuation Certifi cates

“Joint Announcement” : The joint announcement dated 2 October 2017 by the Company and

the Offeror in relation to the Delisting Proposal and the Exit Offer “Joint Announcement Date” : 2 October 2017, being the date on which the Joint Announcement

was made “Latest Practicable Date” : 18 December 2017, being the latest practicable date prior to the

printing of this Circular “Listing Manual” : The Listing Manual of the SGX-ST “Market Day” : A day on which the SGX-ST is open for trading of securities “NAV” : Net asset value “Notice of EGM” : The notice of an extraordinary general meeting of the Company to

be held at Raffl es Country Club, Stamford Suite, 450 Jalan Ahmad Ibrahim, Singapore 639932 on Wednesday, 10 January 2018 at 10.00 a.m. as set out on page N-1 of this Circular

“Offer Shares” : All the Shares to which the Exit Offer relates, as more particularly

described in Section 1.2 of this Circular “Offeror” : OROCHEM PTE. LTD. “OIF” : Oman Investment Fund “OROGOLD” : ORO GOLD PTE. LTD. “Overseas Shareholders” : Shareholders whose addresses are outside Singapore, as shown in

the Register of Members of the Company or in the records of CDP (as the case may be)

“Properties” : The properties as set out in Appendix IX to this Circular “Register” : The register of holders of the Shares, as maintained by the Share

Registrar “REL Investments” : REL Investments Pte Ltd “Relevant Directors” : Collectively, Mr. Roger Chia, Mr. Chia Kim Chua, Ms. Jenny Wong

and Mr. Anwar Al Jabri

“Securities and Futures Act” : The Securities and Futures Act (Chapter 289) of Singapore “SGX-ST” : Singapore Exchange Securities Trading Limited

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DEFINITIONS

“SGXNET” : A broadcast network utilised by companies listed on the SGX-ST for the purposes of sending information (including announcements) to the SGX-ST (or any other broadcast or system networks prescribed by the SGX-ST)

“Share Registrar” : Boardroom Corporate & Advisory Services Pte. Ltd. “Shareholders” : Persons who are registered as holders of Shares in the Register

and Depositors who have Shares entered against their names in the Depository Register

“Shareholders’ Approval” : The approval of the Delisting Resolution by Shareholders as more

particularly described in Section 2.1 of this Circular “Shares” : Issued and paid-up ordinary shares in the capital of the Company “SIC” : The Securities Industry Council of Singapore “SRS” : Supplementary Retirement Scheme “SRS Agent Banks” : Agent banks included under the SRS “SRS Investors” : Investors who have purchased Shares using their SRS contributions

pursuant to the Supplementary Retirement Scheme “Substantial Shareholder” : A person (including a corporation) who has an interest in not less

than 5% of the issued voting Shares of the Company “S$” and “cents” : Singapore dollars and cents respectively, being the lawful currency

of Singapore “Valuation Certifi cates” : The valuation certifi cates from the Independent Valuers as set out in

Appendix IX to this Circular “%” or “per cent.” : Percentage or per centum

All references to Mr. Roger Chia in this Circular shall be a reference to Mr. Roger Chia Kim Piow.

All references to Mr. Anwar Al Jabri or Mr. Anwar in this circular shall be a reference to Mr. Anwar Hilal Hamdoon Al Jabri.

All references to Ms. Jenny Wong in this Circular shall be a reference to Ms. Jenny Wong Oi Moi.

The term “acting in concert” shall have the meaning ascribed to it in the Code, and references to “concert parties” shall be construed accordingly.

The term “associated company” shall have the meaning ascribed to it in the Listing Manual.

The terms “Depositor”, “Depository Agent” and “Depository Register” shall have the meanings ascribed to them respectively in Section 81SF of the Securities and Futures Act .

Exit Offer Letter. References to “Exit Offer Letter” shall include the Acceptance Forms, unless the context otherwise requires. Capitalised terms used in the extracts of the Exit Offer Letter and not defi ned herein shall bear the same meanings as attributed to them in the Exit Offer Letter.

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DEFINITIONS

Genders. Words importing the singular shall, where applicable, include the plural and vice versa. Words importing the masculine gender shall, where applicable, include the feminine and neuter genders. References to persons shall, where applicable, include corporations.

Headings. The headings in this Circular are inserted for convenience only and shall be ignored in construing this Circular.

Rounding. Any discrepancies in fi gures included in this Circular between amounts shown and the totals thereof are due to rounding. Accordingly, fi gures shown as totals in this Circular may not be an arithmetic aggregation of the fi gures that precede them.

Shareholders. References to “you”, “your” and “yours” in this Circular are, as the context so determines, to Shareholders.

Statutes. Save where expressly stated otherwise, any reference in this Circular to any enactment is a reference to that enactment as amended, supplemented, or re-enacted from time to time. Any word defi ned under the Companies Act, the Securities and Futures Act, the Code or the Listing Manual or any modifi cation thereof and used in this Circular shall, where applicable, have the meaning assigned to it under the Companies Act, the Securities and Futures Act, the Code or the Listing Manual or any modifi cation thereof, as the case may be, unless the context otherwise requires.

Subsidiary and Related Corporation. References to “subsidiary” and “related corporation” shall have the meanings ascribed to them respectively in Sections 5 and 6 of the Companies Act.

Time and Date. Any reference to a time of the day and date in this Circular shall be a reference to Singapore time and date, respectively, unless otherwise stated.

Total number of Issued Shares. References in this Circular to the total number of issued Shares are based on 567,518,000 Shares (excluding 336,000 Shares held by the Company as treasury shares) as at the Latest Practicable Date.

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CAUTIONARY NOTE ON FORWARD LOOKING STATEMENTS

All statements other than statements of historical facts included in this Circular are or may be forward-looking statements. Forward-looking statements include but are not limited to those using words such as “seek”, “expect”, “anticipate”, “estimate”, “believe”, “intend”, “project”, “plan”, “strategy”, “forecast” and similar expressions or future or conditional verbs such as “will”, “would”, “should”, “could”, “may” and “might”. These statements refl ect the current expectations, beliefs, hopes, intentions or strategies of the party making the statements regarding the future and assumptions in light of currently available information. Such forward-looking statements are not guarantees of future performance or events and involve known and unknown risks and uncertainties. Accordingly, actual results may differ materially from those described in such forward-looking statements. Shareholders and investors of the Company should not place undue reliance on such forward-looking statements, and the Company assumes no obligation to update publicly or revise any forward-looking statements.

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INDICATIVE TIMETABLE

Latest date and time for lodgment of proxy forms for the EGM (E-2)

: Monday, 8 January 2018 at 10.00 a.m.

Date and time of EGM (“E”) : Wednesday, 10 January 2018 at 10.00 a.m.

Expected Closing Date and time for the Exit Offer (E+14)

: Wednesday, 24 January 2018 at 5.30 p.m. or such other date(s) as may be announced from time to time by or on behalf of the Offeror

Expected date for the Delisting of Shares (E+56)

: Tuesday, 6 March 2018 or such other date(s) as may be announced from time to time by the Company

Expected date for the payment of the Exit Offer Price, in respect of valid acceptances of the Exit Offer

: Within seven (7) business days:

(a) after the Delisting Resolution has been passed at the EGM (where valid acceptances of the Exit Offer are tendered on or prior to the date of the Delisting Resolution being passed at the EGM); or

(b) after the date of receipt of valid acceptances of the Exit Offer (where such acceptances are tendered after the Delisting Resolution has been passed at the EGM but before the close of the Exit Offer)

Shareholders should note that, save for the last date and time for lodgment of proxy forms for the EGM, the date and time of the EGM, the above timetable is indicative only and may be subject to change. For events listed above which are described as “expected”, please refer to future announcement(s) by or on behalf of the Company and/or the Offeror via SGXNET for the exact dates and times of such events.

PLEASE NOTE THAT THE EXIT OFFER IS CONDITIONAL UPON THE DELISTING RESOLUTION BEING PASSED AT THE EGM. PURSUANT TO RULE 1307 OF THE LISTING MANUAL, THE DELISTING RESOLUTION IS CONSIDERED PASSED IF (A) IT HAS BEEN APPROVED BY A MAJORITY OF AT LEAST 75% OF THE TOTAL NUMBER OF ISSUED SHARES EXCLUDING TREASURY SHARES AND SUBSIDIARY HOLDINGS HELD BY THE SHAREHOLDERS PRESENT AND VOTING, ON A POLL, EITHER IN PERSON OR BY PROXY AT THE EGM, AND (B) IF THE DELISTING RESOLUTION HAS NOT BEEN VOTED AGAINST BY 10% OR MORE OF THE TOTAL NUMBER OF ISSUED SHARES EXCLUDING TREASURY SHARES AND SUBSIDIARY HOLDINGS HELD BY THE SHAREHOLDERS PRESENT AND VOTING, ON A POLL, EITHER IN PERSON OR BY PROXY, AT THE EGM THE DIRECTORS AND CONTROLLING SHAREHOLDERS NEED NOT ABSTAIN FROM VOTING ON THE DELISTING RESOLUTION. IF THIS CONDITION IS NOT SATISFIED AT THE EGM TO BE CONVENED, THE DELISTING WILL NOT PROCEED, AND THE COMPANY WILL REMAIN LISTED ON THE SGX-ST AND THE EXIT OFFER WILL LAPSE.

PLEASE ALSO NOTE THAT APPROVING THE DELISTING RESOLUTION AT THE EGM DOES NOT AUTOMATICALLY MEAN THAT YOU HAVE ACCEPTED THE EXIT OFFER. PLEASE REFER TO THE ACCEPTANCE PROCEDURES SET OUT IN APPENDIX I TO THE EXIT OFFER LETTER IF YOU WISH TO ACCEPT THE EXIT OFFER.

SHAREHOLDERS SHOULD NOTE THAT IF THE DELISTING RESOLUTION IS APPROVED IN ACCORDANCE WITH THE REQUIREMENTS OF THE LISTING MANUAL, THE COMPANY WILL BE DELISTED. FOLLOWING THE DELISTING, SHAREHOLDERS WHO DO NOT ACCEPT THE EXIT OFFER WILL CONTINUE TO HOLD SHARES IN THE COMPANY, WHICH WILL THEN BE AN UNLISTED COMPANY.

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LETTER TO SHAREHOLDERS


(Company Registration No.: 198000255E)

Directors: Registered Offi ce:

Mr. Roger Chia Kim Piow (Executive Chairman and Managing Director) Mr. Chia Kim Chua (Executive Director) Mr. Lam Khin Khui (Non-Executive Independent Director) Mr. Keith Tay Ah Kee (Non-Executive Independent Director) Mr. Anwar Hilal Hamdoon Al Jabri (Non-Executive Non-Independent Director)Ms. Jenny Wong Oi Moi (Non-Executive Non-Independent Director)

17 Tuas Avenue 20 Singapore 638828

26 December 2017

To: The Shareholders of the Company

Dear Sir / Madam

PROPOSED VOLUNTARY DELISTING OF ROTARY ENGINEERING LIMITED.

1. INTRODUCTION

1.1 On 2 October 2017 (the “Joint Announcement Date”), the Company and the Offeror jointly announced that the Offeror had presented to the Directors a Delisting Proposal to seek the voluntary delisting of the Company from the Offi cial List of the SGX-ST pursuant to Rules 1307 and 1309 of the Listing Manual. A copy of the Joint Announcement is available on the website of the SGX-ST at www.sgx.com.

1.2 Under the Delisting Proposal, DBS will make, for and on behalf of the Offeror, the Exit Offer to acquire all the Shares other than those held by the Company as treasury shares and those held, directly or indirectly, by the Offeror as at the date of the Exit Offer (the “Offer Shares”), at the Exit Offer Price of S$0.460 for each Offer Share.

1.3 The Directors, have reviewed the Delisting Proposal and have resolved to (a) apply to the SGX-ST for approval of the Delisting, and (b) convene the EGM to seek the Shareholders’ Approval for the Delisting pursuant to Rules 1307 and 1309 of the Listing Manual.

1.4 The purpose of this Circular is to provide Shareholders with relevant information relating to the Delisting Proposal and the Exit Offer, and to seek Shareholders’ Approval at the EGM to be held on Wednesday, 10 January 2018.

2. THE DELISTING PROPOSAL

Under the terms of the Delisting Proposal, DBS will make, for and on behalf of the Offeror, the Exit Offer to acquire the Offer Shares. The Delisting Proposal and the Exit Offer are conditional upon, inter alia, (a) the SGX-ST’s approval for the Delisting; and (b) the Delisting Resolution being passed at the EGM.

Subject to the satisfaction of the foregoing conditions, the Company will be delisted from the Offi cial List of the SGX-ST after the close of the Exit Offer.

2.1 Rules 1307 and 1309 of the Listing Manual

Under Rule 1307 of the Listing Manual, the SGX-ST may agree to an application by the Company to delist from the Offi cial List of the SGX-ST if:

(a) the Company convenes an EGM to obtain Shareholders’ approval of the Delisting Resolution;

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(b) the Delisting Resolution has been approved by a majority of at least 75% of the total number of issued Shares (excluding treasury shares and subsidiary holdings) held by Shareholders present and voting, on a poll, either in person or by proxy at the EGM (the Directors and the Controlling Shareholders need not abstain from voting on the Delisting Resolution); and

(c) the Delisting Resolution has not been voted against by 10% or more of the total number of issued Shares excluding treasury shares and subsidiary holdings held by Shareholders present and voting, on a poll, either in person or by proxy at the EGM,

(collectively, the “Shareholders’ Approval”).

In addition, Rule 1309 of the Listing Manual requires that if the Company is seeking to delist from the Offi cial List of the SGX-ST:

(i) a reasonable exit alternative, which should normally be in cash, should be offered to the Shareholders; and

(ii) the Company should normally appoint an independent fi nancial adviser to advise on the Exit Offer.

2.2 Application to the Securities Industry Council

The information relating to the applications made by the Offeror to the SIC to seek clarifi cation regarding the extent to which the provisions of the Code applied to the Exit Offer and the SIC’s rulings on the applications have been extracted from paragraph 2.4 of the Exit Offer Letter and reproduced below. All terms and expressions used in the extract below shall have the same meanings as those defi ned in the Exit Offer Letter, unless otherwise stated.

Extract from the Exit Offer Letter:

2.4 Regulatory Approvals

An application was made by the Offeror to the Securities Industry Council (“SIC”) to seek clarifi cation regarding the extent to which the provisions of the Code applied to the Exit Offer. The SIC has ruled, inter alia, that:

(a) the Exit Offer is exempted from compliance with the following provisions of the Code:

(i) Rule 20.1 to keep offer open for 14 days after it is revised;

(ii) Rule 22 on offer timetable;

(iii) Rule 28 on acceptances; and

(iv) Rule 29 on the right of acceptors to withdraw their acceptances,

subject to:

(A) the Exit Offer remaining open for at least:

(I) 21 days after the date of the despatch of the Exit Offer Letter if the Exit Offer Letter, together with the relevant acceptance form(s), are despatched after Shareholders’ Approval has been obtained; or

(II) 14 days after the date of the announcement of Shareholders’ Approval if the Exit Offer Letter, together with the relevant acceptance form(s), are despatched on the same date as the Delisting Circular; and

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(B) disclosure in the Delisting Circular of:

(I) the consolidated net tangible assets (“NTA”) per share of the group comprising the Company, its subsidiaries and associated companies based on the latest published accounts prior to the date of the Delisting Circular; and

(II) particulars of all known material changes as of the latest practical date which may affect the consolidated NTA per share referred to in paragraph 2.4(a)(B)(I) above or a statement that there are no such known material changes; and

(b) the arrangements set out in paragraphs 2.61 and 3.42 below do not constitute special deals for the purpose of Rule 10 of the Code; and

(c) Mr. Roger Chia Kim Piow (“Mr. Roger Chia”), Mr. Chia Kim Chua, Ms. Jenny Wong Oi Moi (“Ms. Jenny Wong”) and Mr. Anwar Hilal Hamdoon Al Jabri (“Mr. Anwar”) (collectively, the “Relevant Directors”) are exempted from the requirement to make a recommendation to the Shareholders on the Exit Offer as the Relevant Directors, being Directors and parties acting in concert with the Offeror, face irreconcilable confl icts of interest in doing so. Nevertheless, the Relevant Directors must still assume responsibility for the accuracy of the facts stated in documents or advertisements issued by, or on behalf of, the Company in connection with the Exit Offer.

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3. THE EXIT OFFER

The information relating to the Exit Offer has been extracted from paragraph 2 of the Exit Offer Letter and reproduced below. All terms and expressions used in the extract below shall have the same meanings as those defi ned in the Exit Offer Letter, unless otherwise stated.

Extract from Exit Offer Letter:

2. THE EXIT OFFER

DBS, for and on behalf of the Offeror, hereby offers to acquire all the Offer Shares, on the terms and subject to the conditions set out in this Exit Offer Letter (including the Acceptance Forms), and on the following basis:

2.1 Consideration

The offer price for each Offer Share is S$0.460 in cash (the “Exit Offer Price”).

THE OFFEROR DOES NOT INTEND TO REVISE THE EXIT OFFER PRICE UNDER ANY CIRCUMSTANCES.

The Exit Offer Price represents a premium of approximately 25% over the volume weighted average price (“VWAP”) of S$0.368 for the 3-month period up to and including 28 September 2017, being the last full day of trading (“Last Full Market Day”) in the Shares on the SGX-ST immediately prior to the date of the trading halt by the Company on 29 September 2017.

The Exit Offer Price shall be applicable to any number of the 567,518,000 Offer Shares that are tendered in acceptance of the Exit Offer.

1 Please see Exit Offer Letter as well as section 4.1 of this Circular for details. 2 Please see Exit Offer Letter as well as section 5 of this Circular for details.

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The Offeror shall pay the Exit Offer Price in cash for the Offer Shares which are validly tendered in acceptance of the Exit Offer, save for 344,102,732 Offer Shares held by the Chia Family Group (as defi ned in paragraph 3.2 below) and Funderburk Asia-Pac Investments I Limited (“FAPI”), a wholly-owned subsidiary of Oman Investment Fund (“OIF”). Further information on OIF is set out in paragraph 3.3 below. Each member of the Chia Family Group and FAPI (collectively, the “Undertaking Shareholders”) have undertaken pursuant to their respective Irrevocable Undertakings (as defi ned in paragraph 2.6 below) to, inter alia, vote all their Shares in favour of the Delisting Resolution (as defi ned in paragraph 2.2(a) below) at the EGM and to accept the Exit Offer in respect of all their Shares. Further details of the Irrevocable Undertakings are set out in paragraph 2.6 of this Exit Offer Letter.

FAPI holds 121,350,888 Shares, representing approximately 21.38% of the total number of issued Shares, and the Chia Family Group holds 229,429,844 Shares , representing approximately 40.43% of the total number of issued Shares. In aggregate, the Undertaking Shareholders hold 350,780,732 Shares, representing approximately 61.81% of the total number of issued Shares.

The Exit Offer is extended to all the Offer Shares. Shareholders may choose to accept the Exit Offer in respect of all or part of their holdings of Offer Shares.

The Offer Shares will be acquired fully paid and free from all liens, equities, mortgages, charges, encumbrances, rights of pre-emption and other third party rights and interests of any nature whatsoever (“Encumbrances”), and together with all rights, benefi ts and entitlements attached thereto as at the Joint Announcement Date, and thereafter attaching thereto (including the right to receive and retain all dividends, rights and other distributions, if any, which may be announced, declared, paid or made thereon by the Company, on or after the Joint Announcement Date). If any dividend, other distribution or return of capital is declared, made or paid by the Company on or after the Joint Announcement Date, the Offeror reserves the right to reduce the Exit Offer Price by the amount of such dividend, distribution or return of capital.

2.2 Conditions

The Delisting and the Exit Offer will be conditional on:

(a) the resolution to approve the Delisting (the “Delisting Resolution”) being approved by a majority of at least 75% of the total number of issued Shares (excluding treasury shares and subsidiary holdings) held by Shareholders present and voting, on a poll, either in person or by proxy at the EGM to be convened for Shareholders to vote on the Delisting Resolution (the Directors and controlling Shareholders need not abstain from voting on the Delisting Resolution); and

(b) the Delisting Resolution not being voted against by 10% or more of the total number of issued Shares (excluding treasury shares and subsidiary holdings) held by Shareholders present and voting, on a poll, either in person or by proxy at the EGM,

(collectively, the “Delisting Resolution Approval Conditions”).

As at the Latest Practicable Date, the Offeror and parties acting in concert with it hold Shares representing more than 50% of the total number of issued Shares. Accordingly, the Delisting and the Exit Offer will not be conditional upon a minimum number of acceptances being received by the Offeror, subject to the fulfi lment of the Delisting Resolution Approval Conditions.

14


Under Rule 1307(2) of the Listing Manual, the Directors and the controlling Shareholders are not required to abstain from voting on the Delisting Resolution. Accordingly, the Undertaking Shareholders are entitled to, and have undertaken pursuant to their respective Irrevocable Undertakings to, vote all their Shares in favour of the Delisting Resolution at the EGM and to accept the Exit Offer in respect of all their Shares. The respective shareholdings of the Undertaking Shareholders in the Company are set out in paragraph 8.1 of Appendix II3 of this Exit Offer Letter.

Further details of the Irrevocable Undertakings are set out in paragraph 2.6 of this Exit Offer Letter.

An application was made by the Company to the SGX-ST on 23 October 2017 to delist the Company from the Offi cial List of the SGX-ST. The Company had on 14 December 2017 received confi rmation from the SGX-ST that the SGX-ST has no objection to the Company’s application for the Delisting, subject to Shareholders’ Approval having been obtained and compliance with Rule 1307 of the Listing Manual. However, the SGX-ST’s decision is not to be taken as an indication of the merits of the Delisting.

Shareholders are to note that if any of the above conditions listed in this paragraph 2.2 are not fulfi lled, the Delisting will not proceed and the Company will remain listed on the SGX-ST. The Exit Offer will also lapse and all acceptances of the Exit Offer will be returned.

2.3 Warranty

Acceptance of the Exit Offer by a Shareholder will be deemed to constitute an unconditional and irrevocable warranty by that Shareholder that each Share in respect of which the Exit Offer is accepted is sold by him as, or on behalf of, the benefi cial owner(s) thereof, fully paid and free from all Encumbrances, and together with all rights, benefi ts and entitlements attached thereto as at the Joint Announcement Date and thereafter attaching thereto (including the right to receive and retain all dividends, rights and other distributions, if any, which may be announced, declared, paid or made thereon by the Company on or after the Joint Announcement Date).

2.5 Duration and Closing Date

The Exit Offer is open for acceptance from the date of despatch of this Exit Offer Letter. Shareholders may choose to accept the Exit Offer before the EGM. However, such acceptances would be conditional and if the Delisting Resolution Approval Condition s are not fulfi lled, the Exit Offer will lapse, and all of the Shareholders as well as the Offeror will cease to be bound by any prior acceptances of the Exit Offer by any Shareholder.

If the Delisting Resolution Approval Conditions are fulfi lled, the Exit Offer will continue to be open for acceptance by the Shareholders for at least 14 days after the date of the announcement of the fulfi lment of the Delisting Resolution Approval Conditions.

Accordingly, the Exit Offer will close at 5.30 p.m. on 24 January 201 8 or such later date(s) as may be announced from time to time by or on behalf of the Offeror (the “Closing Date”).

3

3 Please see Exit Offer Letter as well as Appendix III to this Circular for details.

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4. IRREVOCABLE UNDERTAKINGS

4.1 Irrevocable Undertakings

The information relating to the undertakings obtained by the Offeror has been extracted from paragraph 2.6 of the Exit Offer Letter and reproduced below. All terms and expressions used in the extract below shall have the same meanings as those defi ned in the Exit Offer Letter, unless otherwise stated.

Extract from Exit Offer Letter:4

2.6 Irrevocable Undertakings

As at the Latest Practicable Date, the Offeror has obtained irrevocable undertakings (the “Irrevocable Undertakings”) from each member of the Chia Family Group and FAPI (being the Undertaking Shareholders), who collectively hold an aggregate of 350,780,732 Shares representing approximately 61.81 % of the total number of issued Shares, pursuant to which each Undertaking Shareholder has undertaken and/or agreed, inter alia, the following:

(a) to vote all its Shares in favour of the Delisting Resolution and accept the Exit Offer in respect of all its Shares;

(b) to assign its right to receive (and the benefi t of receiving) the proceeds (the “Proceeds”) that would be payable by the Offeror as consideration pursuant to its acceptance of the Exit Offer in respect of the Shares held by such Undertaking Shareholder immediately prior to the release of the Joint Announcement (the “Existing Relevant Shares”):

(i) in respect of the members of the Chia Family Group, to ORO GOLD PTE. LTD. (“OROGOLD”)4; and

(ii) in respect of FAPI, to Funderburk Cayman 1 Limited (“FC1L”),

and that such Proceeds would be regarded as interest-free shareholder’s loans extended to the Offeror by OROGOLD or FC1L (as the case may be) such that no cash shall be payable by the Offeror to the Undertaking Shareholder pursuant to its acceptance of the Exit Offer in respect of the Existing Relevant Shares; and

(c) to waive its rights under Rule 30 of the Code to receive any cash settlement or payment for its acceptance of the Exit Offer in respect of the Existing Relevant Shares.

For the avoidance of doubt, each Undertaking Shareholder will receive the Exit Offer Price for its acceptance of the Exit Offer in respect of each Offer Share which it may acquire or which may be issued or unconditionally allotted to it following the release of the Joint Announcement, pursuant to the terms of the Exit Offer and the relevant Acceptance Form(s).

The Irrevocable Undertakings shall terminate, lapse and cease to have any effect on the earlier of: (i) the conclusion of the EGM convened to obtain Shareholders’ Approval, if the Delisting Resolution is not approved at such EGM; and (ii) the date on which the Exit Offer is withdrawn, lapses or closes.

The respective shareholdings of each member of the Chia Family Group in the Company are set out in paragraph 8.1 of Appendix II of this Exit Offer Letter.

Save as disclosed in this Exit Offer Letter, neither the Offeror nor any of the parties acting in concert with it has received any irrevocable undertaking from any party to (A) vote for or against the Delisting Resolution, and (B) accept or reject the Exit Offer.

4 Please see Exit Offer Letter as well as section 5 of this Circular for details.

16


5. INFORMATION ON THE OFFEROR AND THE PARTIES ACTING IN CONCERT WITH IT

The information relating to the Offeror has been extracted from paragraph 3 of the Exit Offer Letter and reproduced below. Additional information on the Offeror is set out in Appendix III to this Circular. All terms and expressions used in the extract below shall have the same meanings as those defi ned in the Exit Offer Letter, unless otherwise stated.

Extract from Exit Offer Letter:5


3.1 The Offeror

The Offeror is a special purpose vehicle incorporated in Singapore for the purposes of the Delisting and the Exit Offer. Its principal activity is that of investment holding. As at the Latest Practicable Date, the Offeror has an issued and paid-up capital of S$10,000 comprising 10,000 ordinary shares, 64.73% of which is held by OROGOLD and the remaining 35.27% is held by FC1L. Further information on FC1L is set out in paragraph 3.3 below. The board of directors of the Offeror comprises:

(a) Mr. Roger Chia;

(b) Mr. Chia Kim Chua;

(c) Ms. Jenny Wong;

(d) Mr. Anwar5; and

(e) Mr. Amit Mehta.

As at the Latest Practicable Date, the Offeror does not own or have control over any Shares.

3.2 OROGOLD and Chia Family Group

As at the Latest Practicable Date, OROGOLD does not own or have control over any Shares.

OROGOLD is an investment holding company which is incorporated in Singapore. Its directors and shareholders are (a) Mr. Roger Chia (Executive Chairman and Managing Director of the Company), (b) Mr. Chia Kim Chua (Executive Director of the Company and brother of Mr. Roger Chia), and (c) Ms. Jenny Wong (Non-Executive and Non-Independent Director of the Company and spouse of Mr. Roger Chia). The respective shareholdings of Mr. Roger Chia, Ms. Jenny Wong and Mr. Chia Kim Chua in OROGOLD are as follows:

Mr. Roger Chia : 70.0% Ms. Jenny Wong : 20.0% Mr. Chia Kim Chua : 10.0%

As at the Latest Practicable Date, Mr. Roger Chia, Mr. Chia Kim Chua, Ms. Jenny Wong and REL Investments Pte Ltd (an investment holding vehicle of which Mr. Roger Chia and Ms. Jenny Wong hold 74.74% and 12.63% of the total number of issued shares respectively, comprising an aggregate of 87.37% of the total number of issued shares) (“REL Investments”) (Mr. Roger Chia, Mr. Chia Kim Chua, Ms. Jenny Wong and REL Investments collectively, the “Chia Family Group”) have an aggregate interest in 229,429,844 Shares, representing approximately 40.43% of the total number of issued Shares.

5 Mr. Anwar is also a director of FAPI.

17


3.3 FC1L

As at the Latest Practicable Date, FC1L does not own or have control over any Shares.

FC1L is an exempted company incorporated in the Cayman Islands and is a wholly-owned subsidiary of OIF. OIF is an investment arm of the Government of Oman and is fully funded by the Ministry of Finance, Oman. OIF is an investment vehicle, with the objective of building a diversifi ed portfolio in the production and services sectors, projects and other related fi elds that does not contradict with the objectives of other government funds of Oman. OIF has an interest in 121,350,888 Shares, representing approximately 21.38% of the total number of issued Shares which are held by its wholly-owned subsidiary, FAPI.

3.4 Shareholders’ Agreement

OROGOLD, FC1L and the Offeror have entered into a shareholders’ agreement (the “Shareholders’ Agreement”) in relation to, inter alia, the establishment and business of the Offeror and the regulation of the relationship between OROGOLD and FC1L as shareholders of the Offeror and the making of the Exit Offer. The Shareholders’ Agreement includes provisions such as those relating to board matters and board and shareholder reserved matters (giving FC1L veto/consent rights on certain board and shareholder matters in relation to the Offeror and its subsidiaries (which will include the Company if it is successfully privatised at the close of the Exit Offer)).

Under the Shareholders’ Agreement, part of the funding required by the Offeror to satisfy all valid acceptances from the Undertaking Shareholders pursuant to the Exit Offer will be regarded as interest-free shareholder’s loans extended by OROGOLD (for the Existing Relevant Shares held by the members of the Chia Family Group) and FC1L (for the Existing Relevant Shares held by FAPI) to the Offeror respectively, with the remaining funding provided to the Offeror by an external loan from DBS.

6. INFORMATION ON THE COMPANY AND THE GROUP

6.1 Corporate Information on the Company

The Company is incorporated in Singapore and listed on the Mainboard of the SGX-ST. The principal activities of the Company are engineering design, procurement and construction services for plants and associated facilities. The principal activities of the subsidiaries of the Company are disclosed in the notes to the fi nancial statements as set out in the Annual Report of the Company for the fi nancial year ended 31 December 2016.

As at the Latest Practicable Date, the Directors comprise: (a) Mr. Roger Chia (Executive Chairman and Managing Director);

(b) Mr. Chia Kim Chua (Executive Director);

(c) Mr. Lam Khin Khui (Non-Executive Independent Director);

(d) Mr. Keith Tay Ah Kee (Non-Executive Independent Director);

(e) Mr. Anwar Al Jabri (Non-Executive Non-Independent Director); and

(f) Ms. Jenny Wong (Non-Executive Non-Independent Director).

As at the Latest Practicable Date, the Company has an issued and paid-up share capital of S$89,364,213.59 comprising 567,518,000 Shares (excluding 336,000 Shares held by the Company as treasury shares).

18


As at the Latest Practicable Date, the Company has not issued any instruments convertible into, rights to subscribe for, nor options (whether pursuant to an employee share option scheme or otherwise) in respect of, securities which carry voting rights of the Company.

6.2 Additional Information on the Company and the Group Additional information on the Company and the Group is set out in Appendix II to this Circular.

7. RATIONALE FOR DELISTING AND THE OFFEROR’S INTENTIONS

The information relating to the Offeror’s rationale for the Delisting Proposal and the Offeror’s intentions for the Company has been extracted from paragraph 4 of the Exit Offer Letter and reproduced below. All terms and expressions used in the extract below shall have the same meanings as those defi ned in the Exit Offer Letter, unless otherwise stated.


4. RATIONALE FOR THE DELISTING AND THE OFFEROR’S INTENTIONS

4.1 Opportunity for Shareholders to Realise a Clean Cash Exit at a Compelling Premium

The Offeror believes that, through the Delisting Proposal and Exit Offer, the accepting Shareholders will have an opportunity to realise their investments in the Company for a cash consideration at a premium over the historical transacted prices of the Shares on the SGX-ST, without incurring any brokerage and other trading costs.

(a) The Exit Offer Price represents a premium of approximately 21% over the last traded price of S$0.380 per Share on the Last Full Market Day and premium of approximately 22%, 25%, 19%, 20%, over the VWAP of the Shares over the one-month, three-month, six-month, and 12-month periods respectively up to and including the Last Full Market Day.

21% 19% 20%25%22%

S$0.380 S$0.378 S$0.368 S$0.386 S$0.384

Last traded price(1)(2) 1-month(1)

VWAP3-month(1)

VWAP6-month(1)

VWAP12-month(1)

VWAP

Exit Offer Price: S$0.460 per Offer Share

Notes:

(1) The historical market prices and the corresponding premium are computed based on data extracted from Bloomberg L.P..

(2) Last transacted price per Share on the Last Full Market Day.

(b) In addition, the Exit Offer Price exceeds the highest closing price of the Shares since 3 July 2015, being more than two (2) years prior to the Last Full Market Day.

19


(c) The Exit Offer Price also represents a premium of 6 1% over the latest publicly available net tangible asset value per Share of S$0.28 6 as at 30 September 2017 (as reported in the unaudited consolidated fi nancial statements of the Group (as defi ned in paragraph 4.6 below) for the nine-month period ended 30 September 2017).

4.2 Opportunity for Shareholders to Realise Their Investments Amidst Low Trading Liquidity of Shares

The trading liquidity of the Shares on the SGX-ST in the past year has been generally thin. The average daily trading volume of the Shares for the one-month, three-month, six-month, and 12-month periods prior to and including the Last Full Market Day are as follows:

Period prior to and including the Last Full Market Day

Average Daily Trading Volume(1)

As an approximate percentage of total

number of Shares(2) (%)

Last one (1) month 355,023 0.06%

Last three (3) months 240,389 0.04%

Last six (6) months 333,819 0.06%

Last 12 months 329,500 0.06%

Source: Bloomberg L.P.

Notes:

(1) The average daily trading volume is computed based on the total trading volume of the Shares for all Market Days for the relevant periods immediately prior to and including the Last Full Market Day, divided by the total number of Market Days during the respective periods. “Market Day” refers to a day on which the SGX-ST is open for the trading of securities.

(2) Computed based on 567,518,000 Shares (excluding 336,000 Shares held by the Company as treasury shares), being the total number of issued Shares as at the Latest Practicable Date.

In view of the low trading liquidity during the periods prior to and including the Last Full Market Day, the Offeror believes that the Exit Offer represents an opportunity for Shareholders to realise their investments in Shares at a price (without incurring any brokerage and other trading costs) which may not otherwise be readily available.

4.3 Greater Management Flexibility

The Offeror believes that privatising the Company will give the Offeror and the management of the Company more flexibility to manage the business of the Company, optimise the use of its management and capital resources and facilitate the implementation of any operational change without the attendant cost, regulatory restrictions and compliance issues associated with its listed status on the SGX-ST.

4.4 No Need for Access to Capital Markets

Since 2007, the Company has not carried out any corporate exercise to raise cash funding on the SGX-ST. The Company is also unlikely to require access to Singapore capital markets to fi nance its operations in the foreseeable future. Accordingly, it is not necessary for the Company to maintain a listing on the SGX-ST.

4.5 Compliance Costs of Maintaining Listing

In maintaining its listed status, the Company incurs compliance and associated costs. In the event that the Company is delisted from the SGX-ST, the Company will be able to save on expenses relating to the maintenance of a listed status and focus its resources on its business operations.

20


4.6 Offeror’s Intentions

Following the close of the Exit Offer, the Offeror will undertake a comprehensive review of the businesses, organisation, operations and fi xed assets of the Company, its subsidiaries, joint ventures and associated companies (the “Group”). This review will help the Offeror determine the optimal business strategy for the Group.

Save as disclosed above, the Offeror has no current intention of (a) introducing any major changes to the business of the Group, (b) re-deploying the fi xed assets of the Group, or (c) discontinuing the employment of the employees of the Group, other than in the ordinary course of business.

Nonetheless, the Offeror retains the flexibility at any time to consider options or opportunities which may present themselves, and which it regards to be in the interests of the Offeror and/or the Group.

8. IMPLICATIONS OF COMPULSORY ACQUISITION AND DELISTING FOR SHAREHOLDERS

8.1 Implications of Delisting for Shareholders

Shareholders should note that if the Delisting Resolution is approved in accordance with the requirements of the Listing Manual, the Company will be delisted. Following the Delisting, Shareholders who do not accept the Exit Offer will continue to hold shares in the Company, which will then be an unlisted company.

Shareholders should note that shares of unlisted companies are generally valued at a discount to the shares of comparable listed companies due to the lack of marketability. Following the Delisting, it is likely to be diffi cult for Shareholders who do not accept the Exit Offer to sell their Shares in the absence of a public market for the Shares, as there is no arrangement for such Shareholders to exit. Even if such Shareholders were able to sell their Shares, they would likely receive a lower price as compared with the market prices of the shares of comparable listed companies, or as compared with the Exit Offer Price.

Shareholders should also note that, under the Code, except with the consent of the SIC, neither the Offeror nor any person acting in concert with it may, within six months of the close of the Exit Offer, make a second offer to, or acquire any Shares from, any Shareholder on terms better than those made available under the Exit Offer.

If the Company is delisted from the Offi cial List of the SGX-ST, it will no longer be required to comply with the listing requirements of the SGX-ST. Nonetheless, as a company incorporated in Singapore, the Company will still need to comply with the Companies Act and its Constitution, and the interests of Shareholders who do not accept the Exit Offer will be protected to the extent provided for by the Companies Act and the Company’s Constitution.

If the Company is delisted from the Offi cial List of the SGX-ST, each Shareholder who holds Shares that are deposited with the CDP and does not accept the Exit Offer will be entitled to one share certifi cate representing his delisted Shares. The share certifi cate will be sent, by ordinary post and at the Shareholder’s own risk, to the Shareholder’s address as it appears in the records of CDP after the Company has been delisted from the Offi cial List of the SGX-ST. The Company’s Share Registrar, Boardroom Corporate & Advisory Services Pte Ltd, will arrange to forward the share certifi cates to such Shareholders (who are not CPFIS Investors or SRS Investors), by ordinary post and at the Shareholders’ own risk, to their respective addresses as such addresses appear in the records of CDP for their physical safekeeping. The share certifi cates belonging to CPFIS Investors or SRS Investors will be forwarded to their respective CPF Agent Banks or SRS Agent Banks for their safekeeping.

Shareholders who are in doubt of their position should seek independent professional advice.

21


8.2 Rights of Compulsory Acquisition of Shares

The information relating to the rights of compulsory acquisition has been extracted from paragraph 4.7 of the Exit Offer Letter and reproduced below. All terms and expressions used in the extract below shall have the same meanings as those defi ned in the Exit Offer Letter, unless otherwise stated.


4.7 Compulsory Acquisition

In the event the Offeror acquires not less than 90% of the issued Shares (other than those already held by the Offeror, its related corporations and their respective nominees as at the date of the Exit Offer and which, for the avoidance of doubt, excludes any issued and paid-up ordinary shares held by the Company as treasury shares) pursuant to the Exit Offer, the Offeror will be entitled to exercise the right of compulsory acquisition under Section 215(1) of the Companies Act (Chapter 50 of Singapore) (“Companies Act”) to acquire all the remaining issued Shares at the Exit Offer Price.

The Offeror intends to exercise its right of compulsory acquisition in the event that the Offeror acquires at least 90% of the issued Shares (not held by the Offeror, its related corporations or their respective nominees as at the date of the Exit Offer and which, for the avoidance of doubt, excludes any issued and paid-up ordinary shares held by the Company as treasury shares). If so, and upon completion of the compulsory acquisition, the Company will then become a wholly-owned subsidiary of the Offeror.

In addition, Shareholders who do not accept the Exit Offer would have a corresponding right, under and subject to Section 215(3) of the Companies Act, to require the Offeror to acquire their Shares at the Exit Offer Price by serving notice requiring the Offeror to do so, in the event that the Shares acquired by the Offeror pursuant to the Exit Offer, together (a) with any other Shares held by the Offeror, its related corporations and their respective nominees and (b) any issued and paid-up ordinary shares held by the Company as treasury shares, comprise 90% or more of the Shares and any issued and paid-up ordinary shares held by the Company as treasury shares.

Shareholders who have not accepted the Exit Offer and who wish to exercise their rights under Section 215(3) of the Companies Act are advised to seek their own independent legal advice.

Shareholders should read carefully Section 8 of the Letter to Shareholders entitled “Implications of Compulsory Acquisition and Delisting for Shareholders” set out in the Delisting Circular.

22


9. FINANCIAL ASPECTS OF THE EXIT OFFER

The information on the fi nancial aspects of the Exit Offer has been extracted from paragraph 5 of the Exit Offer Letter and reproduced below. All terms and expressions used in the extract below shall have the same meanings as those defi ned in the Exit Offer Letter, unless otherwise stated.


5. MARKET QUOTATIONS

5.1 Closing Prices of the Shares

The following table sets out the last closing prices of the Shares on the SGX-ST on (a) a monthly basis from April 2017 (being six (6) calendar months prior to the Joint Announcement Date), (b) 28 September 2017, being the Last Full Market Day prior to the Joint Announcement Date, and (c) the Latest Practicable Date:

Month Closing price (S$)

April 2017 0.390

May 2017 0.365

June 2017 0.365

July 2017 0.360

August 2017 0.375

September 2017 0.410

28 September 2017, being the Last Full Market Day 0.380

18 December 2017, being the Latest Practicable Date 0.455


5.2 Highest and Lowest Prices of the Shares

The highest and lowest closing prices of the Shares on the SGX-ST during the period commencing six (6) calendar months prior to the Joint Announcement Date and ending on the Latest Practicable Date are as follows:

Price(S$)

Date(s)

Highest closing price 0.4 55 2 November 2017, 18 December 2017

Lowest closing price 0.340 15, 16 and 17 August 2017


10. CONFIRMATION OF FINANCIAL RESOURCES

The confi rmation of fi nancial resources has been extracted from paragraph 6 of the Exit Offer Letter and reproduced below. All terms and expressions used in the extract below shall have the same meanings as those defi ned in the Exit Offer Letter, unless otherwise stated.


6. CONFIRMATION OF FINANCIAL RESOURCES

DBS, being the Offeror’s fi nancial adviser for the Delisting and in connection with the Exit Offer, has confi rmed that, taking into account the Irrevocable Undertakings, suffi cient fi nancial resources are available to the Offeror to satisfy in full all acceptances of the Exit Offer on the basis of the Exit Offer Price.

23


11. OVERSEAS SHAREHOLDERS

The information relating to the availability of the Exit Offer and the documents relating to the Delisting to Overseas Shareholders has been extracted from paragraph 9 of the Exit Offer Letter and reproduced below. All terms and expressions used in the extract below shall have the same meanings as those defi ned in the Exit Offer Letter, unless otherwise stated.


9. OVERSEAS SHAREHOLDERS

9.1 Overseas Shareholders

The availability of the Exit Offer to the Shareholders whose addresses are outside Singapore, as shown on the Register of Members of the Company or, as the case may be, in the records of CDP (each, an “Overseas Shareholder”) may be affected by the laws of the relevant overseas jurisdictions. Accordingly, any Overseas Shareholder should inform himself about and observe any applicable legal requirements in his own jurisdiction, and exercise caution in relation to the Exit Offer, as this Exit Offer Letter, the Acceptance Forms and the Delisting Circular have not been reviewed by any regulatory authority in any overseas jurisdiction. Where there are potential restrictions on sending this Exit Offer Letter, the Acceptance Forms and the Delisting Circular to any overseas jurisdiction, the Offeror, DBS, CDP and the Company each reserves the right not to send these documents to such overseas jurisdictions. For the avoidance of doubt, the Exit Offer is open to all the Shareholders holding Offer Shares, including those to whom this Exit Offer Letter, the Acceptance Forms and the Delisting Circular have not been, or may not be, sent.

Copies of this Exit Offer Letter, the relevant Acceptance Forms, the Delisting Circular and any other formal documentation relating to the Exit Offer are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any jurisdiction where the making of or the acceptance of the Exit Offer would violate the applicable law of that jurisdiction (“Restricted Jurisdiction”) and will not be capable of acceptance by any such use, instrumentality or facility within any Restricted Jurisdiction and persons receiving such documents (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send them in or into or from any Restricted Jurisdiction.

The Exit Offer (unless otherwise determined by the Offeror and permitted by applicable law and regulation) will not be made, directly or indirectly, in or into, or by the use of mails of, or by any means or instrumentality (including, without limitation, telephonically or electronically) of interstate or foreign commerce of, or any facility of a national, state or other securities exchange of, any Restricted Jurisdiction and the Exit Offer will not be capable of acceptance by any such use, means, instrumentality or facility.

9.2 Copies of the Exit Offer Letter, Acceptance Forms and Delisting Circular

Overseas Shareholders may, nonetheless, obtain copies of this Exit Offer Letter, the relevant Acceptance Forms, the Delisting Circular and any related documents, during normal business hours, from the date of this Exit Offer Letter and up to the Closing Date, from the Offeror through its receiving agent, Boardroom Corporate & Advisory Services Pte. Ltd., at 50 Raffl es Place, #32-01 Singapore Land Tower, Singapore 048623. Alternatively, an Overseas Shareholder may write in to the Offeror through Boardroom Corporate & Advisory Services Pte. Ltd. at the address listed above to request for this Exit Offer Letter, the relevant Acceptance Form(s), the Delisting Circular and any related documents to be sent to an address in Singapore by ordinary post at the Overseas Shareholder’s own risk (the last day for despatch in respect of such request shall be a date falling three (3) Market Days prior to the Closing Date).

24


9.3 Overseas Jurisdictions

It is the responsibility of any Overseas Shareholder who wishes to (a) request for this Exit Offer Letter, the relevant Acceptance Form(s), the Delisting Circular and/or any related documents, and/or (b) accept the Exit Offer, to satisfy himself as to the full observance of the laws of the relevant jurisdiction in that connection, including the obtaining of any governmental or other consent which may be required, and compliance with all necessary formalities or legal requirements and the payment of any taxes, imposts, duties or other requisite payments due in such jurisdiction. Such Overseas Shareholder shall be liable for any such taxes, imposts, duties or other requisite payments payable and the Offeror, DBS, CDP, the Company and/or any person acting on its behalf shall be fully indemnifi ed and held harmless by such Overseas Shareholder for any such taxes, imposts, duties or other requisite payments as the Offeror, DBS, CDP, the Company and/or any person acting on its behalf may be required to pay. In (i) requesting for this Exit Offer Letter, the relevant Acceptance Form(s), the Delisting Circular and/or any related documents, and/or (ii) accepting the Exit Offer, the Overseas Shareholder represents and warrants to the Offeror, CDP, DBS and the Company that he is in full observance of the laws of the relevant jurisdiction in that connection, and that he is in full compliance with all necessary formalities or legal requirements.

ANY OVERSEAS SHAREHOLDER WHO IS IN ANY DOUBT ABOUT HIS POSITION SHOULD CONSULT HIS PROFESSIONAL ADVISER IN THE RELEVANT JURISDICTION.

9.4 Notice

The Offeror and DBS each reserves the right to (a) reject any acceptance of the Exit Offer where it believes, or has reason to believe, that such acceptance may violate the applicable laws of any jurisdiction, and (b) notify any matter, including the despatch of this Exit Offer Letter, any formal documentation relating to the Exit Offer, and the fact that the Exit Offer has been made, to any or all the Shareholders (including the Overseas Shareholders) by announcement to the SGX-ST and if necessary, paid advertisement in a newspaper published and circulated in Singapore, in which case such notice shall be deemed to have been suffi ciently given notwithstanding any failure by any Shareholder to receive or see such announcement or advertisement.

12. INTERESTS OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS

The table below sets out the Directors’ and Substantial Shareholders’ interests in the Company as at the Latest Practicable Date, based on the information in the Register of Directors’ Shareholdings and the Register of Substantial Shareholders, respectively.

Direct Interest Deemed Interest Total Interest

No. of Shares

% of Issued Shares(1)

No. of Shares


No. of Shares


Directors

Roger Chia Kim Piow(2) 34,763,916 6.13 172,423,528 30.38 207,187,444 36.51

Chia Kim Chua 22,242,400 3.92 – – – –

Lam Khin Khui 842,800 0.15 – – – –

Keith Tay Ah Kee 459,200 0.08 – – – –

Anwar Hilal Hamdoon Al Jabri – – – – – –

Jenny Wong Oi Moi(3) 6,972,896 1.23 200,214,548 35.28 207,187,444 36.51

25


Direct Interest Deemed Interest Total Interest

No. of Shares


No. of Shares


No. of Shares


Substantial Shareholders (other than Directors)

REL Investments Pte Ltd(2)(3) 165,450,632 29.15 – – 165,450,632 29.15

Funderburk Asia-Pac Investments I Limited(4) 121,350,888 21.38 – – 121,350,888 21.38

Oman Investment Fund(4) – – 121,350,888 21.38 121,350,888 21.38

Notes:

(1) Computed based on 567,518,000 Shares, being the total number of issued Shares (excluding 336,000 Shares held by the Company as treasury shares) as at the Latest Practicable Date.

(2) Mr. Roger Chia is deemed to have an interest in the Shares held by his spouse, Ms. Jenny Wong and REL Investments, in which Mr. Roger Chia and Ms. Jenny Wong hold 74.74% and 12.63% of the total number of issued shares respectively, comprising an aggregate of 87.37% of the total number of issued shares. Accordingly, Mr. Roger Chia is a controlling shareholder of REL Investments.

(3) Ms. Jenny Wong is deemed to have an interest in the Shares held by her spouse, Mr. Roger Chia and REL Investments, in which Ms. Jenny Wong and Mr. Roger Chia hold 12.63% and 74.74% of the total number of issued shares respectively, comprising an aggregate of 87.37% of the total number of issued shares.

(4) Oman Investment Fund is deemed to have an interest in the Shares held by its wholly-owned subsidiary, Funderburk Asia-Pac Investments I Limited. Accordingly, Oman Investment Fund is a controlling shareholder of Funderburk Asia-Pac Investments I Limited.

Save as disclosed in this Circular (in particular Section 5 of this Circular entitled “Information on the Offeror and the Parties Acting in Concert with It”), none of the Directors or Substantial Shareholders has any interest, direct or indirect, in the Delisting or the Exit Offer.

13. EXEMPTION RELATING TO DIRECTORS’ RECOMMENDATION

13.1 All the Directors, except for the Relevant Directors, are independent for the purposes of the Exit Offer and are required to make a recommendation to Shareholders in respect of the Exit Offer.

13.2 The SIC has ruled that the Relevant Directors will be exempted from the requirement of making a recommendation to Shareholders on the Exit Offer and should not join the remainder of the Board in the expression of the Board’s view on the Exit Offer as the Relevant Directors, being directors of and parties acting in concert with the Offeror, face irreconcilable confl icts of interests in doing so. Nevertheless, the Relevant Directors must still assume responsibility for the accuracy of the facts stated and opinions expressed in documents or advertisements issued by, or on behalf of, the Company to the Shareholders in connection with the Exit Offer.

13.3 All the Directors (including, for the avoidance of doubt, the Relevant Directors) are responsible for the accuracy of facts stated and completeness of the information contained in announcements and documents issued by or on behalf of the Company in connection with the Exit Offer.

14. ADVICE OF DELOITTE TO THE INDEPENDENT DIRECTORS IN RELATION TO THE EXIT OFFER

14.1 IFA

Deloitte has been appointed as independent fi nancial adviser to the Independent Directors in relation to the Exit Offer. The IFA Letter setting out the IFA’s advice to the Independent Directors is set out in Appendix I to this Circular. Shareholders are advised to read and consider the IFA Letter in its entirety.

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14.2 IFA’s Advice

Information relating to the advice of the IFA to the Independent Directors in relation to the Exit Offer and the key factors it has taken into consideration have been extracted from Section 8 of the IFA Letter (and reproduced below), and all terms and expressions used in the extract below shall bear the same meanings as attributed to them in the IFA Letter unless otherwise stated. Shareholders are advised to read the following extract in conjunction with, and in the context of the full text of the IFA Letter.

8. OUR RECOMMENDATION ON THE EXIT OFFER AS REQUIRED PURSUANT TO LISTING RULE 1309(2)

In arriving at our recommendation on the Exit Offer, we have assessed the fi nancial terms of the Exit Offer Price after taking into consideration the following key considerations which we consider to be pertinent and which we consider may have a signifi cant bearing on our assessment:

i. We have considered the rationale of the Delisting Proposal and it is based on commercial grounds;

ii. The Exit Offer Price of S$0.46 is higher than the traded price of the Shares in the two-year period preceding the Last Full Trading Day (where the Shares traded in the range of S$0.270 to S$ 0.435 per Share);

iii. The Exit Offer Price represents a premium of 19.7%, 19.3%, 25.1% and 21.9% above the VWAP of the Shares for the 1-year, 6-month, 3-month and 1-month periods prior to and including the Last Full Trading Day respectively and a premium of 20.1% above the VWAP of Shares on the Last Full Trading of S$0.383;

iv. Trading liquidity of the Shares during the 1-year period up to and including the Last Full Trading Day has been low in general at an average daily trading volume of the Shares between 242,000 to 355,000 representing 0.11% to 0.16% of the Company’s free fl oat. Given the thin trading volume, and in particular for Shareholders with larger quantum of Shares, the Exit Offer provides an opportunity to realise their investment which otherwise may not be available given the low trading liquidity;

v. The Exit Offer Price is at a premium of 60.5% and 60.8% over the unaudited NAV and NTA per Share as at 30 September 2017 or a P/NAV and P/NTA ratio of 1.60 and 1.61 times respectively. The value of the revaluation surplus from the Revalued Properties and Assets is material. Taking this into account, the Exit Offer Price is at a premium of 25.5% and 25.7% to the RNAV and RNTA or at an implied P/RNAV and P/RNTA ratio of 1.25 and 1.26 times respectively.

vi. In comparison with the corresponding premia of the Precedent Privatisation Transactions, the premium implied by the Exit Offer Price above the VWAP for 1-month, 3-month and 6-month periods prior to the Last Full Trading Day are within the range but below to the mean and median;

vii. The P/NAV ratio of the Company implied by the Exit Offer Price is within range and higher than the mean and median of the offer price over the NAV ratios of the Precedent Privatisation Transactions. The P/RNAV ratio of the Company as implied by the Exit Offer Price is within range and higher than the median but lower than the mean of the offer price over NAV ratios of the Precedent Privatisation Transactions;

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viii. The revenue and gross profi t of the Group has in line with the general downturn in the oil and gas sector declined by 52% and 32%, respectively in FY2015 from FY2014. Revenue declined further in FY16 by 29% as major projects reached completion; gross profi t fell from S$79.8 million in FY2015 to S$57.1 million for FY2016. Net profi t attributable to shareholders of S$42.8 million in FY2015 declined further to S$11. 4 million in FY2016 resulting in a decrease in earnings per share from 7.5 cents to 2 cents. Revenue improved by 17% in 9M2017 compared to 9M2016 and Net profi t to Shareholder improved by 70% to S$6.4 million from S$3.8 million. We note that the Group still remains cautious on its business outlook with regards to its core focus sector of EPC services for liquid storage terminal;

ix. The Price to trailing historical NTA implied by the Exit Offer Price has been above 0.90 times for the preceding 2-year period from 30 September 2015 to Latest Practicable Date;

x. The Exit Offer Price per share would have been at a 9.6% discount to NTA per share should the Exit Offer have been proposed before 12 December 2016;

xi. The T12M PER & EV/EBITDA of the Group as implied by the Exit Offer Price is within the range and is above the mean and median of T12M PER & EV/EBITDA of the Comparable Companies respectively;

xii. The Offeror has received an irrevocable undertaking from the Undertaking Shareholders to vote all their Shares in favour of the Delisting Resolution and accept the Exit Offer in respect of all their Shares. As at the Latest Practicable Date, the Undertaking Shareholders collectively hold an aggregate of 350,780,732 Shares representing approximately 61.81% of the total number of issued Shares.

Should the Delisting Resolution be approved by a majority of at least 75%, or if the Undertaking Shareholders hold more than 75% of the Shares, the Delisting will still not proceed if at the EGM, convened, the Shareholders (either in person or by proxy) holding 10% or more of the total number of issued Shares excluding treasury shares and subsidiary holdings vote against the Delisting Resolution.

xiii. Unless the Undertaking Shareholders accept an alternative or competing offer; any offer made by a third party would not become unconditional . As at Latest Practicable Date, the Company has not received any alternative offer or proposal for the Shares from any third party.

Based on our analysis and after having considered carefully the information available to us as at the Latest Practicable Date, overall, we are of the view that the fi nancial terms of the Exit Offer are fair and reasonable . Accordingly, we advise the Independent Directors to recommend the Shareholders to vote in favour of the Exit Offer.

15. INDEPENDENT DIRECTORS’ RECOMMENDATIONS

All the Independent Directors, are independent for purposes of the Exit Offer and are required to make a recommendation to Shareholders in respect of the Exit Offer.

Shareholders are advised by the Independent Directors to read and consider carefully the following recommendation of the Independent Directors and the advice of Deloitte contained in the IFA Letter as reproduced in Appendix I to this Circular in its entirety. The Independent Directors would also like to draw the attention of the Shareholders to Section 8 of this Circular entitled “Implications of Compulsory Acquisition and Delisting for Shareholders”.

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In reaching the recommendations set out below, the Independent Directors have carefully considered, amongst other things, the terms of the Delisting Proposal (including the Exit Offer) and the advice given by Deloitte in the IFA letter set out in Appendix I to this Circular.

Having taken the above matters into consideration, the Independent Directors concur with the advice of Deloitte in respect of the Exit Offer. Accordingly, the Independent Directors recommend that Shareholders should VOTE IN FAVOUR of the Delisting Resolution at the EGM, and ACCEPT the Exit Offer in respect of Shares owned by them.

Shareholders should note that they should not rely on the advice of Deloitte as the sole basis for deciding whether or not to accept the Exit Offer.

In rendering the above advice and giving the above recommendations, the Independent Directors have not taken into consideration nor had regard to the general or specifi c investment objectives, fi nancial situation, tax status or position, risk profi les or unique needs and constraints or other particular circumstances of any individual Shareholder. As different Shareholders would have different investment objectives and profi les, the Independent Directors recommend that any individual Shareholder who may require specifi c advice in relation to his investment objectives, portfolio and/or Shares should consult his stockbroker, bank manager, solicitor, accountant, tax adviser or other professional adviser immediately.

16. EXTRAORDINARY GENERAL MEETING

The EGM, notice of which is set out on page N-1 of this Circular, will be held at Raffl es Country Club, Stamford Suite, 450 Jalan Ahmad Ibrahim, Singapore 639932 on 10 January 2018 at 10.00 a.m. for the purpose of considering and, if thought fi t, passing, on a poll, with or without amendments, the Delisting Resolution set out in the Notice of EGM.

17. ACTION TO BE TAKEN BY SHAREHOLDERS

17.1 VOTING AT THE EGM

Shareholders will fi nd enclosed with this Circular the notice of EGM and a proxy form. If a Shareholder is unable to attend the EGM and wishes to appoint a proxy to attend and vote on his behalf, he should complete, sign and return the attached proxy form in accordance with the instructions printed thereon as soon as possible and in any event so as to reach the Company’s Share Registrar, Boardroom Corporate & Advisory Services Pte. Ltd. at 50 Raffl es Place, #32-01 Singapore Land Tower, Singapore 048623, not later than 48 hours before the time fi xed for the EGM. The completion and return of the proxy form by a Shareholder will not prevent him from attending and voting in person at the EGM, if he wishes to do so, in place of his proxy.

A Depositor shall not be regarded as a member of the Company entitled to attend the EGM and to speak and vote thereat unless his name appears on the Depository Register maintained by the CDP not less than 72 hours before the EGM .

17.2 Acceptance of the Exit Offer

The Exit Offer Letter and the Acceptance Forms have been despatched together with this Circular.

The Shareholders may choose to submit the relevant Acceptance Form(s) to accept the Exit Offer before the EGM. However, please note that such acceptance is conditional upon the Delisting Resolution Approval Conditions being satisfi ed. In the event that any of the Delisting Resolution Approval Conditions is not fulfi lled, the Exit Offer will lapse and both the Shareholders as well as the Offeror will cease to be bound by any prior acceptances of the Exit Offer by any Shareholder. Those Offer Shares in respect of which acceptances have been received shall be returned to the relevant Shareholders in accordance with the procedures set out in th e Exit Offer Letter and the Acceptance Forms.

29


To accept the Exit Offer, you should complete, sign and return the relevant Acceptance Form(s) in accordance with the provisions and instructions stated in the Exit Offer Letter and the relevant Acceptance Form(s). Additional information on the procedures for acceptance and settlement of the Exit Offer is set out in Appendix I to the Exit Offer Letter. Shareholders should note that if the Delisting Resolution is not approved at the EGM, the condition to the Exit Offer will not be fulfi lled. In such an event, those Offer Shares in respect of which acceptances have been received shall be returned to the relevant Shareholders in accordance with the procedures set out in the Exit Offer Letter and the Acceptance Form(s).

If you do not wish to accept the Exit Offer, you do not need to take any action. In the event of the delisting of the Company, you will continue to hold Shares in the Company which will then be an unlisted company. If you hold Shares that are deposited with CDP, share certifi cates in respect of your Shares that are deposited with CDP will be sent, by ordinary mail and at your own risk, to your address as it appears in the records of CDP, after the Company has been delisted from the Offi cial List of the SGX-ST. Section 8 of this Circular sets out further details in the event that a Shareholder chooses not to accept the Exit Offer.

17.3 Information pertaining to CPFIS Investors and SRS Investors

Information on the Exit Offer pertaining to CPFIS Investors and SRS Investors is set out in Section 10 of the Exit Offer Letter.

18. RESPONSIBILITY STATEMENTS

The Directors (including any Director who may have delegated detailed supervision of this Circular) collectively and individually accept full responsibility for the accuracy of the information given in this Circular (other than those relating to the Delisting Proposal, the Exit Offer, the IFA Letter, the recommendations of the Independent Directors, the Valuation Certifi cates, the Offeror and persons acting in concert with it and Appendices I, III, VI, VII and IX) and confi rm after making all reasonable enquiries that, to the best of their knowledge and belief, this Circular constitutes full and true disclosures of all material facts about the Group in the context of the Delisting, all the facts stated and opinions expressed herein are fair and accurate and that the Directors are not aware of any material facts the omission of which would make any statement in this Circular misleading. Where information in this Circular has been extracted or reproduced from published or otherwise publicly available sources or obtained from the Offeror or persons acting in concert with it, the sole responsibility of the Directors has been to ensure, through reasonable enquiries, that such information has been accurately and correctly extracted from such sources or, as the case may be, accurately refl ected or reproduced in this Circular in its proper form and context.

In respect of the IFA Letter and the Valuation Certifi cates, the sole responsibility of the Directors has been to ensure that the facts stated therein with respect to the Group are fair and accurate in all material respects.

The recommendations of the Independent Directors to Shareholders as set out in Section 15 entitled “Independent Directors’ Recommendations” are the responsibilities of the Independent Directors.

19. CONSENTS

19.1 The independent fi nancial adviser, Deloitte, has given and has not withdrawn its written consent to the issue of this Circular with the inclusion herein of its advice to the Independent Directors set out in Section 14 of this Circular, the IFA Letter set out in Appendix I to this Circular and the review report on the unaudited consolidated fi nancial statements of the Group for 9M2017 set out in Appendix VII to this Circular, and all references to it and its name in the form and context in which they appear in this Circular.

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19.2 The independent auditors of the Group, Ernst & Young LLP, has given and has not withdrawn its written consent to the issue of this Circular with the inclusion herein of the independent auditors’ report of the Group for the fi nancial year ended 31 December 2016 as set out in Appendix IV to the Circular and the review report on the unaudited consolidated fi nancial statements of the Group for 9M2017 as set out in Appendix VI to the Circular.

19.3 Each of the Independent Valuers, namely Colliers International Consultancy & Valuation

(Singapore) Pte Ltd, Colliers International Croatia, PPC International Sdn Bhd, American Appraisal (Thailand) Ltd and Fearnleys Asia (Singapore) Pte Ltd, has given and has not withdrawn its written consent to the issue of this Circular with the inclusion herein of its respective Valuation Certifi cates set out in Appendix IX to this Circular and all references to it and its name in the form and context in which they appear in this Circular.

19.4 The Company’s Share Registrar, Boardroom Corporate & Advisory Services Pte. Ltd., has given and has not withdrawn its written consent to the issue of this Circular with the inclusion herein of its name and all references to its name in the form and context in which they appear in this Circular.

20. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the Company’s registered offi ce at 17 Tuas Avenue, 20 Singapore 638828 during normal business hours, from the date of this Circular until the date of the EGM:

(a) the Constitution ;

(b) the annual reports of the Company for FY2014, FY2015 and FY2016;

(c) the unaudited consolidated fi nancial statements of the Group for 9M2017;

(d) the letter from the Offeror to the Company dated 1 October 2017 in respect of the Delisting Proposal;

(e) the Joint Announcement;

(f) the Exit Offer Letter;

(g) the IFA Letter;

(h) the valuation reports issued by the Independent Valuers, extracts of which are appended as Valuation Certifi cates in Appendix IX to this Circular; and

(i) the letters of consent referred to in Section 19 of this Circular.

21. ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the Appendices which form part of this Circular.

Yours faithfully,

For and on behalf of the Board of Directors ofROTARY ENGINEERING LIMITED.

Mr. Lam Khin KhuiIndependent Director

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APPENDIX I – LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS

18 December 2017

The Independent DirectorsRotary Engineering LimitedNo. 17 Tuas Avenue 20 Singapore 638828

Dear Sirs

PROPOSED VOLUNTARY DELISTING (AS DEFINED HEREIN) OF ROTARY ENGINEERING LIMITED. (“COMPANY”) FROM THE OFFICIAL LIST OF THE SINGAPORE EXCHANGE SECURITIES TRADING LIMITED (SGX-ST) PURSUANT TO RULES 1307 AND 1309 OF THE SGX-ST LISTING MANUAL (“DELISTING PROPOSAL”)

For the purpose of this letter, capitalised terms not otherwise defi ned shall have the meaning given to them in the circular to the Shareholders of the Company dated 26 December 2017 (the “Delisting Circular”).

1. INTRODUCTION

On 2 October 2017 (“Joint Announcement Date”), the Company and OROCHEM PTE. LTD. (the “Offeror”) jointly announced that the Offeror had presented the Delisting Proposal to the Directors of the Company to seek the voluntary delisting of the Company from the offi cial list of the SGX-ST pursuant to Rules 1307 and 1309 of the SGX-ST listing manual (“Listing Manual”).

Under the Delisting Proposal, DBS Bank Ltd. (“DBS”) will make, for and on behalf of the Offeror, an exit offer (the “Exit Offer”) in cash, conditional on the obtaining of the Shareholders’ Approval to acquire all the issued ordinary shares in the capital of the Company (“Shares”) other than those held by the Company as treasury share and those held, directly or indirectly, by the Offeror as at the date of the Exit Offer (the “Offer Shares”), at the Exit Offer Price of S$0.460 for each Offer Share.

The Directors of the Company (including the Independent Directors) (“Directors”, or “Board”), having considered the Delisting Proposal, have resolved to make an application to the SGX-ST for approval of the Delisting, and to convene the extraordinary general meeting (“EGM”) to seek the approval of the Shareholders in respect of the resolution for the Delisting (“Delisting Resolution”) pursuant to Rules 1307 and 1309 of the Listing Manual.

Under Rule 1309 of the Listing Manual, if the Company is seeking to delist from the SGX-ST the Company should appoint an independent fi nancial adviser (“IFA”) to advise on the Exit Offer. On 3rd October 2017, the Company appointed Deloitte & Touche Corporate Finance Pte Ltd (“DTCF”) as the IFA to the directors of the Company who are considered independent (the “Independent Directors”) for the purpose of making their recommendations to the Shareholders with respect to the Delisting and the Exit Offer.

This letter (“Letter”) sets out, inter alia, our views and evaluation of the Exit Offer and our opinion thereon. It will form part of the Delisting Circular providing, inter alia, our recommendation to the Independent Directors in respect of the Exit Offer.

2. TERMS OF REFERENCE

DTCF has been appointed as the IFA as required under Rule 1309 of the Listing Manual and also to advise the Independent Directors in respect of their recommendation on the actions to be taken by the Shareholders in relation to the Exit Offer.

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We have confi ned our evaluation and assessment to the fi nancial terms of the Exit Offer and related matters and have not taken into account the commercial risks or commercial merits of the Exit Offer and other related matters. In addition, we have not been requested, and we do not express any advice or give any opinion on the merits of the Exit Offer and related matters relative to any other alternative. We were not involved in the negotiations pertaining to the Exit Offer nor were we involved in the deliberation leading up to the decision to put forth the Exit Offer.

The scope of our appointment does not require us to express, and we do not express, any view on the future growth prospects, fi nancial position or earnings potential of the Company and its subsidiaries (the “Group”). Such evaluation or comments remain the responsibility of the Directors although we may draw upon their views or make such comments in respect thereof (to the extent deemed necessary or appropriate by us) in arriving at our opinion. The opinion set forth herein is based solely on publicly available information as well as information provided by the Directors, and is predicated upon the economic and market conditions prevailing as at 18 December 2017, being the Latest Practicable Date. This Letter therefore does not refl ect any projections on the future fi nancial performance of the Group.

We have not been requested or authorised to solicit, and we have not solicited, any indications of interest from any third party with respect to the Shares. In that regard, we have not addressed the relative merits of the Exit Offer in comparison with any alternative transaction that the Company may consider in the future. Therefore, we do not express any views in these areas in arriving at our recommendations.

In formulating our opinion and recommendation, we have held discussions with the Directors and the management of the Group (“Management”) and have relied to a considerable extent on the information set out in the Delisting Circular, other public information collated by us and the information, representations, opinions, facts and statements provided to us, whether written or verbal, by the Company and its other professional advisers. Whilst care has been exercised in reviewing the information we have relied upon and we have made reasonable enquiries and exercised judgement in the use of such information, we have not independently verifi ed the information both written and verbal and accordingly cannot and do not make any representation or warranty, express or implied, in respect of, and do not accept any responsibility for the accuracy, completeness or adequacy of such information.

The Directors have confi rmed, having made all reasonable inquiries and to the best of their respective knowledge, information and belief, all material information in connection with the Exit Offer and related matters, the Company and/or the Group have been disclosed to us, that such information is true, complete and accurate in all material respects and that there is no other material information or fact, the omission of which would cause any information disclosed to us or the facts of or in relation to the Company and/or Group stated in the Delisting Circular to be inaccurate, incomplete or misleading in any material respect. The Directors have jointly and severally accepted full responsibility for such information described herein. Accordingly, no representation or warranty, express or implied, is made and no responsibility is accepted by us concerning the accuracy, completeness or adequacy of such information.

The information which we relied on were based upon market, economic, industry, monetary and other conditions prevailing as at the Latest Practicable Date and may change signifi cantly over a relatively short period of time. We assume no responsibility to update, revise or reaffi rm our opinion or assumptions in light of any subsequent development after the Latest Practicable Date that may affect our opinion or assumptions contained herein. Shareholders should take note of any announcements relevant to their consideration of the Exit Offer, as the case may be, which may be released after the Latest Practicable Date.

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In rendering our advice and giving our recommendation, we have not had regard to the general or specifi c investment objectives, fi nancial situation, risk profi les, tax position or particular needs and constraints of any Shareholder. As each individual Shareholder may have different investment profi les and objectives, we advise the Independent Directors to recommend that any Shareholder who may require specifi c advice in relation to his investment portfolio should consult his stockbroker, bank manager, solicitor, accountant, tax adviser or other professional adviser immediately.

The Company has been separately advised by its own professional advisers in the preparation of the Delisting Circular. We have had no role or involvement and have not and will not provide any advice (fi nancial or otherwise) in the preparation, review and verifi cation of the Delisting Circular. Accordingly, we take no responsibility for and express no view, whether express or implied, on the contents of the Delisting Circular.

We hereby consent to a copy of this Letter to be reproduced in the Delisting Circular and save for such use in the Delisting Circular and Court Hearings, neither the Company nor the Directors may reproduce, disseminate or quote this Letter (or any part thereof) for any other purposes at any time and in any manner, without the prior written consent of DTCF in each specifi c case.

Our opinion is required under Rule 1309 of the Listing Manual and is also addressed to the Independent Directors for their benefi t and deliberation of the Exit Offer. The recommendations made to the Shareholders shall remain the responsibility of the Directors. Our recommendation to the Independent Directors in relation to the Exit Offer should be considered in the context of the entirety of this Letter and the Delisting Circular.

3. THE TERMS OF THE EXIT OFFER

The Exit Offer is made by DBS for and behalf of the Offeror on the basis set out in Section 2 of the Exit Offer Letter. The following is a summary and extraction of the salient terms of the Exit Offer and has been obtained from the Exit Offer Letter and the Delisting Circular. Shareholders are advised of read these documents and the terms and conditions contained therein very carefully.

3.1 Exit Offer Price and Offer Shares

The offer price for each Offer Share is S$0.460 in cash (the “Exit Offer Price”).

The Offeror does not intend to revise the Exit Offer Price under any circumstances.

The Exit Offer Price shall be applicable to any number of the 567,518,000 Offer Shares that are tendered in acceptance of the Exit Offer.

The Offeror shall pay the Exit Offer Price in cash for the Offer Shares which are validly tendered in acceptance of the Exit Offer, save for 344,102,732 Offer Shares held by the Chia Family Group and Funderburk Asia-Pac Investments I Limited (“FAPI”), a wholly-owned subsidiary of Oman Investment Fund (“OIF”). Further information on Chia Family Group and OIF is set out in paragraph 3.2 and 3.3 of the Exit Offer Letter.

The Exit Offer is extended to all the Offer Shares. Shareholders may choose to accept the Exit Offer in respect of all or part of their holdings of Offer Shares.

3.2 No Encumbrances

The Offer Shares will be acquired fully paid and free from all liens, equities, mortgages, charges, encumbrances, rights of pre-emption and other third party rights and interests of any nature whatsoever (“Encumbrances”), and together with all rights, benefi ts and entitlements attached thereto as at the Joint Announcement Date, and thereafter attaching thereto (including the right to receive and retain all dividends, rights and other distributions, if any, which may be announced, declared, paid or made thereon by the Company, on or after the Joint Announcement Date).

I-4


If any dividend, other distribution or return of capital is declared, made or paid by the Company on or after the Joint Announcement Date, the Offeror reserves the right to reduce the Exit Offer Price by the amount of such dividend, distribution or return of capital.

3.3 Conditions

The Delisting and the Exit Offer will be conditional on:

(a) the resolution to approve the Delisting (the “Delisting Resolution”) being approved by a majority of at least 75% of the total number of issued Shares (excluding treasury shares and subsidiary holdings) held by Shareholders present and voting, on a poll, either in person or by proxy at the EGM to be convened for Shareholders to vote on the Delisting Resolution (the Directors and controlling Shareholders need not abstain from voting on the Delisting Resolution); and

(b) the Delisting Resolution not being voted against by 10% or more of the total number of issued Shares (excluding treasury shares and subsidiary holdings) held by Shareholders present and voting, on a poll, either in person or by proxy at the EGM,

(collectively, the “Delisting Resolution Approval Conditions”). As at the Latest Practicable Date, the Offeror and parties acting in concert with it hold Shares

representing more than 50% of the total number of issued Shares. Accordingly, the Delisting and the Exit Offer will not be conditional upon a minimum number of acceptances being received by the Offeror, subject to the fulfi lment of the Delisting Resolution Approval Conditions.

Under Rule 1307(2) of the Listing Manual, the Directors and the controlling Shareholders are not required to abstain from voting on the Delisting Resolution.

Accordingly, the Undertaking Shareholders are entitled to, and have undertaken pursuant to their respective Irrevocable Undertakings (as defi ned in the paragraph below) to vote all their Shares in favour of the Delisting Resolution at the EGM and to accept the Exit Offer in respect of all their Shares.

An application was made by the Company to the SGX-ST on 23 October 2017 to delist the Company from the Offi cial List of the SGX-ST. The Company had on 14 December 2017 received confi rmation from the SGX-ST that the SGX-ST has no objection to the Company’s application for the Delisting, subject to Shareholders’ Approval having been obtained and compliance with Rules 1307 of the Listing Manual. However, the SGX-ST’s decision is not to be taken as an indication of the merits of the Delisting.

Shareholders are to note that if any of the conditions listed above and in paragraph 2.2 of the Exit Offer Letter are not fulfi lled, the Delisting will not proceed and the Company will remain listed on the SGX-ST. The Exit Offer will also lapse and all acceptances of the Exit Offer will be returned.

3.4 Irrevocable Undertaking

The information relating to the undertakings obtained by the Offeror has been extracted from paragraph 2.6 of the Exit Offer Letter and reproduced below.

As at the Latest Practicable Date, the Offeror has obtained irrevocable undertakings (the “Irrevocable Undertakings”) from each member of the Chia Family Group and FAPI (being the “Undertaking Shareholders”), who collectively hold an aggregate of 350,780,732 Shares representing approximately 61.81% of the total number of issued Shares, pursuant to which each Undertaking Shareholder has undertaken and/or agreed, inter alia, the following:

(a) to vote all its Shares in favour of the Delisting Resolution and accept the Exit Offer in respect of all its Shares;

I-5


(b) to assign its right to receive (and the benefi t of receiving) the proceeds (the “Proceeds”) that would be payable by the Offeror as consideration pursuant to its acceptance of the Exit Offer in respect of the Shares held by such Undertaking Shareholder immediately prior to the release of the Joint Announcement (the “Existing Relevant Shares”):

(i) in respect of the members of the Chia Family Group, to ORO GOLD PTE. LTD. (“OROGOLD”); and

(ii) in respect of FAPI, to Funderburk Cavman 1 Limited (“FC1L”),

and that such Proceeds would be regarded as interest-free shareholder’s loans extended to the Offeror by OROGOLD or FC1L (as the case may be) such that no cash shall be payable by the Offeror to the Undertaking Shareholder pursuant to its acceptance of the Exit Offer in respect of the Existing Relevant Shares; and

(c) to waive its rights under Rule 30 of the Code to receive any cash settlement or payment for its acceptance of the Exit Offer in respect of the Existing Relevant Shares.

For the avoidance of doubt, each Undertaking Shareholder will receive the Exit Offer Price for its acceptance of the Exit Offer in respect of each Offer Share which it may acquire or which may be issued or unconditionally allotted to it following the release of the Joint Announcement, pursuant to the terms of the Exit Offer and the relevant Acceptance Form(s).

The Irrevocable Undertakings shall terminate, lapse and cease to have any effect on the earlier of: (i) the conclusion of the EGM convened to obtain Shareholders’ Approval, if the Delisting Resolution is not approved at such EGM; and (ii) the date on which the Exit Offer is withdrawn, lapses or closes.

The respective shareholdings of each member of the Chia Family Group in the Company are also set out in paragraph 8.1 of Appendix II of this Exit Offer Letter.

Save as disclosed in this Exit Offer Letter, neither the Offeror nor any of the parties acting in concert with it has received any irrevocable undertaking from any party to (A) vote for or against the Delisting Resolution, and (B) accept or reject the Exit Offer.


The information relating to the Offeror has been extracted from paragraph 3 of the Exit Offer Letter and reproduced below.

The Offeror is a special purpose vehicle incorporated in Singapore for the purposes of the Delisting and the Exit Offer. Its principal activity is that of investment holding. As at the Latest Practicable Date, the Offeror has an issued and paid-up capital of S$10,000 comprising 10,000 ordinary shares, 64.73% of which is held by OROGOLD and the remaining 35.27% is held by FC1L. The board of directors of the Offeror comprises:

(a) Mr. Roger Chia;

(b) Mr. Chia Kim Chua;

(c) Ms. Jenny Wong;

(d) Mr. Anwar1; and

(e) Mr. Amit Mehta.

As at the Latest Practicable Date, the Offeror does not own or have control over any Shares.

1 Mr. Anwar is also a director of FAPI.

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Section 3 of the Exit Offer Letter sets out certain additional information on the Offeror, OROGOLD & Chia Family Group and FC1L. Additional information on the Offeror is also set out in Appendix III to the Delisting Circular. Shareholders are advised to read these sections carefully.

5. RATIONALE FOR THE DELISTING AND THE OFFEROR’S INTENTIONS

The full text of the rationale for the Exit Offer and the Offeror’s intentions has been extracted from Section 4 of the Exit Offer Letter and is set out below:

“4.1 Opportunity for Shareholders to Realise a Clean Cash Exit at a Compelling Premium

The Offeror believes that, through the Delisting Proposal and Exit Offer, the accepting Shareholders will have an opportunity to realise their investments in the Company for a cash consideration at a premium over the historical transacted prices of the Shares on the SGX-ST, without incurring any brokerage and other trading costs.

(a) The Exit Offer Price represents a premium of approximately 21% over the last traded price of S$0.380 per Share on the Last Full Market Day and premium of approximately 22%, 25%, 19%, 20%, over the VWAP of the Shares over the one-month, three-month, six-month, and 12-month periods respectively up to and including the Last Full Market Day.

21% 19% 20%25%22%

S$0.380 S$0.378 S$0.368 S$0.386 S$0.384

Last traded price(1)(2) 1-month(1)

VWAP3-month(1)

VWAP6-month(1)

VWAP12-month(1)

VWAP

Exit Offer Price: S$0.460 per Offer Share

Notes:

(1) The historical market prices and the corresponding premium are computed based on data extracted from Bloomberg L.P..

(2) Last transacted price per Share on the Last Full Market Day.

(b) In addition, the Exit Offer Price exceeds the highest closing price of the Shares since 3 July 2015, being more than two (2) years prior to the Last Full Market Day .

(c) The Exit Offer Price also represents a premium of 61% over the latest publicly available net tangible asset value per Share of S$0.286 as at 30 September 2017 (as reported in the unaudited consolidated fi nancial statements of the Group (as defi ned in paragraph 4.6 below) for the nine-month period ended 30 September 2017).

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4.2 Opportunity for Shareholders to Realise Their Investments Amidst Low Trading Liquidity of Shares

The trading liquidity of the Shares on the SGX-ST in the past year has been generally thin. The average daily trading volume of the Shares for the one-month, three-month, six-month, and 12-month periods prior to and including the Last Full Market Day are as follows:

Period prior to and including the Last Full Market Day

Average Daily Trading Volume(1)

Approximate percentage of total

number of Shares(2) (%)

Last one (1) month 355,023 0.06%

Last three (3) months 240,389 0.04%

Last six (6) months 333,819 0.06%

Last 12 months 329,500 0.06%


Notes:

(1) The average daily trading volume is computed based on the total trading volume of the Shares for all Market Days for the relevant periods immediately prior to and including the Last Full Market Day, divided by the total number of Market Days during the respective periods. “Market Day” refers to a day on which the SGX-ST is open for the trading of securities.

(2) Computed based on 567,518,000 Shares (excluding 336,000 shares held by the Company as treasury

shares), being the total number of issued Shares as at the Latest Practicable Date.

In view of the low trading liquidity during the periods prior to and including the Last Full Market Day, the Offeror believes that the Exit Offer represents an opportunity for Shareholders to realise their investments in Shares at a price (without incurring any brokerage and other trading costs) which may not otherwise be readily available.

4.3 Greater Management Flexibility

The Offeror believes that privatising the Company will give the Offeror and the management of the Company more fl exibility to manage the business of the Company, optimise the use of its management and capital resources and facilitate the implementation of any operational change without the attendant cost, regulatory restrictions and compliance issues associated with its listed status on the SGX-ST.

4.4 No Need for Access to Capital Markets

Since 2007, the Company has not carried out any corporate exercise to raise cash funding on the SGX-ST. The Company is also unlikely to require access to Singapore capital markets to fi nance its operations in the foreseeable future. Accordingly, it is not necessary for the Company to maintain a listing on the SGX-ST.

4.5 Compliance Costs of Maintaining Listing

In maintaining its listed status, the Company incurs compliance and associated costs. In the event that the Company is delisted from the SGX-ST, the Company will be able to save on expenses relating to the maintenance of a listed status and focus its resources on its business operations.

4.6 Offeror’s Intentions

Following the close of the Exit Offer, the Offeror will undertake a comprehensive review of the businesses, organisation, operations and fi xed assets of the Company, its subsidiaries, joint ventures and associated companies (the “Group”). This review will help the Offeror determine the optimal business strategy for the Group.

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Save as disclosed above, the Offeror has no current intention of (a) introducing any major changes to the business of the Group, (b) re-deploying the fi xed assets of the Group, or (c) discontinuing the employment of the employees of the Group, other than in the ordinary course of business.

Nonetheless, the Offeror retains the flexibility at any time to consider options or opportunities which may present themselves, and which it regards to be in the interests of the Offeror and/or the Group.

6. IMPLICATIONS OF COMPULSORY ACQUSITION AND DELISTING FOR SHAREHOLDERS

The information relating to the rights of Compulsory acquisition has been extracted from paragraph 4.7 of the Exit Offer Letter and reproduced below.

In the event the Offeror acquires not less than 90% of the issued Shares (other than those already held by the Offeror, its related corporations and their respective nominees as at the date of the Exit Offer and which, for the avoidance of doubt, excludes any issued and paid-up ordinary shares held by the Company as treasury shares) pursuant to the Exit Offer, the Offeror will be entitled to exercise the right of compulsory acquisition under Section 215(1) of the Companies Act (Chapter 50 of Singapore) (“Companies Act”) to acquire all the remaining issued Shares at the Exit Offer Price.

The Offeror intends to exercise its right of compulsory acquisition in the event that the Offeror acquires at least 90% of the issued Shares (not held by the Offeror, its related corporations or their respective nominees as at the date of the Exit Offer and which, for the avoidance of doubt, excludes any issued and paid-up ordinary shares held by the Company as treasury shares). If so, and upon completion of the compulsory acquisition, the Company will then become a wholly-owned subsidiary of the Offeror.

In addition, Shareholders who do not accept the Exit Offer would have a corresponding right, under and subject to Section 215(3) of the Companies Act, to require the Offeror to acquire their Shares at the Exit Offer Price by serving notice requiring the Offeror to do so, in the event that the Shares acquired by the Offeror pursuant to the Exit Offer, together (a) with any other Shares held by the Offeror, its related corporations and their respective nominees and (b) any issued and paid-up ordinary shares held by the Company as treasury shares, comprise 90% or more of the Shares and any issued and paid-up ordinary shares held by the Company as treasury shares.

Shareholders who have not accepted the Exit Offer and who wish to exercise their rights under Section 215(3) of the Companies Act are advised to seek their own independent legal advice.”

Shareholders should note that if the Delisting Resolution is approved in accordance with the requirements of the Listing Manual, the Company will be delisted. Following the Delisting, Shareholders who do not accept the Exit Offer will continue to hold shares in the Company, which will then be an unlisted company. Shareholders are advised to read carefully the Implications for Delisting for the Shareholders as set out in paragraph 8.1 of Delisting Circular.

7. FINANCIAL ASSEMENT OF THE FINANCIAL TERMS OF THE EXIT OFFER

In evaluating and assessing the fi nancial terms of the Exit Offer, we have taken into account the pertinent factors set out below which we consider to have a signifi cant bearing on our assessment:

i. Historical market price performance and trading activity of the Shares;

ii. Share price performance relative to market indices;

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iii. Analysis of Net Asset Value (“NAV”), Net Tangible Asset (“NTA”) and Revalued Net Asset Value (“RNAV”) and Revalued Net Tangible Asset (“RNTA”) per Share of the Group;

iv. Comparison with recently completed privatisation of companies listed on the SGX-ST;

v. Historical fi nancial performance of the Group and outlook of the Industry;

vi. Analysis of the Exit Offer Price to the trailing historical NTA of the Group;

vii. Comparison with the valuation statistics of companies broadly comparable to the Group;

viii. Dividend track record of the Company;

ix. Other relevant considerations.

7.1. Historical Market price performance and trading activity of the Shares

7.1.1. Historical Share price performance

We have compared the Exit Offer Price against the historical market price performance of the Shares and considered the historical trading volume of Shares during the period commencing 29 September 2015, being the 2-year period prior to the last full trading day before the Joint Announcement Date and up to the Latest Practicable Date. As the Company requested for a trading halt on 29 September 2017 (Friday) prior to the close of trading on that day, 28 September 2017 is the last full day of trading immediately prior to the Joint Announcement Date on 2 October 2017 (Monday) (the “Last Full Trading Day”).

We set out below a chart showing the Exit Offer Price relative to the daily last transacted prices and trading volume of the Shares from 29 September 2015 and up to the Latest Practicable Date:

Chart 1: Share Price Performance from 29 September 2015 to the Latest Practicable Date

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

0.5

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

29 Sep 2015 29 Mar 2016 29 Sep 2016 29 Mar 2017 29 Sep 2017

Price Volume Analysis

Volume Rotary Offer Price 24-month Low 24-month High

Share Price (S$) Volume (‘000)

Offer Price = S$0.46

24-month High = S$0.435

24-month Low = S$0.27


Note: The 24-month high and low prices is derived from the period 29 September 2015 to 28 September 2017.

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A summary of the salient announcement relating to the Group during the aforesaid period as follow:

Date Event

14 November 2017 Announcement of the Third Quarter Results. The company reported an increase in revenue for the quarter of S$75,237,000 as compared to S$52,649,000 for the same period a year ago. Profi t before tax was S$1,972,000 as compared to S$1,417,000 for the same period a year ago. Profi t attributable to owners of the company was S$1,582,000 as compared S$1,227,000 for the same period a year ago.

2 October 2017 Announcement of Proposed Voluntary Delisting of Rotary Engineering Limited at an Offer Price of S$0.46 per share.

29 September 2017 The Company requested for a trading halt pending release of announcement.

8 August 2017 Announcement of the Second Quarter and Half Yearly Results ended 30 June 2017. The Company reported an increase in revenue for the quarter of S$62,808,000 compared to S$51,843,000 a year ago. Profi t before tax was S$1,611,000 as compared to S$3,177,000 a year ago. Profi t attributable to owners of the company was S$1,168,000 compared to S$2,044,000 a year ago.

9 May 2017 Announcement of the First Quarter Results. The Company reported a decrease in revenue for the quarter of S$59,628,000 as compared to S$64,554,000 for the same period a year ago. Profi t before tax was S$3,891,000 as compared to S$853,000 for the same period a year ago. Profi t attributable to owners of the company was S$3,690,000 as compared to S$524,000 for the same period a year ago.

26 April 2017 The Company announced that they had secured a project for Jurong Port Tank Terminals contract worth about S$140 million.

11 April 2017 Announcement of Audited Consolidated Earnings for the Year Ended 31 December 2016. The Company reported a decrease in revenue of S$233,869,000 from S$329,274,000 for the same period a year ago. Profi t before tax was S$13,243,000 as compared to S$47,950,000 for the same period a year ago. Profi t attributable to owners of the company was S$11,353,000 as compared to S$42,779,000 for the same period a year ago.

11 April 2017 The Company announced securing two projects worth more than US$120 million in United Arab Emirates and Thailand.

22 February 2017 Announcement of Cash Dividend / Distribution of S$0.005 per share for the year ended 31 December 2016.

12 December 2016 The Company announced that it has increased its 51% shareholdings in Petrol Steel Company Limited (“PSCL”) to 98% by acquiring the shares of PSCL held by its current minority shareholders (the “Acquisition”). The NTA per share of the Company decreased by 46.4% from 50.91 cents to 27.27 cents after the transaction.

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Date Event

We note from the announcement that the Board in making the decision to proceed with the increase in shareholdings took into account the huge potential and many opportunities the Saudi Arabia market and the surrounding gulf region will bring due to continuing investments in its major oil and gas sector there. The rationale for the Acquisition was, inter alia, that by increasing the Company’s stake in PSCL, the Company would be able to exercise greater autonomy in the Saudi Arabia operations.

8 November 2016 Announcement of the Third Quarter Results. The Company reported a decrease in revenue for the quarter of S$52,649,000 as compared to S$60,325,000 for the same period a year ago. Profi t before tax was S$1,417,000 as compared to S$6,361,000 a year ago. Profit attributable to owners of the company was S$1,227,000 as compared to S$6,342,000 a year ago.

16 September 2016 The Company announced securing projects worth S$64 million in United Arab Emirates and Thailand.

4 August 2016 Announcement of the Second Quarter and Half Yearly Results ended 30 June 2016. The Company reported a decrease in revenue for the quarter of S$51,843,000 as compared to S$67,380,000 a year ago. Profi t before tax was S$3,177,000 as compared to S$4,871,000 a year ago. Profi t attributable to owners of the company was S$2,044,000 as compared to S$3,703,000 a year ago.

6 May 2016 Announcement of the First Quarter Results. The Company reported a decrease in revenue for the quarter of S $64,554,000 as compared to S$89,393,000 for the same period a year ago. Profi t before tax was S$853,000 as compared to S $8,732,000 for the same period a year ago. Profi t attributable to owners of the company was S$524,000 as compared to S$7,071,000 for the same period a year ago.

25 February 2016 Announcement of Consolidated Earnings for the Year Ended 31 December 2015. The Company reported a decrease in revenue of S$329,274,000 from S$687,658,000 for the same period a year ago. Profi t before tax was S$47,950,000 as compared to S$48,896,000 for the same period a year ago. Profi t attributable to owners of the company was S$42,779,000 as compared to S$50,084,000 for the same period a year ago.

25 February 2016 Announcement of Cash Dividend / Distribution of S$0.015 per share for the year ended 31 December 2015.

18 February 2016 The Company announced securing projects worth S$65 million for a jetty and other projects in Jurong Island.

We highlight the following in respect of the development in market prices of the Shares:

(a) The Offer Price of S$0.46 is higher than the traded price of the Shares in the two-year period preceding the Last Full Trading Day (where the Shares traded in the range of S$0.270 to S$ 0.435 per Share).

(b) The Shares have traded lower than the Exit Offer Price in the period post the Joint Announcement Date to the Latest Practicable Date.

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7.1.2. Exit Offer Price comparison to historical Share price

We have tabulated below the premium/discount implied by the Exit Offer Price over the historical volume weighted average price (“VWAP”) and historical trading volume of the Shares for the 12-month period prior to the Last Full Trading Day and up to the Latest Practicable Date set out below:

Table 1: Share Price Performance and Trading Liquidity Table

Reference period

Highest traded price (S$)

Lowest traded price (S$)

VWAP(1) (S$)

Premium of Exit Offer above VWAP

(%)

Number of traded

days(2)

Average daily

trading volume(3)

(‘000 )

Average daily

trading volume

as a percentage

of free fl oat(4)

(%)

Prior to the Last Full Trading Day

Last 1 year 0.440 0.335 0.384 19.68% 252 330 0.15%

Last 6 months 0.440 0.335 0.386 19.29% 126 334 0.15%

Last 3 months 0.395 0.335 0.368 25.14% 64 240 0.11%

Last 1 month 0.395 0.350 0.378 21.85% 22 355 0.16%

Last Full Trading Day 0.385 0.380 0.383 20.07% 1 242 0.11%

After the Last Full Trading Day

From 29 September 2017 to the Latest Practicable Date 0.455 0.385 0.446 3.14% 57 726 0.34%(5)

Latest Practicable Date 0.455 0.445 0.450 2.21% 1 115 0.05%(5)

Source: Bloomberg

Notes:

(1) The VWAP for the respective periods are calculated based on the daily turnover divided by volume as extracted from Bloomberg.

(2) Traded days refer to the number of days on which the Shares were traded on the SGX-ST during the period.

(3) The average daily trading volume of the Shares is computed based on the total volume of Shares traded on the SGX-ST during the relevant periods, divided by the number of market trading days (excluding market trading days with full day trading halts) for the relevant periods.

(4) Free Float refers to the Shares held by the hands of the public as documented in the fi nancial statements of the Company and amounts to 222,113,268 Shares representing approximately 39.14% of the issued Shares.

(5) Free Float has been updated for Share purchases by the Director during the period after the Joint Announcement Date up to the Latest Practicable Date and amounts to 215,435,268 Shares representing approximately 37.96% of the issued Shares as at the Latest Practicable Date.

We observed the following with regard to the share price performance from 28 September 2016 and up to the Latest Practicable Date:

(a) The Exit Offer Price represents a premium of 19.7%, 19.3%, 25.1% and 21.9% above the VWAP of the Shares for the 1-year, 6-month, 3-month and 1-month periods prior to and including the Last Full Trading Day respectively;

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(b) Over the 1-year period prior to the Last Full Trading Day, the Shares have traded between a low of S$0.335 and a high of S$0.440. The Exit Offer represents a premium of S$0.125 (or 37.3%) above the lowest transacted price of the Shares and a premium of S$0.020 (or 4.6%) above the highest transacted price of the Shares;

(c) The Exit Offer represents a premium of 20.1% above the VWAP of Shares on the Last Full Trading Day of S$0.383;

(d) Since the Last Full Trading Day and up to the Latest Practicable Date, the Shares have not traded above the Exit Offer Price but were generally trading at or around S$0.446;

(e) As at the Latest Practicable Date, the last transacted price of the Shares was S$0.455.

We note that in the 6-month period leading to the Last Full Trading Day and the consequent Joint Announcement Date, the Share surged to a high of S$0.44 cents on 11 April 2017 and a high of S$0.41 on 26 April 2017 which may have been the result of the market reacting positively to the Company’s announcement on securing of two projects worth more than US$120 million in United Arab Emirates and Thailand on 11 April 2017 and securing a project for Jurong Port Tank Terminals contract worth about S$140 million on 26 April 2017 respectively.

Since then, the Shares have been on a downward trend and specifi cally in the 3-month till the Last Full Trading Day and the Joint Announcement Date and has not traded above S$0.395 cents.

We wish to highlight that in the event that the Exit Offer does not become or is not declared unconditional in all respects with the terms, the Exit Offer will lapse and there is no assurance that the price of the Shares will remain at the current levels after the close of the Exit Offer.

7.1.3. Trading Volume and Liquidity

Share prices transacted in the equity capital market can be affected by their liquidity which for this purpose is expressed as average daily volume traded as a percentage of free fl oat. ln order to evaluate whether the historical market prices of the Shares provide a meaningful reference point for comparison of the Exit Offer Price, we have considered the historical liquidity of the Shares over selected reference periods.

(a) Trading liquidity of the Shares over all the reference periods prior to the Last Full Trading Day has been low in general at an average daily trading volume of the Shares between 242,000 to 355,000 representing between 0.11% to 0.16% of the free fl oat of the Company.

(b) During the period following the Last Full Trading Day and up to the Latest Practicable Date, the average trading volume of the Shares was around 725,953 of the free fl oat of the Company representing 0.34% of the free fl oat of the Company.

Shareholders should note that the past trading performance of the Shares should not in any way be relied upon as an indication or an assurance of its future trading performance.

7.2. Share Price Performance of Shares Relative to Selected Market Indices

To assess the market price performance of the Shares vis-à-vis the general price performance of the Singapore equity market, we have compared the market movement of the Shares against the rebased Straits Times Index (“STI”), the SGX Oil & Gas Index (“SOG”) as well as the FTSE ST Fledgling Index1 for the 3-year period prior to the Last Full Trading Day and up to the Latest Practicable Date, as illustrated below.

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Chart 2: Share Price Performance vis a vis Selected Indices

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

29 Sep 2014 29 Mar 2015 29 Sep 2015 29 Mar 2016 29 Sep 2016 29 Mar 2017 29 Sep 2017

Rotary SGX Oil & Gas Index STI Index FTSE ST Fledgling Index

Source: Bloomberg

Note : FTSE ST Fledging Index compromises 219 listed companies on the SGX-ST that are too small for the STI Index to capture; The Company is included as a component of this Index.

We highlight the following key observations in respect of the comparison

a) We noted that for the 3-year period prior to the Last Full Trading Day and on a normalised basis, the market price of the Shares have generally underperformed the STI Index and the FTSE ST Fledgling Index and;

b) The Shares, for the same reference period has generally managed to outperform SOG index which has been on a downtrend over the last 3-year refl ecting the state of the wider oil & gas industry.

7.3. Analysis of the Net Asset Value (“NAV”), Net Tangible Asset (“NTA”) and Revalued Net Asset Value (“RNAV”) and Revalued Net Tangible Asset (“RNTA”) per Share of the Group

NAV and NTA of the Group

The NAV of a group refers to the aggregate value of all the assets in their existing condition, net of any minority interests and all liabilities of the group. The NAV approach may provide an estimate of the value of a group assuming the hypothetical sale of all of its assets over a reasonable period of time, the proceeds of which would be fi rst used to settle the liabilities of that group with the balance available for distribution to its shareholders. Therefore, the NAV of a group are perceived as providing support for the value of shareholders’ equity.

However, such a hypothetical scenario is assumed to be made without considering factors such as, inter alia, time value of money, market conditions, legal fees, liquidation costs, taxes, contractual obligations, regulatory requirements and availability of potential buyers, which would theoretically lower the NAV that can be realised.

Based on the Group’s unaudited fi nancial statements as at 30 September 2017, the NAV attributable to Shareholders is approximately S$162.7 million and its NAV per Share is S$0.287. The Exit Offer Price is at a premium of 60.5% over the NAV per Share, or at a Price-to-NAV (“P/NAV”) ratio of 1.60 times.

As at 30 September 2017 the Group’s had intangible assets of S$0.29 million. The NTA attributable to Shareholders is S$162.4 million and its NTA per Share is S$0.286. The Exit Offer Price is at a premium of 60.8% over the NTA per Share or at a Price-to-NTA (“P/NTA”) ratio of 1.61 times.

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RNAV and RNTA of the Group

In our evaluation of the Offer Price, we have also considered whether there are any assets which may be valued at an amount that is materially different from what was recorded in the unaudited balance sheet of the Group as at 30 September 2017.

Based on the Company’s latest unaudited fi nancial statements as at 30 September 2017, the Group’s property, plant and equipment (which comprises mainly freehold and leasehold land and buildings and vessels) had an aggregate book value of approximately S$66.6 million, representing approximately 55.3% of the Group’s total non-current assets of approximately S$120.4 million.

We understand that the Company has commissioned several valuers (the “Independent Valuers”) to conduct an independent valuation of and review of selected material leasehold and freehold properties, as well as other assets (collectively known as the “Revalued Properties and Assets”).

Based on the valuation reports, we set out the adjustments to determine the RNAV and RNTA of the Group:

As at 30 September 2017

S$’000

Unaudited NAV attributable to Shareholders 162,676

Less: Intangible Assets (293)

Unaudited NTA 162,383

Add: Revaluation surplus 45,362

Group’s RNAV 208,038

Group’s RNTA 207,745

NAV per Share (S$) 0.287

Premium of Offer Price over NAV 60.5%

Offer Price / NAV (times) 1.60

RNAV per Share (S$) 0.367

Premium of Offer Price over RNAV 25.5%

Offer Price / RNAV (times) 1.25

NTA per Share (S$) 0.286

Premium of Offer Price over NTA 60.8%

Offer Price / NTA (times) 1.61

RNTA per Share (S$) 0.366

Premium of Offer Price over RNTA 25.7%

Offer Price / RNTA (times) 1.26

Source: Company fi nancial statements and SGX announcements

Based on the table above, the RNAV per Share and the RNTA per Share of the Group as at 30 September 2017 would be approximately S$0.367 and $0.366 respectively. We note the P/RNAV ratio and P/RNTA ratio as at 30 September 2017 of the Group implied by the Exit Offer Price was 1.25 and 1.26 times. The Exit Offer Price of S$0.46 represents a premium of 25.5% and 25.7% over RNAV per Share and RNTA per Share respectively.

We have not made any independent evaluation or appraisal of the balance sheet items and we have been furnished by the Company with the valuation reports in respect of the fair value of the balance sheet items. With respect to such valuation, we are not experts in the evaluation appraisal of the balance sheet items and have relied on the valuation report for the fair value of the balance sheet items.

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The Directors have represented that they had reviewed the valuation report to understand the assumptions used by the Independent Valuers and the information relied upon by the Independent Valuers in arriving at the fair value of the balance sheet items. The Directors have reviewed the information made available to them as a whole and are of the opinion that the assumptions used by the Independent Valuers are reasonable and confi rmed that the Independent Valuers has been provided with information that to the best of their knowledge or belief is true, complete as per request and accurate in all respects and that there is no other information or fact, the omission of which would render the assumptions used by the Independent Valuers to be untrue, inaccurate or incomplete in any respect or misleading.

The Management has confi rmed to us that save as disclosed in this letter, to the best of their knowledge and belief, there are no material differences between the realizable value of the abovementioned balances and their respective book values as at 30 September 2017 which would result in a material impact on the NAV and NTA of the Group.

7.4. Comparison with recently completed privatisation of companies listed on the SGX-ST

The transaction is presently being proposed to be effected by way of voluntary delisting exit offers. Subject to the Delisting Proposal becoming effective in accordance with its terms, the Company will be delisted from the Offi cial List of the SGX-ST. In assessing the reasonableness of the Exit Offer, we have compared the fi nancial terms of the Exit Offer with those of selected successful privatisation transactions announced since January 2015 and up to the Latest Practicable Date, which were carried out either by way of voluntary delisting exit offers under Rule 1307 of the Listing Manual, offers being made by way of a scheme of arrangement under Section 210 of the Companies Act or general takeover offers under the Code where the offeror has stated its intention to delist the listed company from the SGX-ST (“Precedent Privatisation Transactions”).

This analysis serves as a general indication of the relevant premium/discount that the offerors had paid in order to acquire the target companies without having regard to their specifi c industry characteristics or other considerations, and the comparison sets out the premium or discount represented by each of the respective offer prices to the VWAPs over the last transacted price, the 1-month, 3-month and 6-month periods prior to the announcement of the Precedent Privatisation Transactions.

Table 2: Precedent Privatisation Transactions Table

Premium/ (discount) to (%) (5)

LastPrice

1-month VWAP

3-month VWAP

6-month VWAP

P/NAV or P/NTA

Popular Holdings Limited Property development, retail & distribution of publishing & e-learning

14-Jan-15 39.1% 39.7% 37.3% 32.2% 1.08 (1)

Keppel Land Limited Property developer 23-Jan-15 20.0% 25.0% 28.8% 28.2% 0.70 (1)

Action Asia Limited Manufacturing & assembling of mobile audio & video entertainment products

27-Feb-15 69.6% 68.1% 66.7% 65.2% 0.75 (1)

Junma Tyre Cord Company Limited

Production & sale of Nylon 6 industrial yarn & Nylon 6 dipped tyre cords

10-Mar-15 222.6% (4) 164.4% (4) 174.8% (4) 167.8% (4) 0.93 (1)

United Envirotech Ltd Environmental solutions provider 26-Mar-15 12.6% 16.5% 20.2% 28.1% 2.40 (7)

Texchem Pack Holdings Ltd

Polymer engineering solutions provider

05-Aug-15 23.5% 41.0% 37.2% 31.3% 0.63 (7)

Lizhong Wheel Group Limited

Manufacturer of aluminium wheels 17-Aug-15 96.1% (4) 87.3% (4) 79.2% (4) 92.3% (4) 0.58 (2)

I-17



LastPrice

1-month VWAP

3-month VWAP

6-month VWAP

P/NAV or P/NTA

Chosen Holdings Limited Product design & development, mould design & fabrication, plastic injection moulding & secondary processes & fi nal product assembly

1-Sep-15 21.2% 26.3% 27.0% 33.0% 0.80 (1)

Eastern Holdings Limited Publishing and property development

22-Sep-15 41.7% 41.7% 26.8% 21.8% 0.82 (2)

Zagro Asia Limited Manufacturing and distribution of crop care and animal health products

3-Nov-15 15.4% 19.1% 20.0% 16.3% 0.97 (3)

Biosensors Int’l Group, ltd.

Develops, manufactures and commercialises innovative medical devices

4-Nov-15 23.5% 23.0% 21.0% 12.9% 2.30 (3)

Tiger Airways Holdings Limited

Airline 6-Nov-15 45.2% 48.5% 56.3% 50.0% 4.90 (7)

Sinotel Technologies Ltd Integrated connectivity provider of innovative applications & solutions for the full spectrum of wireless telecommunication value chain

30-Nov-15 33.3% 30.6% 45.5% -4.5% 0.81 (3)

Neptune Orient Lines Limited

Shipping and transportation company

7-Dec-15 48.6% 51.0% 32.9% 30.7% 1.01 (3)

Li Heng Chemical Fibre Manufacture & sale of high-end nylon yarn products

22-Dec-15 115.1% (4) 100.8% (4) 104.5% (4) 60.3% (4) 0.40 (7)

China Dairy Group Ltd Manufacturing & sales of milk products

30-Dec-15 77.3% (4) 97.0% (4) 82.2% (4) 82.2% (4) 1.06 (7)

Lantrovision (S) Ltd Investment holding and supplying, designing, installing and providing consultancy services on network integration and structured cabling

27-Jan-16 47.7% 42.8% 46.2% 56.6% 1.50 (7)

China Yongsheng Production and supply of concrete and related products in Suzhou, Jiangsu province, the People’s Republic of China.

24-Feb-16 52.4% 67.5% 62.4% 56.9% 0.70 (7)

Xinren Aluminium Holdings Limited

Vertically integrated producer of primary aluminum products with one of the most cost-effective structures

25-Feb-16 31.3% 49.6% 50.0% 48.5% 1.48 (1)

Interplex Holdings Ltd Engineering 29-Feb-16 15.5% 11.1% 13.1% 16.5% 1.73 (7)

OSIM International Ltd Massage chairs 7-Mar-16 27.0% 40.9% 42.5% 16.7% 2.60 (7)

Select Group Ltd Food catering and management services provider

23-Mar-16 23.5% 38.2% 43.4% 31.3% 2.90 (7)

XYEC Holdings Co Ltd Engineering services, information technology services and IT solutions

29-Mar-16 50.0% 43.5% 47.1% 51.5% 1.30 (7)

Pteris Global Ltd Suppliers of passenger boarding bridges and integrated solution providers of airport facility equipment

21-Apr-16 33.9% 38.0% 44.1% 49.7% 0.90 (1)

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LastPrice

1-month VWAP

3-month VWAP

6-month VWAP

P/NAV or P/NTA

China Merchants Holdings (Pacifi c) Limited

Leading toll road company focused on investing in & managing toll roads in the PRC.

9-May-16 22.9% 21.8% 25.3% 20.2% 1.08 (1)

Eu Yan Sang International Ltd

TCM 16-May-16 2.6% 8.5% 16.5% 24.7% 1.70 (7)

Otto Marine Enageged in vessel construction, repair and conversion, fabrication, chartering, management and leasing of vessels as well as sub-sea activities

8-Jun-16 39.1% 44.8% 43.5% 42.9% 0.85 (1)

HTL International Holdings

Manufactures, imports and exports leather sofas and leather upholstery furniture

22-Jun-16 46.0% (4) 71.5%(4) 101.2% (4) 108.3% (4) 1.84 (7)

SMRT Transport operator 20-Jul-16 8.7% 10.8% 10.7% 8.7% 2.8 (3)

Sim Lian Group Limited Real estate 8-Aug-16 14.9% 16.6% 19.5% 21.3% 0.78 (1)

China Minzhong Cultivation, production and sale of processed vegetables, fruit and vegetable beverages

6-Sep-16 25.0% 24.8% 23.1% 25.9% 0.72 (7)

Super Group Instant food and beverage manufacturer

3-Nov-16 62.5% 60.5% 62.6% 55.7% 2.69 (3)

ARA Asset Management Real Estate Fund Manager 8-Nov-16 26.2% 29.6% 30.3% 31.7% 3.05 (1)

Auric Pacifi c Group Investment Holding Company 7-Feb-17 13.4% 17.8% 23.8% 35.8% 1.24 (7)

Heathway Medical Corporation Limited

Investment Holding Company 7-Feb-17 2.4% 8.9% 15.0% 16.8% 0.66 (7)

International Healthway Corporation Limited

Investment Holding Company 16-Feb-17 0.0% 14.0% 20.5% 32.5% 0.91 (1)

Nobel Design Holdings Ltd

Engages in the furniture retail, interior design, supply chain management, hotel, and property development businesses

2-May-17 8.5% 9.4% 15.9% 19.4% 0.67 (1)

Changtian Plastic & Chemical Limited

Manufactures and sells chemical-based products in the People’s Republic of China

29-May-17 45.3% 46.6% 48.2% 49.5% 0.40 (7)

Poh Tiong Choon Logistics Limited

Logistics 20-Sep-17 1.6% 30.0% 41.3% 47.7% 3.10 (7)

Max 69.6% 68.1% 66.7% 65.2% 4.9

Min 0.0% 8.5% 10.7% -4.5% 0.4

Mean 27.9% 32.5% 34.3% 32.5% 1.4

Median 24.3% 30.3% 31.6% 31.3% 1.0

Company (Implied by the Exit Offer)

20.1% 19.3% 25.1% 21.9% P/NAV(6) = 1.60

P/RNAV(6) = 1.25

Source: SGX Circulars, Companies’ announcements and Bloomberg

I-19


Notes:

(1) Denotes P/RNAV based on available revalued NAV as reported by respective companies.

(2) Denotes P/RNTA based on available revalued NTA as reported by respective companies.

(3) Denotes P/NTA based on available NTA as reported by respective companies.

(4) Excluded as statistical outlier in the mean and median computations.

(5) Market premia/ discounts calculated relative to the closing price of the respective target companies one (1) day prior to the respective announcement date and VWAP of the 1-month, 3-month and 6-month period prior to the respective announcement date.

(6) P/NAV and P/RNAV ratios implied by the Exit Offer Price over the NAV and RNAV of the Company as at 30

September 2017.

(7) Denotes P/NAV based on available NAV as reported by respective companies.

Based on the above, we note that:

a. the premium implied by the Exit Offer Price above the VWAP for the last transacted price, 1-month period prior to the Last Full Trading Day, VWAP for the 3-month period prior to the Last Full Trading Day and VWAP for the 6-month period prior to the Last Full Trading Day are within the range, and below the mean and median of the corresponding premia of the Precedent Privatisation Transactions.

b. the P/NAV ratio of the Company as implied by the Exit Offer Price is within range and higher than the mean and median of the offer price over the NAV ratios of the Precedent Privatisation Transactions; and

c. the P/RNAV ratio of the Company as implied by the Exit Offer Price is within range and higher than the median but lower than the mean of the offer price over NAV ratios of the Precedent Privatisation Transactions.

We wish to highlight that the target companies involved in the Precedent Privatisation Transactions as set out in the analysis above may not be directly comparable to the Company in terms of market capitalisation, size of operations, composition of business activities, asset base, geographical spread, track record, operating and fi nancial leverage, risk profi le, liquidity, accounting policies, future prospects and other relevant criteria. Each transaction must be judged on its own commercial and fi nancial merits.

The premium or discount that an offeror pays in any particular privatisation transaction varies in different specifi c circumstances depending on, inter alia, factors such as the potential synergy the offeror can gain by acquiring the target, the prevailing market conditions and sentiments, attractiveness and profi tability of the target’s business and assets, the possibility of a signifi cant revaluation of the assets to be acquired, the availability of substantial cash reserves, the liquidity in the trading of the target company’s shares, the presence or absence of competing bids for the target company, and the existing and desired level of control in the target company.

The list of the Precedent Privatisation Transactions is by no means exhaustive and as such any comparison made only serves as an illustration. Conclusions drawn from the comparisons made may not necessarily refl ect the perceived or implied market valuation of the Company.

7.5. Historical fi nancial performance of the Group and outlook of the Industry

We set out below the fi nancial performance and position of the Group for FY2014, FY2015, FY2016 based on the audited fi nancial statements of the Group as well as 9M2016 and 9M2017 based on unaudited fi nancial statements for the respective periods, The following fi nancial statements should be read in conjunction with the full text of the Company’s annual report and fi nancial results announcements in respect of the relevant fi nancial periods:

I-20


Summary of Financial Information of the Group

Statement of Comprehensive Income

AuditedFY 2014

AuditedFY 2015

AuditedFY 2016

Unaudited 9M2016

Unaudited 9M2017

S$’000 S$’000 S$’000 S$’000 S$’000

Revenue 687,658 329,274 233,869 169,046 197,673

Cost of sales (570,434) (249,521) (176,788) (128,885) (155,307)

Gross profi t 117,224 79,753 57,081 40,161 42,366

Other Income 2,128 14,589 4,755 3,096 1,071

Finance Income 605 4,234 3,447 2,572 3,224

Foreign exchange differences 2,385 8,088 3,854 (202) (1,450)

Selling and marketing costs (844) (1,074) (1,001) (835) (612)

General and administrative costs (56,948) (46,676) (43,361) (31,854) (29,933)

Other operating costs (14,377) (9,966) (10,599) (7,091) (6,547)

Finance costs (1,068) (415) (494) (345) (358)

Share of results of associates (209) (583) (439) (55) (287)

Profi t before tax 48,896 47,950 13,243 5,447 7,474

Income tax expense (7,921) (2,886) (1,400) (878) (882)

Profi t /(loss) after tax 40,975 45,064 11,843 4,569 6,592

Profi ts attributable to:

Owners of the Company 50,084 42,779 11,353 3,795 6,440

Non-controlling interests (9,109) 2,285 490 774 152


Historical Financial Performance of the Group

FY2015 vs FY2014

We note that in line with the general downturn in the oil and gas sector, revenue and gross profi t declined by 52% and 32%, respectively. The decline in revenue was largely attributed to a drop in 55% of the project services business, maintenance and trading have also declined by 19%.

Overall, gross profi t declined from S$117.2million to S$79.8million; Gross profi t margin increased from 17% in FY2014 to 24% in FY2015 due to effective cost management and improved operational effi ciency, and higher value-add services.

We note that for FY2015, the Group recorded net profi t attributable to shareholders of S$42.8 million on the back of revenue of S$329.3 million. Profi t after tax and minority interests as a percentage of revenue was 13%. Earnings per share was S$0.075 per ordinary share for FY2015.

FY2016 vs FY2015

We note that revenue declined by 29% in FY2016, as major projects reached completion. Project services business segment declined by 34% in revenue. The Singapore market accounted for 70% of revenue up from 56% in FY2015. This was due to a more diverse mix of smaller projects from a wider spectrum of industries.

Gross profi t declined from S$79.8 million in FY2015 to S$57.1 million in FY2016; Gross profi t margin was maintained at 24%.

I-21


For the FY2016, the Group recorded net profi t attributable to shareholders of S$11.4 million on the back of revenue of S$233.9 million. Earnings per share was S$0.020 per ordinary share in FY2016.

9M2017 vs 9M2016

We note that revenue in the 9M2017 increased by 17% when compared with the same period last year due to newly secured projects being executed in the current period.

Gross profi t margin for the period 9M2017 is lower at 21% compared to 24% for the same period last year. The higher gross profi t margin in 9M2016 was due to closure of completed project.

Other income in 9M2017 was lower than the 9M2016, as the Company recorded gain on disposal of an offi ce building, higher wage credit grants received and sale of scrap in 2016.

Net profi t attributable to shareholders improved by 70% to S$6.4 million from S$3.8 million.

Statement of Financial Position

AuditedAs at 31

December 2014

AuditedAs at 31

December 2015

AuditedAs at 31

December 2016

UnauditedAs at 30

September2017

S$’000 S$’000 S$’000 S$’000

Non-current assets

Property, Plant and Equipment 48,389 43,040 64,897 66,578

Intangible assets 1,199 840 244 293

Investment in Associates 8,593 14,218 22,027 20,608

Other Investments 26,484 31,071 29,270 31,830

Others 8,148 1,118 747 1,086

92,813 90,287 117,185 120,395

Current assets

Gross amount due from customersfor contract work-in-progress 13,248 23,784 26,427 47,332

Inventories 3,808 5,647 6,527 5,605

Other Investments 0 0 9,201 6,007

Prepaid operating expenses 249 508 743 870

Downpayments made to suppliers 5,703 2,028 1,654 13,167

Trade and other receivables 185,504 109,367 105,829 73,535

Foreign currency contracts 238 0 140 0

Cash and short-term deposits 157,057 118,215 86,021 90,033

365,807 259,549 236,542 236,549

Current liabilities

Income tax payable 15,829 9,705 9,656 10,270

Loans and borrowings 2,269 2,804 6,332 6,599

Gross amount due to customersfor contract work-in-progress 137,577 72,255 22,270 14,170

Trade and other payables 143,526 93,487 130,487 107,905

Trust receipts payables 0 0 0 10,265

Downpayments from customers 18,727 9,393 5,353 32,875

Foreign currency contracts 1,398 339 465 255

319,326 187,983 174,563 182,339

I-22


Statement of Financial Position

AuditedAs at 31

December 2014

AuditedAs at 31

December 2015

AuditedAs at 31

December 2016

UnauditedAs at 30

September2017

S$’000 S$’000 S$’000 S$’000

Non-current liabilities

Deferred tax liabilities 2,150 2,020 1,906 1,521

Loans and borrowings 8,772 6,752 14,888 9,339

10,922 8,772 16,794 10,860

Net assets 128,372 153,081 162,370 163,745

Equity attributable to owners of the Company

Share capital 89,365 89,365 89,365 89,365

Treasury shares (161) (161) (161) (161)

Retained earnings 165,738 194,329 197,169 200,771

Other reserves 1,467 5,616 (125,775) (127,299)

256,409 289,149 160,598 162,676

Non-controlling interests (128,037) (136,068) 1,772 1,069

Total equity 128,372 153,081 162,370 163,745


Historical Financial Position of the Group

As at 30 September 2017, the current assets comprise primarily of cash and short-term deposits, amount due from customers for contract work-in-progress, trade and other receivables accounting for 38.1%, 20.0% and 31.1% respectively of the current assets. Trade and other receivables decreased by 30.5% from S$105.8 million at 31 December 2016 due to collections received from customers of projects that were completed.

We note that property, plant & equipment comprise of 55.3% of the total non-current assets as at 30 September 2017. The Group acquired a vessel in FY2016 at a cost of S$22.2 million which resulted in a 50.8% overall increase in fi xed asset from FY2015 to FY2016.

As at 30 September 2017, the Group had total current and non-current Investments which comprise of loans and receivables and equity securities of S$37.8 million.

As at 30 September 2017, the current liabilities comprise primarily of in trade and other payables, down payments from customers and gross amount due to customers for contract work-in-progress accounting for 59.2%, 18.0% and 7.8% of total current liabilities. Gross amount due from and due to customers for contract work-in-progress relate to contract accounting to record revenue and cost on accrual basis. Downpayments from customers have increased by S$27.5 million from 31 December 201 6 due to advances received from new projects. The Group’s acquired S$10.3 million of trust receipts to fund working capital facilities for projects under execution in 3Q2017.

The Group’s borrowings and debt securities as at 30 September 2017 comprise primarily of bank borrowings with approximately S$16.9 million of the S$26.2 million loans due payable within one year. The collateral for the loans include mortgage over the Group’s property, plant and equipment.

Other reserves decreased in FY2016 from FY2015 mainly due to a premium paid on acquisition of shares held. In 2016, the Group acquired an additional equity interest in two of its subsidiaries PSCL and Rotary Arabia Company Limited (RACL) from its non-controlling interests. The total difference of S$141.1 million between the consideration and the carrying value of the additional interest acquired was recognised as “Premium paid on acquisition of non-controlling interests” within equity.

I-23


The Group’s NAV and NTA as at 30 September 2017 is S$162.7 million and S$162.4 million respectively implying a NAV and NTA per Share of S$0.287 and S$0.286.

On 12 December 2016, the Company announced the Acquisition of the additional equity interest in PSCL, Post the Acquisition, the NTA of the Company decreased by 46.4% from S$288.9 million on 30 September 2016 to S$154.8 million or NTA per share from 50.91 cent to 27.27 cents.

Outlook of the Group

We note the following commentary was made in the Company’s result announcement for the fi nancial period ended 30 September 2017.

“Amidst continued uncertainty in the global economy, the Group’s liquid storage terminal EPC business environment continues to remain challenging. At the date of this announcement, the Group’s order book, excluding maintenance, stands at S$474.8M.”

7.6. Analysis of the Exit Offer Price to the trailing historical NTA of the Group

We have compared the Exit Offer Price against the trailing historical NTA of the Group for the period commencing 30 September 2015, being the 2-year period preceding the latest unaudited fi nancial announcement by the Company as at 30 September 2017.

Chart 3: Exit Offer Price to Trailing Historical NTA of the Group

0.8

0.9

1.0

1.1

1.2

1.3

1.4

1.5

1.6

1.7

30 Sep 2015 31 Mar 2016 30 Sep 2016 31 Mar 2017 30 Sep 2017

Exit Offer Price/Historical NTA P/NTA (30 Sep 2017)

Minimum = 0.90

Maximum = 1.63

Source: Companies’ fi nancial statements/announcements

Note : The P/ trailing NTA of the Shares is calculated as the ratio of the Exit Offer Price and the quarterly NTA per Share as reported by the Company in the preceding two years and up to the Latest Practicable Date.

We highlight the following observations from the chart above;

(a) The P/NTA multiple implied by Exit Offer Price has been at a discount to the trailing historical NTA and has ranged between 0.90 to 0.99 times during the period between 30 September 2015 up to and prior to 31 December 2016;

(b) Since 31 December 2016 and up to the Latest Practicable Date, the P/ NTA multiple implied by the Exit Offer Price is at a premium to the trailing historical NAV and has ranged between 1.60 to 1.63 times.

I-24


As mentioned in the previous section and in the announcement by the Company on 12 December 2016, the NTA of the Company decreased by 46.4% from S$288.9 million on 30 September 2016 to S$154.8 million or NTA per share from 50.91 cent to 27.27 cents post the acquisition of the additional equity interest in PSCL. We note that prior to the Acquisition, the Exit Offer Price would have been at a discount of 9.6% to NTA per share.

7.7. Comparison of valuation ratios of selected listed companies which are broadly comparable with the Group

The Group’s business is organised into two main operating businesses:

The Project Services segment provides engineering design, procurement and construction services for plants and associated facilities in oil and gas, petrochemical and pharmaceutical industries; and

The Maintenance and Trading segment provides maintenance, engineering and other related services to chemical process industry, including warehousing, trading and logistics services of equipment and products which accounts.

The Group’s key geographical market is Singapore, Thailand and the Middle East comprising comprise 70%, 12% and 16% of its revenue in FY2016 respectively. Revenue from others countries which include countries such as People’s Republic of China, Malaysia, Indonesia, India and Vietnam account for 2% of the Group’s revenue.

We wish to highlight that the Comparable Companies may not be exhaustive and we have not identifi ed any listed company which is truly comparable to the Company in terms of the composition of its business activities, geographical spread, size of operations, asset base, track record, fi nancial performance, operating and fi nancial leverage, market capitalisation, risk profi le, liquidity, future prospects and other relevant criteria. As a result, any comparisons drawn can serve only as an illustrative guide.

Thus for this purpose, we have considered companies whose principal activities are broadly similar to either the Group’s Project Services business or the Maintenance and Trading business focused primarily on the oil and gas, petrochemical and pharmaceutical industries with a similar geographical focus to the Group (the “Comparable Companies”). We have had discussions with the Management about the suitability and reasonableness of the selected Comparable Companies acting as a basis for comparison with the Group.

We have benchmarked the Exit Offer Price by generating selected valuation statistics for the Company implied by the Exit Offer Price and compared those statistics with those for the Comparable Companies.

In our analysis, we have collated and presented the following ratios:

LTM P/E A variant of the Price-to-Earnings ratio (“P/E”) where the earnings of a company is computed based upon the last-twelve-month (“LTM”) period ending on the most recent quarter for which fi nancial results have been published.

The P/E is the ratio of market capitalisation relative to its profi t after tax attributable to shareholders of the company (“NPAT”). The P/E is affected by, inter alia, the capital structure of a company, its tax position as well as its accounting policies relating to depreciation and intangible assets.

LTM EV/EBITDA A variation of the EV/EBITDA ratio where the EBITDA of a company is computed based upon the LTM period ending on the most recent quarter for which fi nancial results have been published.

I-25


(“EV”) or (“Enterprise Value’’) is the sum of a company’s market capitalisation, preferred equity, minority interests, short and long term debts less its cash and cash equivalents. (“EBITDA’’) stands for historical consolidated earnings before interest, tax, depreciation and amortisation expenses.

The EV/EBITDA ratio illustrates the ratio of the market value of a company’s business relative to its historical consolidated pre-tax operating cashfl ow performance, without regard to its capital structure.

P/NAV P/NAV ratio illustrates the ratio of the market price of a company’s shares relative to its asset backing as measured in terms of its historical consolidated NAV per share as stated in its fi nancial statements. The NAV fi gure provides an estimate of the value of the company assuming the sale of all its tangible and intangible assets, the proceeds which are fi rst used to settle its liabilities and obligations with the balance available for distribution to its shareholders. Any comparison of NAV will be affected by respective accounting policies with respect to depreciation and asset valuation practice.

The selected valuation statistics of the Comparable Companies are based upon their closing prices on the Latest Practicable Date while those of the Company are as implied by the Exit Offer Price. Such comparisons are affected by differences in their accounting policies. Our analysis has not attempted to adjust for such differences. Relevant information has been extracted from Bloomberg, publicly available annual reports and/or public announcements of the selected listed companies. We make no representations or warranties, expressed or implied, as to the accuracy or completeness of such information. The Comparable Companies’ accounting policies with respect to the values for which the assets or revenue and costs are recorded may differ from that of the Group.

The following is the list of Comparable Companies, together with a brief description of their principal activities:

Summary of Comparable Companies

NameCountry of listing Business description

Hiap Seng Engineering Ltd (“Hiap Seng”)

Singapore Hiap Seng provides building construction, engineering, procurement, construction, and plant maintenance services for oil and gas, and energy sectors in Singapore, Malaysia, Thailand, the People’s Republic of China, Vietnam, and internationally. The company operates in two segments, Plant Construction and Maintenance, and Compression and Process Equipment Fabrication.

Mun Siong Engineering Limited(“Mun Siong”)

Singapore Mun Siong provides mechanical engineering services to oil, gas, petrochemicals, energy, refi nery, storage, water, chemicals, biomedical, and other industries worldwide. Its mechanical engineering works include fabrication and erection of steel structures, fixed equipment and piping works, plant shut-down/turnaround management, construction of storage tanks, exchanger re-tubing, tube shooting services for heat exchanger, on-site fl ange re-facing, and ultra-high pressure abrasives water-jet cutting services. Its operations is based in Singapore.

I-26


NameCountry of listing Business description

Hai Leck Holdings(“Hai Leck”)

Singapore Hai Leck provides engineering, procurement, and construction project services and maintenance services to the oil and gas, petrochemical, pharmaceutical, and utilities industries in Singapore. The company operates through three segments: Project Services, Maintenance Services, and Contact Centre Services. It offers mechanical engineering services in structural steel, and piping fabrication and installation, as well as in plant equipment installation, maintenance, modifi cations, and repairs to oil refi nery, petrochemical, chemical, and power plants.

PEC Ltd.(“PEC”)

Singapore PEC provides mechanical engineering and contracting services to the oil and gas, petrochemical, pharmaceutical, and oil and chemical terminal industries. The company operates in three segments: Project Works; Plant Maintenance and Related Services; and Other Operations. It offers engineering, procurement, construction, and maintenance services for various project works. PEC’s operations are in Singapore and United Arab Emirates.

TRC Construction Public Company Limited(“TRC Construction”)

Thailand TRC Construction operates in the construction and engineering industry in Thailand. The company operates through four segments: Pipeline System, Engineering System, Civil Work, and Sales and Other Services. It primarily provides engineering design, procurement, construction, project management, and maintenance services. The company constructs natural gas and crude oil pipelines, gas metering skids, and petrochemical and process plants, as well as offers tank repair and maintenance services.

Sriracha Construction Public Company Limited(“Sriracha Construction”)

Thailand Sriracha Construction engages in construction, machinery and equipment rental, and architectural and engineering consulting activities in Thailand. The company provides construction services in the areas of mechanical, welding, equipment and vessels, steel fabrication, turbines and generators, tanks, structural steel, piping work and installation and civil. It also offers a range of maintenance services for power and petrochemical plants, oil refi neries, industrial plants, etc.

Source: Company websites and CapitalIQ

I-27


We set out below the fi nancial ratios of the Company (implied by the terms of the Exit Offer) and the Selected Comparables as at the Latest Practicable Date.

Table 3: Financial ratios of Comparable Companies

Comparable Companies

Last fi nancial year-end

Market capitalisation as at Latest Practicable

Date(S$’ million)

PER(1)

(times)EV/EBITDA(2)

(times)P/NAV(3)

(times)

Hiap Seng 30-Mar-17 42.0 NM(7) 24.18(4) 0.72(4)

Mun Siong 31-Dec-16 41.3 10.67 1.30 0.70

Hai Leck 30-Jun-17 117.6 15.51 4.09 0.97

PEC 30-Jun-17 159.1 10.12 2.08 0.70

TRC Construction 31-Dec-16 253.8 33.10 16.46 2.25

Sriracha Construction 31-Dec-16 269.3 NM(7) 97.70(4) 3.80(4)

High 33.10 16.46 2.25

Low 10.12 1.30 0.70

Mean 17.35 5.98 1.15

Median 13.09 3.09 0.84

The Group 261.1(5) 20.25 (6) 9.37 (6) P/NAV = 1.60P/RNAV = 1.25

Source: Bloomberg, annual reports and latest publicly available fi nancial information of the respective comparable companies

Notes:

(1) T12 Price-Earnings Ratio (“PER”) was calculated based on the ratio of market capitalisation as at Latest Practicable Date to Trailing 12 months net profi ts after tax attributable to shareholders of the respective companies.

(2) The Enterprise Value (“EV”) was calculated based on the sum of the companies’ market capitalisation as Latest Practicable Date, preferred equity, minority interests, short and long term debts less cash and cash equivalents. The T12 Earnings before Interest, Tax, Depreciation and Amortisation (“EBITDA”) is computed based on the trailing 12 months period for which fi nancial results have been published for the respective companies.

(3) The Price to NAV (“P/NAV”) was calculated based on the ratio of market capitalisation as at the Latest Practicable Date to the latest published NAV attributable to shareholders of the respective companies.

(4) Denotes an outlier and is not included in the calculation of high, low, mean and median of the fi nancial ratios.

(5) Based on the Exit Offer Price of S$0.46 and the Company’s share capital of 567,518,000 Shares (excluding treasury shares) at the Latest Practicable Date.

(6) Based on normalized LTM EBITDA and LTM net profi t after tax attributable to shareholders. The fi gures were normalized for a one off gain from a bareboat sold in FY2016.

(7) Denotes as Not Meaningful as the earnings is negative.

Based on the above, we note that:

(i) the T12M PER of the Group of 20.25 times as implied by the Exit Offer Price is within the range of T12M PER ratios of the Comparable Companies and is above the mean and median of T12M PERs of the Comparable Companies;

(ii) the T12M EV/EBITDA ratio of the Group of 9.37 times as implied by the Exit Offer Price is within the range of T12M EV/EBITDA of the Comparable Companies and is above the mean and median of T12M EV/EBITDA of the Comparable Companies;

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(iii) the P/NAV of the Group of 1.60 times as implied by the Exit Offer Price is higher than the mean and the median of P/NAV ratios of the Comparable Companies; and

(iv) the P/RNAV of the Group of 1.25 times as implied by the Exit Offer Price is higher than the mean and median of P/NAV ratios of the Comparable Companies.

7.8. Dividend Track Record of the Company

We note that the past fi ve fi nancial years, the Company has paid dividends as follows;

Year Share Price1 (S$) TypePrice(S$)

Dividend Yield(%)

FY2016 0.39 Cash 0.005 1.28

FY2015 0.42 Cash 0.015 3.57

FY2014 0.59 Cash 0.025 4.24

FY2013 0.71 Cash 0.015 2.11

FY2012 0.48 Cash 0.005 1.04

Source: Bloomberg, SGX and Company Announcements

Note:

(1) The Share price is the price of Share on the last cum dividend day prior to ex-dividend date for the respective period.

Based on the above, we note that over the last 5 fi nancial years, the Company had been declaring dividends with dividend yields ranging 1.04% to 4.24%. We wish to highlight that the above dividend analysis of the Company serves as an illustrative guide and is not an indication of the Company’s future dividend policy.

We further note that the Company’s dividend policy as stated in their Annual report 2016;

“The Company does not have a policy on payments of dividends. The form, frequency and amount of dividends declared each year will take into consideration the group’s profi t growth, cash position, positive cash generated from operations, projected capital requirements for business growth and other factors as the Board may deem appropriate. The Company endeavours to pay dividend and where dividends are not paid, the Company will disclose its reason(s) accordingly.”

7.9. Other relevant consideration

7.9.1. Irrevocable Undertakings

Paragraph 2.6 of the Exit Offer Letter sets out certain information relating to the Irrevocable Undertaking of the Undertaking Shareholders. The Offeror has obtained irrevocable undertakings from the Undertaking Shareholders pursuant to which they have each undertaken and/or agreed, inter alia, to vote all their Shares in favour of the Delisting Resolution and accept the Exit Offer in respect of all their Shares.

As at the Latest Practicable Date, the Undertaking Shareholders collectively hold an aggregate of 350,780,732 Shares representing approximately 61.81% of the total number of issued Shares;

Taking this into consideration, the Offeror owns or controls an aggregate 350,780,732 Shares, representing 61.81% of the total number of issues Shares.

7.9.2. Offer Condition

The Delisting and Exit Offer is conditional on the Delisting Resolution be being approved by a majority of at least 75% and not voted against by 10% or more of the total number of issued Shares (excluding treasury shares and subsidiary holdings) held by Shareholders present and voting, on a poll, either in person or by proxy at the EGM to be convened for Shareholders to vote on the Delisting Resolution.

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As at the Latest Practicable Date, the Offeror and parties acting in concert with it hold Shares representing more than 50% of the total number of issued Shares. Accordingly, the Delisting and the Exit Offer will not be conditional upon a minimum number of acceptances being received by the Offeror.

In addition, Under Rule 1307(2) of the Listing Manual, the Directors and the controlling Shareholders are not required to abstain from voting on the Delisting Resolution. Accordingly, the Undertaking Shareholders are entitled to, and have undertaken pursuant to their respective Irrevocable Undertakings to vote all their Shares in favour of the Delisting Resolution at the EGM and to accept the Exit Offer in respect of all their Shares.

Accordingly, the Exit Offer is unconditional as to acceptances.

7.9.3. Compulsory Acquisition and Listing Status

As stated in the Exit Offer Letter, pursuant to Section 215(1) of the Companies Act, in the event that the Offeror acquires 90% or more of the Shares (other than those already held by the Offeror, its related corporations and their respective nominees as at the date of the Exit Offer and which, for the avoidance of doubt, excludes any issued and paid-up ordinary shares held by the Company as treasury shares), the Offeror would be entitled to exercise the right to compulsorily acquire all the Shares of Shareholders who have not accepted the Exit Offer at a price equal to the Exit Offer Price.

The Offeror intends to make the Company its wholly-owned subsidiary. Accordingly, when entitled, the Offeror intends to exercise its right of compulsory acquisition under Section 215(1) of the Companies Act.

7.9.4. Alternative Offer from Third Parties and Possible Revision of Exit Offer

As at the Latest Practicable Date there is no publically available evidence of other offers for the Shares from any third party. The management of the Company has also confi rmed that, as at the Latest Practicable Date, apart from the Exit Offer, no alternative offer form third party has been received.

In addition, the Offeror has stated that it does not intend to revise the Exit Offer under any circumstances.

8. OUR RECOMMENDATION ON THE EXIT OFFER AS REQUIRED PURSUANT TO LISTING RULE 1309(2)

In arriving at our recommendation on the Exit Offer, we have assessed the fi nancial terms of the Exit Offer Price after taking into consideration the following key considerations which we consider to be pertinent and which we consider may have a signifi cant bearing on our assessment:

i. We have considered the rationale of the Delisting Proposal and it is based on commercial grounds;

ii. The Exit Offer Price of S$0.46 is higher than the traded price of the Shares in the two-year period preceding the Last Full Trading Day (where the Shares traded in the range of S$0.270 to S$ 0.435 per Share);

iii. The Exit Offer Price represents a premium of 19.7%, 19.3%, 25.1% and 21.9% above the VWAP of the Shares for the 1-year, 6-month, 3-month and 1-month periods prior to and including the Last Full Trading Day respectively and a premium of 20.1% above the VWAP of Shares on the Last Full Trading of S$0.383;

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iv. Trading liquidity of the Shares during the 1-year period up to and including the Last Full Trading Day has been low in general at an average daily trading volume of the Shares between 242,000 to 355,000 representing 0.11% to 0.16% of the Company’s free fl oat. Given the thin trading volume, and in particular for Shareholders with larger quantum of Shares, the Exit Offer provides an opportunity to realise their investment which otherwise may not be available given the low trading liquidity;

v. The Exit Offer Price is at a premium of 60.5% and 60.8% over the unaudited NAV and NTA per Share as at 30 September 2017 or a P/NAV and P/NTA ratio of 1.60 and 1.61 times respectively. The value of the revaluation surplus from the Revalued Properties and Assets is material. Taking this into account, the Exit Offer Price is at a premium of 25.5% and 25.7% to the RNAV and RNTA or at an implied P/RNAV and P/RNTA ratio of 1.25 and 1.26 times respectively;

vi. In comparison with the corresponding premia of the Precedent Privatisation Transactions, the premium implied by the Exit Offer Price above the VWAP for 1-month, 3-month and 6-month periods prior to the Last Full Trading Day are within the range but below the mean and median;

vii. The P/NAV ratio of the Company implied by the Exit Offer Price is within range and higher than the mean and median of the offer price over the NAV ratios of the Precedent Privatisation Transactions. The P/RNAV ratio of the Company as implied by the Exit Offer Price is within range and higher than the median but lower than the mean of the offer price over NAV ratios of the Precedent Privatisation Transactions;

viii. The revenue and gross profi t of the Group has in line with the general downturn in the oil and gas sector declined by 52% and 32%, respectively in FY2015 from FY2014. Revenue declined further in FY16 by 29% as major projects reached completion; gross profi t fell from S$79.8 million in FY2015 to S$57.1 million for FY2016. Net profi t attributable to shareholders of S$42.8 million in FY2015 declined further to S$11.4 million in FY2016 resulting in a decrease in earnings per share from 7.5 cents to 2 cents. Revenue improved by 17% in 9M2017 compared to 9M2016 and net profi t to Shareholder improved by 70% to S$6.4 million from S$3.8 million. We note that the Group still remains cautious on its business outlook with regards to its core focus sector of EPC services for liquid storage terminal;

ix. The Price to trailing historical NTA implied by the Exit Offer Price has been above 0.90 times for the preceding 2-year period from 30 September 2015 to Latest Practicable Date;

x. The Exit Offer Price per share would have been at a 9.6% discount to NTA per share should the Exit Offer have been proposed before 12 December 2016;

xi. The T12M PER & EV/EBITDA of the Group as implied by the Exit Offer Price is within the range and is above the mean and median of T12M PER & EV/EBITDA of the Comparable Companies respectively;

xii. The Offeror has received an irrevocable undertaking from the Undertaking Shareholders to vote all their Shares in favour of the Delisting Resolution and accept the Exit Offer in respect of all their Shares. As at the Latest Practicable Date, the Undertaking Shareholders collectively hold an aggregate of 350,780,732 Shares representing approximately 61.81% of the total number of issued Shares.

Should the Delisting Resolution be approved by a majority of at least 75%, or if the Undertaking Shareholders hold more than 75% of the Shares, the Delisting will still not proceed if at the EGM, convened, the Shareholders (either in person or by proxy) holding 10% or more of the total number of issued Shares excluding treasury shares and subsidiary holdings vote against the Delisting Resolution.

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xiii. Unless the Undertaking Shareholders accept an alternative or competing offer; any offer made by a third party would not become unconditional . As at Latest Practicable Date, the Company has not received any alternative offer or proposal for the Shares from any third party.

Based on our analysis and after having considered carefully the information available to us as at the Latest Practicable Date, overall, we are of the view that the fi nancial terms of the Exit Offer are fair and reasonable. Accordingly, we advise the Independent Directors to recommend the Shareholders to vote in favour of the Exit Offer.

Our opinion, as disclosed in this Letter, is based solely on publicly available information and information provided by the Directors and the Management and therefore does not refl ect any projections of future fi nancial performance of the Company or the Group after the completion of the Exit Offer. In addition, our opinion is based on the economic and market conditions prevailing as at the Latest Practicable Date and is solely confi ned to our views on the Exit Offer.

Our opinion is required under Rule 1309 of the Listing Manual and is also addressed to the Independent Directors for their benefi t and for the purpose of their consideration of the Exit Offer. The recommendation to be made by them to the Shareholders shall remain the responsibility of the Independent Directors. Whilst a copy of this Letter may be reproduced in the Circular, neither the Company, the Directors nor any other person may reproduce, disseminate or quote this Letter (or any part thereof) for any other purpose other than for the purpose of the Exit Offer at any time and in any manner without the prior written consent of DTCF in each specifi c case.

This Letter is governed by, and construed in accordance with, the laws of Singapore, and is strictly limited to the matters stated herein and does not apply by implication to any other matter.

Yours faithfully,

For and on behalf ofDeloitte & Touche Corporate Finance Pte Ltd

Koh Soon BeeExecutive Director

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APPENDIX II – ADDITIONAL INFORMATION ON THE COMPANY AND THE GROUP

1. DIRECTORS

The names, addresses and descriptions of the Directors as at the Latest Practicable Date are set out below:

Name Address Designation

Roger Chia Kim Piow c/o 17 Tuas Avenue 20 Singapore 638828

Executive Chairman and Managing Director

Chia Kim Chua c/o 17 Tuas Avenue 20 Singapore 638828

Executive Director

Lam Khin Khui c/o 17 Tuas Avenue 20 Singapore 638828

Non-Executive Independent Director

Keith Tay Ah Kee c/o 17 Tuas Avenue 20 Singapore 638828

Non-Executive Independent Director

Anwar Hilal Hamdoon Al Jabri c/o 17 Tuas Avenue 20 Singapore 638828

Non-Executive Non-Independent Director

Jenny Wong Oi Moi c/o 17 Tuas Avenue 20 Singapore 638828

Non-Executive Non-Independent Director

2. REGISTERED OFFICE

The registered offi ce of the Company is at 17 Tuas Avenue 20 Singapore 638828.

3. PRINCIPAL ACTIVITIES

The Company is incorporated in Singapore and is listed on the Mainboard of the SGX-ST. The principal activities of the Company are engineering design, procurement and construction services for plants and associated facilities. The principal activities of the subsidiaries of the Company are disclosed in the notes to the fi nancial statements as set out in the Annual Report of the Company for the fi nancial year ended 31 December 2016.

4. SHARE CAPITAL OF THE COMPANY

4.1 Issued Share Capital

As at the Latest Practicable Date, the Company has an issued and paid-up share capital of S$89,364,213.59 comprising 567,518,000 Shares (excluding 336,000 Shares held by the Company as treasury shares).

4.2 Rights in respect of Capital, Dividends and Voting

The rights of Shareholders in respect of capital, dividends and voting are contained in the Constitution, which are available for inspection at the Company’s registered offi ce at 17 Tuas Avenue 20 Singapore 638828. The relevant provisions have been extracted from the Constitution and are reproduced in Appendix VIII to this Circular.

4.3 New Issues

As at the Latest Practicable Date, no new Shares have been issued by the Company since 31 December 2016.

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4.4 Options

There are no outstanding instruments convertible into, rights to subscribe for, and options in respect of, the Shares, as at the Latest Practicable Date.

4.5 Transfer Restrictions

There is no restriction in the Constitution on the right to transfer any Offer Shares, which has the effect of requiring the holders of the Offer Shares, before transferring them, to offer them for purchase to Shareholders or to any other person.

5. SUMMARY OF FINANCIAL INFORMATION

5.1 Consolidated Income Statements

A summary of the audited consolidated income statements of the Group for FY2014, FY2015 and FY2016, and the unaudited consolidated income statements of the Group for 9M2017 is set forth below. The summary set out below should be read together with the annual reports of the Company, the audited consolidated fi nancial statements of the Group for the relevant fi nancial years and the Company’s announcement on the unaudited consolidated fi nancial statements of the Group for 9M2017, and their respective accompanying notes, copies of which are available for inspection at the registered offi ce of the Company at 17 Tuas Avenue 20 Singapore 638828.

Audited FY2014S$’000

Audited FY2015S$’000

AuditedFY2016S$’000

Unaudited 9M2017 S$’000

Revenue 687,658 329,274 233,869 197,673

Cost of sales (570,434) (249,521) (176,788) (155,307)

Gross profi t 117,224 79,753 57,081 42,366

Other income 5,118 26,911 12,056 2,845

Expenses

Selling and marketing costs (844) (1,074) (1,001) (612)

General and administrative costs (56,948) (46,676) (43,361) (29,933)

Other operating costs (14,377) (9,966) (10,599) (6,547)

Finance costs (1,068) (415) (494) (358)

Share of results of associates (209) (583) (439) (287)

Profi t/(loss) before income tax 48,896 47,950 13,243 7,474

Income tax expense (7,921) (2,886) (1,400) (882)

Profi t/(loss) after tax 40,975 45,064 11,843 6,592

Profi t for the period attributable to:

Owners of the Company 50,084 42,779 11,353 6,440

Non-controlling interests (9,109) 2,285 490 152

40,975 45,064 11,843 6,592

Earnings/(loss) per share (cents)

- Basic- Diluted

8.88.8

7.57.5

2.02.0

1.11.1

Dividends per Share for profi t attributable to equity holders of the Company (cents) 2.5 1.5 0.5 –

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5.2 Balance Sheet

A summary of the audited consolidated balance sheet of the Group as at 31 December 2016, and the unaudited consolidated balance sheet of the Group as at 30 September 2017 is set out below. The summary set out below should be read together with the annual reports of the Company, the audited consolidated fi nancial statements of the Group for the relevant fi nancial years and the Company’s announcement on the unaudited consolidated fi nancial statements of the Group for 9M2017, and their respective accompanying notes, copies of which are available for inspection at the registered offi ce of the Company at 17 Tuas Avenue 20 Singapore 638828.

Audited as at 31 December

2016S$’000

Unaudited as at 30 September

2017S$’000

ASSETS

Current assets

Gross amount due from customers for contract work-in-progress 26,427 47,332

Other investments 9,201 6,007

Prepaid operating expenses 743 870

Downpayments made to suppliers 1,654 13,167

Inventories 6,527 5,605

Foreign currency contracts 140 –

Trade and other receivables 105,829 73,535

Cash and cash equivalents 86,021 90,033

Total current assets 236,542 236,549

Non-current assets

Property, plant and equipment 64,897 66,578

Intangible assets 244 293

Investments

Associates 22,027 20,608

Others 29,270 31,830

Deferred tax assets 747 1,086

Total non-current assets 117,185 120,395

Total Assets 353,727 356,944

LIABILITIES

Current liabilities

Income tax payable 9,656 10,270

Gross amount due to customers for contract work-in-progress 22,270 14,170

Downpayments from customers 5,353 32,875

Foreign currency contracts 465 255

Trade and other payables 130,487 107,905

Trust receipt payables – 10,265

Loans and borrowings 6,332 6,599

Total current liabilities 174,563 182,339


Deferred tax liabilities 1,906 1,521

Loans and borrowings 14,888 9,339

Total Non-current liabilities 16,794 10,860

NET ASSETS 162,370 163,745

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Audited as at 31 December

2016S$’000

Unaudited as at 30 September

2017S$’000

EQUITY

Capital and reserves attributable to equity holders of the Company

Share capital 89,365 89,365

Treasury shares (161) (161)

Other reserves(1) (125,775) (127,299)

Retained profi ts/(Accumulated losses) 197,169 200,771

160,598 162,676

Non-controlling interests 1,772 1,069

TOTAL EQUITY 162,370 163,745

Note:

(1) On 12 December 2016, the Company announced that it has increased its 51% shareholdings in its subsidiary in Saudi Arabia, Petrol Steel Company Limited (“PSCL”), to 98% by acquiring the shares of PSCL held by its minority shareholders (the “Acquisition”). The rationale for the Acquisition was, inter alia, that by increasing the Company’s stake in PSCL, the Company would be able to exercise greater autonomy in the Saudi Arabia operations.

5.3 Consolidated NTA per Share

The Consolidated NTA per Share of the Company, its subsidiaries and associated companies based on the unaudited consolidated fi nancial statements of the Group for 9M2017 is S$0.286.

As at the Latest Practicable Date, the Directors are not aware of any material changes which may affect the above stated Consolidated NTA per Share of the Company, its subsidiaries and associated companies.

5.4 Signifi cant Accounting Policies and Changes

A summary of the signifi cant accounting policies of the Group is set out in Note 2 to the audited fi nancial statements of the Group for FY2016, which are set out in Appendix IV to this Circular.

As at the Latest Practicable Date, save as disclosed in this Circular, there are no signifi cant accounting policies nor any points from notes of the accounts of the Group which are of major relevance for the interpretation of the fi nancial statements of the Group referred to in this Circular.

As at the Latest Practicable Date, there is no change in the accounting policies of the Group which will cause the fi gures disclosed in this Appendix II not to be comparable to a material extent.

5.5 Material Changes in Financial Position

Save as disclosed in publicly available information on the Group (including but not limited to the unaudited consolidated income statements of the Group for 9M2017), as at the Latest Practicable Date, there have been no known material changes in the fi nancial position of the Company since 31 December 2016, being the date to which the Company’s last published audited fi nancial statements were made up.

6. DISCLOSURE OF INTERESTS

6.1 Shareholdings and Dealings

(a) Interest of the Company in securities of the Offeror

The Company does not have any direct or deemed interest in the shares of the Offeror or convertible securities of the Offeror, or instruments convertible into such shares or securities, or rights to subscribe for such shares or securities, or warrants, options or derivatives in respect of such shares or securities as at the Latest Practicable Date.

II-5


(b) Dealing in securities of the Offeror by the Company

The Company did not deal for value in the shares of the Offeror or securities which carry voting rights in the Offeror, or instruments convertible into such shares or securities, or rights to subscribe for such shares or securities, or warrants, options or derivatives in respect of such shares or securities during the period commencing three (3) months prior to the Joint Announcement Date, and ending on the Latest Practicable Date.

(c) Interests of the Directors in securities of the Offeror

Save for the interest in securities of the Offeror held by Mr. Roger Chia, Mr. Chia Kim Chua and Ms. Jenny Wong as disclosed in Section 5 of this Circular, none of the Directors has any direct or indirect interest in the shares of the Offeror or securities which carry voting rights in the Offeror, or instruments convertible into such shares or securities, or rights to subscribe for such shares or securities, or warrants, options or derivatives in respect of such shares or securities as at the Latest Practicable Date.

(d) Dealings in securities of the Offeror by the Directors

None of the Directors has dealt for value in shares of the Offeror or securities which carry voting rights in the Offeror, or instruments convertible into such shares or securities, or rights to subscribe for such shares or securities, or warrants, options or derivatives in respect of such shares or securities during the period commencing three (3) months prior to the Joint Announcement Date and ending on the Latest Practicable Date.

(e) Interest of the Directors in securities of the Company

Save as disclosed in Section 12 of this Circular, none of the Directors has any direct or indirect interest in the (i) Shares or (ii) convertible securities, warrants, options or derivatives in respect of any Shares as at the Latest Practicable Date.

(f) Dealings in securities of the Company by the Directors

Save as disclosed below, none of the Directors has dealt for value in any (i) Shares and (ii) convertible securities, warrants, options or derivatives in respect of any Shares during the period commencing three (3) months prior to the Joint Announcement Date and ending on the Latest Practicable Date.

NameDate of

TransactionNumber of Shares

acquired (disposed)Transacted Price per

Share (S$)

Roger Chia 3 October 2017 3,300,000 0.450

Roger Chia 4 October 2017 3,378,000 0.450

(g) Interest of the Independent Financial Adviser in securities of the Company

None of Deloitte, its related corporations or any of the funds whose investments are managed by Deloitte and its related corporations on a discretionary basis owns or controls, directly or indirectly, the (i) Shares or (ii) convertible securities, warrants, options or derivatives in respect of any Shares as at the Latest Practicable Date.

(h) Dealing in securities of the Company by the Independent Financial Adviser

None of Deloitte, its related corporations or any of the funds whose investments are managed by Deloitte and its related corporations on a discretionary basis has dealt for value in any (i) Shares and (ii) convertible securities, warrants, options or derivatives in respect of any Shares during the period commencing three (3) months prior to the Joint Announcement Date, and ending on the Latest Practicable Date.

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6.2 Directors’ Intentions in respect of their Shares

(a) Mr. Roger Chia, the Executive Chairman and Managing Director of the Company, holds 34,763,916 Shares (representing approximately 6.13% of the total issued Shares) at the Latest Practicable Date, and is a party acting in concert with the Offeror. Mr. Roger Chia has also given an irrevocable undertaking to the Offeror to, inter alia, vote all his Shares in favour of the Delisting Resolution and accept the Exit Offer in respect of all his Shares;

(b) Mr. Chia Kim Chua, an Executive Director of the Company, holds 22,242,400 Shares (representing approximately 3.92% of the total issued Shares) at the Latest Practicable Date, and is a party acting in concert with the Offeror. Mr. Chia Kim Chua has also given an irrevocable undertaking to the Offeror to, inter alia, vote all his Shares in favour of the Delisting Resolution and accept the Exit Offer in respect of all his Shares;

(c) Mr. Lam Khin Khui, a Non-Executive Independent Director of the Company, holds 842,800 Shares (representing approximately 0.15% of the total issued Shares) at the Latest Practicable Date. Mr. Lam Khin Khui intends to vote all his Shares in favour of the Delisting Resolution and accept the Exit Offer in respect of all his Shares;

(d) Mr. Keith Tay Ah Kee, a Non-Executive Independent Director of the Company, holds 459,200 Shares (representing approximately 0.08% of the total issued Shares) at the Latest Practicable Date. Mr. Keith Tay Ah Kee intends to vote all his Shares in favour of the Delisting Resolution and accept the Exit Offer in respect of all his Shares;

(e) Mr. Anwar Al Jabri, a Non-Executive Non-Independent Director of the Company, does not hold any Shares; and

(f) Ms. Jenny Wong, a Non-Executive Non-Independent Director of the Company, holds 6,972,896 Shares (representing approximately 1.23% of the total issued Shares) at the Latest Practicable Date, and is a party acting in concert with the Offeror. Ms. Jenny Wong has also given an irrevocable undertaking to the Offeror to, inter alia, vote all her Shares in favour of the Delisting Resolution and accept the Exit Offer in respect of all her Shares.

6.3 Other Disclosures

(a) There are no service contracts between any of the Directors or proposed directors with the Company or its subsidiaries which have more than twelve (12) months to run and which are not terminable by the employing company within the next twelve (12) months without paying any compensation. There are no such service contracts entered into or amended by the Company or its subsidiaries during the period commencing six (6) months prior to the Joint Announcement Date and ending on the Latest Practicable Date.

(b) It is not proposed that any payment or other benefi t be made or given to any Director or director of any other corporation which is by virtue of Section 6 of the Companies Act deemed to be related to the Company, as compensation for loss of offi ce or otherwise in connection with the Exit Offer.

(c) Save for:

(i) the Irrevocable Undertakings provided by each member of the Chia Family Group and FAPI, details of which are set out in paragraph 2.6 of the Exit Offer Letter entitled “Irrevocable Undertakings” (as extracted and reproduced in Section 4 of this Circular);

(ii) the Shareholders’ Agreement, details of which are set out in paragraph 3.4 of the Exit Offer Letter entitled “Shareholders’ Agreement” (as extracted and reproduced in Section 5 of this Circular); and

II-7


(iii) the fi nancing arrangements granted by DBS for the purpose of fi nancing the Exit Offer (including the deed of undertaking entered into by each member of the Chia Family Group and FAPI),

as at the Latest Practicable Date, there are no agreements or arrangements made between any Director and any other person in connection with or conditional upon the outcome of the Exit Offer.

6.4 Material Contracts

Save as disclosed in this Circular, none of the Directors has a material personal interest, whether direct or indirect, in any material contract entered into by the Offeror as at the Latest Practicable Date.

7. MATERIAL CONTRACTS WITH INTERESTED PERSONS

Save as disclosed in this Circular, on the SGXNET, in the Company’s annual reports, or any publicly available information on the Company, neither the Company nor any of its subsidiaries has entered into material contracts (other than those entered into in the ordinary course of business) with persons who are interested persons1 during the period commencing three (3) years before the Joint Announcement Date and ending on the Latest Practicable Date.

8. MATERIAL LITIGATION

As at the Latest Practicable Date, save as disclosed on SGXNET, in the Company’s annual reports, or any publicly available information on the Company, none of the Company nor any of its subsidiaries is engaged in any material litigation as plaintiff or defendant which might materially and adversely affect the fi nancial position of the Company or the Group, taken as a whole, and the Directors are not aware of any litigation, claims or proceedings (pending or threatened) against the Company or any of its subsidiaries or of any facts likely to give rise to any proceedings which might materially and adversely affect the fi nancial position of the Company or the Group, taken as a whole.

9. MATERIAL CHANGE IN INFORMATION

Save as disclosed in this Circular and save for information relating to the Company, the Group or the Exit Offer and the Delisting that is publicly available, there has been no material change in any information previously published by or on behalf of the Company during the period commencing from the Joint Announcement Date and ending on the Latest Practicable Date.

1 An “interested person” is defi ned in the Note on Rule 23.12 of the Code to mean:

(a) a director, chief executive offi cer or Substantial Shareholder of the Company;

(b) the immediate family of a director, the chief executive offi cer or a Substantial Shareholder (being an individual) of the Company;

(c) the trustees, acting in their capacity as such trustees, of any trust of which a director, the chief executive offi cer or a Substantial Shareholder (being an individual) and his immediate family is a benefi ciary;

(d) any company in which a director, the chief executive offi cer or a Substantial Shareholder (being an individual) together and his immediate family together (directly or indirectly) have an interest of 30% or more;

(e) any company that is the subsidiary, holding company or fellow subsidiary of the Substantial Shareholder (being a company); or

(f) any company in which a Substantial Shareholder (being a company) and any of the companies listed in (e) above together (directly or indirectly) have an interest of 30% or more.

II-8


10. VALUATION ON PROPERTIES

10.1 Valuation

The Company has commissioned independent valuations of the Properties. Extracts of the valuation reports issued by the Independent Valuers are appended as Valuation Certifi cates (which includes the basis of the respective valuation) are set out in Appendix IX to this Circular. The valuation was arrived on the basis of valuation set out in each Valuation Certifi cate, which should be considered and read in conjunction with, and in the context of, the full text of each Valuation Certifi cate.

10.2 Potential Tax Liability

Under Rule 26.3 of the Code, the Company is required, inter alia, to make an assessment of any potential tax liability which would arise if the Properties, which are the subject of a valuation given in connection with an offer, were to be sold at the amount of the valuation. Based on the independent valuations by the Independent Valuers, the potential tax liabilities that may be incurred by the Group on the hypothetical disposal of the Properties on an “as is” basis is approximately S$1.36 million. The aforesaid tax liabilities will not crystallise if the Group does not dispose of its interests in the Properties. As at the Latest Practicable Date, the Company has no immediate plan to dispose of its interests in the Properties.

III-1

APPENDIX III – ADDITIONAL INFORMATION ON THE OFFEROR AND PERSONS ACTING IN CONCERT WITH IT

The following section on additional information on the Offeror is reproduced from Appendix II to the Exit Offer Letter, and all terms and expressions used in the extract below shall bear the same meanings as attributed to them in the Exit Offer Letter unless otherwise stated.

APPENDIX II

ADDITIONAL INFORMATION ON THE OFFEROR AND THE PARTIES ACTING IN CONCERT WITH IT

1. DIRECTORS OF THE OFFEROR

The names, addresses and descriptions of the Offeror Directors as at the Latest Practicable Date are as follows:

Name Address Designation

Mr. Roger Chia Kim Piow 54 Jalan Kampong Chantek, Singapore 588626

Director

Mr. Chia Kim Chua 50 Sunset Way, Singapore 597075 Director

Ms. Jenny Wong Oi Moi 54 Jalan Kampong Chantek, Singapore 588626

Director

Mr. Anwar Hilal Hamdoon Al Jabri

House No: 2935, Way No: 2334, Qurm 16, Muscat, Oman

Director

Mr. Amit Mehta House No: 905, Way No: 3012, Shatti Al Qurum, Muscat, Oman

Director

2. REGISTERED OFFICE OF THE OFFEROR

The registered offi ce of the Offeror is at 17 Tuas Avenue 20, Singapore 638828.

3. PRINCIPAL ACTIVITIES OF THE OFFEROR

The principal activity of the Offeror is that of investment holding.

4. SHARE CAPITAL

As at the Latest Practicable Date, the Offeror has an issued share capital of S$10,000 comprising 10,000 fully paid-up ordinary shares, 64.73% of which is held by OROGOLD and the remaining 35.27% is held by FC1L.

5. SUMMARY OF FINANCIAL INFORMATION

As the Offeror was only incorporated on 12 September 2017, no audited fi nancial statements of the Offeror have been prepared since the date of its incorporation.

6. MATERIAL CHANGES IN FINANCIAL POSITION

As at the Latest Practicable Date, save as a result of the making and fi nancing of the Exit Offer, there has been no known material change in the fi nancial position of the Offeror since 12 September 2017, being the date of its incorporation.

III-2


7. SIGNIFICANT ACCOUNTING POLICIES

As no audited fi nancial statements of the Offeror have been prepared since the date of its incorporation, there are no signifi cant accounting policies to be noted.

8. DISCLOSURE OF SHAREHOLDINGS AND DEALINGS

8.1 Shareholdings in the Company

Save as set out in the table below, neither the Offeror, the Offeror Directors nor any of the parties acting or deemed to be acting in concert with the Offeror owns, controls or has agreed to acquire any Relevant Securities as at the Latest Practicable Date.

Name Shareholding Interest

Offeror Directors Number of Shares %(1)

Mr. Roger Chia Kim Piow 34,763,916 6.13

Mr. Chia Kim Chua 22,242,400 3.92

Ms. Jenny Wong Oi Moi 6,972,896 1.23

Mr. Amit Mehta – –

Mr. Anwar Hilal Hamdoon Al Jabri – –

The Offeror – –

Other Parties Acting or deemed to be Acting in Concert

REL Investments Pte Ltd(2) 165,450,632 29.15

Funderburk Asia-Pac Investments I Limited(3) 121,350,888 21.38

ORO GOLD PTE. LTD. – –

F underburk Cayman 1 Limited – –

Mr. Bernard Toh Howe Meng(4) 100,000 0.02

Ms. Chia Kim Cher(5) 20,000 0.00

Mr. Chia Kim Chiang Paul(6) 60,000 0.01

Ms. Chia Kim Ee Nancy(7) 338,600 0.06

Mr. Chia Kim Hung(8) 35,000 0.01

Total Shareholding Interest 351,334,332 61.91

Notes:

(1) The percentage shareholding interest is based on the issued share capital of 567,518,000 Shares (excluding 336,000 Shares held by the Company as treasury shares) as at the Latest Practicable Date, and rounded to two decimal places.

(2) REL Investments Pte Ltd is an investment holding vehicle of which Mr. Roger Chia Kim Piow and Ms. Jenny Wong Oi Moi hold 74.74% and 12.63% of the total number of issued shares respectively, comprising an aggregate of 87.37% of the total number of issued shares. Accordingly, Mr. Roger Chia Kim Piow is a controlling shareholder of REL Investments Pte Ltd.

(3) Funderburk Asia-Pac Investments I Limited is a wholly-owned subsidiary of Oman Investment Fund. Accordingly, Oman Investment Fund is a controlling shareholder of Funderburk Asia-Pac Investments I Limited.

(4) Bernard Toh Howe Meng is the spouse of Grace Chia Mei Foong, who is the daughter of Mr. Roger Chia Kim Piow.

(5) Chia Kim Cher is the sister of Mr. Roger Chia Kim Piow and Mr. Chia Kim Chua. (6) Chia Kim Chiang Paul is the brother of Mr. Roger Chia Kim Piow and Mr. Chia Kim Chua. (7) Chia Kim Ee Nancy is the sister of Mr. Roger Chia Kim Piow and Mr. Chia Kim Chua. (8) Chia Kim Hung is the brother of Mr. Roger Chia Kim Piow and Mr. Chia Kim Chua.

III-3


8.2 Dealings in Shares

Save as disclosed below, neither the Offeror, the Offeror Directors, nor any of the parties acting or deemed to be acting in concert with the Offeror have dealt for value in any Relevant Securities during the period commencing three (3) months prior to the Joint Announcement Date and ending on the Latest Practicable Date.

NameDate of

TransactionNumber of Shares

acquired (disposed)Transacted Price

per Share (S$)

Mr. Roger Chia Kim Piow 3 October 2017 3,300,000 0.450

Mr. Roger Chia Kim Piow 4 October 2017 3,378,000 0.450

8.3 No Other Undertakings

Save as set out in paragraph 2.6 of this Exit Offer Letter entitled “Irrevocable Undertakings”, as at the Latest Practicable Date, neither the Offeror nor any party acting in concert with it has received any irrevocable undertaking from any party to vote for or against the Delisting Resolution and to accept or reject the Exit Offer.

8.4 Indemnity Agreements

Save as set out in paragraph 2.6 of this Exit Offer Letter entitled “Irrevocable Undertakings” and as otherwise disclosed in this Exit Offer Letter, as at the Latest Practicable Date, neither the Offeror nor any party acting in concert with it has any arrangement of the kind referred to under Note 7 to Rule 12 of the Code, including any indemnity or option arrangements, and any agreement or understanding, formal or informal, of whatever nature, relating to the Shares which may be an inducement to deal or refrain from dealing in the Shares.

8.5 Security Interests and Borrowed Securities

Save as disclosed below, as at the Latest Practicable Date, neither the Offeror nor any party acting in concert with it has:

(a) granted a security interest over any Relevant Securities to another person, whether through a charge, pledge or otherwise;

(b) borrowed from another party on any Relevant Securities (excluding borrowed Relevant Securities which have been on-lent or sold); or

(c) lent any Relevant Securities to another person.

The Offer Shares to be acquired by the Offeror (i) pursuant to the Exit Offer or otherwise during the period of the Exit Offer; and (ii) pursuant to the exercise of the compulsory acquisition rights under Section 215(1) and/or 215(3) of the Companies Act, will be charged in favour of DBS (as security agent) pursuant to a share charge over the shares in the Company to be entered into between the Offeror and DBS (as security agent) (the “Share Charge”) and a debenture entered into between the Offeror and DBS (as security agent) (the “Debenture”) as security for the fi nancing arrangements granted by DBS for the purpose of fi nancing the Exit Offer.

III-4


9. GENERAL

9.1 Agreement having any Connection with or Dependence upon the Exit Offer

Save for (a) the Irrevocable Undertakings provided by the Undertaking Shareholders, details of which are set out in paragraph 2.6 of this Exit Offer Letter entitled “Irrevocable Undertakings”; (b) the Shareholders’ Agreement, details of which are set out in paragraph 3.4 of this Exit Offer Letter; and (c) as otherwise disclosed in this Exit Offer Letter, there is no agreement, arrangement or understanding as at the Latest Practicable Date between (i) the Offeror or any parties acting in concert with the Offeror and (ii) any of the current or recent Directors or any of the current or recent Shareholders having any connection with or dependence upon the Exit Offer.

9.2 Payment or Benefi t to the Directors

As at the Latest Practicable Date, there is no agreement, arrangement or understanding for payment or other benefi t to be made or given to any Director or any director of a corporation deemed to be related to the Company by virtue of Section 6 of the Companies Act as compensation for loss of offi ce or as consideration for or in connection with his retirement from offi ce or otherwise in connection with the Exit Offer.

9.3 Transfer of Shares

Save as disclosed in paragraph 8.5 of this Appendix II in which the Share Charge and the Debenture have been granted to DBS by the Offeror, as at the Latest Practicable Date, there is no agreement, arrangement or understanding whereby any Shares acquired pursuant to the Exit Offer will be transferred to any other person.

9.4 Arrangements

Save for (a) the Irrevocable Undertakings, details of which are set out in paragraph 2.6 of this Exit Offer Letter entitled “Irrevocable Undertakings” (b) the Shareholders’ Agreement, details of which are set out in paragraph 3.4 of this Exit Offer Letter entitled “Shareholders’ Agreement” and (c) the fi nancing arrangements granted by DBS for the purpose of fi nancing the Exit Offer (including the deed of undertaking entered into by each member of the Chia Family Group and FAPI), as at the Latest Practicable Date, there is no agreement, arrangement or understanding between the Offeror and any directors of the Company or any other person in connection with or conditional upon the outcome of the Exit Offer or is otherwise connected with the Exit Offer.

9.5 Transfer Restrictions

The Memorandum and Articles of Association comprising the Constitution of the Company does not contain any restrictions on the right to transfer Offer Shares, which has the effect of requiring the holders of the Offer Shares, before transferring them, to fi rst offer them for purchase to Shareholders or to any other person.

9.6 Material Change in Information

Save as disclosed in this Exit Offer Letter and save for the information relating to the Offeror and the Exit Offer that is publicly available, there has been no material change in any information previously published by or on behalf of the Offeror during the period commencing from the Joint Announcement Date and ending on the Latest Practicable Date.

IV-1

APPENDIX IV – AUDITED FINANCIAL STATEMENTS OF THE GROUP FOR FY2016

The directors are pleased to present their statement to the members together with the audited consolidated financial statements of Rotary Engineering Limited (the “Company”) and its subsidiaries (collectively, the “Group”) and the balance sheet and statement of changes in equity of the Company for the financial year ended 31 December 2016.

OPINION OF THE DIRECTORS

In the opinion of the directors,

(a) the consolidated financial statements of the Group and the balance sheet and statement of changes in equity of the Company are drawn up so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2016 and the financial performance, changes in equity and cash flows of the Group and changes in equity of the Company for the year ended on that date; and

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

DIRECTORS

The directors of the Company in office at the date of this statement are:

Roger Chia Kim Piow (Executive Chairman and Managing Director)Chia Kim ChuaKeith Tay Ah KeeLam Khin KhuiBadri Narayanan Santhana KrishnanJenny Wong Oi Moi

ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE SHARES AND DEBENTURES

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

DIRECTORS’ STATEMENT

55Rotary Engineering Limited

IV-2


DIRECTORS’ INTERESTS IN SHARES AND DEBENTURES

The following directors, who held office at the end of the financial year, had, according to the register of directors’ shareholdings, required to be kept under section 164 of the Singapore Companies Act, Chapter 50, an interest in shares of the Company as stated below:

Direct interest Deemed interest

At the

beginning of

financial year

At the

end of

financial year

At the

beginning of

financial year

At the

end of

financial year

Rotary Engineering Limited

Ordinary shares

Roger Chia Kim Piow 28,085,916 28,085,916 172,423,528 172,423,528Chia Kim Chua 22,242,400 22,242,400 – –Jenny Wong Oi Moi 6,972,896 6,972,896 193,536,548 193,536,548Lam Khin Khui 842,800 842,800 – –Keith Tay Ah Kee 459,200 459,200 – –

There was no change in any of the above-mentioned interests in the Company between the end of the financial year and 21 January 2017.

By virtue of Section 7 of the Singapore Companies Act, Chapter 50, Roger Chia Kim Piow and Jenny Wong Oi Moi are deemed to have interests in shares of the subsidiaries of the Company.

Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares, share options, warrants or debentures of the Company, or of related corporations, either at the beginning of the financial year or at the end of the financial year.

SHARE OPTIONS

During the financial year, there were:

(i) no options granted by the Company or its subsidiaries to any person to take up unissued shares in the Company or its subsidiaries; and

(ii) no shares issued by virtue of any exercise of options to take up unissued shares of the Company or its subsidiaries.

As at the end of the financial year, there were no unissued shares of the Company or its subsidiaries under option.


56 Annual Report 2016

IV-3


AUDIT COMMITTEE

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 Company, and reviewed the internal auditor’s evaluation of the adequacy of the Company’s system of internal accounting controls and the assistance given by the Group and Company’s officers to the external and internal auditors;

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

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

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

• Reviewed legal and regulatory matters that may have a material impact on the financial 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 auditor to be nominated, approved the

compensation of the external auditor, 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 satisfied 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 year with full attendance from all members. The AC has also met with the external auditor, 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.



IV-4


AUDITORS

Ernst & Young LLP have expressed their willingness to accept re-appointment as auditor.

On behalf of the board of directors:

Roger Chia Kim Piow

Director

Chia Kim Chua

Director

Singapore27 March 2017



IV-5


INDEPENDENT AUDITOR’S REPORTTO THE MEMBERS OF ROTARY ENGINEERING LIMITED

REPORT ON THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS

We have audited the financial statements of Rotary Engineering Limited (the “Company”) and its subsidiaries (collectively, the “Group”), which comprise the balance sheets of the Group and the Company as at 31 December 2016, 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 flow statement of the Group for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

Opinion

In our opinion, the accompanying consolidated financial statements of the Group, the balance sheet and the statement of changes in equity of the Company are properly drawn up in accordance with the provisions of the Singapore Companies Act, Chapter 50 (the Act) and Financial Reporting Standards in Singapore (FRSs) so as to give a true and fair view of the consolidated financial position of the Group and the financial position of the Company as at 31 December 2016 and of the consolidated financial performance, consolidated changes in equity and consolidated cash flows of the Group and changes in equity of the Company for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with Singapore Standards on Auditing (SSAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Group in accordance with the Accounting and Corporate Regulatory Authority (ACRA) Code of Professional Conduct and Ethics for Public Accountants and Accounting Entities (ACRA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Singapore, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ACRA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have fulfilled our responsibilities described in the Auditor’s responsibilities for the audit of the financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial statements.


IV-6



Key Audit Matters (cont’d)

Revenue recognition Audit response

The Group accounts for project revenue using the percentage of completion (“POC”) method. The stage of completion is determined by reference to the amount of work performed estimated by the project engineers. Where the contract outcome cannot be measured reliably, revenue is recognised to the extent of the expenses recognised that are recoverable. The POC method involved the use of significant judgement in determining the progress towards completion, as well as estimation of total budgeted contract costs taking into consideration the remaining costs to complete each project.

Accordingly, we identified this as a key audit matter.

As part of our audit, we obtained an understanding and tested, on a sample basis, the key controls surrounding management’s internal costing and budgeting process to estimate project revenues, costs and profit margins. On a sample basis, for significant projects, we reviewed the contractual terms and conditions and discussed the status of these projects, including the stage of completion, with the management.

We compared management’s estimates of the stage of completion to certified completion reports prepared by project engineers. We tested the actual project costs incurred by tracing them to relevant supporting documents.

We reviewed the budgeted costs by checking the actual costs incurred to-date and assessed the reasonableness of the remaining costs to be incurred to complete the projects. We evaluated management’s estimates of the forecasted results of the projects, taking into consideration the effect of variation orders, contingencies and any known technical issues. For a sample of ongoing projects, we evaluated management’s assessment of foreseeable losses of the projects.

Information regarding the Group’s construction contracts are disclosed in Note 2.15 and Note 16 to the consolidated financial statements.


IV-7



Key Audit Matters (cont’d)

Provision for warranties Audit response

As at 31 December 2016, provision for warranties amounted to $33.2 million. The Group recognises provision for warranties for rectification works that may arise during the defect liability period of completed projects. Determining the provision for warranties requires management to exercise judgement, taking into consideration experience from past warranty claims for completed projects. The subjectivity involved in assessing the amount of provision required may have a significant impact on the results of the Group.


As part of our audit, we selected a sample of the projects and examined the project documentation to understand the contractual obligations of the Group for each project. We reviewed and evaluated management’s assumptions for the estimation of rectification works including expected warranty costs. We tested, on a sample basis, the warranty costs recorded in respect of certain completed projects by comparing the actual warranty claims incurred to-date against the provisions made. We also assessed the mathematical accuracy of the provision calculation.

Information regarding the Group’s warranty provisions are disclosed in Note 2.17 to the consolidated financial statements.

Recoverability of trade and other

receivables and loan receivables

Audit response

The gross balance of trade and other receivables amounted to $107.0 million as at 31 December 2016, against which allowance for doubtful debts of $1.2 million was made. Total loan receivables as at 31 December 2016 amounted to $30.0 million. The collectability of receivables is a key element of the Group’s working capital management, which is managed on an ongoing basis.

The assessment of recoverability of these receivables requires significant management judgement in assessing the other parties’ ability to pay, which in turn will have an impact on the carrying amounts of the Group’s receivables.


We evaluated the Group’s processes and controls relating to the monitoring of receivables and review of the credit risks of customers.

Our audit procedures included, amongst others, evaluating management’s assessment of the credit review procedures of trade and other receivables and loan receivables, sending requests for confirmation and obtaining evidence of receipts after the year end. We also evaluated management’s assumptions used to determine the receivables’ impairment amount through the analysis of ageing of receivables, assessment of material overdue individual receivables and specific local risks.

Information regarding the Group’s trade and other receivables and loan receivables and the related risks such as credit risk and liquidity risk are disclosed in Notes 27(a) and 27(b) to the consolidated financial statements.


IV-8



Information Other than the Financial Statements and Auditor’s Report Thereon

Management is responsible for the other information. The other information comprises the information included in the annual report, but does not include the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Directors for the Financial Statements

Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Act and FRSs, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair financial statements and to maintain accountability of assets.

In preparing the financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

The directors’ responsibilities include overseeing the Group’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.


IV-9



Auditor’s Responsibilities for the Audit of the Financial Statements (cont’d)

As part of an audit in accordance with SSAs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit 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 Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.


IV-10



We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

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 subsidiary corporations incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.

The engagement partner on the audit resulting in this independent auditor’s report is Mak Keat Meng.

Ernst & Young LLP

Public Accountants andChartered Accountants

Singapore27 March 2017


IV-11


Group

Note 2016 2015

$’000 $’000

Revenue 5 233,869 329,274Cost of sales (176,788) (249,521)

Gross profit 57,081 79,753

Other items of income

Other income 4,755 14,589Finance income 3,447 4,234Foreign exchange differences 3,854 8,088

Other items of expense

Selling and marketing costs (1,001) (1,074)General and administrative costs (43,361) (46,676)Other operating costs (10,599) (9,966)Finance costs (494) (415)

Share of results of associates (439) (583)

Profit before tax 6 13,243 47,950Income tax expense 7 (1,400) (2,886)

Profit for the year 11,843 45,064

Profit for the year attributable to:

Owners of the Company 11,353 42,779Non-controlling interests 490 2,285

11,843 45,064

Earnings per share attributable to owners of the

Company (cents per share)

Basic 8 2.0 7.5

Diluted 8 2.0 7.5

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

CONSOLIDATED INCOME STATEMENTFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016


IV-12


Group

2016 2015

$’000 $’000

Profit for the year 11,843 45,064

Other comprehensive income:

Items that may be reclassified subsequently to profit or loss

Foreign currency translation movement (1,670) (4,887)

Other comprehensive income for the year, net of tax (1,670) (4,887)

Total comprehensive income for the year 10,173 40,177

Total comprehensive income attributable to:

Owners of the Company 12,684 46,928

Non-controlling interests (2,511) (6,751)

10,173 40,177


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016


IV-13


Group Company

Note 2016 2015 2016 2015

$’000 $’000 $’000 $’000

Non-current assets

Property, plant and equipment 9 64,897 43,040 10,275 8,707Intangible assets 10 244 840 129 607Investments

Subsidiaries 11 – – 50,829 50,879Associates 12 22,027 14,218 12,527 12,527Others 13 29,270 31,071 895 895

Deferred tax assets 14 747 1,022 – –Prepaid loan appraisal fees – 96 – –

117,185 90,287 74,655 73,615

Current assets

Gross amount due from customers for contract work-in-progress 16 26,427 23,784 995 5,209

Inventories 17 6,527 5,647 469 495Other investments 13 9,201 – 6,006 –Prepaid operating expenses 743 508 24 195Downpayments made to suppliers 1,654 2,028 787 1,102Trade and other receivables 15 105,829 109,367 186,113 214,658Foreign currency contracts 18 140 – 51 –Cash and cash equivalents 19 86,021 118,215 29,139 60,062

236,542 259,549 223,584 281,721

Current liabilities

Income tax payable 9,656 9,705 3,751 3,974Loans and borrowings 20 6,332 2,804 3,226 50Gross amount due to customers for

contract work-in-progress 16 22,270 72,255 32,059 53,618Trade and other payables 21 130,487 93,487 95,387 107,870Downpayments from customers 5,353 9,393 971 1,449Foreign currency contracts 18 465 339 465 339

174,563 187,983 135,859 167,300

Net current assets 61,979 71,566 87,725 114,421


Deferred tax liabilities 14 1,906 2,020 1,255 1,255Loans and borrowings 20 14,888 6,752 11,178 93

16,794 8,772 12,433 1,348

Net assets 162,370 153,081 149,947 186,688

BALANCE SHEETSAS AT 31 DECEMBER 2016


IV-14


Group Company

Note 2016 2015 2016 2015

$’000 $’000 $’000 $’000

Equity attributable to owners of the

Company

Share capital 22(a) 89,365 89,365 89,365 89,365Treasury shares 22(b) (161) (161) (161) (161)Retained earnings 197,169 194,329 60,743 97,484Other reserves 23 (125,775) 5,616 – –

160,598 289,149 149,947 186,688Non-controlling interests 1,772 (136,068) – –

Total equity 162,370 153,081 149,947 186,688


BALANCE SHEETSAS AT 31 DECEMBER 2016


IV-15


Group

2016

Share

capital

Treasury

shares

Retained

earnings

Capital

reserve

Statutory

reserve

Foreign

currency

translation

reserve

Premium

paid on

acquisition

of non-

controlling

interests Total

Non-

controlling

interests

Total

equity

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

At 1 January 2016 89,365 (161) 194,329 547 300 4,769 – 289,149 (136,068) 153,081

Profit for the year – – 11,353 – – – – 11,353 490 11,843

Other comprehensive income for the year – – – – – 1,331 – 1,331 (3,001) (1,670)

Total comprehensive income for the year – – 11,353 – – 1,331 – 12,684 (2,511) 10,173

Contributions by and distributions to owners

Dividends on ordinary shares (Note 30) – – (8,513) – – – – (8,513) – (8,513)

Dividends paid by subsidiaries to non-controlling interests – – – – – – – – (800) (800)

Total contributions by and distributions to owners – – (8,513) – – – – (8,513) (800) (9,313)

Changes in ownership interests in subsidiaries

Liquidation of a subsidiary – – – (14) – – – (14) – (14)

Acquisition of control in a subsidiary – – – – – – – – 46 46

Acquisition of non-controlling interests without a change in control – – – – – – (141,105) (141,105) 141,105 –

– – – (14) – – (141,105) (141,119) 141,151 32

Contributions from owners of the associate

Share of capital reserve in associate – – – 8,397 – – – 8,397 – 8,397

At 31 December 2016 89,365 (161) 197,169 8,930 300 6,100 (141,105) 160,598 1,772 162,370

STATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016


IV-16


Group

2015

Share

capital

Treasury

shares

Retained

earnings

Capital

reserve

Statutory

reserve

Foreign

currency

translation

reserve Total

Non-

controlling

interests

Total

equity

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

At 1 January 2015 89,365 (161) 165,738 547 300 620 256,409 (128,037) 128,372

Profit for the year – – 42,779 – – – 42,779 2,285 45,064Other comprehensive

income for the year – – – – – 4,149 4,149 (9,036) (4,887)

Total comprehensive income for the year – – 42,779 – – 4,149 46,928 (6,751) 40,177


Dividends on ordinary shares (Note 30) – – (14,188) – – – (14,188) – (14,188)

Dividends paid by subsidiaries to non-controlling interests – – – – – – – (1,280) (1,280)

Total contributions by and distributions to owners – – (14,188) – – – (14,188) (1,280) (15,468)

At 31 December 2015 89,365 (161) 194,329 547 300 4,769 289,149 (136,068) 153,081



IV-17


Company

Share

capital

Treasury

shares

Retained

earnings

Total

equity

$’000 $’000 $’000 $’000

2016

At 1 January 2016 89,365 (161) 97,484 186,688

Loss for the year, representing total comprehensive income for the year – – (28,228) (28,228)


Dividends on ordinary shares (Note 30) – – (8,513) (8,513)

Total transactions with owners in their capacity as owners – – (8,513) (8,513)

At 31 December 2016 89,365 (161) 60,743 149,947

2015

At 1 January 2015 89,365 (161) 62,780 151,984

Profit for the year, representing total comprehensive income for the year – – 48,892 48,892


Dividends on ordinary shares (Note 30) – – (14,188) (14,188)

Total transactions with owners in their capacity as owners – – (14,188) (14,188)

At 31 December 2015 89,365 (161) 97,484 186,688




IV-18


Note 2016 2015

$’000 $’000

Operating activities

Profit before tax 13,243 47,950Adjustments for:

Allowance for doubtful debts 749 –Amortisation of intangible assets 10 678 594Amortisation of prepaid loan appraisal fees 96 245Depreciation of property, plant and equipment 9 9,489 9,288Fair value gain on foreign currency contracts, net (14) (821)Fair value loss on investment in debt securities, net 53 –Finance income (3,447) (4,234)Gain on liquidation of a subsidiary (14) –Gain on disposal of other investments 13 – (3,000)Gain on disposal of partial interest in associate 12 – (76)Gain on disposal of property, plant and equipment (1,478) (270)Impairment of plant and equipment 9 – 29Interest expense 398 170Inventories written down 17 37 65Write back of allowance for doubtful debts (407) (6)Write back of impairment loss of an associate 12 – (6,816)Write back of inventories previously written down – (4)Share of results of associates 439 583

Operating cash flows before changes in working capital 19,822 43,697(Increase)/Decrease in:Prepaid operating expenses, downpayments made to suppliers

and trade and other receivables 2,837 94,638Inventories (896) (1,855)Increase/(Decrease) in:Trade and other payables and downpayments from customers 31,603 (80,707)Gross amount due to customers for contract

work-in-progress, net (52,893) (77,643)

Cash flows from/(used in) operations 473 (21,870)Interest received 155 368Interest paid (398) (170)Income tax paid (1,248) (9,170)

Net cash flows used in operating activities (1,018) (30,842)

CONSOLIDATED CASH FLOW STATEMENTFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016


IV-19


Note 2016 2015

$’000 $’000

Investing activities

Additions to intangible assets 10 (82) (237)Additional investment in associate (82) –Dividends from associates – 943Net cash inflow from change in control in a subsidiary 11(e) 139 –Proceeds from disposal of associate – 411Proceeds from disposal of other investments – 3,000Proceeds from disposal of property, plant and equipment 1,104 331Purchase of investment securities (6,764) –Purchase of property, plant and equipment 9 (26,318) (3,213)(Loan to)/repayment from associate (1,133) 7,040

Net cash flows (used in)/from investing activities (33,136) 8,275

Financing activities

Dividends paid:– by the Company 30 (8,513) (14,188)– by subsidiaries to non-controlling interests (800) (1,280)Proceeds from bank loans 14,851 –Repayment of bank loans (4,226) (2,389)Repayment of finance lease obligations (39) (3)

Net cash flows from/(used in) financing activities 1,273 (17,860)

Net decrease in cash and cash equivalents (32,881) (40,427)Effect of exchange rate changes on cash and cash equivalents 687 1,585Cash and cash equivalents at 1 January 118,215 157,057

Cash and cash equivalents at 31 December 19 86,021 118,215


CONSOLIDATED CASH FLOW STATEMENTFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016


IV-20


1. CORPORATE INFORMATION

Rotary Engineering Limited (the “Company”) is a limited liability company incorporated and domiciled in Singapore and is listed on the Singapore Exchange.

The registered office and principal place of business of the Company is located at No. 17, Tuas Avenue 20, Singapore 638828.

The principal activities of the Company are engineering design, procurement and construction services for plants and associated facilities. The principal activities of the subsidiaries are disclosed in Note 4 to the financial statements.

Related companies relate to the Rotary Engineering Limited group of companies.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation

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

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

2.2 Changes in accounting policies

The accounting policies adopted are consistent with those of the previous financial year except in the current financial year, the Group has adopted all the new and revised standards that are applicable and effective for annual periods beginning on or after 1 January 2016. The adoption of these standards did not have any effect on the financial performance or position of the Group and the Company.


31 DECEMBER 2016

NOTES TO THE FINANCIAL STATEMENTS

IV-21


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

2.3 Standards issued but not yet effective

The Group has not adopted the following standards applicable to the Group that have been issued but not yet effective:

Description

Effective for annual periods beginning

on or after

Amendments to FRS 110 and FRS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

To be determined **

Amendments to FRS 7 Disclosure Initiative 1 January 2017Amendments to FRS 12 Recognition of Deferred Tax Assets for Unrealised Losses

1 January 2017

Improvements to FRSs issued in December 2016(a) FRS 112 Disclosure of Interests in Other Entities:

Clarification of the scope of the Standard 1 January 2017

(b) FRS 28 Investments in Associates and Joint Ventures: Measuring an associate or joint venture at fair value

1 January 2018

FRS 109 Financial Instruments 1 January 2018FRS 115 Revenue from Contracts with Customers 1 January 2018Amendments to FRS 104 Applying FRS 109 Financial Instruments with FRS 104 Insurance Contracts

1 January 2018

INT FRS 122 Foreign Currency Transactions and Advance Consideration

1 January 2018

FRS 116 Leases 1 January 2019

** The mandatory effective date of this Amendment had been revised from 1 January 2016 to a date to be determined by the ASC in Dec 2015 via Amendments to Effective Date of Amendments to FRS 110 and FRS 28.

Except for FRS 109, FRS 115 and FRS 116, the directors expect that the adoption of the other standards above will have no material impact on the financial statements in the period of initial application. The nature of the impending changes in accounting policy on adoption of FRS 109, FRS 115 and FRS 116 are described below.

FRS 115 Revenue from Contracts with Customers

FRS 115 establishes a five-step model to account for revenue arising from contracts with customers. Under FRS 115, revenue is recognised at an amount that reflects the consideration which an entity expects to be entitled in exchange for transferring goods or services to a customer.

The new revenue standard will supersede all current revenue recognition requirements under FRS. Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after 1 January 2018. Early adoption is permitted.

During 2016, the Group performed a preliminary assessment of FRS 115 which is subject to changes arising from a more detailed ongoing analysis. The Group is in a business of providing engineering design, procurement and construction services for plant and associated facilities.


31 DECEMBER 2016


IV-22



2.3 Standards issued but not yet effective (cont’d)

FRS 115 Revenue from Contracts with Customers (cont’d)

The Group expects the following impact upon adoption of FRS 115:

(a) Variable consideration

Some contracts with customers provide a right of return, trade discounts or volume rebates. Currently, the Group recognises revenue from the sale of goods measured at the fair value of the consideration received or receivable, net of returns and allowance, trade discounts and volume rebates. If revenue cannot be reliably measured, the Group defers revenue recognition until the uncertainty is resolved. Such provisions give rise to variable consideration under FRS 115, and will be required to be estimated at contract inception. FRS 115 requires the estimated variable consideration to be constrained to prevent over-recognition of revenue. The Group continues to assess individual contracts to determine the estimated variable consideration and related constraint.

Transition

The following practical expedients are available when applying FRS 115 retrospectively.

– For completed contracts, an entity need not restate contracts that begin and end with the same annual reporting period or are completed contracts at the beginning of the earliest period presented.

– For completed contracts that have variable consideration, an entity may use the transaction price at the date the contract was completed rather than estimating the variable consideration amounts in the comparative reporting periods; and

– For contracts that were modified before the beginning of the earliest period presented, an entity need not retrospectively restate the contract for those contract modifications. Instead, an entity shall reflect the aggregate effect of all of the modifications that occur before the beginning of the earliest period presented when:

o identifying the satisfied and unsatisfied performance obligations;o determining the transaction price; ando allocating the transaction price to the satisfied and unsatisfied performance

obligations.

– For all reporting periods presented before the date of initial application, an entity need not disclose the amount of the transaction price allocated to the remaining performance obligations and an explanation of when the entity expects to recognise that amount as revenue.


31 DECEMBER 2016


IV-23




FRS 115 Revenue from Contracts with Customers (cont’d)

The Group plans to adopt the new standard on the required effective date using the full retrospective method and apply all the practical expedients available for full retrospective approach under FRS 115 as listed above.

FRS 109 Financial Instruments

FRS 109 introduces new requirements for classification and measurement of financial assets, impairment of financial assets and hedge accounting. Financial assets are classified according to their contractual cash flow characteristics and the business model under which they are held. The impairment requirements in FRS 109 are based on an expected credit loss model and replace the FRS 39 incurred loss model.

(a) Classification and measurement

For equity and debt securities, the Group will continue to measure its currently held for trading securities and available-for-sale quoted equity securities at fair value through profit or loss (FVTPL). The Group does not expect any significant impact arising from these changes. The Group will elect to measure its available-for-sale unquoted equity securities at fair value through other comprehensive income (FVOCI). In addition, the Group currently measures one of its investments in unquoted equity securities at cost. Under FRS 109, the Group will be required to measure the investment at fair value. Any difference between the previous carrying amount under FRS 39 and the fair value would be recognised in the opening retained earnings when the Group applies FRS 109.

(b) Impairment

FRS 109 requires the Group to record expected credit losses on all of its debt securities, loans and trade receivables, either on a 12-month or lifetime basis. The Group expects to apply the simplified approach and record lifetime expected losses on all trade receivables. Upon application of the expected credit loss model, the Group expects a significant impact on its equity due to unsecured nature of its loans and receivables, but it will need to perform a more detailed analysis which considers all reasonable and supportable information, including forward-looking elements to determine the extent of impact.

Transition

The Group plans to adopt the new standard on the required effective date without restating prior periods’ information and recognises any difference between the previous carrying amount and the carrying amount at the beginning of the annual reporting period at the date of initial application in the opening retained earnings.


31 DECEMBER 2016


IV-24




FRS 116 Leases

FRS 116 requires lessees to recognise most leases on balance sheets to reflect the rights to use the leased assets and the associated obligations for lease payments as well as the corresponding interest expense and depreciation charges. The standard includes two recognition exemption for lessees – leases of ‘low value’ assets and short-term leases. The new standard is effective for annual periods beginning on or after 1 January 2019.

The Group is currently assessing the impact of the new standard and plans to adopt the new standard on the required effective date. The Group expects the adoption of the new standard will result in increase in total assets and total liabilities, EBITDA and gearing ratio.

2.4 Basis of consolidation and business combinations

(a) Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the end of the reporting period. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to transactions and events in similar circumstances. When the end of the reporting period of the Company is different from that of a subsidiary, the subsidiary prepares, for consolidation purposes, additional financial statements as of the same date as the financial statements of the Company, unless it is impracticable to do so.

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

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

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

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 interests;– de-recognises the cumulative translation differences recorded in equity;– recognises the fair value of the consideration received;– recognises the fair value of any investment retained;– recognises any surplus or deficit in profit or loss;– re-classifies the Group’s share of components previously recognised in other

comprehensive income to profit or loss or retained earnings, as appropriate.


31 DECEMBER 2016


IV-25



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

(b) Business combinations and goodwill

Business combinations are accounted for by applying the acquisition method. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are recognised as expenses in the periods in which the costs are incurred and the services are received.

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 profit 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 identifiable 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 identifiable assets and liabilities is recorded as goodwill. In instances where the latter amount exceeds the former, the excess is recognised as gain on bargain purchase in profit or loss on the acquisition date.

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 the Group’s cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

The cash-generating units to which goodwill have 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.


31 DECEMBER 2016


IV-26



2.5 Transactions with non-controlling interests

Non-controlling interest represents the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company.

Changes in the Company’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any 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.

2.6 Foreign currency

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

(a) Transactions and 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 profit or loss.

(b) Consolidated financial 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 profit 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 profit or loss.


31 DECEMBER 2016


IV-27



2.6 Foreign currency (cont’d)

(b) Consolidated financial statements (cont’d)

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

Exchange differences arising on monetary items that form part of the Group’s net investment in foreign operations are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to profit or loss of the Group on disposal of foreign operation.

2.7 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.

When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognises such parts as individual assets with specific 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 satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred.

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 and buildings – over period of the lease of 20 to 99 yearsVessels – 5 to 30 yearsOffice renovations – 5 to 10 yearsOffice equipment, furniture and fittings – 3 to 10 yearsPlant and machinery – 5 to 10 yearsMotor vehicles – 5 yearsOther assets – 3 to 10 years

Other assets comprise electrical equipment, containers, air conditioners and hand tools.

Assets under construction included in construction-in-progress are not depreciated as these assets are not yet available for use.


31 DECEMBER 2016


IV-28



2.7 Property, plant and equipment (cont’d)

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

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

An item of property, plant and equipment is de-recognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on de-recognition of the asset is included in profit or loss in the year the asset is de-recognised.

2.8 Intangible assets

Intangible assets acquired separately are measured initially at cost. Following initial acquisition, intangible assets are carried 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 reflected in profit or loss in the year in which the expenditure is incurred.

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

Intangible assets with finite 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 at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates.

Intangible assets with indefinite 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 indefinite useful life is reviewed annually to determine whether the useful life assessment continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

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

Software

Software acquired separately is amortised on a straight line basis over its finite useful life of 3 years.


31 DECEMBER 2016


IV-29



2.9 Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when an annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs of disposal and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

Impairment losses of continuing operations are recognised in profit or loss, except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case, the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation.

A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase.

2.10 Subsidiaries

A subsidiary is an investee that is controlled by the Group. The Group controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses.

2.11 Joint ventures and associates

An associate is an entity over which the Group has the power to participate in the financial and operating policy decisions of the investee but does not have control or joint control of those policies.

The Group accounts for its investments in associates and joint ventures using the equity method from the date on which it becomes an associate or joint venture.


31 DECEMBER 2016


IV-30



2.11 Joint ventures and associates (cont’d)

On acquisition of the investment, any excess of the cost of the investment over the Group’s share of the net fair value of the investee’s identifiable assets and liabilities is accounted as goodwill and is included in the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the investee’s identifiable assets and liabilities over the cost of the investment is included as income in the determination of the entity’s share of the associate or joint venture’s profit or loss in the period in which the investment is acquired.

Under the equity method, the investment in associates or joint ventures are carried in the balance sheet at cost plus post-acquisition changes in the Group’s share of net assets of the associates or joint ventures. The profit or loss reflects the share of results of the operations of the associates or joint ventures. Distributions received from joint ventures or associates reduce the carrying amount of the investment. Where there has been a change recognised in other comprehensive income by the associates or joint venture, the Group recognises its share of such changes in other comprehensive income. Unrealised gains and losses resulting from transactions between the Group and associate or joint venture are eliminated to the extent of the interest in the associates or joint ventures.

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

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 associate or joint ventures. The Group determines at the end of each reporting period whether there is any objective evidence that the investment in the associate or joint venture is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate or joint venture and its carrying value and recognises the amount in profit or loss.

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


31 DECEMBER 2016


IV-31



2.12 Financial instruments

(a) 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 financial instrument. The Group determines the classification of its financial assets at initial recognition.

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

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as follows:

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

Financial assets at fair value through profit or loss include financial assets held for trading. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. This category includes derivative financial instruments entered into by the Group. Derivatives, including separated embedded derivatives are also classified as held for trading.

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

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 measured at fair value with changes in fair value recognised in profit or loss. These embedded derivatives are measured at fair value with changes in fair value recognised in profit or loss. Reassessment only occurs if there is a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required.


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2.12 Financial instruments (cont’d)

(a) Financial assets (cont’d)

Subsequent measurement (cont’d)

(ii) Loans and receivables

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

(iii) Held-to-maturity investments

Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Group has the positive intention and ability to hold the investment to maturity. Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest method, less impairment. Gains and losses are recognised in profit or loss when the held-to-maturity investments are de-recognised or impaired, and through the amortisation process.

The Group has not designated any held-to-maturity investments.

(iv) Available-for-sale financial assets

Available-for-sale financial assets include equity and debt securities. Equity investments classified as available-for-sale are those, which are neither classified as held for trading nor designated at fair value through profit or loss. Debt securities in this category are those which are intended to be held for an indefinite 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 financial assets are subsequently measured at fair value. Any gains or losses from changes in fair value of the financial assets 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 profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is de-recognised.


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(a) Financial assets (cont’d)

Subsequent measurement (cont’d)

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

De-recognition

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

Regular way purchase or sale of a financial asset

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

(b) 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 financial instrument. The Group determines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognised initially at fair value plus in the case of financial liabilities not at fair value through profit or loss, directly attributable transaction costs.


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(b) Financial liabilities (cont’d)

Subsequent measurement

The measurement of financial liabilities depends on their classification as follows:

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

Financial liabilities at fair value through profit or loss include financial liabilities held for trading. Financial liabilities are classified as held for trading if they are acquired for the purpose of selling in the near term. This category includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.

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

(ii) Financial liabilities at amortised cost

After initial recognition, financial liabilities that are not carried at fair value through profit or loss are subsequently measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the liabilities are de-recognised, and through the amortisation process.

De-recognition

A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

(c) Offsetting of financial instruments

Financial assets and financial liabilities are offsetted 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.


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2.13 Impairment of financial assets

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

(a) Financial assets carried at amortised cost

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

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

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

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

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


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2.13 Impairment of financial assets (cont’d)

(b) Financial assets carried at cost

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

(c) Available-for-sale financial assets

In the case of equity investments classified as available-for-sale, objective evidence of impairment include (i) significant financial difficulty of the issuer or obligor, (ii) information about significant changes with an adverse effect that have taken place in the technological, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in equity instrument may not be recovered; and (iii) a significant or prolonged decline in the fair value of the investment below its costs.

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

2.14 Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and on hand, and short-term deposits.

2.15 Construction contracts

The Group principally operates fixed price contracts. Contract revenue and contract costs are recognised as revenue and expenses respectively by reference to the stage of completion of the contract activity at the end of the reporting period (the percentage of completion method), when the outcome of a construction contract can be estimated reliably.

The outcome of a construction contract can be estimated reliably when: (i) total contract revenue can be measured reliably; (ii) it is probable that the economic benefits associated with the contract will flow to the entity; (iii) the costs to complete for the contract and the stage of completion can be measured reliably; and (iv) the contract costs attributable to the contract can be clearly identified and measured reliably so that actual contract costs incurred can be compared with prior estimates.


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2.15 Construction contracts (cont’d)

When the outcome of a construction contract cannot be estimated reliably (principally during early stages of a contract), contract revenue is recognised only to the extent of contract costs incurred that are likely to be recoverable and contract costs are recognised as expense in the period in which they are incurred.

An expected loss on the construction contract is recognised as an expense immediately when it is probable that total contract costs will exceed total contract revenue.

In applying the percentage of completion method, revenue recognised corresponds to the total contract revenue (as defined below) multiplied by the actual completion rate based on the stage of completion as determined by the measurement of work performed.

Contract revenue – Contract revenue corresponds to the initial amount of revenue agreed in the contract and any variations in contract work, claims and incentive payments to the extent that it is probable that they will result in revenue; and they can be reliably measured.

Contract costs – Contract costs include costs that relate directly to the specific contract and costs that are attributable to contract activity in general and can be allocated to the contract.

2.16 Inventories

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 using purchase costs on a weighted average cost formula.

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.


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2.17 Provisions

General

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

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

Provision for warranties

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 costs is revised annually.

2.18 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.

Government grants are recognised in profit or loss on a systematic basis over the periods in which the Company recognises as expenses the related costs for which the grants are intended to compensate. Grants related to income are presented under “Other income”.

2.19 Financial guarantee

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument.

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


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2.20 Employee benefits

(a) Defined contribution plans

The Group participates in the national pension schemes as defined by the laws of the countries in which it has operations. In particular, the Singapore companies in the Group make contributions to the Central Provident Fund scheme in Singapore, a defined contribution pension scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed.

(b) Employee leave entitlement

Employee entitlements to annual leave are recognised as a liability when they are accrued to the employees. The undiscounted liability for leave expected to be settled before twelve months after the end of reporting period is recognised for services rendered by employees up to the end of the reporting period.

2.21 Leases

(a) As lessee

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

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

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

(b) As lessor

Leases in which the Group does not transfer substantially all the risks and rewards of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income. Contingent rents are recognised as revenue in the period in which they are earned.


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2.22 Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is made. Revenue is measured at the fair value of consideration received or receivable, taking into account contractually defined 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 following specific recognition criteria must also be met before revenue is recognised:

(a) Sale of goods

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

(b) Rendering of services

Revenue from construction contracts is recognised by reference to the stage of completion at the end of the reporting period. Stage of completion is determined by reference to the professional judgement of project engineers on amount of work performed. Where the contract outcome cannot be measured reliably, revenue is recognised to the extent of the expenses recognised that are recoverable.

Revenue from other services provided to customers is recognised in the period in which the service is provided.

2.23 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 profit or loss except to the extent that the tax relates to items recognised outside profit 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.


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2.23 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 financial reporting purposes.

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

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

– In respect of taxable temporary differences associated with investments in subsidiaries, 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, the carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except:

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

– 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 profit 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 sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at the end of each reporting period and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply 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.


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2.23 Taxes (cont’d)

(b) Deferred tax (cont’d)

Deferred tax relating to items recognised outside profit or loss is recognised outside profit 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 offsetted, if a legally enforceable right exists to set off current income tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Tax benefits 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 profit or loss.

(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.

2.24 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 29, including the factors used to identify the reportable segments and the measurement basis of segment information.


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2.25 Treasury shares

The Group’s own equity instruments, which are re-acquired (treasury shares) are recognised at cost and deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments. Any difference between the carrying amount of treasury shares and the consideration received, if reissued, is recognised directly in equity. Voting rights related to treasury shares are nullified for the Group and no dividends are allocated to them respectively.

2.26 Contingencies

A contingent liability is:

(a) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or 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 outflow of resources embodying economic benefits will be required to settle the obligation; or

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

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

Contingent liabilities and assets are not recognised on the 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.


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2.27 Related parties

A related party is defined as follows:

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

(i) Has control or joint control over the Company;

(ii) Has significant influence over the Company; or

(iii) Is a member of the key management personnel of the Group or Company or of a parent of the Company.

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

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

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

(iii) Both entities are joint ventures of the same third party.

(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.

(v) The entity is a post-employment benefit plan for the benefit of employees of either the Company or an entity related to the Company. If the Company is itself such a plan, the sponsoring employers are also related to the Company.

(vi) The entity is controlled or jointly controlled by a person identified in (a).

(vii) A person identified in (a) (i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).


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3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES

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

3.1 Judgements made in applying accounting policies

Income taxes

Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and timing of future taxable income. Given the wide range of international business relationships and the long-term nature and complexity of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax provisions already recorded. The Group establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities of the respective countries in which it operates. The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the relevant tax authority. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the respective Group company’s domicile.

Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies.

The carrying amounts of the Group’s deferred tax assets and deferred tax liabilities as at 31 December 2016 is disclosed in Note 14 to the financial statements.


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3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (CONT’D)

3.2 Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period are discussed below. The Group based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

(a) Impairment of loans and receivables

The Group assesses at the end of each reporting period whether there is any objective evidence that a financial asset is impaired. Factors such as the probability of insolvency or significant delays in payments are objective evidence of impairment. In determining whether there is objective evidence of impairment, the Group considers whether there has been observable data indicating that there have been significant changes in the debtor’s payment ability or whether there have been significant changes with adverse effect in the technological, market, economic or legal environment in which the debtor operates in.

Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Group’s loans and receivables at the end of the reporting period is disclosed in Note 15 to the financial statements.

(b) Construction contracts

The Group recognises contract revenue by reference to the stage of completion of the contract activity at the end of each reporting period, when the outcome of a construction contract can be estimated reliably. The stage of completion is measured by reference to the measurement of work performed. In making these estimates, management will place reliance on measurements performed by professionals and project engineers. The carrying amounts of assets and liabilities arising from construction contracts at the end of the reporting period are disclosed in Note 16 to the financial statements.

If the revenue on major uncompleted contracts as at balance sheet date had been 10% lower/higher than management’s estimate, the Group’s revenue would have been lower/higher by 2.0% (2015: 3.0%).

(c) Provision for warranties

The Group recognises provision for rectification works that may arise during the defect liability period on completed projects. Determining the level of provision requires the Group to exercise judgements, taking into consideration the experience from past warranty claims for completed projects. The carrying amounts of the Group’s and Company’s provision for warranties are disclosed in Note 21 to the financial statements.


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4. GROUP COMPANIES

The subsidiaries and associates at 31 December 2016 and 2015 are:

Name of Company

(Country of incorporation and place of

business) Principal activities

Proportion (%) of

ownership interest

2016 2015

Subsidiaries held by the Company:

Rotary Electrical & Instrumentation Pte. Ltd. (1)

(Singapore)

Electrical and engineering contractor and supplier

100.0 100.0

Rotary Mechanical and Construction Company (Private) Limited (1)

(Singapore)

Contractor in mechanical piping and related works

100.0 100.0

Rotary-Thai Construction Pte. Ltd.(1) (Singapore)

Contractor in engineering and scaffolding works

100.0 100.0

Rotary IMC Pte. Ltd. (1)

(Singapore) Provision of integrated maintenance services

100.0 100.0

Supermec Private Limited (1)

(Singapore) Insurance broker and electrical and engineering material traders

60.0 60.0

Rotary BNC Pte. Ltd. (1) (Singapore)

Engineering design, procurement and construction services for plants and associated facilities

100.0 100.0

Sixty-Six Switchgears Co Pte Ltd (1)

(Singapore) Electrical testing and testing of switchgear

60.0 60.0

Innovative Biotech Pte Ltd (6)

(Singapore) Trading of medical products and equipment

99.7 99.7

Roil Pte. Ltd. (1)

(Singapore) Ship leasing and cargo vessel operator

100.0 100.0

Oro Storage Asset Management Pte. Ltd. (1)

(Singapore)Investment holding 100.0 100.0

ShopGlobal Pte. Ltd. (1)

(Singapore) Investment holding 100.0 100.0


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4. GROUP COMPANIES (CONT’D)

Name of Company



Proportion (%) of

ownership interest

2016 2015

Subsidiaries held by the Company (cont’d):

BuildGlobal Pte. Ltd. (1)


Rotary Logistics Pte. Ltd. (4)

(Singapore)Dormant 100.0 100.0

Roil Shipping Pte. Ltd. (formerly known as Rotary Automation Pte. Ltd.) (1)

(Singapore)

Vessel charter 100.0 100.0

Rotary Electrical Company (Private) Limited (1)

(Singapore)

Engineering design, installation and repair services

100.0 100.0

Rotary (APAC) Offshore Pte. Ltd. (4)

(Singapore) Dormant 100.0 100.0

Thai Rotary Engineering Public Company Limited (3)(5)

(Thailand)

Engineering design and construction works

95.2 95.2

Calvert Limited (3)

(Thailand)Investment holding 90.6 90.6

Rotary International Trading (Shanghai) Co., Ltd. (7)

(People’s Republic of China)

Construction and engineering related materials and equipment as well as provision of trading agency and services

– 100.0

Fushun Rotary Engineering Co Ltd (4)

(People's Republic of China)Dormant 90.0 90.0

P.T. Rotary Engineering Indonesia (2)(a)

(Indonesia)Steel fabrication and construction

100.0 100.0

P.T. Rotary MECOM (4)

(Indonesia) Dormant 70.0 70.0


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Name of Company



Proportion (%) of

ownership interest

2016 2015

Subsidiaries held by the Company (cont’d):

Rotary MEC Engineering (India) Private Limited (2)(b)

(India)

Dormant 100.0 100.0

Singlobal (M) Sdn. Bhd. (2)(c)

(Malaysia)Engineering design, procurement and construction services for plants and associated facilities

100.0 100.0

Petrol Steel Company Limited (3)(8)

(Saudi Arabia) Engineering, procurement and construction services for storage tanks of oil and gas, petroleum and petrochemical plants

98.0 51.0

Rotary Arabia Company Limited (3)(8)

(Saudi Arabia) Construction works, maintenance and providing professionals and engineers in relation to engineering, procurement, construction and commissioning of the refinery tanks

98.0 51.0

Rotary Engineering Fujairah FZE (3)

(United Arab Emirates)Engineering, procurement and construction services for storage tanks of oil and gas, petroleum and petrochemical plants

100.0 100.0

Rotary Developments Company Limited (4)(9)

(Vietnam)

Business development activities in Vietnam

100.0 –

Rotary Engineering Vietnam Company Limited (4)(9)

(Vietnam)

Provision of engineering, procurement and construction services

100.0 –


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Name of Company



Proportion (%) of

ownership interest

2016 2015

Held by subsidiaries:

P.T. Rotary Engineering South East Asia (2)(d) (Indonesia)

Engineering design, procurement and construction services for plants and associated facilities

95.0 95.0

P.T. Marino Logistics (2)(d)(10)

(Indonesia)Ship owning and provision of marine transportation services

49.0 –

Oro Storage (HK) Limited (2)(e)

(Hong Kong SAR)Trading of construction material and equipment, oil and gas product

100.0 100.0

Supermec Vietnam Co., Ltd (2)(f)

(Vietnam) Importing, exporting and distribution of ex-proof lightings and equipment, cables and cable support system, heat tracing materials, valves, piping and fittings and other related products

60.0 60.0

Supermec Middle East FZE (4)

(United Arab Emirates)Trade and sale of electrical distribution and control apparatus, lighting, equipment, machinery and industrial equipment

60.0 –

Supermec (M) Sdn. Bhd. (2)(g)

(Malaysia) Trading in electrical and engineering materials

60.0 60.0

Supermec Proizvodnja in Prodaja Elektronike d.o.o. (4) (Slovenia)

Manufacturing and sale of electrical distribution and control apparatus, lighting, equipment, machinery and industrial equipment

60.0 60.0


31 DECEMBER 2016


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Name of Company



Proportion (%) of

ownership interest

2016 2015

Held by subsidiaries (cont’d):

Sinmec Engineering Services (India) Private Limited (2)(h)

(India)

Engineering design, execution and management of EPC (engineering design, procurement and construction), and recruitment, training and deployment of engineers to projects

100.0 100.0

Rotary Engineering Myanmar Company Limited (4)

(Myanmar)

Dormant 100.0 100.0

(1) Audited by Ernst & Young LLP, Singapore(2) Audited by other firms

(a) Jamaludin, Ardi, Sukimto & Rekan, Indonesia(b) Vivek Mallya & Co., Chartered Accountants, India(c) Deloitte & Touche, Chartered Accountants, Malaysia(d) KAP Charles & Nurlena Registered Public Accountants, Indonesia(e) Mazars CPA Limited(f) Auditing and lnformatic Services Company Limited, Vietnam(g) W. L. Chong & Associates, Malaysia(h) MZSK & Associates (BDO International), Chartered Accountants, India

(3) Audited by member firms of Ernst & Young Global in the respective countries(4) Not required to be audited under the laws of the country of incorporation(5) The Company holds a direct interest of 48.6% in the subsidiary. The balance interest is held through a subsidiary.(6) Not audited as the subsidiary is in the process of members’ voluntary liquidation.(7) During the financial year, the subsidiary has been liquidated pursuant to members’ voluntary liquidation.(8) During the financial year, the Company acquired additional interest in these subsidiaries without loss of control (Note

11(c)).(9) Incorporated during the year (Note 11(d)).(10) As at 31 December 2016, the Group obtained control over the entity (Note 11(e)).


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Name of Company



Proportion (%) of

ownership interest

2016 2015

Associates held by the Company:

Rotary MEC (M) Sdn. Bhd. (2)(a)

(Malaysia)Engineering works 49.0 49.0

Jasinusa Automobile Pte. Ltd. (2)(b)


Eastlog Holding Pte. Ltd. (1)

(Singapore)Investment holding 22.2 22.2

Jinzhou Everthriving Logistics Co., Ltd. (2)(c)

(People’s Republic of China) Transport and sale of liquefied natural gas

45.0 45.0

Associates held by subsidiaries:

iPromar (Pte.) Ltd. (3)

(Singapore) Process plant engineering services

25.0 25.0

P.T. Marino Logistics (2)(d)(4)

(Indonesia)Ship owning and provision of marine transportation services

– 49.0

(1) Audited by Ernst & Young LLP, Singapore(2) Audited by other firms

(a) Deloitte & Touche, Chartered Accountants, Malaysia(b) BDO LLP, Singapore(c) Liaoning Huawei Accountant’s Company Ltd, China(d) KAP Charles & Nurlena Registered Public Accountants, Indonesia

(3) Not required to be audited under the laws of the country of incorporation.(4) As at 31 December 2016, the Group obtained control over the entity (Note 11(e)).

5. REVENUE

Group

2016 2015

$’000 $’000

Services 226,725 322,150Sales of goods 7,144 7,124

233,869 329,274


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6. PROFIT BEFORE TAX

The following items have been included in arriving at profit before tax:

Group

2016 2015

$’000 $’000

Other incomeGain on disposal of partial interest in associate (Note 12) – 76Gain on liquidation of a subsidiary 14 –Gain on disposal of other investments (Note 13) – 3,000Gain on disposal of property, plant and equipment 1,478 270Government grants 992 829Investment income – 965Sales of scrap 1,064 2,163Write back of impairment loss of an associate (Note 12) – 6,816Others 1,207 470

Audit fees paid to:– Auditor of the Company (180) (204)– Other auditors (182) (195)

Non-audit fees paid to:– Auditor of the Company (11) (11)– Other auditors (40) (152)

Allowance for doubtful debts (749) –Amortisation of intangible assets (Note 10) (678) (594)Amortisation of prepaid loan appraisal fees (96) (245)Depreciation of property, plant and equipment (Note 9) (9,489) (9,288)Employee benefits expense (including executive directors):

– Salaries, bonuses and other benefits (79,541) (91,549)– Central Provident Fund contributions (3,511) (3,780)– Other short-term benefits (16,036) (20,865)

Fair value gain on foreign currency contracts, net 14 821Fair value loss on investment in debt securities, net (53) –Impairment of plant and equipment (Note 9) – (29)Interest expense on loans and borrowings

(excluding finance charges) (398) (170)Inventories written down (Note 17) (37) (65)Write back of allowance for doubtful debts 407 6

Government grants relates mainly to amounts received from Wage Credit Scheme (WCS), Temporary Employment Credit (TEC) and Special Employment Credit (SEC) by the Singapore government to local companies.


31 DECEMBER 2016


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7. INCOME TAX EXPENSE

(a) Major components of income tax expense

The major components of income tax expense for the years ended 31 December 2016 and 2015 are:

Group

2016 2015

$’000 $’000

Consolidated income statement:

Current income tax – Current year

Singapore (2,269) (1,407)Foreign (172) (2,512)

(2,441) (3,919) – Overprovision in respect of previous years 1,239 933

(1,202) (2,986)

Deferred income tax – Origination and reversal of temporary differences (198) 100

Income tax expense recognised in profit or loss (1,400) (2,886)

(b) Relationship between tax expense and accounting profit

A reconciliation between tax expense and the product of accounting profit multiplied by the applicable corporate tax rate for the years ended 31 December 2016 and 2015 is as follows:

Group

2016 2015

$’000 $’000

Profit before tax 13,243 47,950

Tax at the domestic rates applicable to profits in the countries where the Group operates (1,056) (2,308)

Adjustments:Non-deductible expenses (1,615) (1,488)Income not subject to taxation 1,290 2,185Effect of Development & Expansion Incentive on qualifying transactions 2,364 271

Effect of partial tax exemption and tax relief 784 524Deferred tax assets not recognised (3,992) (2,958)Overprovision in respect of previous years 1,239 933Share of results of associates (414) (45)

Income tax expense recognised in profit or loss (1,400) (2,886)


31 DECEMBER 2016


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7. INCOME TAX EXPENSE (CONT’D)

(b) Relationship between tax expense and accounting profit (cont’d)

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

Singapore

The Company is granted the Development & Expansion Incentive under the International Headquarters Award, which income from qualifying transactions, in excess of the average corresponding income (“base”), are taxed at the concessionary rate of 5% for a period up to 31 December 2019. The base of $2,400,000 as well as income from non-qualifying activities shall be taxed at the normal corporate tax rate of 17%. The other entities in Singapore are taxed at a corporate tax rate of 17% (2015: 17%).

Kingdom of Saudi Arabia

The tax rate applicable in Saudi Arabia was 20% (2015: 20%).

United Arab Emirates, Fujairah

The Company has a subsidiary which is a registered establishment with the Fujairah Free Zone Authority of the United Arab Emirates and is entitled to certain incentives including 100% corporate tax exemption.

8. EARNINGS PER SHARE

Basic earnings per share are calculated by dividing earnings for the year, net of tax, attributable to owners of the Company amounting to $11,353,000 (2015: $42,779,000) by the weighted average number of ordinary shares outstanding during the financial year of 567,518,000 (2015: 567,518,000).

The Company did not have any potential ordinary shares during the year and in the previous financial year.

There have been no transactions involving ordinary shares or potential ordinary shares since the reporting date and before the completion of these financial statements.


31 DECEMBER 2016


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9. PROPERTY, PLANT AND EQUIPMENT

Group

Freehold

land

Leasehold

land and

buildings

Office

renovations

Office

equipment,

furniture

and fittings

Motor

vehicles

Plant and

machinery Vessels

Other

assets

Construction-

in-progress Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Cost:

At 1 January 2015 2,020 47,229 2,822 15,509 9,895 61,290 – 15,438 274 154,477

Additions 297 763 18 327 796 718 – 114 323 3,356

Disposals – – (15) (257) (579) (717) – (193) – (1,761)

Reclassification – – – – – 4 – – (4) –

Currency realignment (22) 691 22 100 109 1,509 – 16 (8) 2,417

At 31 December 2015 and 1 January 2016 2,295 48,683 2,847 15,679 10,221 62,804 – 15,375 585 158,489

Additions – – 23 281 786 649 22,215 232 2,132 26,318

Disposals – (901) – (194) (223) (2,245) – (103) – (3,666)

Acquisition of control in a subsidiary (Note 11(e)) – – – – – – 6,264 – – 6,264

Reclassification – 32 – (64) – 5,703 – (5,074) (597) –

Currency realignment 24 620 7 92 63 1,266 – 292 18 2,382

At 31 December 2016 2,319 48,434 2,877 15,794 10,847 68,177 28,479 10,722 2,138 189,787

Accumulated

depreciation and

impairment loss:

At 1 January 2015 – 19,172 2,034 14,392 7,944 50,218 – 12,328 – 106,088

Depreciation charge for the year – 1,521 240 757 700 5,002 – 1,068 – 9,288

Disposals – – (15) (250) (568) (675) – (192) – (1,700)

Impairment – – – (3) – (26) – – – (29)

Currency realignment – 29 19 97 93 1,544 – 20 – 1,802

At 31 December 2015 and 1 January 2016 – 20,722 2,278 14,993 8,169 56,063 – 13,224 – 115,449

Depreciation charge for the year – 1,505 205 193 720 3,887 2,615 364 – 9,489

Disposals – (419) – (160) (160) (2,241) – (63) – (3,043)

Acquisition of control in a subsidiary (Note 11(e)) – – – – – – 1,020 – – 1,020

Reclassification – – 6 (90) – 3,893 – (3,809) – –

Currency realignment – 292 8 89 61 1,210 44 271 – 1,975

At 31 December 2016 – 22,100 2,497 15,025 8,790 62,812 3,679 9,987 – 124,890

Net carrying amount:

At 31 December 2016 2,319 26,334 380 769 2,057 5,365 24,800 735 2,138 64,897

At 31 December 2015 2,295 27,961 569 686 2,052 6,741 – 2,151 585 43,040


31 DECEMBER 2016


IV-57


9. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

Company

Leasehold

land and

buildings

Office

renovations

Office

equipment,

furniture

and fittings

Motor

vehicles

Plant

and

machinery

Other

assets

Construction-

in-progress Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Cost:

At 1 January 2015 10,304 1,742 10,217 1,087 3,797 2,296 – 29,443

Additions 763 12 144 492 46 14 – 1,471

Disposals – – (156) (235) – – – (391)

At 31 December 2015 and 1 January 2016 11,067 1,754 10,205 1,344 3,843 2,310 – 30,523

Additions – 9 72 23 6 52 2,221 2,383

Disposals – – (82) (116) (124) – – (322)

At 31 December 2016 11,067 1,763 10,195 1,251 3,725 2,362 2,221 32,584

Accumulated depreciation:

At 1 January 2015 4,328 1,100 9,717 460 2,977 2,279 – 20,861

Depreciation charge for the year 214 172 443 181 295 11 – 1,316

Disposals – – (153) (208) – – – (361)

At 31 December 2015 and 1 January 2016 4,542 1,272 10,007 433 3,272 2,290 – 21,816

Depreciation charge for the year 213 161 271 238 195 25 – 1,103

Disposals – – (436) (52) (122) – – (610)

At 31 December 2016 4,755 1,433 9,842 619 3,345 2,315 – 22,309


At 31 December 2016 6,312 330 353 632 380 47 2,221 10,275

At 31 December 2015 6,525 482 198 911 571 20 – 8,707

(a) During the previous financial year, the Group acquired property, plant and equipment with an aggregate cost of $492,000 by means of finance lease. The cash outflow on acquisition of property, plant and equipment amounted to $26,318,000 (2015: $3,213,000).

The carrying amount of fixed assets held under finance leases at the end of the reporting period was $387,000 (2015: $478,000).

Leased assets are pledged as security for the related finance lease liabilities.

(b) Leasehold building of a subsidiary with a carrying amount of $10,217,000 (2015: $10,422,000) are mortgaged to secure the subsidiary’s bank loan (Note 20).

(c) As at 31 December 2016, a vessel with net carrying amount of $19,600,000 (2015: Nil) was pledged as security to secure the Company’s bank loan (Note 20).


31 DECEMBER 2016


IV-58


9. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

(d) The following are the major properties of the Group:

Located in Singapore:

(i) A 3-hangar workshop building and a 3-storey office building located at 17 Tuas Avenue 20 on a leasehold land area of 19,863 sqm (30 years from 1 January 1992 with renewal option of 30 years).

(ii) A JTC Type 4 single-storey corner terrace with extended mezzanine office floor at 2 Gul Street 2 on a leasehold land area of 1,610 sqm (25 years from 6 August 2011).

(iii) A building on a leasehold land area of 27,027 sqm in Jurong Island for industrial use (30 years from 1 April 1999).

Located overseas:

(i) A leasehold land and building with a land area of 120,000 sqm in Batam, Indonesia for industrial use (30 years from 1996).

(ii) A freehold land and workshop building with a land area of 69,718 sqm in Banchang Rayong, Thailand for industrial use.

(iii) A leasehold land with an area of 64,943 sqm in Jubail, Saudi Arabia for industrial use (10 years from 2016).

(iv) A freehold land with area of 63,000 sqm in Jubail, Saudi Arabia for dormitory and storage.

(v) An industrial property in Malaysia with a leasehold land area of 669 sqm with existing office, factory and ancillary buildings located at No. 16 Jalan PJS 7/21 Bandar Sunway, 46150 Petaling Jaya, Selangor (55 years from 2009).

(vi) A leasehold land with an area of 10,021 sqm in Al Hail Industrial Area – Block M – Plot No. 6 – Fujairah & limited with four boundaries for construction of fabrication shop and office.

(vii) A freehold land with an area of 4,639 sqm in Slovenia for construction of manufacturing plant.


31 DECEMBER 2016


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10. INTANGIBLE ASSETS

Group Company

Software Software

$’000 $’000

Cost:

At 1 January 2015 8,385 6,571Additions 237 149Disposals (639) –Currency realignment 1 –

At 31 December 2015 and 1 January 2016 7,984 6,720

Additions 82 24

Disposals (42) (42)

Currency realignment 20 –

At 31 December 2016 8,044 6,702

Accumulated amortisation:

At 1 January 2015 7,186 5,720Amortisation for the year 594 393Disposals (639) –Currency realignment 3 –

At 31 December 2015 and 1 January 2016 7,144 6,113

Amortisation for the year 678 502

Disposals (42) (42)

Currency realignment 20 –

At 31 December 2016 7,800 6,573


At 31 December 2016 244 129

At 31 December 2015 840 607

The amortisation of software is included in the “Other operating costs” line item in the consolidated income statement.


31 DECEMBER 2016


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11. INVESTMENTS IN SUBSIDIARIES

Company

2016 2015

$’000 $’000

Unquoted equity shares, at cost 66,871 66,921Impairment losses (16,042) (16,042)

50,829 50,879

Details of the subsidiaries are set out in Note 4 to the financial statements.

(a) Interest in subsidiary with material non-controlling interest

As at 31 December 2016, no non-controlling interest was considered individually material to the Group.

As at 31 December 2015, the following subsidiary has non-controlling interest that was material to the Group:

Petrol Steel Company Limited

2015

$’000

Principal place of business Saudi ArabiaProportion of ownership interest held by non-controlling interest 49%Profit allocated to non-controlling interest during the reporting period 612Accumulated non-controlling interest at the end of the reporting period (144,975)

There are no other significant restrictions on the Group’s ability to use or access assets and settle liabilities of the subsidiary with material non-controlling interest except as disclosed in Note 23(b).


31 DECEMBER 2016


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11. INVESTMENTS IN SUBSIDIARIES (CONT’D)

(b) Summarised information about subsidiary with material non-controlling interest

As at 31 December 2015, the summarised financial information before intercompany eliminations of subsidiary with material non-controlling interest are as follows:

2015

$’000

Summarised balance sheetCurrent:Assets 18,507Liabilities 321,030

Net current liabilities (302,523)

Non-current:Assets 13,315Liabilities 6,659

Net non-current assets 6,656

Net liabilities (295,867)

Summarised statement of comprehensive income Revenue 37,197Profit before income tax 1,248Net profit after tax 1,248Other comprehensive income (18,471)Total comprehensive income (17,223)

Other summarised informationNet cash flows from operations 22,430Net cash flows used in financing activities (26,939)

(c) Acquisition of ownership interest in subsidiaries, without loss of control

Petrol Steel Company Limited (“PSCL”)

On 30 November 2016, the Company acquired an additional 47% equity interest in PSCL from its non-controlling interest for a cash consideration of US$2. As a result of this acquisition, the Group’s effective interest in PSCL increased from 51% to 98%.

The carrying value of the net liabilities of PSCL as at 30 November 2016 was $302,717,017 and the carrying value of the additional interest acquired was $142,276,998. The difference of (i) $142,277,000 between the consideration and the carrying value of the additional interest acquired has been recognised as “Premium paid on acquisition of non-controlling interests” within equity (Note 23(d)).


31 DECEMBER 2016


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(c) Acquisition of ownership interest in subsidiaries, without loss of control (cont’d)

Rotary Arabia Company Limited (“RACL”)

On 30 November 2016, the Company acquired an additional 47% equity interest in RACL from its non-controlling interest for a cash consideration of US$2. As a result of this acquisition, the Group’s effective interest in RACL increased from 51% to 98%.

The carrying value of the net assets of RACL as at 30 November 2016 was $2,493,621 and the carrying value of the additional interest acquired was $1,172,002. The difference of (ii) $1,172,000 between the consideration and the carrying value of the additional interest acquired has been recognised as “Discount on acquisition of non-controlling interests” within equity (Note 23(d)).

The following summarises the effect of the change in the Group’s ownership interest in PSCL and RACL on the net liabilities attributable to owners of the Company:

$’000

Consideration paid for acquisition of non-controlling interests *

Less: Net liabilities attributable to non-controlling interest ((i) – (ii)) 141,105

Net liabilities attributable to owners of the Company (141,105)

* less than $1,000

(d) Incorporation of subsidiaries

During the financial year, the Company incorporated two wholly-owned subsidiaries, Rotary Engineering Vietnam Company Limited (“REV”) and Rotary Developments Company Limited (“RD”), in Vietnam with an authorised capital of US$400,000 (equivalent to $578,000) and US$300,000 (equivalent to $433,500) respectively and a paid-up share capital of US$100,000 (equivalent to $144,500) each.

During the financial year, the Group’s subsidiary, Supermec Private Limited, incorporated a subsidiary, Supermec Middle East FZE (“Supermec FZE”), in United Arab Emirates with issued share capital of AED100,000 (equivalent to $37,570).

The principal activities of REV, RD and Supermec FZE are as disclosed in Note 4.


31 DECEMBER 2016


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(e) Acquisition of control in a subsidiary

On 31 December 2016, the Group through a wholly-owned subsidiary, obtained the financial and operational control of P.T. Marino Logistics (“PTML”), a 49% owned associate. Effective from that date, PTML became a subsidiary of the Group.

The Group has elected to measure the non-controlling interest at the non-controlling interest’s proportionate share of PTML’s identifiable net assets.

The fair value of the identifiable assets and liabilities of PTML as at the acquisition date were:

Fair value

recognised on

acquisition

$’000

Property, plant and equipment 5,200

Trade and other receivables 26

Cash and cash equivalents 139

Trade and other payables (5,275)

Total identifiable net assets at fair value 90

Non-controlling interest measured at the non-controlling interest’s proportionate share of PTML’s identifiable net assets (46)

44

Consideration transferred for the acquisition of PTML$’000

Consideration paid –

Fair value of equity interest in PTML held by the Group immediately before the acquisition 44

44

Effect of acquisition of control in PTML on cash flows of the Group

$’000

Consideration paid –

Cash and cash equivalents acquired 139

Net cash inflow from change in control in a subsidiary 139


31 DECEMBER 2016


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(e) Acquisition of control in a subsidiary (cont’d)

Impact of the acquisition of control on profit or loss

If the business combination had taken place at the beginning of the year, the revenue from continuing operations would have been $234,013,000 and the Group’s profit from continuing operations, net of tax would have been $10,574,000.

12. INVESTMENTS IN ASSOCIATES

Group Company

2016 2015 2016 2015

$’000 $’000 $’000 $’000

Unquoted equity shares, at cost 24,091 24,712 23,966 23,966Impairment losses (7,700) (7,700) (11,439) (11,439)

16,391 17,012 12,527 12,527Share of post-acquisition reserves 5,313 (2,702) – –Currency realignment 323 (92) – –

Carrying value of investments 22,027 14,218 12,527 12,527

Details of the associates are set out in Note 4 to the financial statements.

In the previous years, total impairment losses of $7,700,000 and $11,439,000 had been recognised for the Group and the Company respectively, to write down the carrying value of associates as the associates have been persistently making losses. There has been no further impairment in the current year.

During the previous year, impairment of an associate $6,816,000 was written back due to a turnaround in the associate’s business and financial performance.

During the previous year, the Group disposed its partial interest in Jasinusa Automobile Pte. Ltd. for an aggregate consideration of $411,000 and recognised a gain on disposal of an associate amounting to $76,000 in the “Other income” line item in the consolidated income statement.

The Group’s material investments in associates are summarised below:Group

2016 2015

$’000 $’000

Eastlog Holding Pte. Ltd. 17,381 9,084Other associates 4,646 5,134

22,027 14,218


31 DECEMBER 2016


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12. INVESTMENTS IN ASSOCIATES (CONT’D)

The summarised financial information in respect of Eastlog Holding Pte. Ltd., based on its FRS financial statements and a reconciliation with the carrying amount of the investment in the consolidated financial statements are as follows:

Summarised balance sheetGroup

2016 2015

$’000 $’000

Assets and liabilitiesCurrent assets 34,792 20,494Non-current assets 82,857 78,795Total assets 117,649 99,289

Current liabilities 17,876 39,067Non-current liabilities 9,574 23,039Total liabilities 27,450 62,106

Non-controlling interest (11,905) 3,736

Net assets 78,294 40,919

Proportion of Group’s ownership 22.2% 22.2%

Group's share of net assets and carrying amount of the investment 17,381 9,084

Summarised statement of comprehensive incomeGroup

2016 2015

$’000 $’000

Revenue 20,621 40,349(Loss)/Profit after tax (1,712) 7,859Other comprehensive income 324 (89)Total comprehensive income (1,388) 7,770

Aggregate information about the Group’s investments in associates, not adjusted for the proportion of ownership interest held by the Group, that are not individually material is as follows:

Group

2016 2015

$’000 $’000

Loss for the year (258) (2,684)Other comprehensive income (753) 1,015

Total comprehensive income (1,011) (1,669)


31 DECEMBER 2016


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13. OTHER INVESTMENTS

Group Company

2016 2015 2016 2015

$’000 $’000 $’000 $’000

Non-current

Available-for-sale financial assets Equity securities (quoted) 29 29 28 28 Equity securities (unquoted), at cost 1,790 1,755 119 119 Less: Impairment losses (109) (109) (109) (109)

1,710 1,675 38 38Loans and receivables 27,560 29,396 857 857

29,270 31,071 895 895

Current

Held for trading investments Debt securities (quoted) 6,006 – 6,006 – Others (quoted) 738 – – –Loans and receivables 2,457 – – –

9,201 – 6,006 –

Equity securities (unquoted), at cost

Included in unquoted equity securities is an amount of $1,671,000 (2015: $1,636,000), equivalent to US$1,150,000 for a 10% equity stake in an independent oil storage terminal in Indonesia.

During the previous year, the Company disposed its interest in a fully impaired unquoted equity securities for a total consideration amounting to $3,000,000 and recognised a gain on disposal of other investments amounting to $3,000,000 in the “Other income” line item in the consolidated income statement.

Loans and receivables

Loans and receivables includes two loans by a subsidiary of the Company to support operations of the independent oil storage terminal in Indonesia.

Details of the loans are as follows:

(i) Loan A with principal amount of $26,703,000 (2015: $26,135,000), equivalent to US$18,480,000 (2015: US$18,480,000), bears interest at 12% per annum. The loan is repayable by year 2024.

(ii) Loan B with principal amount of $2,457,000 (2015: $2,404,000), equivalent to US$1,700,000 (2015: US$1,700,000), bears interest at the deposit rate of PT Bank Rakyat Indonesia. The loan is repayable by year 2017.


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14. DEFERRED TAX

Deferred tax as at 31 December relates to the following:

Group Company

2016 2015 2016 2015

$’000 $’000 $’000 $’000

Deferred tax liabilities

Differences in depreciation for tax purposes (2,303) (2,386) (1,391) (1,391)

Deferred tax assets

Provisions 1,144 1,388 136 136

(1,159) (998) (1,255) (1,255)

Disclosures in balance sheets:

Deferred tax assets 747 1,022 – –Deferred tax liabilities (1,906) (2,020) (1,255) (1,255)

(1,159) (998) (1,255) (1,255)

Unrecognised tax losses

A loss-transfer system of group relief (group relief system) for companies was introduced in Singapore with effect from year of assessment 2003. Under the group relief system, a company belonging to a group may transfer its current year unabsorbed capital allowances, current year unabsorbed trade losses and current year unabsorbed donations (loss items) to another company belonging to the same group, to be deducted against the assessable income of the latter company.

As at 31 December 2016, the Group has tax losses and unabsorbed capital allowances of approximately $194,555,000 (2015: $170,703,000) and $9,529,000 (2015: $2,641,000) respectively that are available for offset against future taxable profits of the companies in which the losses arose, for which no deferred tax asset is recognised due to uncertainty of its recoverability. The use of these tax losses is subject to the agreement of the tax authorities and compliance with certain provisions of the tax legislation of the respective countries in which the companies operate.

Unrecognised temporary differences relating to investments in subsidiaries

As at 31 December 2016, no deferred tax liability (2015: Nil) has been recognised for taxes that would be payable on the undistributed earnings of certain of the Group’s subsidiaries as the Group has determined that undistributed earnings of its subsidiaries will not be distributed in the foreseeable future.

Such temporary differences for which no deferred tax liability has been recognised aggregate to $18,311,000 (2015: $22,322,000). The deferred tax liability is estimated to be $1,925,000 (2015: $2,546,000).


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14. DEFERRED TAX (CONT’D)

Tax consequences of proposed dividends

There are no income tax consequences (2015: Nil) attached to the proposed dividends by the Company to its shareholders (Note 30).

15. TRADE AND OTHER RECEIVABLES

Group Company

2016 2015 2016 2015

$’000 $’000 $’000 $’000

Trade and other receivables

(current):

Trade receivables – External parties 85,394 90,243 45,067 54,371 – Subsidiaries – – 1,625 2,268 – Associates 594 320 2 1Other receivables – Subsidiaries – – 136,507 155,832 – Associates 1,427 166 1,249 112 – External parties 6,269 7,312 – –Loan and advances 1,410 4,404 11 2Sundry deposits 2,246 2,430 1,171 1,553Recoverables 3,197 2,507 423 512Income tax recoverables 931 916 – –Interest receivables 4,361 1,069 58 7

105,829 109,367 186,113 214,658

Other receivables (non-current):

Other receivables – Associates 3,939 3,855 3,939 3,855Less: Allowance for impairment (3,939) (3,855) (3,939) (3,855)

– – – –

Total trade and other receivables (current and non-current) 105,829 109,367 186,113 214,658

Add: Cash and cash equivalents (Note 19) 86,021 118,215 29,139 60,062

Total loans and receivables 191,850 227,582 215,252 274,720


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15. TRADE AND OTHER RECEIVABLES (CONT’D)

Trade receivables

Trade receivables are non-interest bearing and are generally on 30 to 90 days’ terms. They are recognised at their original invoice amounts which represent their fair values on initial recognition.

Trade receivables denominated in currencies other than SGD at 31 December are as follows:

Group Company

2016 2015 2016 2015

$’000 $’000 $’000 $’000

Arab Emirates Dirham 4,648 11,405 – 417Saudi Riyal 3,151 – 954 –Thai Baht 1,953 11,676 – –United States Dollar 19,066 37,111 13,461 27,845Other currencies 690 – – –

Related party balances

As at 31 December 2016, the Company has amount due from subsidiaries and associates in current trade and other receivables amounting to $139,383,000 (2015: $158,213,000). The amounts due from subsidiaries and associates included in current trade and other receivables are unsecured, repayable upon demand and are to be settled in cash. These amounts are non-interest bearing except for loans at carrying amount of $60,963,000 (2015: $86,929,000) bearing interest ranging from 3.5% to 6.0% (2015: 5.5% to 6.0%) per annum. During the financial year, the Company recognised an impairment on receivables due from a subsidiary amounting to $43,350,000 (2015: Nil).

Non-current amounts due from associates are unsecured, have no repayment terms and are repayable only when the cash flow of the borrower permits. Accordingly, the fair values of these amounts are not determinable as the timing of the future cash flow arising from the amounts cannot be estimated reliably.


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Receivables that are past due but not impaired

The Group and Company has trade receivables amounting to $17,429,000 (2015: $17,317,000) and $11,088,000 (2015: $7,811,000) that are past due at the end of the reporting period but not impaired respectively. These receivables are unsecured and the analysis of their ageing at the end of the reporting period is as follows:

Group Company

2016 2015 2016 2015

$’000 $’000 $’000 $’000

Trade receivables past due but not impaired:

Lesser than 30 days 9,703 4,182 6,044 76930 – 60 days 928 1,440 99 12461 – 90 days 3,629 951 2,040 40191 – 120 days 176 85 – 1More than 120 days 2,993 10,659 2,905 6,516

17,429 17,317 11,088 7,811

Receivables that are impaired

The Group’s and the Company’s trade receivables that are impaired at the end of the reporting period and the movement of the allowance accounts used to record the impairment is as follows:

Group

Individually impaired

Company

Individually impaired

2016 2015 2016 2015

$‘000 $‘000 $‘000 $‘000

Trade receivables – nominal amounts 1,168 1,008 – –Less: Allowance for impairment (1,168) (1,008) – –

– – – –


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Receivables that are impaired (cont’d)

Group Company

2016 2015 2016 2015

$’000 $’000 $’000 $’000

Movement in allowance accounts: At 1 January 1,008 1,028 – –Charge for the year 569 – – –Write back for the year (407) (6) – –Currency realignment (2) (14) – –

1,168 1,008 – –

Trade receivables that are individually determined to be impaired at the end of the reporting period relate to debtors that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.

16. GROSS AMOUNT DUE FROM/(TO) CUSTOMERS FOR CONTRACT WORK-IN-PROGRESS

Group Company

2016 2015 2016 2015

$’000 $’000 $’000 $’000

Aggregate amount of costs incurred and recognised profits (less recognised losses) to date 1,733,105 1,115,719 833,719 759,866

Less: Progress billings (1,728,948) (1,164,190) (864,783) (808,275)

4,157 (48,471) (31,064) (48,409)

Presented as:Gross amount due from customers

for contract work-in-progress 26,427 23,784 995 5,209Gross amount due to customers for

contract work-in-progress (22,270) (72,255) (32,059) (53,618)

4,157 (48,471) (31,064) (48,409)

Retention sums on construction contract included in trade receivables 40,788 41,823 29,211 34,824


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17. INVENTORIES

Group Company

2016 2015 2016 2015

$’000 $’000 $’000 $’000

Balance sheet:

Raw materials, supplies and consumables 6,527 5,647 469 495

Total inventories at lower of cost and net realisable value 6,527 5,647 469 495

Group

2016 2015

$’000 $’000

Income statement:

Inventories recognised as an expense in “Cost of sales” 5,639 3,367Inventories recognised as an expense in “Other operating costs”

is inclusive of the following charge: – Inventories written down 37 65

18. FOREIGN CURRENCY CONTRACTS

Group

2016 2015

Maturity

date

Contract/

Notional

Amount Assets Liabilities

Contract/

Notional


$’000 $’000 $’000 $’000 $’000 $’000

Forward currency contracts to sell USD and buy SGD– at fair value

through profit or loss

13 Jan 2017to

28 Feb 2017 68,927 140 (465) 84,852 – (339)


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18. FOREIGN CURRENCY CONTRACTS (CONT’D)

Company

2016 2015

Maturity

date

Contract/

Notional


Contract/

Notional


$’000 $’000 $’000 $’000 $’000 $’000

Forward currency contracts to sell USD and buy SGD– at fair value

through profit or loss

13 Jan 2017to

10 Feb 2017 65,025 51 (465) 84,852 – (339)

The Group does not apply hedge accounting in respect to the above foreign exchange contract.

19. CASH AND CASH EQUIVALENTS

Group Company

2016 2015 2016 2015

$’000 $’000 $’000 $’000

Short-term deposits 17,474 49,289 11,260 41,291Cash at banks and on hand 68,547 68,926 17,879 18,771

Cash and cash equivalents 86,021 118,215 29,139 60,062

Cash at banks earn interest at floating 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 the Company, and earn interests at the respective short-term deposit rates. The weighted average effective interest rates as at 31 December 2016 for the Group and the Company were 0.68% (2015: 0.31%) and 0.50% (2015: 0.23%) respectively.

Cash and cash equivalents denominated in currencies other than SGD at 31 December are as follows:

Group Company

2016 2015 2016 2015

$’000 $’000 $’000 $’000

Arab Emirates Dirham 3,319 10,088 – –Saudi Riyal 1,576 1,037 – –Thai Baht 14,157 4,158 – –United States Dollar 17,628 46,024 14,561 40,824Other currencies 1,940 2,249 1 125


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20. LOANS AND BORROWINGS

Group Company

Maturity 2016 2015 2016 2015

$’000 $’000 $’000 $’000

Current:

Obligations under finance leases (Note 25a)

2020 57 55 47 50

Bank loans:– SAR term loan 2018 3,096 2,749 – –– USD term loan 2021 3,179 – 3,179 –

6,332 2,804 3,226 50

Non-current:

Obligations under finance leases (Note 25a)

2020 52 93 52 93

Bank loans:– SAR term loan 2018 3,710 6,659 – –– USD term loan 2021 11,126 – 11,126 –

14,888 6,752 11,178 93

Total loans and borrowings 21,220 9,556 14,404 143

Obligations under finance leases

These obligations are secured by a charge over the leased assets (Note 9). The average discount rate implicit in the leases is 2.5% (2015: 2.5%) per annum. These obligations are denominated in the respective functional currencies of the relevant entities in the Group.

SAR term loan

In 2010, Saudi Industrial Development Fund (SIDF) sanctioned a loan of Saudi Riyal (SAR) 51,980,000 to a subsidiary. As at 31 December 2016, an amount of SAR 43,723,000 (2015: SAR 43,723,000) has been drawn down from the facility. The loan is repayable in 14 semi-annual instalments commencing from 8 March 2014 with the last instalment on 29 June 2018. During the financial year, the subsidiary has made repayments amounting to SAR 7,220,000 (2015: SAR 6,420,000). A SIDF loan appraisal fee of SAR 4,000,000 was deducted upfront and is being amortised over the period of the loan. The loan is secured by mortgage over property, plant and equipment of the subsidiary. The interest rate for the loan is 3.14% (2015: 2.97%).

USD term loan at LIBOR +1.5%

This loan is secured by a mortgage over the vessel of the Group (Note 9(c)) and is repayable in 10 semi-annual instalments commencing from 17 June 2016. The interest rate ranges from 2.24% to 2.44% (2015: Nil). The loan includes a financial covenant which requires the Company and a subsidiary to maintain a positive net worth throughout the tenure of the loan.


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21. TRADE AND OTHER PAYABLES

Group Company

2016 2015 2016 2015

$’000 $’000 $’000 $’000

Trade and other payables (current):

Trade payables – External parties 44,531 38,611 4,543 6,116 – Subsidiaries – – 5,814 12,744 – Associates – 250 – –Other payables – External parties 2,257 2,549 – 307 – Subsidiaries – – 59,176 73,444Accrued operating expenses 50,520 52,077 11,561 15,259Provision for warranties 33,179 – 14,293 –

Total trade and other payables 130,487 93,487 95,387 107,870Add:Loans and borrowings (Note 20) 21,220 9,556 14,404 143

Total financial liabilities carried at amortised cost 151,707 103,043 109,791 108,013

Trade and other payables are non-interest bearing. Trade payables are normally settled on 60-day terms while other payables have an average credit term of two months.

As at 31 December 2016, the Group and Company recognised provision for warranties amounting to $33,179,000 (2015: Nil) and $14,293,000 (2015: Nil) respectively. Provision for warranties is recognised for expected warranty claims on the Group’s and Company’s completed projects.

Trade payables denominated in currencies other than SGD as at 31 December are as follows:

Group Company

2016 2015 2016 2015

$’000 $’000 $’000 $’000

Arab Emirates Dirham 4,385 9,252 – –Saudi Riyal 5,991 7,830 1 67Thai Baht 732 1,500 – –United States Dollar 9,014 6,741 236 594Other currencies 1,687 812 252 27

Amounts due to subsidiaries and associates

These amounts are unsecured, non-interest bearing, repayable on demand and are to be settled in cash.

Purchases from subsidiaries and associates are made at terms equivalent to those prevailing in arm’s length transactions with third parties.


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22. SHARE CAPITAL AND TREASURY SHARES

(a) Share capital

Group and Company

2016 2015

No. of shares No. of shares

’000 $’000 ’000 $’000

Issued and fully paid ordinary

shares:

At 1 January and 31 December 567,854 89,365 567,854 89,365

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

(b) Treasury shares

Group and Company

2016 2015

No. of shares No. of shares

’000 $’000 ’000 $’000

At 1 January and 31 December (336) (161) (336) (161)

Treasury shares relate to ordinary shares of the Company that is held by the Company.

23. OTHER RESERVES

Group Company

2016 2015 2016 2015

$’000 $’000 $’000 $’000

Foreign currency translation reserve 6,100 4,769 – –Statutory reserve 300 300 – –Capital reserve 8,930 547 – –Premium paid on acquisition of

non-controlling interests (141,105) – – –

(125,775) 5,616 – –


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23. OTHER RESERVES (CONT’D)

(a) Foreign currency translation reserve

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

(b) Statutory reserve

In accordance with the Saudi Arabian Regulations applicable to the Group’s subsidiaries in the Saudi Arabia (“SA”), these subsidiaries are required to make appropriation to a Statutory Reserve Fund (“SRF”). At least 10% of the statutory profits net of tax as determined in accordance with the applicable SA accounting standards and regulations must be allocated to the SRF until the cumulative total of the SRF reaches 50% of the subsidiary company’s registered capital. Subject to the approval from the relevant SA authorities, the SRF may be used to offset any accumulated losses of the subsidiary company. The SRF is not available for dividend distribution to shareholders.

(c) Capital reserve

Capital reserve includes an amount of $8,397,000 (2015: Nil) relating to the share of an associate’s capital reserve.

(d) Premium paid on acquisition of non-controlling interests

The premium paid on acquisition of non-controlling interests raised from the acquisition of additional equity from its non-controlling interest as disclosed in Note 11(c).

24. RELATED PARTY DISCLOSURES

(a) Sale and purchase of goods and services

In addition to the related party information disclosed elsewhere in the financial statements, the following significant transactions between the Group and related parties took place at terms agreed between the parties during the financial year:

Group

2016 2015

$’000 $’000

Associate company

Contract sales and services 638 1,904Rental received 46 50

The associate company refers to Rotary MEC (M) Sdn. Bhd., which is 49% held by the Company.


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24. RELATED PARTY DISCLOSURES (CONT’D)

(b) Compensation of key management personnel

Group

2016 2015

$’000 $’000

Short-term employee benefits 8,391 10,965Central Provident Fund contributions 102 110

8,493 11,075

Comprise amounts paid to:

Directors of the Company 6,463 8,146Other key management personnel 2,030 2,929

8,493 11,075

The remuneration of key management personnel is determined by the Remuneration Committee having regard to the performance of individuals and market trends.

25. COMMITMENTS AND CONTINGENCIES

(a) Finance lease

The Group and Company has finance leases for certain items of plant and equipment (Note 9). These leases have terms of renewal but no purchase options and escalation clauses. There are no restrictions placed upon the Group by entering into the leases. Renewals are at the option of the specific entity that holds the lease.

Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows:

2016 2015

Minimum

payments

Present

value of

payments

Minimum

payments

Present

value of

payments

$’000 $’000 $’000 $’000

Group

Not later than one year 53 57 53 55Later than one year but not later

than five years 65 52 108 93

Total minimum lease payments 118 109 161 148Less: Amounts representing

finance charges (9) – (13) –

Present value of minimum lease payments 109 109 148 148


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25. COMMITMENTS AND CONTINGENCIES (CONT’D)

(a) Finance lease (cont’d)

2016 2015

Minimum

payments

Present

value of

payments

Minimum

payments

Present

value of

payments

$’000 $’000 $’000 $’000

Company

Not later than one year 50 47 50 50Later than one year but not later

than five years 55 52 105 93

Total minimum lease payments 105 99 155 143Less: Amounts representing

finance charges (6) – (12) –

Present value of minimum lease payments 99 99 143 143

(b) Operating lease commitments – as lessee

The Group has entered into commercial leases on certain premises and office equipment. These leases have remaining tenures ranging from 1 year to 21 years with no contingent rent provision included in the contracts.

Minimum lease payments recognised as an expense in profit or loss for the financial year ended 31 December 2016 amounted to $1,176,000 (2015: $1,182,000).

Future minimum rental payable under non-cancellable operating leases at the end of the reporting period are as follows:

Group

2016 2015

$’000 $’000

Not later than one year 910 822Later than one year but not later than five years 3,495 3,206Later than five years 3,475 3,828

7,880 7,856

(c) Guarantees

The Company has provided corporate guarantees to a maximum amount of $6,669,000 (2015: $4,784,000) to secure banking facilities for a subsidiary company (Note 20).

At the end of the reporting period, the Group and Company has provided bank guarantees amounting to $124,667,000 (2015: $163,994,000) and $99,606,000 (2015: $144,012,000) respectively for the performance of its operating activities and construction contracts.


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25. COMMITMENTS AND CONTINGENCIES (CONT’D)

(d) Legal claim

In 2015, a Suit was filed in the High Court of the Republic of Singapore against the Company and two of the Company’s officers. The plaintiffs have claimed for amongst other things, damages to be assessed for alleged breaches of contracts purportedly entered into between the Company and the plaintiffs relating to business operations in the Kingdom of Saudi Arabia. On 21 March 2017, the Singapore Court of Appeal granted the Company’s application for the Suit to be stayed in Singapore on the basis that the Kingdom of Saudi Arabia is clearly the more appropriate forum to hear the dispute.

In 2016, a Suit was filed in the High Court of the Republic of Singapore against the Company and its Board members. The plaintiff is claiming damages for libel in respect of a statement contained in an SGX announcement made by the Company in relation to the legal claim mentioned above. The Company will take all measures necessary to resist and refute the claim in the Suit.

The Company does not anticipate that the outcome of either of the two court actions mentioned above will have a material impact on the Company.

26. FAIR VALUE OF ASSETS AND LIABILITIES

(a) Fair value hierarchy

Fair value hierarchy

The Group categorises fair value measurements using a fair value hierarchy that is dependent on the valuation inputs used as follows:

Level 1 – Quoted prices (unadjusted) in active market for identical assets or liabilities that the Group can access at the measurement date,

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, and

Level 3 – Unobservable inputs for the asset or liability.

Fair value measurements that use inputs of different hierarchy levels are categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

There have been no transfers between fair value measurement levels during the financial years ended 31 December 2016 and 2015.


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26. FAIR VALUE OF ASSETS AND LIABILITIES (CONT’D)

(b) Assets and liabilities measured at fair value

The following table shows an analysis of each class of assets and liabilities carried at fair value at the end of the reporting period:

Quoted prices in

active markets

for identical

instruments

Significant

observable

inputs other than

quoted prices Total

(Level 1) (Level 2)

$’000 $’000 $’000

Group

2016

Assets measured at fair value

Financial assets:

Available-for-sale financial assets (Note 13)– Equity securities (quoted) 29 – 29

Held for trading financial assets (Note 13)– Debt securities (quoted) 6,006 – 6,006

– Others (quoted) 738 – 738

Foreign currency contracts (Note 18)– At fair value through profit or loss – 140 140

At 31 December 2016 6,773 140 6,913

Liabilities measured at fair value

Financial liabilities:

Foreign currency contracts (Note 18)– At fair value through profit or loss – (465) (465)

At 31 December 2016 – (465) (465)

2015


Financial assets:


At 31 December 2015 29 – 29




At 31 December 2015 – (339) (339)


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(b) Assets and liabilities measured at fair value (cont’d)

Quoted prices in

active markets

for identical

instruments

Significant

observable

inputs other than

quoted prices Total

(Level 1) (Level 2)

$’000 $’000 $’000

Company

2016


Financial assets:


Held for trading financial assets (Note 13)– Debt securities (quoted) 6,006 – 6,006

Foreign currency contracts (Note 18)– At fair value through profit or loss – 51 51

At 31 December 2016 6,034 51 6,085




At 31 December 2016 – (465) (465)

2015


Financial assets:


At 31 December 2015 28 – 28




At 31 December 2015 – (339) (339)


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(b) Assets and liabilities measured at fair value (cont’d)

Determination of fair value

Quoted equity, debt and other securities (Note 13)

Fair value is determined by direct reference to their bid price quotations in an active market at the end of the reporting period.

Foreign currency contracts (Note 18)

Forward currency contracts are valued using a valuation technique with market observable inputs. The most frequently applied valuation techniques include forward pricing models using present value calculations. The models incorporate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates and forward rate curves.

(c) Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value

This pertains to current loans and receivables (Note 13), current trade and other receivables (Note 15), trade and other payables (Note 21), and current loans and borrowings (Note 20).

The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values, either due to their short-term nature or that they are floating rate instruments that are re-priced to market interest rates on or near the end of the reporting period.

(d) Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value

The fair value of financial assets and liabilities by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value are as follows:

Group Company

2016

$’0002015

$’0002016

$’0002015

$’000

Note

Carrying

amount

Fair

value

Carrying

amount

Fair

value

Carrying

amount

Fair

value

Carrying

amount

Fair

value

Financial assets:

Equity securities, at cost 13 1,681 * 1,646 * 10 – 10 –

Loans and receivables (non-current) 13 27,560 @ 29,396 @ 857 – 857 –


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Group Company

2016

$’0002015

$’0002016

$’0002015

$’000

Note

Carrying

amount

Fair

value

Carrying

amount

Fair

value

Carrying

amount

Fair

value

Carrying

amount

Fair

value

Financial

liabilities:

Loans and borrowings (non-current) 20 14,888 14,044 6,752 6,449 11,178 10,478 93 93

* Investment in equity securities carried at cost (Note 13)

Fair value information has not been disclosed for the Group’s and the Company’s investments in equity instruments that are carried at cost because fair value cannot be measured reliably. These equity instruments represent ordinary shares in companies that are not quoted on any market and do not have any comparable industry peer that is listed. In addition, the variability in the range of reasonable fair value estimates derived from valuation techniques is significant. The Group does not intend to dispose these investments in the foreseeable future.

@ Loans and receivables (Note 13)

Fair value information has not been disclosed for the Group’s loans and receivables that is carried at cost because the fair value cannot be measured reliably. The fair values of these amounts are not determinable as there is no observable input on the incremental lending rate for similar types of borrowing arrangements at the end of the reporting period.

Non-current other receivables due from associates (Note 15)

Fair value information has not been disclosed for the Group’s and the Company’s non-current receivables from associates that are carried at cost because fair value cannot be measured reliably. The fair values of these amounts are not determinable as the timing of the future cash flow cannot be estimated reliably because the amounts are repayable only when the cash flow of the borrower permits.

Determination of fair value

Non-current loans and borrowings (Note 20)

The fair values as disclosed in the table above have been measured under level 2 of the fair value hierarchy, by discounting expected future cash flows at market incremental lending rate for similar types of borrowing arrangements at the end of the reporting period.


(d) Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value (cont’d)


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27. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group and the Company is exposed to financial risks arising from its operations and the use of financial instruments. The key financial risks include credit risk, liquidity risk, interest rate risk and foreign currency risk. The board of directors reviews and agrees on the policies and procedures for the management of these risks. The Audit Committee provides independent oversight to the effectiveness of the risk management process. It is, and has been throughout the current and previous financial year, the Group’s policy that no trading in derivatives for speculative purposes shall be undertaken.

The following sections provide details regarding the Group’s and the Company’s exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks.

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

(a) Credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments in the event that a counterparty default on its obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including other investments, cash and short-term deposits, and derivatives), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties.

The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis thus the Group’s exposure to bad debts is not significant.

Exposure to credit risk

At the end of the reporting period, the Group’s and the Company’s maximum exposure to credit risk is represented by:

– A nominal amount of $6,669,000 (2015: $4,784,000) relating to corporate guarantees provided by the Company to banks on bank facilities granted to a subsidiary company.

– A nominal amount of $124,667,000 (2015: $163,994,000) and $99,606,000 (2015: $144,012,000) relating to bank guarantees provided by the Group and Company respectively for the performance of its operating activities and construction contracts.


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27. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D)

(a) Credit risk (cont’d)

Credit risk concentration profile

The Group determines concentrations of credit risk by monitoring the country of its trade receivables on an ongoing basis. The credit risk concentration profile of the Group’s trade receivables from external parties at the end of the reporting period is as follows:

Group

2016 2015

$’000 % of total $’000 % of total

By country:

Singapore 58,058 68 49,874 55Saudi Arabia 14,711 17 17,202 19United Arab Emirates 9,337 11 17,377 19Thailand 1,953 2 5,183 6Others 1,335 2 607 1

85,394 100 90,243 100

At the end of the reporting period, approximately:

50% (2015: 52%) of the Group’s trade receivables were due from 5 major customers who are in the oil and gas industry located in Singapore, Kingdom of Saudi Arabia and United Arab Emirates.

2% (2015:–*) of the Group’s trade and other receivables were due from related parties while 75% (2015: 74%) of the Company’s receivables were balances with related parties.

* less than 1%

Financial assets that are neither past due nor impaired

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

Financial assets that are either past due or impaired

Information regarding financial assets that are either past due or impaired is disclosed in Note 13 (Other investments) and Note 15 (Trade and other receivables).


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(b) Liquidity risk

Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group’s and the Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities.

The Group maintains sufficient liquid financial assets and stand-by credit facilities with at least five different banks. At the end of the reporting period, approximately 30% (2015: 29%) of the Group’s loans and borrowings (Note 20) will mature in less than one year based on the carrying amount reflected in the financial statements.

Analysis of financial instruments by remaining contractual maturities

The table below summarises the maturity profile of the Group’s and the Company’s financial liabilities at the end of the reporting period based on contractual undiscounted repayment obligations.

2016

$’0002015

$’000One

year or

less

One

to five

years

Over

five

years Total

One

year or

less

One

to five

years

Over

five

years Total

Group

Trade and other payables 130,487 – – 130,487 93,487 – – 93,487

Forward currency contracts 465 – – 465 339 – – 339

Loans and borrowings 6,737 15,288 – 22,025 2,940 6,815 – 9,755

Total undiscounted financial liabilities 137,689 15,288 – 152,977 96,766 6,815 – 103,581

Company

Trade and other payables 95,387 – – 95,387 107,870 – – 107,870

Forward currency contracts 465 – – 465 339 – – 339

Loans and borrowings 3,491 11,550 – 15,041 50 93 – 143

Total undiscounted financial liabilities 99,343 11,550 – 110,893 108,259 93 – 108,352


31 DECEMBER 2016


IV-88



(b) Liquidity risk (cont’d)

The table below shows the contractual expiry by maturity of the Group’s and the Company’s contingent liabilities. The maximum amount of the financial guarantee contracts are allocated to the earliest period in which the guarantee could be called.

2016

$’0002015

$’000One

year or

less

One

to five

years

Over

five

years Total

One

year or

less

One

to five

years

Over

five

years Total

Group

Financial guarantees 92,490 32,177 – 124,667 101,302 62,692 – 163,994

Company

Financial guarantees 81,037 25,238 – 106,275 90,962 57,834 – 148,796

(c) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments will fluctuate because of changes in market interest rates. The Group’s and the Company’s exposure to interest rate risk arise from their loans and borrowings. Currently, the Group’s and Company’s borrowings are at floating rates. The Group manages its interest rate risk on an ongoing basis with the primary objective of limiting the extent to which net interest expense could be affected by an adverse movement of rates.

Sensitivity analysis for interest rate risk

There is no interest rate risk exposure as interest bearing loans and borrowings have been repaid during the year. At the end of the previous reporting period, if interest rates had been 100 (2015: 100) basis points lower/higher with all other variables held constant, the Group’s profit before tax would have been $211,000 (2015: $94,000) higher/lower, arising mainly as a result of lower/higher interest expense on floating rate loans and borrowings. The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment, showing a significantly higher volatility as in prior years.


31 DECEMBER 2016


IV-89



(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 SGD, Thai Baht (THB), Saudi Riyal (SAR) and Arab Emirates Dirham (AED). The foreign currencies in which these transactions are denominated are mainly United States Dollars (USD). Approximately 15% (2015: 29%) and 14% (2015: 33%) of the Group’s sales and cost of sales are denominated in foreign currencies. The Group’s trade receivable and trade payable balances denominated in foreign currencies at the end of the reporting period are disclosed in Note 15 and 21, respectively.

The Group and the Company also hold cash and cash equivalents denominated in foreign currencies for working capital purposes. At the end of the reporting period, such foreign currency balances are disclosed in Note 19.

The Group enters into forward currency contracts to hedge the net exposure of its foreign currency denominated financial assets, liabilities and firm commitments. The Group does not enter into these forward currency contracts for speculative purpose. The forward currency contracts must be in the same currency as the hedged item. It is the Group’s policy not to enter into forward contracts until a firm commitment is in place. It is the Group’s policy to negotiate the terms of the hedge derivatives to match the terms of the hedged item to maximise hedge effectiveness.

The Group is also exposed to currency translation risk arising from its net investments in foreign operations, including Saudi Arabia, United Arab Emirates, Malaysia, Indonesia, People’s Republic of China (“PRC”), India and Thailand. The Group’s net investments are not hedged as their currency positions are considered to be long-term in nature.

Sensitivity analysis for foreign currency risk

The following table demonstrates the sensitivity of the Group’s profit/(loss) before tax to a reasonably possible change in the USD exchange rate against the respective functional currencies of the Group entities, with all other variables held constant.

Group

2016 2015

$’000 $’000

Profitbefore tax

Profitbefore tax

USD/SGD – strengthened 1% (2015: 1%) +66 +670 – weakened 1% (2015: 1%) -66 -670


31 DECEMBER 2016


IV-90


28. CAPITAL MANAGEMENT

Capital includes debt and equity items as disclosed in the table below.

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

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 31 December 2016 and 31 December 2015.

As disclosed in Note 23(b), certain subsidiaries of the Group are required by the Saudi Arabian Regulations to contribute to and maintain a non-distributable statutory reserve fund whose utilisation is subject to approval by the relevant Saudi Arabia authorities. This externally imposed capital requirement has been complied with by the above-mentioned subsidiary for the financial years ended 31 December 2016 and 2015.

The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group’s policy is to keep the gearing ratio at below 50%. The Group includes within net debt, loans and borrowings, trade and other payables, less cash and cash equivalents. Capital includes equity attributable to owners of the Company less the above-mentioned restricted statutory reserve.

Group

2016 2015

$’000 $’000

Loans and borrowings (Note 20) 21,220 9,556Trade and other payables (Note 21) 130,487 93,487Less: Cash and cash equivalents (Note 19) (86,021) (118,215)

Net debt/(cash) 65,686 (15,172)

Equity attributable to owners of the Company 160,598 289,149Less: Statutory reserve (300) (300)

Total capital 160,298 288,849

Capital and net debt 225,984 273,677

Gearing ratio 29% NM

* NM denotes not meaningful


31 DECEMBER 2016


IV-91


29. SEGMENT INFORMATION

Reporting format

The primary segment reporting format is determined to be business segments as the Group’s risks and rates of return are affected predominantly by differences in the products and services produced. Secondary information is reported geographically. The operating businesses are organised and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets.

Business segments

The Project Services segment provides engineering design, procurement and construction services for plants and associated facilities in oil and gas, petrochemical and pharmaceutical industries.

The Maintenance and Trading segment provides maintenance, engineering and other related services to chemical process industry, including warehousing, trading and logistics services of equipment and products.

Geographical segments

The Group’s geographical segments are based on the location of the Group’s assets. Sales to external customers disclosed in geographical segments are based on the geographical location of its customers. Others include countries such as People’s Republic of China, Malaysia, Indonesia, India and Vietnam.

Allocation basis and transfer pricing

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets, income tax and deferred tax assets and liabilities and related expenses.

Transfer prices between business segments are set on an arm’s length basis in a manner similar to transactions with third parties. Segment revenue, expenses and results include transfers between business segments. These transfers are eliminated on consolidation.


31 DECEMBER 2016


IV-92


29. SEGMENT INFORMATION (CONT’D)

Business segments

The following table presents revenue and results information regarding the Group’s business segments for the years ended 31 December 2016 and 2015.

Project services

Maintenance

and trading Eliminations Consolidated

2016 2015 2016 2015 2016 2015 2016 2015

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Segment

revenue

Sales to external customers 182,981 278,550 50,888 50,724 – – 233,869 329,274

Inter-segment sales 2,941 3,732 7,233 7,963 (10,174) (11,695) – –

Total revenue 185,922 282,282 58,121 58,687 (10,174) (11,695) 233,869 329,274

Segment result 43,932 64,065 13,149 15,688 – – 57,081 79,753

Unallocated expenses, net (42,905) (30,805)

Finance costs (494) (415) – – – – (494) (415)Share of results

of associates 233 125 – – – – 233 125Unallocated

share of results of associates (672) (708)

Profit before tax 13,243 47,950Income tax

expense (1,400) (2,886)

Profit after tax 11,843 45,064

The nature of the elimination to arrive at amounts reported in the consolidated financial statements relates to inter-segment revenues that are eliminated on consolidation.


31 DECEMBER 2016


IV-93



Business segments (cont’d)

The following table presents assets, liabilities and other segment information regarding the Group’s business segments as at and for the years ended 31 December 2016 and 2015.

Project services

Maintenance

and trading Consolidated

2016 2015 2016 2015 2016 2015

$’000 $’000 $’000 $’000 $’000 $’000

Assets and liabilities:

Segment assets 261,246 258,955 68,776 74,724 330,022 333,679Investment in associates 497 214 – – 497 214Unallocated assets (Note A) 23,208 15,943

Total assets 353,727 349,836

Segment liabilities 162,118 168,109 17,677 16,921 179,795 185,030Unallocated liabilities (Note B) 11,562 11,725

Total liabilities 191,357 196,755

Other segment information:

Capital expenditure 26,211 3,107 189 486 26,400 3,593Depreciation and amortisation 9,000 8,720 1,167 1,162 10,167 9,882

Notes

A Unallocated assets consist of deferred tax assets, tax recoverable and investments in associates amounting to $747,000 (2015: $1,022,000), $931,000 (2015: $917,000) and $21,530,000 (2015: $14,004,000) respectively.

B Unallocated liabilities consist of deferred tax liabilities and income tax payable amounting to $1,906,000 (2015: $2,020,000) and $9,656,000 (2015: $9,705,000) respectively.

Information about major customers

Revenue from 5 (2015: 2) major customers amount to $72,991,000 (2015: $108,546,000), arising from the project services segment.


31 DECEMBER 2016


IV-94



Geographical segments

The following table presents revenue, capital expenditure and certain assets information regarding the Group’s geographical segments for the years ended 31 December 2016 and 2015.

Singapore Thailand Middle East Others Total

2016 2015 2016 2015 2016 2015 2016 2015 2016 2015

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Revenue:

Sales to external

customers 163,855 186,428 29,370 38,670 36,404 97,790 4,240 6,386 233,869 329,274

Other segment

information:

Segment assets 222,553 214,425 31,916 27,191 36,512 56,009 39,041 36,054 330,022 333,679

Investment in

associates 17,381 8,968 – – – – 4,646 5,250 22,027 14,218

Unallocated assets 1,678 1,939

Total assets 353,727 349,836

Capital expenditure 25,971 2,386 207 938 141 111 81 158 26,400 3,593

30. DIVIDENDS

Group and Company

2016 2015

$’000 $’000

Declared and paid during the financial year:

Dividends on ordinary shares:– Final exempt (one-tier) dividend for 2015: 1.5 cents (2014: 2.5 cents) per share 8,513 14,188

Proposed but not recognised as a liability as at 31 December:

Dividends on ordinary shares, subject to shareholders’ approval at the Annual General Meeting:

– Final exempt (one-tier) dividend for 2016: 0.5 cent (2015: 1.5 cents) per share 2,838 8,513

31. AUTHORISATION OF FINANCIAL STATEMENTS FOR ISSUE

The financial statements for the year ended 31 December 2016 were authorised for issue in accordance with a resolution of the directors on 27 March 2017.


31 DECEMBER 2016


V-1

APPENDIX V – UNAUDITED THIRD QUARTER AND NINE MONTHS FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 SEPTEMBER 2017

ROTARY ENGINEERING LIMITED (Company Registration No. 198000255E)

THIRD QUARTER AND NINE MONTHS FINANCIAL STATEMENT AND DIVIDEND ANNOUNCEMENT FOR THE PERIOD ENDED 30 SEPTEMBER 2017 1(a). A statement of comprehensive income (for the Group) together with a comparative statement for the third quarter and nine months ended 30 September 2017. Consolidated income statement

(All figures in S$'000) 3Q17 3Q16%

Increase/ (Decrease)

9M17 9M16%


Revenue 75,237 52,649 43% 197,673 169,046 17%Cost of sales (61,386) (39,085) 57% (155,307) (128,885) 21%Gross profit 13,851 13,564 42,366 40,161

18% 26% 21% 24%Other income 202 509 (60%) 1,071 3,096 (65%)Foreign exchange differences (801) 977 NM (1,450) (202) 618%Selling and marketing costs (201) (217) (7%) (612) (835) (27%)General and administrative costs (9,540) (10,670) (11%) (29,933) (31,854) (6%)Other operating costs (2,357) (3,315) (29%) (6,547) (7,091) (8%)Finance income 989 849 16% 3,224 2,572 25%Finance costs (100) (134) (25%) (358) (345) 4%Share of results of associates (71) (146) (51%) (287) (55) 422%Profit before tax 1,972 1,417 7,474 5,447 Income tax (expense)/credit (380) 6 NM (882) (878) 0%

Profit after tax 1,592 1,423 6,592 4,569

Profit for the period attributable to:Owners of the company 1,582 1,227 29% 6,440 3,795 70%Non-controlling interests 10 196 (95%) 152 774 (80%)

1,592 1,423 6,592 4,569

Group Group

*NM denotes not meaningful

V-2


Consolidated statement of comprehensive income



9M17 9M16%


Profit after tax 1,592 1,423 6,592 4,569

Other comprehensive incomeForeign currency translation movement attributable to owners of the company

(634) 780 NM (1,524) (3,619) (58%)

Foreign currency translation movement attributable to non-controlling interests

75 (1,272) NM 345 4,903 (93%)

Other comprehensive income for the period (559) (492) (1,179) 1,284

Total comprehensive income for the period 1,033 931 5,413 5,853

Total comprehensive income attributable to:Owners of the company 948 2,007 (53%) 4,916 176 NMNon-controlling interests 85 (1,076) NM 497 5,677 (91%)

1,033 931 5,413 5,853

Group Group

Profit after tax is stated after (charging)/ crediting the following items:



9M17 9M16%


(a) Other incomeGain on disposal of property, plant and equipment 5 17 (71%) 110 478 (77%)

Government grants 36 156 (77%) 322 867 (63%)Sale of scrap 84 103 (18%) 417 825 (49%)(b) Foreign exchange differences Foreign exchange (loss)/gain (366) 2,433 NM (1,609) (262) 514%Fair value (loss)/gain on foreign currency contracts, net (435) (1,456) (70%) 159 60 165%

Net foreign exchange differences (801) 977 (1,450) (202) (c) Other operating costsAllowance for doubtful debts - - NM - (194) NMAmortisation of intangible assets (54) (79) (31%) (184) (252) (27%)Bad debts written off - - NM (56) - NMDepreciation of property, plant and equipment (2,295) (3,258) (30%) (6,838) (7,094) (4%)

Fair value (loss)/gain on investment in debt securities, net (4) 22 NM 93 40 132%

Inventories written down (4) - NM (12) - NMWrite back of allowance for doubtful debts - - NM 450 409 10%

(d) Finance costsAmortisation of prepaid loan appraisal fees - - NM - (96) NM

Interest expense (100) (134) (25%) (358) (249) 44%

GroupGroup

*NM denotes not meaningful

V-3


1(b)(i). A statement of financial position (for the Issuer and Group), together with a comparative statement as at the end of the immediately preceding financial year

30-Sep-17 31-Dec-16 30-Sep-17 31-Dec-16Non-current assets

Property, plant and equipment 66,578 64,897 12,179 10,275 Intangible assets 293 244 144 129 Investments

Subsidiaries - - 55,657 50,829 Associates 20,608 22,027 12,527 12,527 Others 31,830 29,270 895 895

Deferred tax assets 1,086 747 - - 120,395 117,185 81,402 74,655

Current assetsGross amount due from customers for contract work-in-progress 47,332 26,427 3,339 995

Inventories 5,605 6,527 568 469 Other investments 6,007 9,201 5,256 6,006 Prepaid operating expenses 870 743 297 24 Downpayments made to suppliers 13,167 1,654 5,850 787 Trade and other receivables 73,535 105,829 156,545 186,113 Foreign currency contracts - 140 - 51 Cash and cash equivalents 90,033 86,021 25,635 29,139

236,549 236,542 197,490 223,584

Current liabilitiesIncome tax payable 10,270 9,656 3,393 3,751 Loans and borrowings 6,599 6,332 3,029 3,226 Gross amount due to customers for contract work-in-progress 14,170 22,270 1,894 32,059

Trade and other payables 107,905 130,487 82,259 95,387 Trust receipt payables 10,265 - 5,299 - Downpayments from customers 32,875 5,353 8,608 971 Foreign currency contracts 255 465 255 465

182,339 174,563 104,737 135,859 Net current assets 54,210 61,979 92,753 87,725

Non-current liabilitiesDeferred tax liabilities 1,521 1,906 830 1,255 Loans and borrowings 9,339 14,888 9,074 11,178

10,860 16,794 9,904 12,433

163,745 162,370 164,251 149,947

Share capital 89,365 89,365 89,365 89,365 Treasury shares (161) (161) (161) (161) Retained earnings 200,771 197,169 75,047 60,743 Other reserves (127,299) (125,775) - -

162,676 160,598 164,251 149,947 Non-controlling interests 1,069 1,772 - -

Total equity 163,745 162,370 164,251 149,947

Equity attributable to owners of the Company

(All figures in S$'000) Group Company

Net assets

V-4


1(b)(ii). Aggregate amount Group's borrowings and debt securities. (All figures in S$’000 unless stated) Amount repayable in one year or less, or on demand

Secured Unsecured Secured Unsecured16,864 - 6,332 -

Amount repayable after one year

Secured Unsecured Secured Unsecured9,339 - 14,888 -

30-Sep-17 31-Dec-16

30-Sep-17 31-Dec-16

Details of any collateral Collateral for $15.9 million (31 December 2016: $21.2 million) loans include mortgage over property, plant and equipment. Trust receipt payables of $10.3 million (31 December 2016: nil) are secured over materials procured for the purpose of project execution.

V-5


1(c). A statement of cash flows (for the Group), together with a comparative statement for the corresponding period of the immediately preceding financial year.

(All figures in S$'000)

3Q17 3Q16 9M17 9M16

Operating activitiesProfit before tax 1,972 1,417 7,474 5,447 Adjustments for :Allowance for doubtful debts - - - 194 Amortisation of intangible assets 54 79 184 252 Amortisation of prepaid loan appraisal fees - - - 96 Bad debts written off - - 56 - Depreciation of property, plant and equipment 2,295 3,258 6,838 7,094 Fair value loss/(gain) on foreign currency contracts, net 435 1,456 (159) (60)

Fair value loss/(gain) on investment in debt securities, net 4 (22) (93) (40)

Finance income (989) (849) (3,224) (2,572) Gain on disposal of property, plant and equipment (5) (17) (110) (478) Interest expense 100 134 358 249 Inventories written down 4 - 12 - Write back of allowance for doubtful debts - - (450) (409) Share of results of associates 71 146 287 55 Operating cash flows before changes in working capital 3,941 5,602 11,173 9,828

(Increase)/Decrease in:Trade and other receivables, prepaid operating expenses and downpayments made to suppliers (1,589) 9,598 21,545 13,112

Inventories 537 (121) 863 219 (Decrease)/Increase in:Trade and other payables and downpayments from customers 17,528 13,041 6,152 (4,031)

Gross amount due to customers for contract work-in-progress, net (14,875) (27,027) (28,607) (9,566)

Cash flows from operations 5,542 1,093 11,126 9,562 Interest received 89 101 300 248 Interest paid (324) (134) (1,004) (249) Income tax paid (240) (179) (545) (1,043)

Net cash flows from operating activities 5,067 881 9,877 8,518

Group Group

V-6


(All figures in S$'000)

3Q17 3Q16 9M17 9M16

Investing activitiesAdditions to intangible assets (39) (39) (233) (46) Additional investment in associate - - - (82) Proceeds from disposal of other investments - - 759 - Proceeds from disposal of property, plant and equipment 57 29 683 1,016

Purchase of investment securities - - - (6,783) Purchase of property, plant and equipment (5,457) (1,390) (9,762) (24,496) Repayment of loan from other investment - - 2,119 -

Net cash flows used in investing activities (5,439) (1,400) (6,434) (30,391)

Financing activitiesDividends paid:- by the Company - - (2,838) (8,513) - by subsidiaries to non-controlling interests - - (1,200) (800) Proceeds from trust receipt payables 10,265 - 10,265 - Proceeds from bank loans - - - 14,851 Repayment of bank loans, net (1,828) (1,321) (4,431) (2,649) Repayment of finance lease obligations, net (29) (10) (62) (22)

Net cash flows from/(used in) financing activities 8,408 (1,331) 1,734 2,867

Net increase/(decrease) in cash and cash equivalents 8,036 (1,850) 5,177 (19,006)

Effect of exchange rate changes on cash and cash equivalents (407) 97 (1,165) (1,162)

Cash and cash equivalents at beginning of quarter/period 82,404 99,800 86,021 118,215

Cash and cash equivalents at end of the period 90,033 98,047 90,033 98,047

Group Group

V-7


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easu

ry

shar

esRet

aine

d ea

rnin

gsC

apita

l re

serv

eSt

atut

ory

rese

rve

Fore

ign

curr

ency

tr

ansl

atio

n re

serv

eTo

tal

Non

-co

ntro

lling

in

tere

sts

Tota

l equ

ity

At 1

Jan

uary

201

689

,365

(161

)

194,

329

547

300

4,

769

28

9,14

9

(136

,068

)

15

3,08

1

Prof

it fo

r th

e pe

riod

-

-

2,56

8

-

-

-

2,

568

57

8

3,

146

Oth

er c

ompr

ehen

sive

inco

me

Fore

ign

curr

ency

tra

nsla

tion

-

-

-

-

-

(4,3

99)

(4,3

99)

6,17

5

1,77

6

Tota

l com

preh

ensi

ve in

com

e fo

r th

e pe

riod

-

-

2,56

8

-

-

(4,3

99)

(1,8

31)

6,75

3

4,92

2

Con

trib

utio

ns b

y an

d di

strib

utio

ns t

o ow

ners

Div

iden

ds o

n ord

inar

y sh

ares

-

-

(8,5

13)

-

-

-

(8

,513

)

-

(8,5

13)

Div

iden

ds p

aid

by s

ubsi

diar

ies

to n

on-

cont

rolli

ng in

tere

sts

-

-

-

-

-

-

(8

00)

(800

)

Tota

l con

trib

utio

ns b

y an

d di

strib

utio

ns t

o ow

ners

-

-

(8,5

13)

-

-

-

(8

,513

)

(800

)

(9

,313

)

At

30

Jun

e 2

01

689

,365

(161

)

188,

384

547

300

37

0

27

8,80

5

(130

,115

)

14

8,69

0

Prof

it fo

r th

e pe

riod

-

-

1,22

7

-

-

-

1,

227

19

6

1,

423

Oth

er c

ompr

ehen

sive

inco

me

Fore

ign

curr

ency

tra

nsla

tion

-

-

-

-

-

780

780

(1,2

72)

(4

92)

To

tal c

ompr

ehen

sive

inco

me

for

the

perio

d-

-

1,22

7

-

-

780

2,00

7

(1,0

76)

93

1

Con

trib

utio

ns fr

om o

wne

rs o

f the

as

soci

ate

Shar

e of c

apita

l res

erve

s in

ass

oci

ate

-

-

-

8,

370

-

-

8,

370

-

8,

370

Tota

l con

trib

utio

ns fr

om o

wne

rs o

f the

as

soci

ate

-

-

-

8,

370

-

-

8,

370

-

8,

370

At

30

Sep

tem

ber

20

16

89

,36

5

(16

1)

1

89

,61

1

8,9

17

3

00

1,1

50

28

9,1

82

(1

31

,19

1)

1

57

,99

1

Att

ribu

tabl

e to

ow

ners

of

the

com

pany

V-9


Company Share capital

Treasury shares

Retained earnings Total equity

At 1 January 2017 89,365 (161) 60,743 149,947

Profit for the period, representing total comprehensive income for the period - - 7,600 7,600

Contributions by and distributions to ownersDividends on ordinary shares - - (2,838) (2,838) Total transactions with owners in their capacity as owners - - (2,838) (2,838)

At 30 June 2017 89,365 (161) 65,505 154,709


At 30 September 2017 89,365 (161) 75,047 164,251

At 1 January 2016 89,365 (161) 97,484 186,688


Contributions by and distributions to ownersDividends on ordinary shares - - (8,513) (8,513) Total transactions with owners in their capacity as owners - - (8,513) (8,513)

At 30 June 2016 89,365 (161) 92,565 181,769


At 30 September 2016 89,365 (161) 100,187 189,391 1(d)(ii). Details of any changes in the company’s share capital arising from rights issue, bonus issue, share buy-backs, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares for cash or as consideration for acquisition or for any other purpose since the end of the previous period reported on. State the number of shares that may be issued on conversion of all the outstanding convertibles, if any, against the total number of issued shares excluding treasury shares and subsidiary holdings of the issuer, as at the end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year. State also the number of shares held as treasury shares and the number of subsidiary holdings, if any, and the percentage of the aggregate number of treasury shares and subsidiary holdings held against the total number of shares outstanding in a class that is listed as at the end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year. There were no changes in the share capital of the Company as at 30 September 2017. As at 30 September 2017, the Company has 336,000 (30 September 2016: 336,000) ordinary shares of the Company by way of market purchases on the Singapore Exchange and held them as treasury shares. The number of treasury shares represented 0.06% (30 September 2016: 0.06%) of the total number of issued shares, excluding treasury shares. There are no subsidiary holdings as at 30 September 2017.

V-10


1(d)(iii). To show the total number of issued shares excluding treasury shares as at the end of the current financial period and as at the end of the immediate preceding year. Total number of issued shares, excluding treasury shares, as at 30 September 2017 is 567,518,000 (31 December 2016: 567,518,000). 1(d)(iv). A statement showing all sales, transfers, cancellation and/or use of treasury shares as at the end of the current financial period reported on. Nil. 1(d)(v). A statement showing all sales, transfers, cancellation and/or use of subsidiary holdings as at the end of the current financial period reported on. Not applicable. 2. Whether the figures have been audited or reviewed, and in accordance with which auditing standard or practice. The statements of financial position of the Group and the Company as at 30 September 2017, the statements of changes in equity of the Group and the Company, the consolidated income statement, consolidated statement of comprehensive income and consolidated statement of cash flows of the Group for the nine-month financial period ended 30 September 2017, prepared in this result announcement are presented in accordance with Singapore Financial Reporting Standard 34 Interim Financial Reporting and have not been audited, but have been reviewed by the auditors of the Group, in accordance with Singapore Standards on review Engagement 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity. Certain financial information of this announcement has been extracted from the interim financial information for the financial period ended 30 September 2017. 3. Where the figures have been audited or reviewed, the auditors' report (including any qualifications or emphasis of matter). Please refer to the attached independent auditors’ review report for the nine months ended 30 September 2017. 4. Whether the same accounting policies and methods of computation as in the issuer's most recently audited annual financial statements have been applied. The Company had considered and consistently applied all applicable revised and new Singapore Financial Reporting Standards. 5. If there are any changes in the accounting policies and methods of computation, including any required by an accounting standard, what has changed, as well as the reasons for, and the effect of, the change. See point 4 as above.

V-11


6. Earnings per ordinary share of the Group for the current financial period reported on and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividend.

(In S$'000 unless stated)

3Q17 3Q16 9M17 9M16

Earnings per ordinary share of the group for the period after deducting any provision for preference dividends:Based on weighted average number of ordinary shares in issue (in cent)

0.3 0.2 1.1 0.7

On a fully diluted basis (in cent) 0.3 0.2 1.1 0.7

Net profit attributable to ordinary shareholders for basic and diluted earnings per share

1,582 1,227 6,440 3,795

Weighted average number of ordinary shares applicable to basic and diluted earnings per share ('000)

567,518 567,518 567,518 567,518

Group Group

7. Net asset value (for the Issuer and Group) per ordinary share based on the total number of issued shares excluding treasury shares of the Issuer at the end of the:- (a) current financial period reported on; and (b) immediately preceding financial year.

30-Sep-17 31-Dec-16 30-Sep-17 31-Dec-16

Net asset value per ordinary share (in cents) based on issued share capital as at the end of the year reported on

28.7 28.3 28.9 26.4

Group Company

The calculation of net asset value per ordinary share is based on 567,518,000 shares as at 30 September 2017 (31 December 2016: 567,518,000). 8. A review of the performance of the Group, to the extent necessary for a reasonable understanding of the Group's business. It must include a discussion of the following:- (a) any significant factors that affected the turnover, costs, and earnings of the Group

for the current financial period reported on, including (where applicable) seasonal or cyclical factors.

(b) any material factors that affected the cash flow, working capital, assets or liabilities of the Group during the current financial period reported on.

2017 Third Quarter (3Q17) Review Revenue in 3Q17 increased when compared with the same quarter last year, due to newly secured projects being executed in 2017. Gross profit margin for 3Q17 was lower at 18% compared to the same quarter last year. The higher gross profit margin in 3Q16 was due to closure of completed projects. The Group recognised a net foreign exchange loss of S$0.8M during 3Q17. This comprises an exchange loss which relates mainly to the depreciation of USD against SGD as at balance sheet date.

V-12


General and administrative costs were higher in 3Q16 due to higher professional fees incurred. Other operating costs decreased due to decline in depreciation expense as certain fixed assets were disposed in the prior year. Foreign currency translation movement attributable to owners of the Company mainly relates to the translation of the Group’s subsidiaries in Thailand, Saudi Arabia and United Arab Emirates. This amounted to a loss of S$0.6M for the quarter as reflected in the other comprehensive income. Foreign currency translation movement attributable to non-controlling interests mainly relates to the translation of the Group’s subsidiary in Saudi Arabia. 2017 Nine Months (9M17) Review Revenue in 9M17 increased when compared with the same period last year, due to newly secured projects being executed in the current period. Gross profit margin for the 9M17 was lower at 21% compared to the same period last year. The higher gross profit margin in 9M16 was due to closure of completed projects. Other income was higher in 9M16 mainly contributed by a gain on disposal of an office building, higher wage credit grants received and sale of scrap. General and administrative costs were higher in 9M16 due to higher professional fees incurred. Other operating costs in 9M17 decreased due to decline in depreciation expense as certain fixed assets were disposed in the prior year. Finance income relates mainly to interest income from an investment loan. The Group recognised a net foreign exchange loss of S$1.5M during 9M17. The exchange loss relates to the depreciation of USD against SGD as at balance sheet date, partially offset by the exchange gain of S$0.2M from foreign currency contracts. Foreign currency translation movement attributable to owners of the Company mainly relates to the translation of the Group’s subsidiaries in Thailand, Saudi Arabia and United Arab Emirates. This amounted to a loss of S$1.5M for the period as reflected in the other comprehensive income. Foreign currency translation movement attributable to non-controlling interests mainly relates to the translation of the Group’s subsidiary in Saudi Arabia. This amounted to a gain of S$0.3M for the period as reflected in the other comprehensive income. Balance Sheet Review � Gross amount due from customers for contract work-in-progress � Gross amount due to customers for contract work-in-progress

These relate to contract accounting to record revenue and cost on accrual basis. These figures can be reconciled to the trade receivables and trade payables. Gross amount due from customers for contract work-in-progress increased due to unbilled receivables from new projects being executed. Trade and other receivables decreased due to collections received from customers of projects that were completed. Trust receipt payables pertain to working capital facilities used for projects under execution. Down payments from customers increased due to advances received from new projects.

V-13


9. Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results. No forecast or prospect statement was previously made. 10. A commentary at the date of announcement of the significant trends and competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months. Amidst continued uncertainty in the global economy, the Group’s liquid storage terminal EPC business environment continues to remain challenging. At the date of this announcement, the Group’s order book, excluding maintenance, stands at S$474.8M. On 2 October 2017, OROCHEM PTE. LTD. (the “Offeror”) and the Company, jointly announced that the Offeror had presented to the Company’s Directors a formal proposal (the “Delisting Proposal”) to seek the voluntary delisting of the Company (the “Delisting”) from the Official List of the Singapore Exchange Securities Trading Limited (the “SGX-ST”) pursuant to Rules 1307 and 1309 of the listing manual of the SGX-ST. Under the Delisting Proposal, DBS Bank Ltd will make, for and on behalf of the Offeror, an exit offer (the “Exit Offer”) in cash, conditional on the approval of shareholders of the Company (the “Shareholders”) for the Delisting being obtained, to acquire all the issued ordinary shares in the capital of the Company (the “Shares”), other than those held by the Company as treasury shares and those held, directly or indirectly, by the Offeror as at the date of the Exit Offer. The Company has submitted an application in relation to the Delisting, which is subject to approval from the SGX-ST. The Board will update the Shareholders on the status of the Delisting in due course. 11. Dividend (a) Current financial period reported on Any dividend declared for the current financial period reported on? Nil.

(b) Corresponding period of the immediately preceding financial year Any dividend declared for the corresponding period of the immediately preceding financial year? Nil. (c) Date payable Not applicable. (d) Books closure date Not applicable.

V-14


12. If no dividend has been declared/recommended, a statement to that effect. No dividend has been declared/ recommended for the financial period ended 30 September 2017. 13. If the Group has obtained a general mandate from shareholders for interested person transactions (“IPT”), the aggregate value of such transactions as required under Rule 920(1)(a)(ii). If no IPT mandate has been obtained, a statement to that effect. The Group does not have a shareholders’ mandate for interested person transactions. 14. Confirmation pursuant to Rule 720(1) The Group has procured undertakings from all its directors and executive officers in the format set out in Appendix 7.7 under Rule 720(1). 15. Negative confirmation The Directors of the Company confirm that, to the best of their knowledge, nothing has come to their attention, which may render the third quarter financial results for the period ended 30 September 2017 to be false or misleading in any material aspect. BY ORDER OF THE BOARD TOH LI PING, ANGELA COMPANY SECRETARY 14 November 2017

VI-1

APPENDIX VI – REVIEW REPORT FROM ERNST & YOUNG LLP ON THE UNAUDITED THIRD QUARTER AND NINE MONTHS FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 SEPTEMBER 2017

VI-2

APPENDIX VI – REVIEW REPORT FROM ERNST & YOUNG LLP ON THE UNAUDITED THIRD QUARTER AND NINE MONTHS FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 SEPTEMBER 2017

VII-1

APPENDIX VII – REVIEW REPORT FROM THE IFA ON THE UNAUDITED THIRD QUARTER AND NINE MONTHS FINANCIAL STATEMENTS FOR THE PERIOD

ENDED 30 SEPTEMBER 2017

VIII-1

APPENDIX VIII – RELEVANT PROVISIONS IN THE CONSTITUTION RELATING TO THE RIGHTS OF SHAREHOLDERS IN RESPECT OF CAPITAL, DIVIDENDS

AND VOTING

The provisions in the Constitution of the Company relating to the rights of the Shareholders in respect of capital, dividends and voting have been reproduced below:

A. Rights in respect of Capital

SHARES

5. Subject to the Statutes and the Listing Manual, no shares may be issued without the prior approval of the Company in General Meeting but subject thereto and to these Articles relating to new shares and to any special right attached to any share for the time being issued, the Directors may allot (with or without conferring any right of renunciation), grant options over or otherwise dispose of the same to such persons on such terms and conditions (including such consideration) and at such time as the Directors determine Provided Always that the rights attaching to shares of a class other than ordinary shares shall be expressed in the resolution creating the same.

Shares under control of Company in General Meeting.

6(1). The Company in General Meeting may by Ordinary Resolution authorise the Directors to exercise any power of the Company to issue shares, such authority being confi ned to a particular exercise of that power or generally. Any such authority may be unconditional or subject to conditions and shall continue in force until the conclusion of the Annual General Meeting commencing next after the date on which the approval was given or the expiration of the period within which the next Annual General Meeting after that date is required by law to be held whichever is the earlier but may be previously revoked or varied by the Company in General Meeting Provided Always that no shares may be issued to transfer a controlling interest without prior approval of the Company in General Meeting.

Authority of Directors to issue shares.

6(2). Subject to the terms and conditions of any application for shares, the Directors shall allot shares applied for within ten Market Days of the closing date (or such other period as may be approved by the SGX-ST) of any such application. The Directors may, at any time after the allotment of any share but before any person has been entered in the Register as the holder thereof or before such share is entered against the name of a Depositor in the Depository Register, as the case may be, recognise a renunciation thereof by the allottee in favour of some other person and may accord to any allottee of such share a right to effect such renunciation upon and subject to such terms and conditions as the Directors may think fi t.

7. Any share in the Company may be issued with such preferred, qualifi ed, deferred or other special rights, privileges and conditions or such restrictions, whether in regard to dividend, return of capital, voting or otherwise, as the Company may from time to time by Ordinary Resolution determine, and subject to the Statutes, the Company may issue preference shares which are or, at the option of the Company, are liable to be redeemed on such terms and in such manner as the Company before the issue thereof may by Ordinary Resolution determine PROVIDED ALWAYS that the total number of issued preference shares shall not exceed the total number of issued ordinary shares at any one time.

Company may issue shares with preferred, qualifi ed, deferred and other special rights.

8. The Company shall have the power to issue further preference capital ranking equally with or in priority to the preference capital then already issued.

Issue of further preference shares.

VIII-2


AND VOTING

9. Subject to the provisions of the Statutes, all or any of the special rights or privileges for the time being attached to any preference share for the time being issued may from time to time (whether or not the Company is being wound up) be modifi ed, affected, altered or abrogated and preference capital other than redeemable preference shares may be repaid if authorised by a Special Resolution passed by holders of such preference shares at a special meeting called for the purpose. To any such special meeting, all provisions of these Articles as to General Meetings of the Company shall mutatis mutandis apply but so that the necessary quorum shall be two persons at least holding or representing by proxy not less than one third of the issued preference shares concerned and that every holder of the preference shares concerned shall be entitled on a poll to one vote for every such share held by him and that any holder of the preference shares concerned present either in person or by proxy may demand a poll Provided Always that where the necessary majority for such a Special Resolution is not obtained at the meeting, consent in writing if obtained from holders of three-fourths of the preference shares concerned within two months of the meeting shall be as valid and effectual as a Special Resolution carried at the meeting.

Alteration of rights of preference shareholders.

10. Preference shareholders shall have the same rights as ordinary Members as regards the receiving of notices, reports and balance sheets and the attending of General Meetings of the Company. Preference shareholders shall also have the right to vote at any meeting convened for the purpose of reducing the capital of the Company or winding up or sanctioning the sale of the undertaking of the Company or where the proposal to be submitted to the meeting directly affects their rights and privileges or when the dividend on the preference shares is more than six months in arrears.

Rights of preference shareholders.

11. If by the conditions of allotment of any share, the whole or part of the amount or issue price thereof shall be payable by instalments, every such instalment shall, when due, be paid to the Company by the holder for the time being of the share or his legal personal representative.

Instalments of shares.

12. The Company may pay a commission to any person in consideration of his subscribing, or agreeing to subscribe, whether absolutely or conditionally, for any share in the capital of the Company but such commission shall not exceed ten per cent of the price at which the shares are issued or an amount equivalent thereof. Any such commission may be paid in whole or in part in cash or fully or partly paid shares of the Company as may be arranged, and the Company may, in addition to, or in lieu of, such commission, in consideration of any person so subscribing or agreeing to subscribe, or of his procuring or agreeing to procure subscriptions, whether absolute or conditional, for any share in the Company, confer on any such person an option call within a specifi ed time for a specifi ed number or amount of shares in the Company at a specifi ed price. The payment or agreement to pay a commission or the conferring of an option shall be in the discretion of the Directors on behalf of the Company. The requirements of the Statutes shall be observed, so far as applicable.

Commission for subscribing.

13(1). The Company shall not be bound to register more than three persons as the joint holders of any share except in the case of executors, administrators or trustees of the estate of a deceased Member.

Joint holders.

VIII-3


AND VOTING

13(2). Subject to Article 13(1), any two or more persons may be registered as joint holders of any share and the joint holders of a share shall be severally as well as jointly liable for the payment of all instalments and calls and interest (if any) due in respect of such share.

13(3). The joint holder fi rst named in the Register or the Depository Register, as the case may be, shall as regards voting, proxy, service of notices and delivery of certifi cates and dividend warrants, be deemed to be the sole owner of such share.

14. No person shall be recognised by the Company as holding any share upon any trust, and the Company shall not be bound by or be required in any way to recognise (even when having notice thereof) any equitable, contingent, future or partial interest in any share or any other rights in respect of any share other than an absolute right to the entirety thereof in the person (other than the depository) entered in the Register as the registered holder or in the person whose name is entered In the Depository Register in respect of that share, as the case may be, except only where these Articles otherwise provide or as required by the Statutes or pursuant to any order of Court.

No trust recognised.

15. No person shall exercise any rights of a Member in respect of a share until his name shall have been entered in the Register as the registered holder thereof or in the Depository Register in respect of such share, as the case may be, and, unless the Directors otherwise determine, such person shall have paid all calls and other moneys for the time being due and payable on any share held by him.

Exercise of rights of Members

16. No part of the funds of the Company shall be employed by the Directors or the Company in the acquisition of shares in the Company or in lending on the security of shares in the Company unless permitted by the Statutes.

Company not to deal with its own shares.

SHARE CERTIFICATE

17. Every certifi cate for Shares shall be under the Seal. Authentication of certifi cates.

18. Every certifi cate of shares shall specify the number of the shares in respect of which it is issued, and the amount paid up thereon. No share certifi cate shall be issued representing shares of more than one class.

Certifi cates shall specify number of shares.

19. Every person whose name is entered as a registered holder in the Register shall be entitled without payment to receive within ten Market Days (or such other period as may be approved by the Exchange) after the closing date for applications to subscribe for a new issue of shares and within fi fteen Market Days (or such other period as may be approved by the Exchange) after lodgement of a registrable transfer one certifi cate under the Seal in respect of each class of shares held by him for all his shares in that class or several certifi cates in reasonable denominations each for one or more of his shares in any one class subject to such person’s prior payment of two Singapore Dollars (or such other sum as the Directors shall from time to time determine having regard to any limitation thereof as the Exchange may prescribe) for every certifi cate after the fi rst and such stamp duty as is payable on such certifi cate unless otherwise directed by the Directors Provided Always that in the case of joint registered holders, the Company shall not be bound to issue more than one certifi cate and delivery of such certifi cate to any one of them shall be suffi cient delivery to all such holders.

Member’s right to certifi cate & cancellation of certifi cates.

VIII-4


AND VOTING

20(1). Where only some of the shares comprised in any share certifi cate are transferred, the old certifi cate shall be cancelled and a new certifi cate for the balance of such shares shall be issued in lieu thereof without charge.

Issue of replacement certifi cates.

20(2). Any two or more certifi cates representing shares of any one class held by any person whose name is entered in the Register may be cancelled at his request and a single new certifi cate for such shares issued in lieu thereof without charge.

20(3). Any share certifi cate representing shares of any class held by any person whose name is entered in the Register may be surrendered by such person for cancellation and at his request the Company may issue in lieu thereof two or more share certifi cates representing such shares in such proportions as such person may specify, and the Directors may comply with such request if they think fi t. Such person shall pay a maximum of two Singapore. Dollars for each share certificate issued in lieu of a share certificate surrendered for cancellation or such other fee as the Directors may from time to time determine, taking into consideration any limitation thereof as may be prescribed by the Exchange.

20(4). Subject to the Statutes, if any share certifi cate shall be defaced, worn out, destroyed, stolen or lost, it may be renewed on such evidence being produced and a letter of indemnity or undertaking (if required) being given by the purchaser, registered holder, transferee, person entitled or Member company of the Exchange or on its behalf or their client or clients as the Directors shall require and in the case of defacement or wearing out on delivery up of the old certifi cate and in any case on payment of such sum not exceeding two Singapore Dollars as the Directors may from time to time require (or such other amount not exceeding two Singapore Dollars as may be permitted under the Statutes). In the case of theft, destruction or loss the registered holder or the person entitled to whom such renewed certifi cate is given shall also bear the loss and pay to the Company all expenses incidental to the investigations by the Company of the evidence of such theft, destruction or loss.

20(5). Where shares are registered jointly in the names of several persons, any such request may be made by any one of the registered joint holders.

21. The certifi cates of shares registered in the names of two or more persons may be delivered to the joint holder fi rst named in the Register.

Delivery of share certifi cates.

22. The Company shall have a fi rst and paramount lien on every share (not being a fully-paid share) and all dividends or interests from time to time declared in respect thereof for all moneys (whether presently payable or not) called or payable at a fi xed time, in respect of that share and for all moneys which the Company may be called upon by law to pay in respect of the shares of the Member or the deceased Member. The Directors may however waive any lien which has arisen and may resolve that any share shall for any limited period be exempt wholly or partially from the provisions of this Article 22.

Company’s lien on shares.

VIII-5


AND VOTING

23. For the purpose of enforcing such lien the Directors may sell all or any of the shares subject thereto in such manner as they think fi t, and no sale shall be made until such time as the moneys are presently payable, and until a notice in writing stating the amount due and demanding payment, and giving notice of intention to sell in default, shall have been served in such a manner as the Directors shall think fi t on the holder for the time being of the share or the person (if any) entitled by transmission to the shares, and default in payment shall have been made by him or them for seven days after such notice.

Right to enforce lien by sale.

24. The net proceeds of any such sale shall be applied in or towards the satisfaction of the amount due, and the residue (if any) shall be paid to the person whose share has been sold, his executors, administrators, trustees or assignees or as he shall direct.

Application of proceeds of sale.

25. To give effect to any such sale the Directors may authorise some person to transfer or to effect the transfer, as the case may be of the shares sold to the purchaser.

How sale to be effected.

CALLS ON SHARES

26. The Directors may from time to time make calls upon the Members in respect of any money unpaid on their shares or on any class of shares and not by the conditions of allotment thereof made payable at fi xed times, and each Member shall (subject to his having been given at least fourteen days’ notice specifying the time or times and place of payment) pay to the Company at the time or times and place so specifi ed the amount called on his shares. A call may be made payable by instalments. A call may be revoked or postponed as the Directors may determine. A call shall be deemed to have been made at the time when the resolution of the Directors authorising the call was passed.

Powers of Directors to make calls.

27. The joint holders of a share shall be jointly and severally liable to pay all calls and interest (if any) in respect thereof.

Joint and several liability.

28. If before or on the day appointed for payment thereof a call payable in respect of a share is not paid, the person from whom the amount of the call is due shall pay interest on such amount at the rate of eight per cent per annum from the day appointed for payment thereof to the time of actual payment, but the Directors shall have power to waive payment of such interest or any part thereof.

Interest on unpaid calls.

29. Any sum which by the terms of allotment of a share is made payable upon issue or at any fi xed date and any instalment of a call shall for all purposes of these Articles be deemed to be a call duly made and payable on the date fi xed for payment, a nd in case of non-payment the provisions of these Articles as to payment of interest and expenses, forfeiture and the like, and all the other relevant provisions of these Articles or the Statutes shall apply as if such sum were a call duly made and notifi ed as hereby provided.

Sums payable under terms of allotment to be deemed calls.

30. The Directors may from time to time make arrangements on the issue of shares for a difference between the holders of such shares in the amount of calls to be paid and in the time of payment of such calls .

Difference in calls between various holders.

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31. The Directors may, if they think fi t, receive from any Member willing to advance the same all or any part of the moneys uncalled and unpaid upon any share held by him, and upon all or any part of the moneys so advanced may (until the same would, but for the advance, become payable) pay interest at such rate not exceeding (unless the Company in General Meeting shall otherwise direct) eight per cent per annum as may be agreed upon between the Directors and the Member paying the sum in advance. Capital paid on shares in advance of calls shall not, whilst carrying interest, confer a right to participate in profi ts.

Payment of call in advance.

FORFEITURE OF SHARES

32. If any Member fails to pay the whole or any part of any call or instalment of a call on or before the day appointed for the payment of the same or any interest thereon, the Directors may at any time thereafter during such time as the call or instalment or interest remains unpaid serve a notice on such Member requiring him to pay the same, together with any interest (including interest upon interest) and expenses that may have been incurred by the Company by reason of such non-payment.

Notice to be given of intended forfeiture.

33. The notice shall name a further day (not being less than fourteen days from the date of service of the notice) and a place on and at which such call or instalment and such interest and expenses as aforesaid are to be paid. The notice shall also state that in the event of non-payment at or before the time and at the place appointed, the shares in respect of which the call was made or instalment or interest is payable shall be liable to be forfeited.

Form of notice.

34. If the requirements of any notice as aforesaid are not complied with, any share in respect of which the notice has been given, may at any time thereafter, before payment of all such calls or instalments, interests and expenses due in respect thereof, be forfeited by a resolution of the Directors to that effect. Such forfeiture shall include all dividends declared in respect of the forfeited shares and not actually paid before the forfeiture. The Directors may accept a surrender of any share liable to be forfeited hereunder.

If notice not complied with shares may be forfeited.

35. Any share so forfeited or surrendered shall be deemed to be the property of the Company, and the Directors may sell, re-allot, or otherwise dispose of the same in such manner as they think fi t. The Company may receive the consideration, if any, given for the share on any sale or disposition thereof and may execute a transfer of the share in favour of the person to whom the share is sold or disposed.

Sale etc of forfeited and surrendered shares.

36. The Directors may at any time before any share so forfeited or surrendered shall have been sold, re-allotted or otherwise disposed of, annul the forfeiture or surrender thereof upon such conditions as they think fi t.

Power to annul forfeiture.

37. For the purpose of giving effect to any sale of forfeited or surrendered shares, the Directors may authorise some person to transfer or to effect the transfer of, as the case may be, the shares sold to the purchaser.

Transfer of forfeited or surrendered shares.

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38. Any Member whose shares shall have been forfeited or surrendered shall cease to be a Member in respect of the forfeited or surrendered shares but shall, notwithstanding such forfeiture or surrender, be liable to pay, and shall forthwith pay to the Company all calls, instalments, interest and expenses owing upon or in respect of such shares at the time of forfeiture or surrender, together with interest thereon from the time of forfeiture or surrender until payment, at the rate of eight per cent per annum and the Directors may enforce the payment of such moneys or any part thereof if they think fi t, but shall not be under any obligation so to do. Any residue after the satisfaction of the unpaid calls, accrued interest and expenses shall be paid to the person whose shares have been forfeited or surrendered, his executors, administrators, trustees or assignees or as he shall direct.

Liability on forfeited share.

39(1). A statutory declaration in writing that the declarant is a Director or the Secretary, and that a share has been duly forfeited, surrendered or sold to satisfy a lien of the Company on a date stated in the declaration shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the share. Such declaration and the receipt by the Company of the consideration (if any) given for the share on the sale, re-allotment or disposal thereof together with the share certifi cate, where the same be required, delivered to a purchaser or (where the purchaser is a Depositor) to the Depository or the allottee thereof, as the case may be, shall (subject to the execution of a transfer if the same be required) constitute a good title to the share.

Declaration by Director or Secretary conclusive of fact of forfeiture.

39(2). (a) In the event of such sale, re-allotment or disposal, where the person (the “Relevant Person”) to whom the share is sold, re-allotted or disposed of is not a Depositor, the share shall be registered in the Register in the name of the Relevant Person and, where the Relevant Person is a Depositor, the Company shall procure that his name be entered in the Depository Register in respect of the share so sold, re-allotted or disposed of.

(b) The Relevant Person shall not be bound to see to the application of the purchase money (if any) nor shall his title to the share be affected by any irregularity or invalidity in the proceedings relating to the forfeiture, surrender, sale, re-allotment or disposal of the share.

TRANSFER OF SHARES

40. Save as provided by these Articles, there shall be no restriction on the transfer of fully paid shares (except where required by law or by the rules, bye-laws or listing rules of the Exchange). All transfers of shares may be effected by way of book-entry in the Depository Register Provided Always that the legal title in the shares may be transferred by the registered holders thereof by an instrument of transfer in the form approved by the Exchange. The instrument of transfer shall be left at the Offi ce accompanied by the certifi cate of the shares to be transferred and such other evidence (if any) as the Directors may reasonably require to show the right of the transferor to make the transfer. The transferor shall be deemed to remain the registered holder of the shares until the name of the transferee is entered in the Register in respect thereof.

Shares to be transferable.

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41. The instrument of transfer shall be signed both by the transferor and by the transferee, and it shall be witnessed Provided Always that an instrument of transfer in respect of which the transferee is the Depository shall be effective although not signed or witnessed by or on behalf of the Depository.

Instrument of transfer.

42. Shares of different classes shall not be comprised in the same instrument of transfer.

Only shares of same class to be in same instrument.

43. No share shall in any circumstances be transferred to any infant, bankrupt or person of unsound mind.

Restriction on transfer.

44(1). All instruments of transfer which are registered shall be retained by the Company, but any instrument of transfer which the Directors may refuse to register shall (except in any case of fraud) be returned to the party presenting the same.

Retention of Instrument of transfer and disposal of documents.

44(2). The Company shall be entitled to destroy:-

(a) all instruments of transfer which have been registered at any time after the expiration of six years from the date of registration thereof;

(b) all dividend mandates and notifi cations of change of address at any time after the expiration of six years from the date of recording thereof; and

(c) all share certifi cates which have been cancelled at any time after the expiration of six years from the date of the cancellation thereof.

44(3). It shall be conclusively presumed in favour of the Company that every entry in the Register purporting to have been made on the basis of an instrument of transfer or other document so destroyed was duly and properly made and that:

(a) every instrument of transfer so destroyed was a valid and effective instrument duly and properly registered;

(b) every share certificate so destroyed was a valid and effective certifi cate duly and properly cancelled; and

(c) every other document hereinbefore mentioned so destroyed was a valid and effective document;

in accordance with the recorded particulars thereof in the books or records of the Company.

44(4). Articles 44(2) and 44(3) shall apply only to the destruction of a document in good faith and without notice of any claim (regardless of the parties thereto) to which the document might be relevant.

44(5). Nothing contained in this Article 44 shall be construed as imposing upon the Company any liability in respect of the destruction of any such document earlier than as aforesaid or in any other circumstance which would not attach to the Company in the absence of this Article 44, and references in this Article 44 to the destruction of any document include references to the disposal thereof in any manner.

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45. The Directors may decline to accept any instrument of transfer unless:-

(a) all or any part of the stamp duty (if any) payable on each share transfer and such fee not exceeding two Singapore Dollars for each transfer or such other sum as may from time to time be prescribed by the Exchange is paid to the Company; and

(b) such fee not exceeding two Singapore Dollars as the Directors may from time to time determine is paid to the Company in respect of the registration of any instrument of transfer, probate, letters of administration, certifi cate of marriage or death, power of attorney or any document relating to or affecting the title to the shares.

Fees relating transfers.

46. The Directors may refuse to register the transfer of shares or allow the entry of or against a person’s name in the Depository Register in respect of shares transferred or to be transferred to such person:-

(a) which are not fully paid up; or

(b) on which the Company has a lien.

Power of Directors to refuse to register.

47. If the Directors refuse to register any transfer of any share they shall, where required by the Statutes, serve on the transferor and transferee, within one month beginning with the day on which the transfer was lodged with the Company, a notice in writing informing each of them of such refusal and of the facts which are considered to justify the refusal.

Notice of refusal to be sent by Company.

48. The Register may be closed at such times and for such periods as the Directors may from time to time determine Provided Always that the Register shall not be closed for more than thirty days in any year Provided Always that the Company shall give prior notice of such closure as may be required to the Exchange stating the period and purpose or purposes for which such closure is to be made.

Closure of the Register.

TRANSMISSION OF SHARES

49(1). In the case of the death of a Member the survivor where the deceased was a joint holder, and the legal personal representative of the deceased who was a sole or only surviving holder, or where such legal representative is entered in the Depository Register in respect of the shares of the deceased Member who was a Depositor, shall be the only person recognised by the Company as having any title to his shares.

Transmission of registered shares.

49(2). Nothing herein contained shall release the estate of a deceased Member from any liability in respect of any share solely or jointly held by him.

50. Any person becoming entitled to the legal title in a share in consequence of the death or bankruptcy of a person whose name is entered in the Register may upon producing such evidence of his title as the Directors may require, have the right either to be registered himself as the holder of the share, upon giving to the Company notice in writing of such intent, or to make such transfer thereof as such deceased or bankrupt person could have made, but the Directors shall in either case have the same right to refuse or suspend registration as they would have had in the case of such transfer by such deceased or bankrupt person before the death or bankruptcy, as the case may be.

Rights of registration and transfer upon demise or bankruptcy of Member.

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51. Save as otherwise provided in these Articles, a person becoming entitled to a share pursuant to Articles 49(1) and 50, shall have the right to receive and give a discharge for any dividends or other moneys payable in respect of the share, but he shall have no right to receive notice or to attend or vote at meetings of the Company, or (save as aforesaid) to any of the rights or privileges of a Member until he shall have been registered as a Member in the Register or his name shall have been entered in the Depository Register, as the case may be Provided Always that the Directors may at any time give notice requiring any such person to elect either to be registered himself or transfer the share, and if the notice is not complied with within ninety days of the date of such notice, the Directors may thereafter withhold payment of all dividends or other moneys payable in respect of the share until the requirements of the notice have been complied with.

Person registered under transmission clause entitled to dividends.

PURCHASE OF OWN SHARES

52(1). Subject to and in accordance with the provisions of the Act, the Company may purchase or otherwise acquire ordinary shares issued by it on such terms as the Company may think fi t and in the manner prescribed by the Act.

Company may purchase its own shares.

52(2). All shares purchased by the Company shall (unless held as treasury shares in accordance with the provisions of the Act) be deemed to be cancelled. The Company shall not exercise any right in respect of treasury shares other than as provided by the Act. Subject thereto, the Company may hold or deal with its treasury shares in the manner authorized by, or prescribed pursuant to, the Act.

Treasury Shares.

STOCK

53. The Company in General Meeting may by Ordinary Resolution convert any paid-up shares into stock and may from time to time reconvert such stock into paid-up shares.

Conversion of shares to stock.

54. When any shares have been converted into stock the several holders of such stock may transfer their respective interests therein or any part of such interests in such manner as the Company in General Meeting shall direct, but in default of any direction then in the same manner and subject to the same regulations as and subject to which the shares from which the stock arose might previously to conversion have been transferred or as near thereto as circumstances will admit. But the Directors may if they think fi t from time to time fi x the minimum amount of stock transferable.

Stockholders entitled to transfer interest.

55. The several holders of stock shall be entitled to participate in the dividends and profi ts of the Company according to the amount of their respective interests in such stock and such interests shall, in proportion to the amount thereof, confer on the holders thereof respectively the same rights, privileges and advantages for the purposes of voting at meetings of the Company and for other purposes as if they held the shares from which the stock arose, but so that none of such rights, privileges or advantages, except the participation in the dividends, profi ts and assets of the Company, shall be conferred by any such aliquot part of consolidated stock as would not, if existing in shares, have conferred such rights, privileges or advantages.

Stockholders entitled to profi ts.

56. All such provisions of these Articles as are applicable to paid up shares shall apply to stock and in all such provisions the words “shares” shall include “stock”, and “Depositor”, “Member” and “shareholder” shall include “stockholder”.

Defi nitions.

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INCREASE OF CAPITAL

57. The Company in General Meeting may from time to time by Ordinary Resolution, whether all the shares for the time being issued have been fully paid up or not, increase its capital by the creation and issue of new shares, such aggregate increase to be of such amount and to be divided into shares of such respective amounts as the Company by the resolution authorising such increase shall direct.

Power to increase capital.

58(1). Subject to any direction to the contrary that may be given by the Company in General Meeting or except as permitted under the Listing Manual, all new shares shall before issue be offered to such persons as at the date of the offer are entitled to receive notices from the Company of General Meetings in proportion, as nearly as the circumstances permit, to the number of the existing shares to which they are entitled. The offer shall be made by notice specifying the number of shares offered, and limiting a time within which the offer, if not accepted, will be deemed to be declined, and after the expiration of that time, or on the receipt of an intimation from the person to whom the offer is made that he declines to accept the shares offered, the Directors may dispose of those shares in such manner as they think fi t most benefi cial to the Company. The Directors may likewise so dispose of any new shares which (by reason of the ratio which the new shares bear to shares held by persons entitled to an offer of new shares) cannot, in the opinion of the Directors, be conveniently offered under this Article 58(1).

Issue of new shares to Members and Notice of issue.

58(2). Notwithstanding Article 58(1), the Company may by Ordinary Resolution in General Meeting give to the Directors a general authority, either unconditionally or subject to such conditions as may be specifi ed in the Ordinary Resolution, to:

(i) (a) issue shares in the capital of the Company (“shares”) whether by way of rights, bonus or otherwise; and/or

(b) make or grant offers, agreements or options, (collectively, “Instruments”) that might or would require shares to be Issued, including but not limited to the creation and issue of warrants, debentures or other instruments convertible into shares; and

(ii) notwithstanding the authority conferred by the Ordinary Resolution may have ceased to be in force, issue shares in pursuance of any Instrument made or granted by the Directors while the Ordinary Resolution was in force.

provided that:

(A) the aggregate number of shares to be issued pursuant to the Ordinary Resolution (including shares to be issued in pursuance of Instruments made or granted pursuant to the Ordinary Resolution) shall be subject to such limits and manner of calculation as may be prescribed by SGX-ST;

(B) In exercising the authority conferred by the Ordinary Resolution, the Company shall comply with the Listing Manual (unless such compliance is waived by the SGX-ST) and these Articles; and

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(C) unless revoked or varied by the Company in General Meeting, the authority conferred by the Ordinary Resolution shall not continue in force beyond the conclusion of the Annual General Meeting of the Company next following the passing of the Ordinary Resolution, or the date by which such Annual General Meeting of the Company is required by law to be held, or the expiration of such other period as may be prescribed by the Act whichever is the earliest.

59. Subject to any directions that may be given in accordance with the powers contained in the Memorandum of Association or these Articles, any capital raised by creation of new shares shall be considered as part of the original capital and all new shares shall be subject to the same provisions with reference to the payment of calls, transfer, transmission, forfeiture, lien and otherwise as if it had been part of the original capital.

New capital considered part of original capital.

ALTERATION OF CAPITAL

60(1). The Company may by Ordinary Resolution:-

(a) consolidate and divide all or any of its share capital; or

(b) cancel the number of shares which at the date of the passing of the resolution have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the number of the shares so cancelled; or

(c) sub-divide its existing shares or any of them. The resolution by which the subdivision is effected may determine that, as between the holders of the resulting shares, one or more of such shares may have any such preferred, deferred or other special rights or be subject to any restriction as the Company has power to attach to unissued or new shares; or

(d) subject to the Statutes, convert any class of shares into any other class of shares.

Alteration of Capital.

60(2). The Company may by Special Resolution reduce its share capital in any manner and with and subject to any requirement authorised and consent required by law.

CAPITALISATION OF PROFITS AND RESERVES

148(1). The Company in General Meeting may, upon the recommendation of the Directors, resolve that it is desirable to capitalise any part of the amount for the time being standing to the credit of the Company’s reserve funds or to the credit of the profi t and loss account or otherwise available for distribution; and accordingly that such sum be set free for distribution amongst the holders of shares in the Register or in the Depository Register, as the case may be, who would have been entitled thereto if distributed by way of dividends and in the same proportions on condition that the same be not paid in cash but be applied either in or towards paying up any amounts for the time being unpaid on any shares held by such Members respectively or paying up on full unissued shares or debentures of the Company to be allotted and distributed credited as fully paid up to and amongst such holders or in their nominees in the proportion aforesaid or partly in the one way and partly in the other and the Directors shall give effect to such resolution.

Capitalisation of profi ts and reserves.

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148(2) Whenever such resolution as aforesaid shall have been passed, the Directors shall make all appropriations and applications of the amounts resolved to be capitalised thereby and all allotments and issues of fully paid shares or debentures, if any, and generally shall do all acts and things required to give effect thereto with full power to the Directors to make such provision for the satisfaction of the right of the holders of such shares in the Register or in the Depository Register, as the case may be, under such resolution to a fractional part of a share by the issue of fractional certifi cates or by payment in cash or otherwise as they think fi t and also to authorise any persons to enter on behalf of such holders entitled thereto or their nominees into an agreement with the Company providing for the allotment to them respectively credited as fully paid up of any further shares to which they may be entitled upon such capitalisation; and any agreement made under such authority shall be effective and binding on all such holders and their nominees.

B. Rights in respect of Voting

GENERAL MEETINGS

66. In addition to any other meetings, a General Meeting shall be held once at least in every calendar year, at such time and place as may be determined by the Directors, but so that no more than fi fteen months shall be allowed to elapse between any two such General Meetings but in any event before the expiry of four months from the close of the fi nancial year of the Company, or such other period as may be prescribed under the Statutes or by the SGX-ST from time to time.

General Meetings.

67. The abovementioned General Meetings shall be called Annual General Meetings. All other General Meetings shall be called Extraordinary General Meetings.

Annual General Meetings.

68. The First Annual General Meeting of the Company shall be held at such time within a period of not more than eighteen months from the date of incorporation of the Company and at such time and place as the Directors may determine.

First Annual General Meeting.

69. The Directors may call an Extraordinary General Meeting of the Company whenever they think fi t in accordance with the Statutes.

Directors may call Extraordinary General Meetings.

70. The Directors shall, on the request of the holders of not less than one-tenth of the issued capital of the Company upon which all calls or other sums then due have been paid, forthwith proceed to convene an Extraordinary General Meeting of the Company, and in the case of such request the following provisions shall have effect:-

(a) The request must state the objects of the meeting and must be signed by the requestor and deposited at the Offi ce, and may consist of several documents in like form each signed by one or more requestor.

(b) If the Directors of the Company do not proceed to cause a meeting to be held within twenty-one days from the date of the request being so deposited, the requestor or any of them representing more than one-half of the voting rights of all of them may themselves convene the meeting, but any meeting so convened shall not be held after three months from the date of the deposit.

Extraordinary General Meetings called on requisition of shareholders.

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(c) In the case of a meeting at which a resolution is to be proposed as a Special Resolution the Directors shall be deemed not to have duly convened the meeting if they do not give such notice as is required by the Statutes.

(d) Any meeting convened under this Article by the requestor shall be convened in the same manner as nearly as possible as that in which meetings are to be convened by Directors.

71. Subject to the Statutes relating to the convening of meetings to pass Special Resolutions and agreements for shorter notice, at least fourteen clear days’ notice in writing specifying the place, day and hour of the meeting, and in case of special business, a notice in writing setting out the general nature of such special business, accompanied by a statement regarding the effect of any proposed resolution in respect of such special business, shall be given to all Members and the Exchange other than such as are not entitled under these Articles to receive such notices from the Company. At least fourteen days notice in writing of any General Meeting shall be given and at least twenty-one days’ notice in writing in the case of a Meeting to pass Special Resolution shall be given to all Members and the Exchange. Every such notice shall be published in at least one English Language daily newspaper circulating in Singapore at least fourteen clear days before the meeting. Whenever any meeting is adjourned for fourteen days or more, at least seven days’ notice in writing of the place and hour of such adjourned meeting shall be given in like manner Provided Always that when a meeting is adjourned for thirty days or more, notice of the adjourned meeting shall be given as in the case of an original meeting.

Notice of meeting.

72. Any Member entitled to be present and vote at a meeting or his proxy may submit any resolution to any General Meeting, provided that at least for the prescribed time before the day appointed for the meeting he shall have served upon the Company a notice in writing by him containing the proposed resolution, and stating his intention to submit the same. The prescribed time abovementioned shall be such that, between the date that the notice is served and the day appointed for the meeting, there shall be not less than three nor more than fourteen intervening days.

Members may submit resolution to meeting on giving notice to Company.

73. Upon receipt of any such notice as in the last preceding Article mentioned, the Secretary shall include in the notice of the meeting in any case where the notice of intention is received before the notice of the meeting is issued, and shall in any other case issue as quickly as possible to the Members notice that such resolution will be proposed.

Secretary to give notice to Members.

74. The accidental omission to give any notice to or non-receipt of any notice by any Member shall not invalidate the meeting or any resolution passed or proceedings at any such meeting.

Accidental omission to give notice.

PROCEEDINGS AT GENERAL MEETINGS

75. All business shall be deemed special that is transacted at an Extraordinary General Meeting and also all business that is transacted at an Annual General Meeting with the exception of the consideration of the accounts, balance sheets and reports (if any) of the Directors and Auditors, the fi xing of the remuneration of Directors, the election of Directors in the place of those retiring, the declaration of dividends and the appointment of and the fi xing of the remuneration of the Auditors.

Special business.

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76. Save as is herein otherwise provided, two Members present in person or by proxy shall be a quorum for a General Meeting and no business shall be transacted at any General Meeting unless the quorum is present at the commencement of the business. A corporation being a Member shall be deemed to be personally present if represented in accordance with the provisions of Article 91.

Quorum

77. If within half an hour from the time appointed for the meeting a quorum is not present, the meeting, if convened upon the requisition of Members, shall be dissolved; in any other case it shall stand adjourned to the same day in the next week, at the same time and place. At the adjourned meeting, any two or more Members present in person or by proxy shall be a quorum.

If quorum not present.

78. The Chairman (if any) of the Board of Directors shall preside as Chairman at every General Meeting, but if there be no such Chairman, or if at any meeting he shall not be present within fifteen minutes after the time appointed for holding the same, or shall be unwilling to act as Chairman, the Members present shall choose some Director or, if no Director be present or if all the Directors present decline to take the chair, one of themselves to be Chairman of the meeting.

Chairman.

79. The Chairman may with the consent of any meeting at which a quorum is present (and shall if so directed by the meeting), adjourn the meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfi nished at the meeting from which the adjournment took place.

Adjournment.

80. At every General Meeting a resolution put to the vote of the meeting shall be decided on a show of hands by the Members present in person and entitled to vote, unless before or upon the declaration of the result of the show of hands a poll be demanded by:-

(a) the Chairman of the meeting; or

(b) not less than two Members present in person or by proxy and entitled to vote; or

(c) a Member or Members present in person or by proxy, holding or representing, as the case may be:-

(i) not less than one-tenth of the total voting rights of all Members entitled to vote at the meeting; or

(ii) shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right.

How matters are to be decided.

81(1) If a poll is duly demanded it shall be taken in such manner as the Chairman directs, and the results of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded.

Chairman’s direction as to poll.

81(2) No poll shall be demanded on the election of a Chairman of a meeting or on a question of adjournment. A poll demanded on any other question shall be taken at such time as the Chairman of the meeting directs.

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82. Unless a poll be so demanded, a declaration by the Chairman of the meeting that a resolution has been carried, or has been carried by a particular majority, or lost, or not carried by a particular majority shall be conclusive, and an entry to that effect in the minute book of the Company shall be conclusive evidence thereof, without proof of the number or proportion of the votes recorded in favour of or against such resolution.

Declaration of Chairman conclusive.

83(1). No objection shall be raised as to the admissibility of any vote except at the meeting or adjourned meeting, as the case may be, at which the vote objected to is or may be given, tendered or cast, and every vote not disallowed at such meeting shall be valid for all purposes. Any such objection shall be referred to the Chairman of the meeting whose decision shall be fi nal and conclusive.

Objection to admissibility.

83(2). If any votes shall be counted which ought not to have been counted, or might have been rejected, the error shall not vitiate the result of the voting unless it be pointed out at the same meeting, or at any adjournment thereof, and unless in the opinion of the Chairman at the meeting or at any adjournment thereof as the case may be, it shall be of suffi cient importance to vitiate the result of the voting.

84. In case of an equality of votes, whether on a show of hands or on a poll, the Chairman of the meeting at which the show of hands takes place or at which the poll is demanded, as the case may be, shall have a second or casting vote.

In the event of equality of votes.

VOTES OF MEMBERS

85(1). Subject to and without prejudice to any special privileges or restriction as to voting for the time being attached to any special class of shares for the time being forming part of the capital of the Company:-

(a) every Member who is present in person or by proxy shall have one vote on a show of hands, the Chairman to decide which proxy shall be entitled to vote where a Member is represented by two proxies; and

(b) every Member who is present in person or by proxy, in case of a poll, shall have one vote for every share which he holds or represents and upon which all calls or other sums due thereon to the Company have been paid.

Voting rights.

85(2). For the purpose of determining the number of votes which a Member, being a Depositor, or his proxy may cast at any General Meeting upon a poll being called, the number of shares held or represented shall, in relation to the shares of that Depositor, be the number of shares entered against his name in the Depository Register as at the Cut-Off Time as certifi ed by the Depository to the Company.

86. In the case of joint holders the vote of the senior who tenders a vote whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders; and for this purpose seniority shall be determined by the order in which the names stand in the Register or the Depository Register, as the case may be.

Right of joint holders.

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87. Unless the Directors otherwise determine, no person other than a Member who shall have paid everything for the time being due from him and payable to the Company in respect of his shares, shall be entitled to be present or to vote on any question either personally or by proxy at any General Meeting.

Members only entitled to vote upon full payment.

88. A Member of unsound mind, or in respect of whom an order has been made by any Court having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll by the committee, curator bonis, or other person in the nature of committee or curator bonis appointed by that Court, and any such committee, curator bonis, or other person may, on a poll, vote by proxy.

Votes of Members of unsound mind.

89. On a poll, votes may be given either personally or by proxy and a person entitled to more than one vote need not use all his votes or cast all the votes he uses in the same way.

Vote personal or by proxy.

90(1). A proxy need not be a Member. Proxies.

90(2). A Member shall not be entitled to appoint more than two proxies to attend and vote at the same General Meeting Provided Always that where the Member is a Depositor, the Company shall be entitled and bound:-

(a) to reject any instrument of proxy lodged if the Depositor is not shown to have any shares entered against his name in the Depository Register as at the Cut-Off Time as certifi ed by the Depository to the Company;

(b) to accept as the maximum number of votes which in aggregate the proxy or proxies appointed by the Depositor is or are able to cast on a poll a number which is the number of shares entered against the name of that Depositor in the Depository Register as at the Cut-Off Time as certifi ed by the Depository to the Company, whether that number be greater or smaller than the number specifi ed in any instrument of proxy executed by or on behalf of that Depositor; and

(c) in determining rights to vote and other matters in respect of a completed instrument of proxy submitted to it, to have regard to the instructions (if any) given by and the notes (if any) set out in the instrument of proxy.

90(3). In any case where a form of proxy appoints more than one proxy, the proportion of the shareholding concerned to be represented by each proxy shall be specifi ed in the form of proxy. If no proportion is specifi ed, the Company shall be entitled to treat the fi rst named proxy as representing the entire number of shares entered against his name in the Depository Register and any second named proxy as an alternate to the fi rst named or at the Company’s option to treat the instrument of proxy as invalid.

91. Any corporation which is a Member may, by resolution of its directors or other governing body, authorise any person to act as its representative at any meetings of the Company or any class of Members of the Company, and such representative shall be entitled to exercise the same powers on behalf of the corporation which he represents as if he had been an individual shareholder.

Corporation may appoint representative.

VIII-18


AND VOTING

92. An instrument appointing a proxy shall be in writing in any usual or common form (including the form approved from time to time by the Depository) or in any other form which the Directors may approve and:-

(1) in the case of an individual shall be signed by the shareholder or his attorney;

(2) in the case of a corporation shall be either given under its common seal or signed on its behalf by an attorney or a duly authorised offi cer of the corporation.

Execution of instrument of proxy on behalf of shareholder.

93. Where an instrument appointing a proxy is signed on behalf of the shareholder by an attorney, the letter or the power of attorney or other authority, if any, or a duly certifi ed copy thereof shall (failing previous registration with the Company) if required by law, be duly stamped and be deposited at the Offi ce, not less than forty-eight hours before the time for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote and in default the instrument of proxy shall not be treated as valid.

Lodgement of instrument appointing proxy.

94. The signature on an instrument of proxy need not be witnessed. No witness needed for instrument of proxy.

95. A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death of the principal or revocation of the proxy or transfer of the share in respect of which the vote is given Provided Always that no notice in writing of the death or revocation or transfer shall have been received at the Offi ce one hour at least before the time fi xed for holding the meeting.

When vote by proxy valid though authority revoked.

96. An instrument appointing a proxy shall be deemed to confer authority to demand or join in demanding a poll and to speak at the meeting.

Instrument deemed to confer authority.

97. Where the capital of the Company consists of shares of different monetary denominations, voting rights shall be prescribed in such manner that a unit of capital in each class, when reduced to a common denominator, shall carry the same voting power when such right is exercisable.

Voting in respect of shares of different monetary denominations.

C. Rights in respect of Dividends

DIVIDENDS

135. The profi ts of the Company, subject to any special rights relating thereto created or authorised to be created by these Articles and subject to the provisions of these Articles as to the reserve fund shall be divisible among the Members in proportion to the amount of capital paid up on the shares held by them respectively.

Appropriation of profi ts.

136. The Company in General Meeting may by Ordinary Resolution declare a dividend on or in respect of any share to the Members according to their rights and interest in the profi ts and may fi x the time for payment. No larger dividend shall be declared than is recommended by the Directors but the Company in General Meeting may declare a smaller dividend.

Declaration of Dividend.

VIII-19


AND VOTING

137. No dividend shall be payable except out of the profi ts of the Company. No dividend shall carry interest.

Dividend payable out of profi ts.

138. The declaration of the Directors as to the net profi ts of the Company shall be conclusive.

Declaration conclusive.

139. The Directors may from time to time pay to the Members such interim dividends as in their judgment the position of the Company justifi es provided no such dividends shall be declared more than once in six months.

Interim dividend.

140. The Directors may retain any dividends on which the Company has a lien and may apply the same in or towards satisfaction of the debts, liabilities, or engagements in respect of which the lien exists.

Debts may be deducted.

141. A transfer of shares shall not pass the right to any dividend declared thereon before the registration of the transfer or the entry of the shares against the Depositor’s name in the Depository Register, as the case may be.

Effect of transfer.

142. Any General Meeting declaring a dividend may direct payment of such dividend wholly or in part by the distribution of specifi c assets, and in particular of wholly or partly paid-up shares, debentures, or debenture stock of the Company, or wholly or partly paid-up shares, debentures, or debenture stock of any other company, or in any one or more of such ways.

(1) The Directors may further resolve in the case of ordinary shares in the Company, that members entitled to such dividend be entitled to elect to receive an allotment of ordinary shares credited as fully paid in lieu of cash in respect of the whole or such part of the dividend, as the Directors may think fi t. In such case, the following provisions shall apply:-

(a) the basis of any such allotment shall be determined by the Directors;

(b) the Directors shall determine the manner in which members shall be entitled to elect to receive an allotment of ordinary shares credited as fully paid in lieu of cash in respect of the whole or such part of any dividend in respect of which the Directors shall have passed such a resolution as aforesaid, and the Directors may make such arrangements as to the giving of notice to members, providing for forms of election for completion by members (whether in respect of a particular dividend or dividends or generally), determining the procedure for making such elections or revoking the same and the place at which and the latest date and time by which any forms of election or other documents by which elections are made or revoked must be lodged, and otherwise make all such arrangements and do all such things, as the Directors consider necessary or expedient in connection with the provisions of this Article;

(c) the right of election may be exercised in respect of the whole of that portion of the dividend in respect of which the right of election has been accorded provided that the Directors may determine, either generally or in any specifi c case, that such right shall be exercisable in respect of the whole or any part of that portion; and

Dividend in specie.

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AND VOTING

(d) the dividend (or that part of the dividend in respect of which a right of election has been accorded) shall not be payable in cash on ordinary shares in respect whereof the share election has been duly exercised (the “elected ordinary shares”) and in lieu and in satisfaction thereof ordinary shares shall be allotted and credited as fully paid to the holders of the elected ordinary shares on the basis of allotment determined as aforesaid for such purpose (notwithstanding any provision of the Articles to the contrary), the Directors shall be empowered to do all things necessary and convenient for the purpose of implementing the aforesaid including, without limitation, the making of each necessary allotment of shares and of each necessary appropriation, capitalization, application, payment and distribution of funds which may be lawfully appropriated, capitalized, applied, paid or distributed for the purpose of the allotment and without prejudice to the generality of the foregoing the Directors may (a) capitalize and apply the amount standing to the credit of any of the Company’s reserve accounts or any sum standing to the credit of the profi t and loss account or otherwise for distribution as the Directors may determine, such sum as may be required to pay up in full the appropriate number of ordinary shares for allotment and distribution to and amongst the holders of the elected ordinary shares on such basis, or (b) apply the sum which would otherwise have been payable in cash to the holders of the elected ordinary shares towards payment of the appropriate number of ordinary shares for allotment and distribution to and among the holders of the elected ordinary shares on such basis.

(2) (a) The ordinary shares allotted pursuant to the provisions of paragraph (1) of this Article shall rank pari passu in all respects with the ordinary shares then in issue save only as regards participation in the dividend which is the subject of the election referred to above (including the right to make the election referred to above) or any other distributions, bonuses or rights paid, made, declared or announced prior to or contemporaneous with the payment or declaration of the dividend which is the subject of the election referred to above, unless the Directors shall otherwise specify.

(b) The Directors may do all acts and things considered necessary or expedient to give effect to any appropriation, capitalization application, payment and distribution of funds pursuant to this Article, with full power to make such provisions as they think fi t in the case of fractional entitlements to shares (including, notwithstanding any provision to the contrary in these Articles, provisions whereby in whole or in part, fractional entitlements are disregarded or rounded up or down, or whereby the benefi t of fractional entitlements accrues to the Company rather than the members) and to authorize any person to enter on behalf of all the members interested into an agreement with the Company providing for any such appropriation, capitalization, application, payment and distribution of funds and matters incidental thereto and any agreement made under such authority shall be effective and binding on all concerned.

VIII-21


AND VOTING

143. The Directors may retain the dividends payable upon shares in respect of which any person is under the provisions as to the transmissions of shares hereinbefore contained entitled to become a Member, or which any person under those provisions is entitled to transfer until such person shall become a Member in respect of such shares or shall duly transfer the same.

Power to retain dividends.

144. In case several persons are registered in the Register or entered in the Depository Register, as the case may be, as the holders of any share, any resolution of the Directors or the Company in General Meeting declaring a dividend on shares of any class may specify that the dividend shall be payable to such persons at the close of business on a particular date and thereupon the dividend shall be payable in accordance with their respective holdings so registered. Any person registered in the Register or in the Depository Register, as the case may be, as the holder or joint holder of any share or is entitled jointly to a share in consequence of the death or bankruptcy of the holder may give effectual receipts for dividends, bonuses, other moneys payable or properties distributable and payment on account of dividends on or in respect of such shares.

Payment to and receipt by joint holders.

145. Notice of declaration of any dividend, whether interim or otherwise, may be given by advertisement.

Notice of dividend.

146. Unless otherwise directed, any dividend may be paid by cheque, dividend warrant or Cashiers’ Order, sent through the post to the registered address appearing in the Register or the Depository Register, as the case may be, of the Member or person entitled, or where two or more persons are registered in the Register or entered in the Depository Register, as the case may be, as joint holders or are entitled to the dividend as a result of the death or bankruptcy of the holder, to that one whose name shall stand fi rst on the Register or the Depository Register, as the case may be, in respect thereof and every cheque, dividend warrant or Cashiers’ Order so sent shall be made payable to the order of the person to whom it is sent or to any person and address as such Member(s) or persons(s) may direct in writing. The Company shall not be responsible for the loss of any cheque, dividend warrant or Cashiers’ Order, which shall be sent by post duly addressed to and at the sole risk of the Member or person for whom it is intended. Payment of the cheque, dividend warrant or Cashiers’ Order by the bank upon which they are respectively drawn shall be a full and valid discharge to the Company. Notwithstanding the provisions of these Articles, payment by the Company to the Depository of any dividend payable to a Depositor shall also be a full and valid discharge of the Company from liability to the Depositor in respect of that payment to the extent of the payment made to the Depository.

Payment by post.

147. The Depository will hold all dividends unclaimed for six years after having been declared and paid before release to the Directors, and the Directors may invest or otherwise make use of the unclaimed dividends for the benefi t of the Company until claimed.

Unclaimed Dividends.

VIII-22


AND VOTING

D. Rights in respect of Reserves

RESERVE FUND

149. The Directors may, before declaring any dividend or bonus in respect of any class of shares out of or in respect of the earnings or profi ts of the Company for any yearly or other period, cause to be reserved or retained and set aside out of such sums as they may determine to form a Reserve Fund to meet contingencies or depreciation in the value of the property of the Company, or for equalising dividends or for special dividends or for distribution of bonuses or for repairing, improving and maintaining any of the property of the Company, or for such other purposes the Directors shall, in their absolute discretion, think conducive to the interest of the Company.

Formation and object of Reserve Fund.

E. Rights in respect of Winding Up

WINDING UP

168. The Directors shall have the power to present a petition to the court in the name and on behalf of the Company for the Company to be wound up.

Directors have power to present petition.

169. If the Company shall be wound up, and the assets available for distribution among the Members as such shall be insuffi cient to repay the whole of the paid-up capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the Members in proportion to the capital paid up, or which ought to have been paid up, at the commencement of the winding up, on the shares held by them respectively. And if in a winding up the assets available for distribution among the Members shall be more than suffi cient to repay the whole of the capital paid up at the commencement of the winding up, the excess shall be distributed amongst the Members in proportion to the capital at the commencement of the winding up paid up or which ought to have been paid up on the shares held by them respectively. But this Article is to be without prejudice to the rights of the holders of shares issued upon special terms and conditions.

Distribution of assets in winding up.

170. If the Company shall be wound up, the liquidators may, with the sanction of a Special Resolution, divide among the Members in specie any part of the assets of the Company and any such division may be otherwise than in accordance with the existing rights of the Members, but so that if any division is resolved or otherwise than in accordance with such rights, the Members shall have the same right of dissent and consequential rights as if such resolution were a Special Resolution passed pursuant to Section 306 of the Act. A Special Resolution sanctioning a transfer or sale to another company duly passed pursuant to the said Section may in like manner authorise the distribution of any share or other consideration receivable by the Liquidators amongst the Members otherwise than in accordance with their existing rights; and any such determination, shall be binding upon all the Members subject to the right of dissent and consequential rights conferred by the said Section.

Distribution of assets in specie.

171. On the voluntary liquidation of the Company, no commission or fee shall be paid to a liquidator unless it shall have been ratifi ed by the Members. The amount of such payment shall be notifi ed to all Members at least seven days prior to the meeting at which it is to be considered.

Commission or fee to liquidators.

IX-1

APPENDIX IX – VALUATION CERTIFICATES

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IX-8


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VALUATION CERTIFICATE Our Reference : 2017/541 Date : October 18, 2017 Rotary Engineering Limited 17 Tuas Avenue 20, Singapore 638828 Dear Sirs: CERTIFICATE OF UPDATE OF VALUATION OF PROPERTY AT 168 MOO 5, TESSABAL SOI 11 AND HIGHWAY NO. 3376, BANCHANG SUB-DISTRICT, SAMNAKTHON DISTRICT, RAYONG PROVINCE This desktop valuation is subject to the Assumptions and Limiting Conditions in

attached. It should not be used for any other purposes except for the specific purpose stated herein. Our valuation should be read together with our valuation report dated October 18, 2017. The current use of the property as a factory is the highest and best use. 1. Address of Property : 168 Moo 5, Tessabal Soi 11 and Highway No.

3376, Banchang Sub-district, Samnakthon District, Rayong Province, Thailand

2. Purpose : For the proposed voluntary delisting of Rotary Engineering Limited as announced on 2nd October 2017

3. Registered Proprietor : Thai Rotary Engineering Public Company Limited 4. Property Type : Industrial 5. Tenure : Free Hold 6. Total Gross Floor Area : 20,887 square meters (224,827 square feet) 7. Date of Valuation : October 18, 2017 8. Condition of Property : Fair 9. Fair Market Value : SGD 5,400,000/- 10. Basis of Valuation : Fair Market Value Yours faithfully, For and on behalf of American Appraisal (Thailand) Ltd. __________________ ________________________ Rodolfo L. Vergara Subhaddhar Luengmahamongkhon Managing Director Manager Real Estate Valuation

Examiner and Qualified Senior Valuer - . Examiner and Qualified Senior Valuer - . Valuation / Transaction Consulting / Real Estate Advisory / Fixed Asset Management

IX-11


Colliers International Consultancy & Valuation (S) Pte Ltd 1 Raffles Place #45-00 One Raffles Place Singapore 048616 RCB No: 198105965E

MAIN +65 6223 2323 FAX +65 6222 4901

Valuation Summary

Property Address : Plot No. 6, Block M, Al Hayle Industrial Area, Fujairah, U.A.E.

Valuation Prepared For : Rotary Engineering Limited

Type of Property : Plot No. 6 comprises a completed office block and a workshop building under construction.

Brief Description : The subject property is located within Block M of Al Hayle Industrial Area of Fujairah. Al Hayle Industrial Area is located approximately 6km south-west of the city of Fujairah and approximately 6km west of Kalba, Dubai is situated 100km to the west and Fujairah International Airport is 4km away. The plot has been subdivided into office building and workshop sections, accessible via separate ingresses. The property comprises an office building, workshop building under construction, water tanks and circulation area with interlock covering and canopies for parking spaces.

Tenure : Leasehold for 1 year, expiring 31 December 2017

Registered Owner : Fujairah Municipality

Plot Area : Approx. 10,020.80 sq m (107,863 sq ft)

Year of Completion : The office building was completed in November 2016. The workshop is in its final stage of construction and is expected to be completed within the next 3 months.

Occupancy/ Tenancy : Leased to Rotary Engineering Limited – Fujairah Branch

Land Use : Industrial workshop

Valuation Standards : Royal Institution of Chartered Surveyors (RICS) Global Valuation Professional Standards, incorporating the International Valuation Standards of the International Valuation Standards Council (IVSC)

Interest Valued : Leasehold interest

Valuation Method : Investment (Income) and Residual Methods

Basis of Valuation : Market Value

Special Assumptions : The subject property is held on an annual renewable ground lease and as such, the security of tenure offered is only until 31 December 2017. We are advised that the lease is renewed annually for a fee of AED 50,100 (AED 5 per sq m), however there is no confirmation that this is an undisputed or automatic right. In our valuation, we have made a special assumption of perpetual renewal of the ground lease. Our valuation has been provided on the basis of limited information, as such, the Client understands the inherent flaws this may present and should additional information be provided, our valuation may be materially affected and accordingly we reserve the right to review and amend our report and valuation contained therein.

Valuation Date : 5 November 2017

IX-12


2 Plot No. 6, Block M, Al Hayle Industrial Area, Fujairah, U.A.E.

Valuation : Plot No. 6, Block M, Al Hayle Industrial Area, Fujairah, U.A.E.

Market Value of Unexpired term (subject to details in full report)

AED 18,000 (EIGHTEEN THOUSAND UNITED ARAB EMIRATES

DIRHAMS ONLY)

Market Value subject to the Special Assumption of Perpetual Renewal of

the Ground Lease (subject to details in full report)

AED 3,200,000 (THREE MILLION TWO HUNDRED THOUSAND UNITED

ARAB EMIRATES DIRHAMS ONLY)

For and on behalf of Colliers International Consultancy & Valuation (Singapore) Pte Ltd

Govinda Singh FCCA, FCMA, MRICS

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Valuation Summary

Property Address : Business-Industrial zone Goja e

Valuation Prepared For : Rotary Engineering Limited

Type of Property : Development land

Brief Description : The Property is currently undeveloped commercial land located in Business-Industrial zone. Plot has slightly irregular rectangular shape. Necessary infrastructure is available on site. Road access is available from south side.

Legal Description : Cadastral municipality of Goja e, land parcels 754, 757, 758/1, 760/1, 761/1, 761/2. The Property is clear of any encumbrances.

Registered Proprietor(s) : SUPERMEC Proizvodnja in prodaja elektronike d.o.o., Velika pot 14, 5250 Solkan

Land Area : 4,639 sq m

Condition : Unimproved land, clear of any buildings

Town Planning/ Approved Use

: Business-Industrial zone (IG)

Valuation Standards : RICS Valuation Standards 9th edition, IVS

Interest Valued : Freehold

Valuation Method : Sales Comparison Approach

Basis of Valuation : Market Value

Valuation Assumptions : We have not measured the Property. We have relied on the area in official document delivered to us by the Client.

Valuation Date : October 25, 2017

Market Value : EUR 157,700

For and on behalf of COLLIERS INTERNATIONAL CROATIA Filip Vu agi , MRICS Head of Investment, Valuation and Advisory Services

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IX-15


N-1

NOTICE OF EXTRAORDINARY GENERAL MEETING


(Company Registration No. 198000255E)

All capitalised terms used in this Notice which are not defi ned herein shall, unless the context otherwise requires, have the same meaning ascribed to them in the circular to Shareholders dated 26 December 2017.

NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting of the Shareholders of Rotary Engineering Limited. (the “Company”) will be held at Raffl es Country Club, Stamford Suite, 450 Jalan Ahmad Ibrahim, Singapore 639932 on 10 January 2018 at 10.00 a.m. for the purpose of considering and, if thought fit, passing, with or without amendments, the following resolution (on a poll to be taken) to be passed in accordance with the requirements of the listing manual (the “SGX-ST Listing Manual”) of the Singapore Exchange Securities Trading Limited (the “SGX-ST”) (the “Delisting Resolution”):

DELISTING RESOLUTION

That:

(1) the voluntary delisting of the Company from the Offi cial List of the SGX-ST under Rules 1307 and 1309 of the SGX-ST Listing Manual (the “Delisting”), pursuant to which the Exit Offer (as defi ned in the circular dated 26 December 201 7 (the “Circular”) to the shareholders of the Company (the “Shareholders”) would be made to the Shareholders on the terms and conditions set out in the Circular, be and is hereby approved; and

(2) the directors of the Company and each of them be and is hereby authorised and empowered to complete and do all such acts and things as they may consider necessary or expedient to give effect to the Delisting and/or this Delisting Resolution, with such modifi cation thereto (if any) as they or he shall think fi t in the interests of the Company.

By Order of the Board

Mr. Lam Khin KhuiIndependent Director26 December 201 7

Notes:

1. (a) A member of the Company who is not a relevant intermediary is entitled to appoint not more than two proxies to attend, speak and vote at the extraordinary general meeting (“Meeting”). Where such member’s form of proxy appoints more than one proxy, the proportion of the shareholding concerned to be represented by each proxy shall be specifi ed in the form of proxy.

(b) A member of the Company who is a relevant intermediary is entitled to appoint more than two proxies to attend, speak and vote at the Meeting, but each proxy must be appointed to exercise the rights attached to a different share or shares held by such member. Where such member’s form of proxy appoints more than two proxies, the number and class of shares in relation to which each proxy has been appointed shall be specifi ed in the form of proxy.

“Relevant intermediary” has the meaning ascribed to it in Section 181 of the Companies Act, Cap. 50 of Singapore.

2. Where a member appoints more than one proxy, he/she should specify the proportion of his/her shareholding (expressed as a percentage of the whole) to be represented by each proxy and if no percentage is specifi ed, the fi rst named proxy shall be treated as representing 100% of the shareholding and the second named proxy shall be deemed to be an alternate to the fi rst named.

3. Where an instrument appointing a proxy or proxies is signed on behalf of the appointor by an attorney, the letter or power of attorney or a duly certifi ed copy thereof must (failing previous registration with the Company) be lodged with the instrument of proxy, failing which the instrument may be treated as invalid.

N-2

NOTICE OF EXTRAORDINARY GENERAL MEETING

4. The form of proxy in the case of an individual shall be signed by the appointor or his attorney, and in the case of a corporation, either under its common seal or under the hand of an offi cer or attorney duly authorised.

5. If the form of proxy is returned without any indication as to how the proxy shall vote, the proxy will vote or abstain as he thinks fi t.

6. If no name is inserted in the space for the name of your proxy on the form of proxy, the Chairman of the Meeting will act as your proxy.

7. The form of proxy or other instruments of appointment shall not be treated as valid unless deposited with the Company’s Share Registrar, Boardroom Corporate & Advisory Services Pte. Ltd. at 50 Raffl es Place, #32-01 Singapore Land Tower, Singapore 048623 not less than 48 hours before the time appointed for holding the meeting and at any adjournment thereof.

Personal data privacy:

By submitting an instrument appointing a proxy(ies) and/or representative(s) to attend, speak and vote at the Meeting and/or any adjournment thereof, a member of the Company:

(i) consents to the collection, use and disclosure of the member’s personal data by the Company (or its agents or service providers) for the purpose of the processing, administration and analysis by the Company (or its agents or service providers) of proxies and representatives appointed for the Meeting (including any adjournment thereof) and the preparation and compilation of the attendance lists, minutes and other documents relating to the Meeting (including any adjournment thereof), and in order for the Company (or its agents or service providers) to comply with any applicable laws, listing rules, take-over rules, regulations and/or guidelines (collectively, “Purposes”);

(ii) warrants that where the member discloses the personal data of the member’s proxy(ies) and/or representative(s) to the Company (or its agents or service providers), the member has obtained the prior consent of such proxy(ies) and/or representative(s) for the collection, use and disclosure by the Company (or its agents or service providers) of the personal data of such proxy(ies) and/or representative(s) for the Purposes; and

(iii) agrees that the member will indemnify the Company in respect of any penalties, liabilities, claims, demands, losses and damages as a result of the member’s breach of warranty.

PROXY FORM

ROTARY ENGINEERING LIMITED.(Incorporated in Singapore)(Company Registration No. 198000255E)

Important:CPF/SRS Investorsa. For CPF/SRS investors who have used their CPF money to buy Shares in Rotary

Engineering Limited., this Circular is forwarded to them at the request of their CPF Approved Nominees and is sent solely FOR INFORMATION ONLY.

b. This Proxy Form is not valid for use by CPF/SRS investors and shall be ineffective for all intents and purposes if used or purported to be used by them.

c. CPF/SRS investors who wish to attend the EGM as OBSERVERS must submit their requests through their respective Agent Banks so that their Agent Banks may register, in the required format with the Company Secretary, by the timeframe specifi ed. (Agent Banks: Please see Note 10 on required format.) Any voting instructions must also be submitted to their Agent Banks within the timeframe specifi ed to enable them to vote on the CPF/SRS investor’s behalf.

Personal Data PrivacyBy submitting an instrument appointing a proxy(ies) and/or representative(s), the member accepts and agrees to the personal data privacy terms set out in the Notice of EGM dated 26 December 2017 .

*I/We, (Name) *NRIC/Passport/Co. Reg. No. of (address)

being a *member/members of ROTARY ENGINEERING LIMITED. (“Company”), hereby appoint:

Name AddressNRIC/Passport

No.

Proportion of Shareholdings to be represented by proxy

No. of Shares %

*and/or

Name AddressNRIC/Passport

No.

Proportion of Shareholdings to be represented by proxy

No. of Shares %

or failing *him/them the Chairman of the Extraordinary General Meeting of the Company (“Meeting”) as my/our proxy/proxies to vote for me/us on my/our behalf at the Meeting to be held at Raffl es Country Club, Stamford Suite, 450 Jalan Ahmad Ibrahim, Singapore 639932 on 10 January 2018 at 10.00 a.m. and at any adjournment thereof.

*I/We direct *my/our *proxy/proxies to vote for or against the Resolution to be proposed at the Meeting as indicated with an “X” in the spaces provided hereunder. If no specifi ed directions as to voting are given, the *proxy/proxies will vote or abstain from voting at *his/their discretion.

Please indicate your vote “For” or “Against” with an “X” within the box provided if you wish to exercise all your votes. Alternatively, please indicate the number of votes as appropriate.

No. Resolution Number ofVotes for

Number ofVotes against

1. To approve the voluntary delisting of the Company from the Offi cial List of the SGX-ST pursuant to Rules 1307 and 1309 of the SGX-ST Listing Manual

Date this day of 2017/2018*

Total Number of Shares held in:

CDP Register

Register of Members

Signature(s) of Member(s) or Common Seal of Corporate Shareholder

* Please delete accordingly

IMPORTANT: PLEASE READ THE NOTES OVERLEAF

PROXY FORM

Notes:

1. (a) A member of the Company who is not a relevant intermediary is entitled to appoint not more than two proxies to attend, speak and vote at the Meeting. Where such member’s form of proxy appoints more than one proxy, the proportion of the shareholding concerned to be represented by each proxy shall be specifi ed in the form of proxy.

(b) A member of the Company who is a relevant intermediary is entitled to appoint more than two proxies to attend, speak and vote at the Meeting, but each proxy must be appointed to exercise the rights attached to a different share or shares held by such member. Where such member’s form of proxy appoints more than two proxies, the number and class of shares in relation to which each proxy has been appointed shall be specifi ed in the form of proxy.

“Relevant intermediary” has the meaning ascribed to it in Section 181 of the Companies Act, Cap. 50 of Singapore.

2. Where a member appoints more than one proxy, he/she should specify the proportion of his/her shareholding (expressed as a percentage of the whole) to be represented by each proxy and if no percentage is specifi ed, the fi rst named proxy shall be treated as representing 100% of the shareholding and the second named proxy shall be deemed to be an alternate to the fi rst named.

3. A proxy need not be a member of the Company.

4. Please insert the total number of Shares held by you. If you have Shares entered against your name in the Depository Register (as defi ned in Section 81SF of the Securities and Futures Act, Cap. 289 of Singapore), you should insert that number of Shares. If you have Shares registered in your name in the Register of Members of the Company, you should insert that number of Shares. If you have Shares entered against your name in the Depository Register and registered in your name in the Register of Members, you should insert the aggregate number of Shares. If no number is inserted, this form of proxy will be deemed to relate to all the Shares held by you.

5. The instrument appointing a proxy or proxies must be deposited with the Company’s Share Registrar, Boardroom Corporate & Advisory Services Pte. Ltd. at 50 Raffl es Place, #32-01 Singapore Land Tower, Singapore 048623 not less than 48 hours before the time set for the Extraordinary General Meeting.

6. The instrument appointing a proxy or proxies must be under the hand of the appointor or by his/her attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its common seal or under the hand of its attorney or a duly authorised offi cer.

7. Where an instrument appointing a proxy or proxies is signed on behalf of the appointor by an attorney, the letter or power of attorney or a duly certifi ed copy thereof must (failing previous registration with the Company) be lodged with the instrument of proxy, failing which the instrument may be treated as invalid.

8. A corporation which is a shareholder of the Company may, in accordance with Section 179 of the Companies Act, Cap. 50 of Singapore, authorise by resolution of its directors or other governing body such person as it thinks fi t to act as its representative at the Extraordinary General Meeting.

9. The Company shall be entitled to reject the instrument appointing a proxy or proxies, if it is incomplete, improperly completed, illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specifi ed on the instrument appointing a proxy or proxies. In addition, in the case of shares entered in the Depository Register, the Company may reject any instrument appointing a proxy or proxies if a shareholder of the Company, being the appointor, is not shown to have shares entered against his/her name in the Depository Register as at 72 hours before the time appointed for holding the Extraordinary General Meeting, as certifi ed by The Central Depository (Pte) Limited to the Company.

10. Agent Banks acting on the request of CPF/SRS Investors who wish to attend the Extraordinary General Meeting as observers are requested to submit in writing, a list of details of the members’ names, NRIC/Passport numbers, addresses and numbers of Shares held. The list, signed by an authorised signatory of the Agent Bank, should reach the Company’s Share Registrar not later than 48 hours before the time appointed for holding the Extraordinary General Meeting.

Personal data privacy:

By submitting an instrument appointing a proxy(ies) and/or representative(s), the member accepts and agrees to the personal data privacy terms set out in the Notice of Extraordinary General Meeting.

Documents

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