17 Tuas Avenue 20 Singapore 638828 Tel: 6861 1155 (19 ... · PDF fileROTARY ENGINEERING...

Annual Report 2002

Beyond the

HORIZON ... .

RO

TA

RY

EN

GIN

EE

RIN

G L

IMIT

ED

An

nu

al R

ep

ort 2

00

2

designed and produced by Integral Com

munications (S) Pte Ltd

, 17 Tuas Avenue 20 Singapore 638828 Tel: 6861 1155 (19 lines)

1

Beyond the HORIZON ....

our vision We aspire to be a world-class engineering,procurement and construction company.

our mission Our mission is to provide quality services that consistently meet our clients’ needs and expectations through continuous achievement of operational excellence.

Creating

Value for all Customers

2


3


“The outlook for

the petroleum and

petrochemical industry

in Singapore is expected

to remain very competitive

in 2003.”

Chairman’s Statement

2


3


Chairman’s Statement

It is my pleasure to present the Annual Report and

Audited Accounts of the Rotary Group for the financial

year ended 31 December 2002.

Financial Review

The Rotary Group remained profitable in 2002 despite

adverse market conditions. The economy continued

to deteriorate and this affected our business during

the year. Our turnover decreased by S$ 32.4 million

or 23% to S$ 108.1 million over the previous financial

year. This was due mainly to a decline in the number

of projects available in the petrochemical industry and

resulted in very competitive market conditions.

The Group’s operating profit decreased by 56% to

S$ 4.4 million compared to the previous year. This was

mainly due to a decline in turnover, reduced interest

income and exchange losses incurred.

As a result, the net profit for the year declined by 70%

from S$ 6.7 million to S$ 2.0 million. This included

our share of losses in some associated companies and

provisions made during the year.

Business Review

In 2002 we diversified our business into new areas

to overcome the slow growth in Singapore. There

was increased recognition as a specialist company for

electrical and instrumentation works for offshore rigs,

oil platforms and FPSO’s. The storage terminal business

for the petrochemical industry continued to be strong

in difficult market conditions and saw Oiltanking

awarding us another significant expansion project of

over S$ 30 million.

Our pharmaceutical team made a small but significant

entry into a new area by providing validation services

for the first time to multinational companies in

Singapore. We expect that this experience will help us

to develop more capabilities in this field.

There was also increased revenue growth in our

maintenance activities as a result of forging strategic

alliances. Our presence on Jurong Island has been a

key factor and more plant owners now recognize us as

a provider of quality maintenance services.

Looking Ahead

The outlook for the process industry in Singapore is

expected to remain very competitive in 2003. We do

not envisage any major investments in this sector in

the short term as some of the larger projects have

been held back or moved to other preferred locations.

To overcome such local market conditions, we will

shift our focus to secure more projects overseas and

continue to upgrade our capabilities as a specialist

service provider to the pharmaceutical industry.

The Group will also look at diversifying its activities by

making strategic investments in some key projects.

Acknowledgements

On behalf of the Board of Directors, I take this

opportunity to thank our valued clients, bankers,

business associates, suppliers and shareholders for

their continued support. I would also like to express

my appreciation to all management and staff for their

dedicated work and contribution to the Group.

CHIA KIM PIOW

Chairman & Managing Director

15 April 2003

4


5


Inspiring Excellence

6


7


Nurturing Talents, Cultivating

Innovation

6


7


Operations Review

1. Panyu Project

2. Oiltanking - Jetty 12 Project

3. Baku Project - E & I Works

The year 2002 was a difficult one for the

construction industry and our operations

also reflected this general trend. While it

was a period of continued restructuring

and downsizing, the support of our key

clients and the long-standing relationships

built over time enabled us to see through

the year successfully. The restructuring

which had started the previous year saw

increased activity in the maintenance and

pharmaceuticals field and this trend will

increase in the coming years. With projects

coming into Jurong Island continuing to be

slow, we expanded overseas into the Middle

East and made an initial foray into the West

African market.

SINGAPORE

Oil and Gas

With the successful completion and hand

over of the Phase 5 project for Oiltanking

the previous year, this year marked the

handover of the Chem1&2 facilities to

them, including the Jetty 12 facilities for

bringing in the products to store. The oil

and chemical storage business was in good

demand and we were asked by Oiltanking

to further expand the facilities and build

additional chemical tanks in a new Chem

3&4 project with a total capacity of 83,000

cubic metres. Jurong Engineering also

awarded us the piping and tankage works

for the SUT-IWX industrial wastewater

treatment plant. Minor works awarded

during the year included the supply of silos

for the Mitsui Bisphenol Sea Bulk project.

Alstom awarded us the construction of

their raw water, demineralised tanks and

Geiger International, the seawater intake

facilities for the SUT Project, while Singapore

Petroleum’s requirements for additional

tanks at their Jurong Bulk plant was received

late in the year.

Our specialisation in undertaking electrical

and instrumentation works for offshore

structures continued to be recognised and

Keppel Shipyard awarded us the Topsides

Intermodules Cabling work for their FPSO

in Brazil. Sembawang Marine awarded us

the electrical and instrumentation works

for the wellhead platform for their Panyu

1

2

3

8


9


8


9


Operation Review

5. Atwood Beacon Jack-up Rig – E & I works

6. Shutdown maintenance – Dryer lifting and reinstatement

7. Tank prefabrication and installation

field project in China and we embarked

on our first venture in Baku, Azerbaijan for

the semi-submersible drilling rig DSS-20.

We were also awarded the work on the

prestigious Atwood Beacon jack-up rig and

the hull of the Matterhorn Seastar Tension

Leg Platform from Keppel FELS.

Projects completed during the year included

the prefabricated Remote Instrument

Enclosure for Exxonmobil’s Control System

Modernisation project, the mechanical

erection works for Foster Wheeler for the

Exxonmobil Zone 1000/2000 project, Asahi’s

Feed Systems project for Vopak Terminals

and the compression package electrical

and instrumentation work for GSI’s CPP3

project.

Pharmaceutical

There was some activity in the pharmaceutical

sector and early in the year we were awarded

the electrical and instrumentation works by

Foster Wheeler for Glaxo’s PB-3 expansion

project and Pfizer’s wastewater treatment

plant by Jacobs Engineering. We also

undertook the electrical works for Pfizer’s

Thermal Oxidiser project under Jacobs.

These projects were completed during the

year. Others completed included the Offsites

and Utilities for Schering-Plough’s MPP-1

project and Glaxo’s PB-3 project and the

mechanical works for Foster Wheeler for

Merck’s Singapore Pharmaceutical Facility.

The year saw ProsCon Asia make its entry in

the market by supplying specialist validation

services to Schering-Plough’s Tablet and

Biotech plants and Vetter’s fully automated

injection filling line in their Biotech facility.

Maintenance

Our maintenance operations grew

substantially in 2002 with the Jurong

Island facilities becoming fully operational.

With the good track record and proven

methodology of replacing existing corroded

tank roofs with aluminum dome roofs, year

2002 saw through another repeat order of

six more tanks from Tankstore. Other major

works undertaken during the year included

three large diameter roofs replacement in

Power Gas Seraya, perlite insulation of a five-

kilometer steam line in Sembcorp Utilities

Terminal, and the shutdown works for

Eastman Chemical and Lonza. In year 2002,

we also successfully clinched deals with

three new clients: a Mechanical, Electrical

& Instrumentation service contract from

Seraya Chemical, a Maintenance contract

from COIM, and a tank prefabrication and

installation contract from Infineum.

Our maintenance team has assembled a set

of specialised equipment and components

that could retard the rate of corrosion from

occurring on the roof underside of fuel oil

tanks. We have received orders for such

work for over twenty tanks from Oiltanking

and Chevron Texaco.

5

7

1. Matterhorn Seaster TLP – E & I works (Photo Courtesy of

Keppel FELS Limited)

2. Shutdown Maintenance – Shell & Tube exchanger bundle extraction

3. CPP3 Project – E & I work

4. Perlite insulation on 5km 24 inch steam line (Photo Courtesy of

Keppel FELS Limited)

1

2

4

6

3

10


11


Our Central Warehouse Division also

experienced an expansion of activities

during the year. While consolidating the

Group’s material procurement through our

team of specialist, the division also manages

our client’s spare parts, components,

consumables and other material supplies.

OVERSEAS

Our overseas operations continued to

support the group during 2002, with

Thailand, Malaysia and India playing key

roles. In Thailand, our subsidiary Thai Rotary

Engineering Limited was awarded the Liquid

Bulk Terminal expansion project from Thai

Tank Terminal for construction of a new

tankfarm with jetty facilities for Xylene

storage. Work on the Algerian project for

ABB Lummus Global was also completed

satisfactorily by our Thailand company.

In Malaysia, Malaysia LNG awarded us

the MRR project for electro-chlorination.

Electrical and Instrumentation Work for

the MLNG TIGA plant project in Bintulu

progressed well and we completed the

electrical and instrument installation work

for the Synthomer latex plant.

In India, we completed the Navagam

marketing terminal for Indian Oil, which

was commended by them for the quality

workmanship.

NEW VENTURES

Rotary Engineering Qatar

In our quest to expand our horizons, we

decided to venture into the Middle East

markets to cater to oil and gas projects there,

and set up a joint venture with an established

group in Doha, Qatar. Rotary Engineering

Qatar will be the focus of the projects we

will undertake in the Middle East.

Operations Review

1. Synthomer Latex Plant Project – E & I works

2. Ohanet Gas Development Project

3. Navagam Marketing Terminal Project

3

1

2

10


11


Rotary Group of Companies

Australia

Indonesia

Malaysia

People’s Republic of China

India

Japan

United States of America

Singapore

SINGAPORE:• Rotary Electrical Company (Private)

Limited

• Rotary Mechanical and Construction

Company (Private) Limited

• Rotary Scaffolding & Construction

Pte Ltd

• Rotary Coatings (Singapore) Pte Ltd

• Supermec Pte Ltd

• Rotary Pharma Pte Ltd

• Rotary Services Pte Ltd

• Sixty-six Switchgears Co Pte Ltd

• Innovative Biotech Pte Ltd

• Rotary TREL Pte Ltd

• Rotary IMC Pte Ltd

• IMC Retrofi tting Services Pte Ltd

• Futura Pacifi c Corporation Pte Ltd

• IMC Equipment Pte Ltd

• RKB Engineering Co Pte Ltd

• Perlite Services Pte Ltd

• EnRis Pte Ltd

§ Paper Dimension (S) Pte Ltd

§ Honeywell Rotary Pte Ltd

§ Rotary Brown & Root Pte Ltd

§ Powell Industries Asia Pte Ltd

§ RSK Engineering Pte Ltd

§ Thyssen Hunnebeck Scaffolding Pte Ltd

§ ProsCon Asia Pte Ltd

MALAYSIA:• Biotech Medical Corporation Sdn Bhd

§ Rotary MEC (M) Sdn Bhd

§ Alpha Paper (M) Sdn Bhd

§ Perlite Products Sdn Bhd

§ Paper Dimension (Malaysia) Sdn Bhd

* RBC Engineering Sdn Bhd

THAILAND:• Thai Rotary Engineering Ltd

• Calvert Limited

• TRC Construction Co Limited

INDONESIA:• P.T. Rotary MECOM

• P.T. Rotary Engineering Indonesia

INDIA:• Rotary MEC Engineering (India) Private

Limited

§ Rotary Techskill (India) Private Limited

JAPAN:# Rotary Japan Representative Offi ce

(Tokyo)

PEOPLE’S REPUBLIC OF CHINA:• Fushun Rotary Engineering Co. Ltd

• Fushun Rotary Cable Co. Ltd

• Fushun Rotary Cable and Electronics

Co Ltd

* Changchun FAW UCC

# Rotary China Representative Offi ce

(Shanghai)

QATAR:§ Rotary Engineering (Qatar) W.L.L.

AUSTRALIA:• Rotary Engineering (Australia) Pty Ltd

BRITISH VIRGIN ISLANDS• Comdale Services Limited

United States of America§ MP World Corporation

• Subsidiary Companies § Associated Companies * Affi liated Companies # Representative Offi ce

QatarThailand

12


Financial Highlights

50 100 150

Turnover (S$million)

148.8

158.0

140.0

108.1

105.7

2002

2001

2000

1999

1998

5 10

Net Profit Attributable to Shareholders (S$million)

6.9

8.4

6.8

2.0

7.7

2002

2001

2000

1999

1998

10 20

Net Tangible Assets (cents per S$0.10 share)

20

23

24

23.4

21

2002

2001

2000

1999

1998

50 100

Shareholder’s Equity (S$million)

85.4

94.8

93.7

80.0

2002

2001

2000

1999

1998

91.8

13


contents

14 code of corporate governance

21 key information on directors and

key executives

23 directors’ report

29 statement by the directors

30 auditors’ report

31 balance sheets

32 profit and loss accounts

33 statement of changes in equity

35 consolidated statement of

cash flow

36 notes to the financial statements

Financial Statements

14


Code of Corporate Governance15


Code of Corporate Governance

INTRODUCTION

Rotary Engineering Limited (the “Company”) is committed to achieving high standards of corporate conduct and has generally complied with the Principles of the Code of Corporate Governance. We have outlined our policies and practices covering each of the principles in the sections that follow.

BOARD OF DIRECTORS

Principles:

The Board’s Conduct of its Affairs - Every company should be headed by an effective Board to lead and control the company.

Board Composition and Balance - There should be a strong and independent element on the Board, which is able to exercise objective judgement on corporate affairs independently, in particular, from Management. No individual or small group of individuals should be allowed to dominate the Board’s decision making.

Access to Information - In order to fulfil their responsibilities, board members should be provided with complete, adequate and timely information prior to board meetings and on an on-going basis.

The Board of Directors is accountable to the shareholders and is responsible for maintaining a high standard of corporate governance and promoting continuing improvements in Board effectiveness. The Group strives to be consistent with the Code of Corporate Governance.

The Board comprises eight Directors, three are independent, and five are non-independent, of whom four are executive directors and one non-executive. The Board is made up of individuals from different professional, technical and financial backgrounds. Their core competencies, qualifications, skills and experience are extensive and complementary. Key information on Directors is set out on pages 21 to 22 of the Annual Report.

The Board oversees the management of the business and affairs of the Group; approves the Group’s corporate and strategic directions, approves nomination of directors to the Board and appointment of key managerial personnel, approves major funding, investment proposals and divestment, and reviews the financial performance of the Group. Where necessary, additional Board meetings are held to address significant issues or approve major transactions.

The four Executive Directors form the Executive Committee that acts for the Board in supervising the management of the group’s business and affairs. Monthly business review meetings, presided by at least one Executive Director, are held to review the progress of projects and operational performance. Major issues are highlighted for follow-up and corrective actions.

To facilitate effective management, certain functions have been assigned to various Board committees, of which each has its own written terms of reference. The composition of the Board and Board Committees are:

Committee Membership Nature of Director Board Member Audit Nominating Remuneration

Chia Kim Piow Chairman & Member Managing DirectorWong Liang Feng Executive Member Member Member (resigned 5-Dec-02)Chia Kim Chua ExecutiveChee Eu Kee ExecutiveWong Oi Moi Non-ExecutiveLam Khin Khui Independent Member Member ChairmanQuek Wee Hong Independent Member Chairman MemberKeith Tay Ah Kee Independent Chairman Member Member

The Board of Directors is familiar with the Group’s business and governance practices. Notwithstanding, they will receive updates and relevant training, particularly on relevant new laws, regulations and changing commercial risks, from time to time. However, there is a program to ensure new directors receive relevant training and orientation before appointment to the Board.

14





All Directors have direct access to senior management and to the Company Secretary. The Company Secretary attends all Board meetings and ensures that the Board procedures are followed. The Company Secretary is responsible to ensure that the Company meets with requirements of the Companies Act. Working hand in hand with the management, the Company Secretary also ensures that Company complies with other applicable rules and regulations.

The Company will examine the need for telephonic and videoconference meetings. When warranted, the Company’s Articles will be amended to allow for such meetings. The number of Board meetings held in the year, as well as the attendance of every Board member at those meetings is as follows:

Board Audit Nominating Remuneration Committee Committee Committee No. of Meetings held in 2002: 4 4 2 1

Name & Attendance of DirectorChia Kim Piow 4 2Wong Liang Feng 4 4 2 1Chia Kim Chua 4Chee Eu Kee 4Wong Oi Moi 2Quek Wee Hong 4 4 2 1Lam Khin Khui 3 4 2 1Keith Tay Ah Kee 4 4 2 1

CHAIRMAN AND MANAGING DIRECTOR

Principles:

There should be a clear division of responsibilities at the top of the company - the working of the Board and the executive responsibility of the company’s business - which will ensure a balance of power and authority, such that no one individual represents a considerable concentration of power.

Mr. Chia Kim Piow who is both Chairman and Managing Director of the Company leads the Board. This practice has been carried on since inception and he leads the Board meetings because of his in-depth knowledge of the Group’s operations as well as his excellent relationship with customers, suppliers and other external parties that carry out business with the Group. The Board members unanimously support Mr. Chia’s role as both Chairman and Managing Director.

NOMINATING COMMITTEE

Principles:

Board Membership - There should be a formal and transparent process for the appointment of new directors to the Board. As a principle of good corporate governance, all directors should be required to submit themselves for re-nomination and re-election at regular intervals.

Board Performance - There should be a formal assessment of the effectiveness of the Board as a whole and the contribution by each director to the effectiveness of the Board.

The Nomination Committee comprises Mr. Quek Wee Hong, Mr. Keith Tay, Mr. Lam Khin Khui, Mr. Chia Kim Piow and Mr. Wong Liang Feng. Mr. Quek, as Chairman of the Committee, Mr. Lam and Mr. Tay, are independent Directors.

The Committee, which has written terms of reference approved by the Board, recommends to the Board any new Board appointments or re-appointments. In line with this, it determines if a Director is independent. Further, it sets objective performance criteria and the measurement processes to evaluate the performance of the Board and the contributions from the Directors on a year-to-year basis. The Committee also considers and reviews other miscellaneous related matters that it should take action as set out in the Code of Corporate Governance.

16





Information on Directors’ age, position, date of initial appointment and date of last re-election are listed below.

Director Age Position Date of Initial Date of Last Appointment Re-election

Chia Kim Piow 54 Chairman & 02-Dec-1980 N.A. Managing DirectorWong Liang Feng 61 Executive Director 01-Feb-1993 29-May-2002Chia Kim Chua 52 Executive Director 01-Mar-1982 08-Jun-2000Chee Eu Kee 60 Executive Director 01-Feb-2001 29-May-2001Wong Oi Moi 46 Non-Executive Director 04-May-1983 08-Jun-2000Lam Khin Khui 54 Director 01-Feb-1993 29-May-2001Quek Wee Hong 61 Director 01-Jan-1993 29-May-2001Keith Tay Ah Kee 58 Director 01-Feb-1993 29-May-2002

Pursuant to the Company’s Articles of Association, other than the Managing Director, all Directors submit themselves for re-election at least once every three years.

In accordance with Article 100, one-third of the Directors are subject to re-election at every Annual General Meeting. The Nominating Committee has determined that Mr. Chia Kim Chua as Executive Director and Madam. Wong Oi Moi being substantial shareholder and spouse of the Chairman are not independent. The Committee has recommended the re-election of both Mr. Chia and Madam. Wong as directors of the Company at the forthcoming Annual General Meeting.

REMUNERATION COMMITTEE

Principles:

Procedures for Developing Remuneration Policies - There should be a formal and transparent procedure for fixing the remuneration packages of individual directors. No director should be involved in deciding his own remuneration.

Level and Mix of Remuneration - The level of remuneration should be appropriate to attract, retain and motivate the directors needed to run the company successfully but companies should avoid paying more for this purpose. A proportion of the remuneration, especially that of executive directors, should be linked to performance. Disclosure on Remuneration - Each company should provide clear disclosure of its remuneration policy, level and mix of remuneration, and the procedure for setting remuneration, in the company’s annual report.

The Remuneration Committee comprises Mr. Lam Khin Khui as Chairman, Mr. Quek Wee Hong, Mr. Keith Tay and Mr. Wong Liang Feng. Except for Mr. Wong, all are non-executive directors, independent of management. The Committee, when required, has access to expert advice, both within and outside the Company.

The role of the Committee, which has written terms of reference approved by the Board, is to review and recommend to the Board a framework of remuneration for the Board of Directors and key executives of the Group. It determines specific remuneration packages for each Executive Director and ensures that they are in compliance with the Code of Corporate Governance. In line with the above, it considers and approves guidelines on salary, bonus, and other terms and conditions for members of senior management, as well as the granting of share options in accordance with the rules of the Company’s Share Option Scheme.

In setting remuneration packages for Directors and key executives of the Group, the pay and employment conditions within the industry and in comparable companies are taken into consideration. The Committee seeks to establish and maintain an appropriate and competitive level of remuneration to attract, retain and motivate key executives. The Committee also ensures that the remuneration policies support the company’s objectives and strategies.

16





The Managing Director and the Executive Directors have service contracts and do not receive director’s fees. Their compensations consist of salary, bonuses, options and performance awards that are dependent on the performance of the Group. The performance-related awards form a significant portion of their compensation. This is to align their interests with those of the shareholders and link rewards to corporate and individual performance.

The Independent Directors are compensated through director’s fees. The fees take into account the level of contribution and responsibilities of the Directors. These fees are subject to shareholders’ approval at the Annual General Meeting.

No director is involved in determining his own remuneration. The Committee and the Board are of the view that the remuneration packages of the Executive Directors are not excessive and Directors’ service contracts are not excessively long or with onerous removal clauses.

The remuneration policy for key executives follows the guidelines laid down by the National Wages Council. Further, the Company’s performance, the responsibility and performance of individual key executive are taken into consideration. Both the Committee and the Chairman of the Board recommend the remuneration packages to key executives for Board’s approval.

The Directors’ annual remuneration is set out below. Directors’ interests and the Executives’ Share Option Scheme are set out in the Directors’ Report.

Other Directors of Company Salary (%) Bonus (%) Fees (%) Benefits (%) Total (%)

From $1,000,001 to $1,500,000 Chia Kim Piow 46 48 - 6 100

From $500,001 to $1,000,000 Wong Liang Feng 36 54 - 10 100

From $250,001 to $500,000 Chia Kim Chua 67 30 - 3 100

Below $250,000 Chee Eu Kee 74 19 - 7 100 Lam Khin Khui - - 100 - 100 Quek Wee Hong - - 100 - 100 Keith Tay Ah Kee - - 100 - 100

The annual remuneration for key executives is as follows:

Other No. of employees Salary (%) Bonus (%) Benefits (%) Total (%)

Below $250,000 4 85 11 4 100

18





AUDIT COMMITTEE

Principles:

Audit Committee - The Board should establish an Audit Committee with written terms of reference, which clearly set out its authority and duties.

Internal Audit - The company should establish an internal audit function that is independent of the activities it audits.

The Audit Committee, which has written terms of reference approved by the Board, comprises Mr. Keith Tay Ah Kee as Chairman, Mr. Lam Khin Khui, Mr. Quek Wee Hong and Mr. Wong Liang Feng. All are independent directors, except Mr. Wong who had resigned on 5 December 2002. Two of the members, including the Chairman, are qualified accountants.

The Committee reviews the scope of work, as set out in section 201 B(5) of the Companies Act, Cap 50, of both internal and external auditors and the assistance given by the company’s officers to the auditor. It meets with the company’s internal and external auditors to review their audit plans and discussed the results of their respective examinations and their evaluation of the Group’s operations and system of internal accounting controls. The Committee also reviews the financial statements of the Group for each financial year as well as the Auditor’s report thereon, and the interim and annual results announcements, before submitting to the Board for approval. With the assistance of the auditors, the Committee reviews the interested persons transactions for the Group. The Committee considers the appointment or re-appointment of external auditors and the audit fees.

Apart from four formal meetings held during the financial year, the Chairman and various members of the Committee held informal meetings and discussions with the management from time to time. Members of the Committee have independent access to both external and internal auditors. The Committee met with both internal and external auditors without the presence of management. The Committee has reviewed the nature and volume of non-audit services to the Group by the external auditors, are satisfied that the nature and extent of such services would not prejudice the independence and objectivity of the external auditors. The Committee recommends the re-nomination of the external auditors for shareholders’ approval.

ACCOUNTABILITY

Principles:

Accountability - The Board is accountable to the shareholders while the Management is accountable to the Board.

The Board is accountable to the shareholders while management is accountable to the Board. Management presents half-year and full-year financial statements to the Audit Committee and the Board for review and approval. The Board approves the results and authorizes the release of results to SGX-ST and the public via MASNET. The Company will commence quarterly reporting in the current financial year.

INTERNAL CONTROLS

Principles:

The Board should ensure that the Management maintains a sound system of internal controls to safeguard the shareholders’ investments and the company’s assets.

The Group has during the year outsourced its internal audit function. The Committee reviews its adequacy every year. The Committee has reviewed the internal audit function and is satisfied that it has the appropriate standing to perform its functions effectively and objectively. Ernst & Young’s Business Risk Services provided the internal audit services for the Company and its subsidiaries during the year. The internal auditor reports primarily to the Audit Committee.

The Group has in place a system of internal controls to ensure that assets are safeguarded, proper accounting records are maintained and financial information used within the business and for publication is reliable. The controls include the documentation of key procedures and rules relating to the delegation of authorities. The Audit Committee, assisted by internal auditors, has reviewed the effectiveness of these controls and the Board has deemed them to be adequate within the Group’s guidelines.

18





COMMUNICATION WITH SHAREHOLDERS

Principles:

Companies should engage in regular, effective and fair communication with shareholders.

Companies should encourage greater shareholder participation at AGMs, and allow shareholders the opportunity to communicate their views on various matters affecting the company.

Price-sensitive information relating the to Group is released through MASNET onto the SGX website which is available to the public in general. Similarly, interim, full year results and annual reports announced or issued within the mandatory period are also released through the MASNET onto SGX website. The Company’s Annual Report is available at its website www.rotaryeng.com.sg.

All shareholders of the Group receive the Annual Report and notice of Annual General Meeting. At annual general meetings, shareholders will be given opportunity to voice their views and to direct questions regarding the Group to senior management or Directors, including the Chairman of each of the Board committees.

All Directors are encouraged to be present at all general meetings of the Company. The external auditors were present at the last Annual General Meeting.

RISK MANAGEMENT

The Company’s risk management policies are summarized as follows:

Contract pricing and executionThe ability to secure projects depends on competitive pricing, fulfilling the technical and commercial requirements, and delivery.

The Tender Review Committee comprising of at least one Director, Project Manager, Engineering Manager and Business Development Manager reviews the technical and commercial terms and conditions, as well as quantity and pricing, before approval is given for the submission of the tender proposal.

Upon receipt of contract, the Contract Review Committee comprising of at least one Director, Project Manager, Engineering Manager and Business Development Manager reviews the changes to the technical and commercial terms and conditions, as well as quantity and pricing, before accepting the contract.

The Project Manager monitors the progress and the productivity of the contract on a regular and continuous basis to ensure technical specifications are met, delivery on schedule and costs are under control.

Information systemThe Company has a disaster recovery plan and a maintenance program for its accounting and management information system. Adequate resources are dedicated to ensure the systems are running smoothly and, if there is a disruption, a quick resumption of services is assured.

Foreign currenciesThe Group operates in several countries and is exposed to movements in foreign currency rates. It identifies foreign currency needs for all contracts. The currency outflows are matched against the inflows. Hedging is used only when there is a material discrepancy between the flows.

Key executivesThe Company is a service provider. Therefore, its business development and profitability depends on its ability to attract and retain qualified personnel. Besides the basic human resource programs, the key executives are offered remuneration packages that are competitive within the industry, employees’ share option scheme and a challenging work environment.

Material pricesThe Company depends on its suppliers for materials such as steel plates, pipes and fittings. Changes in prices affect the cost of construction. This is managed by forward planning of requirements, sourcing for alternate supply, and obtaining sufficient quantity at competitive prices.

20


21


Source of revenueMore than 60% of Group’s turnover is derived from Singapore. Therefore, it is susceptible to a slowdown of Singapore economy. It has sought and continues to seek projects from outside of Singapore to diversify revenue stream.

SECURITIES TRANSACTIONS

The Group has adopted the SGX-ST Best Practices Guide with respect to dealings in securities for the guidance of Directors and officers. In line with the guidelines, Directors, management and officers of the Group who have access to price-sensitive and confidential information are not permitted to deal in the Company’s shares during the periods commencing one month before the announcement of the Group’s annual or quarterly results and ending on the date of the announcement of such results, or when they are in possession of unpublished price-sensitive information on the Group.

MATERIAL CONTRACTS

Since the end of the previous financial year, the Company and its subsidiaries did not enter into any material contracts involving the interests of Directors or controlling shareholders, and no such material contract subsisted at end of the financial year.


20


21


Chia Kim Piow

Founder, Chairman and Managing Director of Rotary Engineering Limited, has more than 20 years of working experience in plant and facility engineering design and construction. He has been instrumental in developing the Company from a sub-contractor to a turnkey plant engineering design and construction group and now progressing towards world-class construction firm.

Wong Liang Feng

Executive Director, holds a bachelor degree in Mechanical Engineering from University of Malaya. He is a member of the Institute of Engineers-Singapore and is a registered professional engineer. He has been associated with the Group since 1993. Between 1966 and 1981, he held a senior position in a multinational oil company. He had served as a member of VITB Mechanical Engineering and Trade Advisory Committee from 1980 to 1983.

Chia Kim Chua

Joined the Company in 1980 and was appointed to the Board as Executive director in 1982. He is a graduate from the Singapore Polytechnic with a Technician Diploma in Land Surveying.

Chee Eu Kee

Executive Director, holds a bachelor degree in Mechanical Engineering from the University of Malaya. He held the position of Senior General Manager for the Group’s mechanical division before appointed as Executive Director in February 2001. He is responsible for the Group’s operations in Batam. Before joining Rotary Group in 1997 as General Manager, he was the Senior Engineer in NatSteel Engineering Pte Ltd.

Lam Khin Khui

Independent Director, holds a bachelor degree in Chemical Engineering from University of Melbourne and a diploma in Business Administration from the National University of Singapore. He has worked many years in the private and public sectors and served on the Boards of government-linked companies. Currently, he is a principal consultant with an international management-consulting firm.

Quek Wee Hong

Joined the Board in 1993 as Executive Director. He relinquished his executive position on 30 June1995 and has since remained a non-executive member of the Board. He was also Company Secretary and member of Audit Committee from 1993 to 1995. He was re-appointed a member of the Audit Committee on 20 September in year 2001.

He is a Certified Public Accountant and a Chartered Secretary & Administrator. He also holds a master degree in Business from Australia. Prior to joining the Company, he has many years of working experience in Singapore and overseas, with local and multinational companies holding senior management positions in accounting, finance and management.

Keith Tay Ah Kee

Independent Director, is a Chartered Accountant by profession and was formerly Chairman and Managing Partner of an international accounting firm. He was President of the Institute of Certified Public Accountant of Singapore from 1982 to1992.

Mr. Tay holds directorship in several other companies. He is also on the Board of the Singapore International Chamber of Commerce, of which he was Chairman from 1995 to 1997. A founder member and Honorary Vice-President of the Singapore Institute Of Directors, he also serves as Adjunct Professor in the School Of Accountancy and Business of the Nanyang Technological University.

Key Information on Directors and Key Executives

22


23


Wong Oi Moi

She has been associated with the company since 1983. She is currently a non-executive and non-independent Director of the Board.

Ang Chiap Hong (Age: 42)

Joined the Group in 1986 as a Project Manager overseeing several projects in the discipline of Electrical and Instrumentation for both the oil/gas and marine industries. He is currently serving as General Manager handling the commercial aspects of Rotary Electrical Company Pte Ltd. He is a Diploma graduate in Electrical Engineering.

Hoon Mai Hong (Age: 50)

He joined the Group in 1978 and has been actively involved in Electrical and Instrument installation works. He has been General Manager, Rotary Electrical Company Pte Ltd since 1989 overseeing all construction aspects of this company.

Khow Chong Lam, Joseph (Age: 39)

He joined the Group in 2000 and currently is General Manager of Rotary IMC Pte Ltd. He has worked in multinational oil companies for a number of years before joining as General Manager of an engineering company servicing the same industry. He has a master degree in Science and is currently the President of Association of Process Industry.

Loh Eng Kee (Age: 45)

He is a graduate with Diploma in Mechanical Engineering from the Singapore Polytechnic. He has experience with Japanese multinational corporation before joining the Group in 1985. He had started as Construction Superintendent and was later promoted to Project Engineer. In 1995, he was promoted to General Manager of Rotary Mechanical & Construction Company Pte Ltd. He has been seconded to lead Thai Rotary Engineering Ltd since 1998.

Key Information on Directors and Key Executives

22


23


Directors’ Report

The Directors are pleased to present their report to the members together with the audited financial statements of the Company and of the Group for the financial year ended 31 December 2002.

Directors

The Directors of the Company in office at the date of this report are :-

Chia Kim Piow (Chairman and Managing Director)Wong Liang FengWong Oi MoiChia Kim ChuaQuek Wee HongKeith Tay Ah KeeLam Khin KhuiChee Eu Kee

In accordance with the Company’s Article of Association, Chia Kim Chua and Wong Oi Moi retire and, being eligible, offer themselves for re-election.

Principal activities

The principal activities of the Company are engineering design, procurement and construction services for plants and associated facilities. The principal activities of the Company’s subsidiaries are set out in Note 3 to the financial statements.

There have been no significant changes in the nature of these activities during the year.

Results for the financial year

Group Company $’000 $’000

Net profit for the year 2,012 318Revenue reserves brought forward 42,912 29,003

44,924 29,321Dividends paid (3,120) (3,120)

Revenue reserves carried forward 41,804 26,201

Material movements in reserves and provisions

There were no material transfers to or from reserves and provisions during the financial year other than those disclosed in the financial statements.

24


Directors’ Report25


Directors’ Report

Acquisition and disposal of subsidiaries

During the year, the Group disposed shares in the following company :-

Interest Net tangibleName of subsidiary disposed Consideration assets disposed % $ $

Jasinusa Automobile Pte Ltd 100 2 2(Formerly known as MP World Automobile Pte Ltd)

Issue of shares and debentures

During the year, the following subsidiary issued shares at par for cash to provide additional working capital :-

Held by company

Name of company Details of issue Group interest Cost % $’000

Rotary Services Pte Ltd 75,000 ordinary shares of $1 each 100.0 75

No subsidiary companies issued any debentures during the year.

No shares and debentures were issued by the Company during the year.

Arrangements to enable directors to acquire shares and debentures

Neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose object is to enable the Directors of the Company to acquire benefits by means of the acquisition of shares or debentures of the Company or any other body corporate.

Directors’ interests in shares and debentures

The following Directors, who held office at the end of the financial year, had, according to the register of Directors’ shareholdings required to be kept under Section 164 of the Singapore Companies Act, an interest in shares of the Company’s holding company, REL Investments Pte Ltd, and the Company as stated below :-

Number of ordinary shares of $1 each in REL Investments Pte Ltd Held in the name of Director Deemed interest At At At At AtName of Director 1.1.2002 31.12.2002 1.1.2002 31.12.2002 21.01.2003

Chia Kim Piow 1,101,601 1,101,601 372,300 372,300 372,300Wong Liang Feng 456,451 456,451 456,450 456,450 456,450Chia Kim Chua 163,200 163,200 - - -

24




Directors’ Report

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

Number of ordinary shares of $0.10 each in Rotary Engineering Limited Held in the name of Director Deemed interest At At At At Name of Director 1.1.2002 31.12.2002 1.1.2002 31.12.2002 Chia Kim Piow 39,049,440 39,049,440 204,462,000 204,462,000Wong Liang Feng 19,388,640 19,388,640 217,721,680 217,721,680Wong Oi Moi 13,148,640 13,148,640 204,462,000 204,462,000Chia Kim Chua 5,713,600 5,713,600 - - Quek Wee Hong 600,000 600,000 200,000 200,000Keith Tay Ah Kee 300,000 300,000 - - Lam Khin Khui 302,000 302,000 - -

Options to subscribe for ordinary shares of $0.10 each in Rotary Engineering Limited

Chia Kim Chua 600,000 600,000 - - Quek Wee Hong 300,000 300,000 - - Keith Tay Ah Kee 300,000 300,000 - - Lam Khin Khui 300,000 300,000 - - Chee Eu Kee 300,000 300,000 - -

By virtue of Section 7 of the Singapore Companies Act, Chia Kim Piow and Wong Liang Feng are deemed to have an interest in the subsidiaries of the holding company at the beginning and at the end of the financial year; and Chia Kim Piow, Wong Liang Feng and Wong Oi Moi are deemed to have an interest in the subsidiaries of the Company at the beginning and at the end of the financial year.

The interests of the Directors in the Company as at 21 January 2003 remain unchanged from those shown above.

No Director who held office at the end of the financial year had an interest in shares or debentures of the Company and its subsidiary companies, other than that stated above.

Dividends

During the year, a first and final dividend of 0.8 cents per share of $0.10 each less tax of 22% amounting to $2,496,000 and a special dividend of 0.2 cents per share of $0.10 each less tax of 22% amounting to $624,000, was paid in respect of the previous year as proposed in the Report of the Directors of that year. No dividend was paid during the year in respect of the current financial year.

The Directors recommend that a first and final dividend of 0.6 cents per share of $0.10 each less tax of 22% amounting to $1,872,000 be paid in respect of the financial year under review.

Bad and doubtful debts

Before the profit and loss account and balance sheet of the Company were made out, the Directors took reasonable steps to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and have satisfied themselves that all known bad debts if any have been written off and that where necessary adequate provision has been made for doubtful debts.

At the date of this report, the Directors are not aware of any circumstances which would render any amount written off or provided for bad and doubtful debts in the Group of Companies inadequate to any substantial extent.

26




Directors’ Report

Current assets

Before the profit and loss account and balance sheet of the Company were made out, the Directors took reasonable steps to ascertain that any current assets which were unlikely to realise their book value in the ordinary course of business have been written down to their estimated realisable values or adequate provision had been made for the diminution in the value of such current assets.

At the date of this report, the Directors are not aware of any circumstances which would render the values attributed to current assets in the consolidated financial statements misleading.

Charges on assets and contingent liabilities

Since the end of the financial year, and up to the date of this report, no charge on the assets of the Company or any company in the Group has arisen which secures the liabilities of any other person and no contingent liability has arisen.

Ability to meet obligations

No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the ability of the Company and of the Group to meet their obligations as and when they fall due.

Other circumstances affecting the financial statements

At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or in the consolidated financial statements which would render any amount stated in the financial statements of the Company and consolidated financial statements misleading.

Unusual items

In the opinion of the Directors, the results of the operations of the Company and of the Group during the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature.

Unusual items after the financial year

In the opinion of the Directors, no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which would affect substantially the results of the operations of the Company and of the Group for the financial year in which this report is made.

Directors’ contractual benefits

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

Directors’ Report

26




Directors’ Report

Share options

The Rotary Engineering Employees’ Share Option Scheme (“the ESOS”) was approved at the Company’s Extraordinary General Meeting on 15 December 2000.

The ESOS is a share incentive scheme to give recognition to employees whose contributions have been essential to the well-being and

prosperity of the Group, i.e. referring to Rotary Engineering Limited and its subsidiaries and associated companies.

On 26 October 2001, a total of 6,480,000 options to subscribe for ordinary shares of $0.10 each in the Company (“Grant 1”) was granted to Executive Directors, Independent Directors, Managerial Staff and Selected Employees (“the Grantees”) as follow :-

Options granted during Participants the financial year

Directors

- Chia Kim Chua 600,000 - Quek Wee Hong 300,000 - Keith Tay Ah Kee 300,000 - Lam Khin Khui 300,000 - Chee Eu Kee 300,000

Managerial Staff 3,770,000

Specially Selected staff 910,000

6,480,000

The exercise price for Grant 1 was fixed at 18.66 cents per share, and are exercisable between 27 October 2002 to 26 October 2011.

No options have been exercised during the financial year.

Directors’ Report

28


29


Audit Committee

The Audit Committee comprises three Board members, all of whom are non-executive Directors. The members, including the chairman are independent. The members of the committee during the financial year and at the date of this report are :-

Keith Tay Ah Kee - ChairmanLam Khin KhuiQuek Wee Hong

The Audit Committee held four meetings since the last Directors’ Report and performed the functions specified in the Companies Act. The Audit Committee may examine whatever aspects it deems appropriate of the Group’s financial affairs, its internal and external audits and its exposure to risks of a regulatory or legal nature. It keeps under review the effectiveness of the Company and the Group’s system of accounting and internal financial controls, for which the Directors are responsible. It also keeps under review the Company’s programme to monitor compliance with its legal, regulatory and contractual obligations.

In performing its functions, the Committee reviewed the overall scope of both internal and external audits and the assistance given by the Company’s officers to the auditors. The Committee met with the internal and external auditors to discuss the results of their respective examinations and their evaluation of the Company and the Group’s system of accounting internal control. The Committee also reviewed the financial statements of the Company and the consolidated financial statements of the Group for the financial year ended 31 December 2002 as well as the external auditors’ report thereon.

The Audit Committee has recommended to the Board of Directors the nomination of Ernst & Young for re-appointment as auditors of the Company at the forthcoming annual general meeting.

Auditors

Ernst & Young have expressed their willingness to accept re-appointment as auditor.

On behalf of the Board :

Chia Kim PiowDirector

Wong Liang FengDirector

Singapore7 April 2003

Directors’ Report

28


29


We, Chia Kim Piow and Wong Liang Feng, being two of the Directors of Rotary Engineering Limited, do hereby state that, in the opinion of the Directors :

(a) the accompanying balance sheets, profit and loss accounts, statements of changes in equity and consolidated cash flows statement together with the notes thereto are drawn up so as to give a true and fair view of the state of affairs of the Company and of the Group as at 31 December 2002 and of the results of the business and changes in equity of the Company and of the Group and cash flows of the Group for the year then ended; 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.

The Board of Directors authorised these financial statements for issue on 7 April 2003.

On behalf of the Board :

Chia Kim PiowDirector

Wong Liang FengDirector


Statement by the Directors

30


31


Auditors’ Report

To the members of Rotary Engineering Limited

We have audited the financial statements of Rotary Engineering Limited set out on pages 31 to 62. The financial statements comprise the balance sheets of the Company and of the Group as at 31 December 2002, the profit and loss accounts and the statements of changes in equity of the Company and of the Group and cash flow statement of the Group for the year ended 31 December 2002, and notes thereto. These financial statements are the responsibility of the Company’s Directors. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Directors, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion,

(a) the financial statements and consolidated financial statements are properly drawn up in accordance with the provisions of the Singapore Companies Act (Act) and Singapore Statements of Accounting Standard and so as to give a true and fair view of:-

(i) the state of affairs of the Company and of the Group as at 31 December 2002 and of the results and changes in equity of the Company and of the Group and cash flows of the Group for the year ended on that date; and

(ii) the other matters required by section 201 of the Act to be dealt with in the financial statements and consolidated financial statements;

(b) the accounting and other records, and the registers required by the Act to be kept by the Company and by those subsidiary companies incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.

We have considered the financial statements and auditors’ reports of all subsidiaries for which we have not acted as auditors, being financial statements included in the consolidated financial statements. We have also considered the financial statements of Rotary Engineering (Australia) Pty Ltd and Comdale Services Limited which are not required to be audited under the laws of the country of incorporation being financial statements that are included in the consolidated financial statements. The names of those subsidiaries audited by our associated firms and those audited by other firms are stated in Note 3.

We are satisfied that the financial statements of the subsidiary companies that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations as required by us for those purposes.

The auditors’ reports on the financial statements of the subsidiary companies were not subject to any qualification and in respect of subsidiary companies incorporated in Singapore did not include any comment made under section 207(3) of the Act.

ERNST & YOUNGCertified Public Accountants


30


31


Balance Sheets as at 31 December 2002

Group Company Note 2002 2001 2002 2001 $’000 $’000 $’000 $’000

Fixed assets 8 41,711 43,485 9,728 10,623

InvestmentsSubsidiary companies 9 - - 37,585 37,590Associated companies 10 2,737 3,516 3,434 3,434Other investments 11 9,498 5,054 8,562 4,333

Current assetsCash at banks and in hand 12 40,701 45,921 24,887 28,450Debtors 13 46,593 54,778 49,091 55,535Contracts-in-progress 14 1,584 8,161 602 806Stocks 15 4,905 3,921 - -

93,783 112,781 74,580 84,791

Current liabilitiesContracts-in-progress 14 18,350 27,984 8,008 7,261Creditors 16 30,437 34,996 42,988 47,860

48,787 62,980 50,996 55,121

Net current assets 44,996 49,801 23,584 29,670

Long term liabilitiesHire purchase creditors 17 279 1,905 45 -Deferred taxation 18 1,121 1,058 778 778

(1,400) (2,963) (823) (778) 97,542 98,893 82,070 84,872

Share capital and reservesShare capital 19 40,000 40,000 40,000 40,000Reserves 20 53,684 54,820 42,070 44,872

93,684 94,820 82,070 84,872Minority interest 3,858 4,073 - -

97,542 98,893 82,070 84,872

The accounting policies and explanatory notes on pages 36 through 62 form an integral part of the financial statements.

32


33


Group Company Note 2002 2001 2002 2001 $’000 $’000 $’000 $’000

Turnover 4 108,065 140,445 47,174 85,494Cost of sales (78,307) (105,546) (40,978) (79,651)

Gross profit 29,758 34,899 6,196 5,843Other revenue 1,416 2,641 1,261 23,592Administrative costs (20,436) (23,547) (3,903) (4,852)Other operating costs (6,336) (4,035) (2,784) (2,245)

Profit from operating activities 4,402 9,958 770 22,338Finance costs (143) (81) (6) (5)Share of loss from unconsolidated associates (571) (30) - -

Profit from operations before tax and minority interest 5 3,688 9,847 764 22,333Taxation 6 (1,587) (2,601) (446) (5,458)Minority interests, net of tax (89) (493) - -

Net profit for the year 2,012 6,753 318 16,875

Earnings per share (cents)Basic earnings per share 7 0.5 1.7

Diluted earnings per share 7 0.5 1.7


Profit and Loss Accounts for the year ended 31 December 2002

32


33


Statement of Changes in Equity for the year ended 31 December 2002

Group Amounts Shares Note 2002 2001 2002 2001 $’000 $’000 ’000 ’000

Issued capital (1)

Balance at beginning and end of year 40,000 40,000 400,000 400,000 Share premiumBalance at beginning and end of year 15,869 15,869

Exchange translation lossBalance at beginning of year (3,989) (3,865)Addition during the year (28) (124) Balance at end of year (4,017) (3,989) Revenue reserveBalance at beginning of year as previously stated 42,912 37,065Changes in accounting policies - Proposed dividend - 3,624 - Accrual for unconsumed leave - (906)

Balance at beginning of year as restated 42,912 39,783Profit for the year 2,012 6,753Dividends paid 21 (3,120) (3,624) Balance at end of year 41,804 42,912 Capital reserveBalance at beginning of year 28 83Disposal of subsidiary during the year - (55)

Balance at end of year 28 28

Total equity 93,684 94,820

(1) The holders of ordinary shares are entitled to receive dividends when declared by the Company. All ordinary shares carry one vote per share without restriction.


34


35


Statement of Changes in Equity for the year ended 31 December 2002

Company Amounts Shares Note 2002 2001 2002 2001 $’000 $’000 ’000 ’000

Issued capital (1)

Balance at beginning and end of year 40,000 40,000 400,000 400,000 Share premiumBalance at beginning and end of year 15,869 15,869 Revenue reserveBalance at beginning of year as previously stated 29,003 15,365Changes in accounting policies - Proposed dividend - 3,624 - Proposed dividend from subsidiaries - (2,756) - Accrual for unconsumed leave - (481) Balance at beginning of year as restated 29,003 15,752Profit for the year 318 16,875Dividend paid during the year 21 (3,120) (3,624) Balance at end of year 26,201 29,003

Total equity 82,070 84,872

(1) The holders of ordinary shares are entitled to receive dividends when declared by the Company. All ordinary shares carry one vote per share without restriction.


34


35


2002 2001 $’000 $’000

Cash flow from operating activities :Profit before taxation 3,688 9,847

Adjustments for :Share of results of associated companies 571 30Depreciation of fixed assets 4,734 4,836Gain on disposal of fixed assets (189) (110)Gain on disposal of quoted equity investments (5) (120)Gain on disposal of unquoted investments - (55)Interest income (533) (1,227)Interest expense 143 81Currency realignment (586) 34 Operating income before reinvestment in working capital 7,823 13,316Decrease in debtors 8,161 24,306Increase in stocks (984) (466)Decrease in contracts-in-progress (3,057) (17,311)Decrease in creditors (5,978) (7,966) Cash generated from operations 5,965 11,879

Interest received 558 1,277Interest paid (143) (81)Income tax paid (2,810) (3,543) Net cash generated from operating activities 3,570 9,532 Cash flow from investing activities :Disposal of subsidiary, net of cash - (170)Increase in investment in associated companies (5) (200)Increase in other investments, net (4,691) (2,791)Purchase of fixed assets (5,568) (11,986)Proceeds from disposal of fixed assets 3,198 3,590Proceeds from disposal of investments 252 4,125 Net cash used in investing activities (6,814) (7,432) Cash flow generated from financing activities :Issue of shares by subsidiaries to minority shareholders - 69Dividend paid : - by the company (3,120) (3,624) - by subsidiaries to minority shareholders (148) (493) Net cash flows used in financing activities (3,268) (4,048) Net decrease in cash and cash equivalents (6,512) (1,948)Cash and cash equivalents at beginning of year (Note 23) 45,431 47,379 Cash and cash equivalents at end of year (Note 23) 38,919 45,431


Consolidated Statement of Cash Flows for the year ended 31 December 2002

36


Notes to the Financial Statements - 31 December 200237



1. Corporate information

The financial statements of Rotary Engineering Limited (“the Company”) for the year ended 31 December 2002 were authorised for issue in accordance with a resolution of the Directors on 7 April 2003. The Company is a limited liability company which is incorporated in Singapore. The Company’s immediate and ultimate holding company is REL Investments Pte Ltd, which is incorporated in the Republic of Singapore.

The registered office 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 Company’s subsidiaries are set out in Note 3 below. There have been no significant changes in the nature of these activities during the year.

The Group operates in 16 (2001 : 11) countries and employed 1,526 (2001 : 1,445) employees as of 31 December 2002, respectively.

2. Summary of significant accounting policies

(a) Basis of preparation

The financial statements of the Company and of the Group, which are expressed in Singapore dollars (“SGD” or “$”), are prepared under the historical cost convention and in accordance with Singapore Statements of Accounting Standards (SAS) and applicable requirements of Singapore law.

The accounting policies have been consistently applied by the Company and, except for the changes in accounting policy discussed more fully below, are consistent with those used in the previous year.

(b) Changes in accounting policy

The Group and Company has adopted the revised Singapore Statement of Accounting Standard (SAS) 12 (2001) - Income Taxes. The adoption of this Standard has not given rise to any adjustments to the opening balances of revenue reserve of the previous year and current year or to changes in comparatives.

(c) Principles of consolidation

The consolidated financial statements comprise the financial statements of Rotary Engineering Limited (the parent company) and its controlled subsidiaries, after elimination of all material inter-company transactions.

Subsidiaries are consolidated from the date the parent obtains control until such time as control ceases. Acquisitions of subsidiaries are accounted for using the purchase method of accounting.

The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. Adjustments are made to conform any dissimilar material accounting policies that may exist.

(d) Subsidiary companies

Shares in subsidiary companies are stated at cost and provision is made for permanent impairment in values.

Dividend income is recognised when dividends are declared. An assessment of investments in subsidiary companies is performed when there is indication that the amount has been impaired or the impairment losses recognised in the previous years no longer exist.

36





2. Summary of significant accounting policies (cont’d)

(e) Associated companies

An associated company is defined as a company, not being a subsidiary, in which the Group has a long-term interest of not less than 20% of the equity and in whose financial and operating policy decisions the Group exercises significant influence.

The Group’s share of the results of associated companies is included in the consolidated profit and loss account. The Group’s share of the post-acquisition reserves of associated companies is included in investments in the consolidated balance sheet.

Shares in associated companies are stated in the Company’s balance sheet at cost and provision is made for permanent impairment in values.

Dividend income is recognised when dividends are declared.

(f) Investments

Investments held on a long-term basis are stated at average cost. Provision is made for any diminution in value which is considered to be permanent.

Dividend income is recognised when dividends are declared. Interest income is accrued on the day-to-day basis.

(g) Revenue recognition

Revenue from contracts is recognised on the percentage of completion method by reference to the physical progress on each contract and all losses are provided for as they become known. Claims for additional contract compensation are not recognised until resolved.

Revenues from employment, advertising, insurance agencies and procurement are recognised upon the provision of services. Revenues from the sale of goods are recognised upon passage of title to the customer which generally coincides with their delivery and acceptance.

(h) Contracts-in-progress

Contracts-in-progress consists of contract costs incurred and attributable profits less progress billings.

Contract costs include all direct material and labour costs and those indirect costs related to contract performance. General and administrative costs are expensed as incurred.

Progress billings comprise progress claims and claimables based on the percentage of completion on uncompleted contracts. Provisions for foreseeable losses on uncompleted contracts are made in the period in which such losses are determined.

(i) Fixed assets

Fixed assets are stated at cost less accumulated depreciation. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to working condition for its intended use. Expenditure for additions, improvements and renewals are capitalised and expenditure for maintenance and repairs are charged to the profit and loss account. When assets are sold or retired, their cost and accumulated depreciation are removed from the accounts and any gain or loss resulting from their disposal is included in the profit and loss account.

The carrying amounts are reviewed at each balance sheet date to assess whether they are recorded in excess of their recoverable amount, and if carrying values exceed this recoverable amount, assets are written down.

38





2. Summary of significant accounting policies (cont’d) (j) Leased assets Where assets are financed by lease agreements that give rights approximating to ownership (finance leases), the assets are capitalised under fixed assets as if they had been purchased outright at the values equivalent to the present values of total rental payable during the periods of the leases and the corresponding lease commitments are included under liabilities. Lease payments are treated as consisting of capital and interest elements and the interest is charged to profit and loss account. Depreciation on the relevant assets is charged to the profit and loss account on the basis outlined in paragraph (k) below.

Annual rental on operating leases is charged to the profit and loss account.

(k) Depreciation

Depreciation is calculated on the straight line method to write off the cost of fixed assets over their estimated useful lives. The estimated useful lives of fixed assets are as follows :-

Leasehold land in People’s Republic of China - over period of lease of 30 years Leasehold buildings - over the period of the lease of 30 to 50 years Office renovations - 10 years Office equipment, furniture and fittings - 5 to 10 years Plant and machinery - 5 to 10 years Motor vehicles - 5 years Computers (included in office equipment) - 3 years Other assets - 3 to 10 years

Fully depreciated fixed assets are retained in the accounts until they are no longer in use and no further charge for depreciation is made in respect of these assets. (l) Stocks

Stocks are stated at the lower of cost and net realisable value. Cost comprises direct materials on a first-in-first-out basis and, in the case of finished products, include direct labour and attributable production overheads based on normal levels of activity. Net realisable value represents the estimated selling price less anticipated cost of disposal and after making allowance for damaged, obsolete and slow-moving items.

(m) Deferred taxation

Deferred income tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax assets and liabilities are measured using the tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled based on tax rates enacted or substantively enacted at the balance sheet date.

At each balance sheet date, the Group re-assesses unrecognised deferred tax assets and the carrying amount of deferred tax assets. The Group recognises a previously unrecognised deferred tax asset to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. The Group conversely reduces the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of the deferred tax asset to be utilised.

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

Current tax and deferred tax are charged or credited directly to equity if the tax relates to items that are credited or charged, in the same or a different period, directly to equity.

38






(n) Foreign currency translation

Foreign currency transactions Monetary assets and liabilities denominated in non-SGD currencies are translated into SGD equivalents using year-end spot

foreign exchange rates. Non-monetary assets and liabilities are translated using exchange rates that existed when the values were determined. Exchange differences on foreign currency transactions are included in other revenue along with any related hedge effects. Hedges of foreign currency exposures include forward exchange contracts.

Foreign entities Assets and liabilities of foreign entities are translated into SGD equivalents using year-end spot foreign exchange rates. Revenues

and expenses are translated monthly at average exchange rates. The effects of translating these operations are included in equity along with the related hedge and tax effects.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and are translated at the closing rate.

(o) Provisions

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

(p) Borrowing costs

Borrowing costs are recognised as expenses in the period in which they are incurred.

(q) Impairment

The carrying amounts of the Group’s assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated.

An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. All impairment losses are recognised in the profit and loss account.

(r) Cash and cash equivalents

Cash and cash equivalents are defined as cash on hand, demand deposits and short term highly liquid investment readily convertible to known amounts of cash and subject to insignificant risk of changes in value.

Cash on hand and in banks and short-term deposits which are held to maturity are carried at cost.

For the purpose of the Cash Flow Statement, cash and cash equivalents consist of cash at banks and in hand less bank overdrafts but exclude secured bank overdrafts which are used for financing activities.

(s) Employee benefits

Defined contribution plan As required by law, the Group’s companies in Singapore make contributions to the state pension scheme, the Central Provident

Fund (“CPF”). CPF contributions are recognised as compensation expense in the same period as the employment that gives rise to the contribution.

Equity compensation plan The Company has an employee share incentive plan for the granting of non-transferable options. There are no charges in the profit

and loss account upon the grant or exercise of fixed options.

40






(t) Trade and other debtors

Trade debtors are recognised and carried at original invoiced amount less an allowance for any uncollectible amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred.

Receivables from related parties are recognised and carried at cost less an allowance for any uncollectible amounts.

(u) Trade and other creditors

Liabilities for trade and other amounts payable are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the group.

Payables to related parties are carried at cost.

3. Group companies

The subsidiary and associated companies at 31 December 2002 are :-

PercentageName of company of equity held(Country of Principal activities Cost by the groupincorporation) (Place of business) 2002 2001 2002 2001 $’000 $’000 % %

Subsidiary companiesheld by the company :

Rotary Electrical Company Electrical and engineering 4,543 4,543 100.0 100.0(Private) Limited contractor and supplier(Singapore) (Singapore)

Rotary Mechanical and Contractor in mechanical 1,544 1,544 100.0 100.0Construction Company piping and related works(Private) Limited (Singapore)(Singapore)

Rotary Scaffolding & Contractor in engineering 500 500 100.0 100.0Construction Pte Ltd and scaffolding works(Singapore) (Singapore)

Rotary Coatings Employment and 80 80 100.0 100.0(Singapore) Pte Ltd advertising agent(Singapore) (Singapore)

Supermec Pte Ltd Insurance broker and 84 84 70.0 70.0(Singapore) electrical and engineering material traders (Singapore)

Rotary Pharma Pte Ltd Engineering consultants, 973 973 100.0 100.0(formerly known as designers and builders Rotary Integrated Supply (Singapore)Pte Ltd)(Singapore)

(####) P.T. Rotary MECOM Dormant 225 225 70.0 70.0 (Indonesia) (Indonesia)

40





3. Group companies (cont’d)



Rotary Services Pte Ltd Engineering, design 550 475 100.0 100.0(Singapore) installation and repair services (Singapore)

Sixty-six Switchgears Electrical testing and 129 129 60.0 60.0Co Pte Ltd testing of switchgear(Singapore) equipment (Singapore)

Innovative Biotech Pte Ltd Trading of medical 1,939 1,939 52.2 52.2(Singapore) products and equipment (Singapore)

(#) Fushun Rotary Engineering Dormant 249 249 90.0 90.0 Co Ltd (People’s Republic of China) (People’s Republic of China)

(*) Fushun Rotary Cable Co Ltd Manufacturing of cables 708 708 69.1 69.1 (1) (People’s Republic of China) and wires (People’s Republic of China)

(***) Rotary Engineering (Australia) Dormant - - 100.0 100.0 (****) Pty Ltd (Australia) (Australia) Rotary TREL Pte Ltd Engineering construction 957 957 100.0 100.0 (Singapore) (Singapore)

(***) Jasinusa Automobile Dormant - - - 100.0 Pte Ltd (formerly known (Singapore) as MP World Automobile Pte Ltd) (Singapore)

(*) P.T. Rotary Engineering Steel fabrication and 2,750 2,750 100.0 100.0 (2) Indonesia construction (Indonesia) (Indonesia)

(##) CT Environmental Pte Ltd In the process of liquidation - - 60.0 60.0 (Singapore) (Singapore)

(*) Rotary MEC Engineering Engineering design, 513 513 100.0 100.0 (3) (India) Private Limited procurement and (India) construction services for plants and associated facilities

(India)

42








(**) Thai Rotary Engineering Engineering design and 2,003 2,003 49.0 49.0 Ltd construction works (###) (###) 46.2 46.2 (Thailand) (Thailand)

(**) Calvert Limited Investment holding 2 2 90.6 90.6 (Thailand) (Thailand)

Rotary IMC Pte Ltd Provision of integrated 20,000 20,000 100.0 100.0 (Singapore) maintenance services (Singapore)

(#) Fushun Rotary Cable Dormant 141 141 69.1 69.1 and Electronics Co Ltd (People’s Republic of China) (People’s Republic of China) 37,890 37,815

Held by subsidiaries :

(**) Biotech Medical Corporation Trading of medical 52.2 52.2 Sdn Bhd products and equipment (Malaysia) (Malaysia)

(***) IMC Retrofitting Services Civil engineering and 100.0 100.0 Pte Ltd (formerly known as construction works Construction Plus Pte Ltd) (Singapore) (Singapore)

(**) Thai Rotary Engineering Ltd Engineering design and 46.2 46.2 (Thailand) construction works (Thailand)

(***) Comdale Services Limited Investment holding 100.0 100.0 (****) (British Virgin Islands) (British Virgin Islands)

(***) Futura Pacific Corporation Dormant 52.2 52.2 Pte Ltd (Singapore) (Singapore)

IMC Equipment Pte Ltd Marketing, sales, rental, 51.0 51.0(Singapore) distribution and servicing of heavy machinery and equipment to plant and chemical process industry operators (Singapore)

RKB Engineering Co Engineering works 51.0 51.0Pte Ltd (Singapore)(Singapore)

42







Held by subsidiaries : Perlite Services Pte Ltd Provide insulation services 51.0 51.0 (Singapore) and products for the oil and petrochemical industries (Singapore)

(**) TRC Construction Engineering design and 48.6 48.6 Co Limited construction works (Thailand) (Thailand)

EnRis Pte Ltd Provision of diagnostic and 90.0 90.0 (Singapore) maintenance services for plants and related facilities (Singapore)

(*) Audited by other firms. (1) Fushun Certified Public Accountants, China (2) Drs. Gafar Salim & Rekan, Indonesia (3) P.R. Jayakumar & Co., India (**) Audited by Ernst & Young in Malaysia and Thailand. (***) $2 share capital. (****) Not required to be audited under the laws of the country of incorporation. (#) Not required to be audited as the company is dormant since its incorporation. (##) No audited accounts as company is in the process of liquidation. (###) The 46.2% is held through a subsidiary of the Company. (####) No audited accounts as company is dormant.


Associated companies held by the company:

(*) MP World Corporation Investment holding 2,554 2,554 20.0 20.0 (1) (United States of America) (United States of America)

Paper Dimension (S) Pte Ltd Paper merchant 82 82 41.0 41.0 (Singapore) (Singapore)

(**) Rotary MEC (M) Sdn Bhd Engineering works 253 253 49.0 49.0 (Malaysia) (Malaysia)

Honeywell Rotary Pte Ltd Engineering, design, 245 245 49.0 49.0 (Singapore) procurement, construction and maintenance services (Singapore)

44







Associated companies held by the company:

Rotary Brown & Root Pte Ltd Engineering, construction 50 50 50.0 50.0 (Singapore) and maintenance services (Singapore)

Powell Industries Asia Supply of power control 250 250 50.0 50.0 Pte Ltd rooms systems (Singapore) (Singapore)

3,434 3,434

Held by subsidiary : RSK Engineering Pipe fabrication services 120 120 40.0 40.0 Pte Ltd (Singapore) (Singapore) Thyssen Hunnebeck Sale, rental and marketing 250 250 50.0 50.0 Scaffolding Pte Ltd of scaffolding equipment (Singapore) (Singapore)

Rotary Techskill India Testing and certification 17 12 30.0 30.0 Private Limited of workers in mechanical (India) works (India)

Proscon Asia Pte Ltd Design, engineering and 50 50 50.0 50.0 (Singapore) construction of biotechnology & pharmaceutical plants (Singapore)

3,871 3,866

(*) Audited by other firms. (1) C.G. Uhlenberg & Co. LLP, USA. (**) Audited by associated firm of Ernst & Young in Malaysia.

44





4. Turnover

Turnover represents invoiced value of goods supplied, services rendered and progress claims on the percentage of completion of contracts-in-progress analysed as follows :-

Group Company 2002 2001 2002 2001 $’000 $’000 $’000 $’000

External parties 105,225 136,008 41,461 78,759Subsidiary companies - - 5,713 6,682Associated companies 2,840 4,437 - 53 108,065 140,445 47,174 85,494

Contract revenue 83,035 122,221 47,174 85,494Sales of goods and services rendered 25,030 18,224 - - 108,065 140,445 47,174 85,494

5. Profit from operations before tax and minority interest

Group Company 2002 2001 2002 2001 $’000 $’000 $’000 $’000

This is stated after charging :-Auditors’ remuneration - Auditors of the company 171 177 60 60 - Other auditors of subsidiary companies 8 12 - - - (Over)/underprovision in previous year 39 (17) 40 - - Non-audit services 150 42 150 42 - Non-audit services underprovided - 64 - 64Depreciation of fixed assets 4,734 4,836 1,205 2,054Directors’ fee - Directors of the company 110 140 110 140 - Directors of subsidiary companies 19 15 - - Directors’ performance bonus - Directors of the company 448 935 448 935Directors’ remuneration - Directors of the company 1,187 1,462 1,187 1,462 - Directors of subsidiary companies 549 591 - - - The Central Provident Fund 82 142 29 83Provision for doubtful debts - Trade 62 98 - - - Associated company, non-trade 1,500 - 1,500 - Stocks written off 45 65 - - Bad debts written off - Trade 6 - - - Other interest expenses 143 81 6 5

46





5. Profit from operations before tax and minority interest (cont’d)

Group Company 2002 2001 2002 2001 $’000 $’000 $’000 $’000

Provision for diminution in value of investment in a subsidiary - - 80 - Write-off of pre-operating expenses - 8 - - Operating lease expenses 771 786 312 397Exchange differences, net 990 - 759 - And after crediting :-Gain on disposal of fixed assets 189 110 62 95Gain on disposal of long-term quoted equity investments 5 120 5 120Gain on disposal of unquoted investments - 55 - - Gross dividends - Unquoted subsidiary companies - - 410 21,920 - Quoted corporations in Singapore 36 75 36 75Interest income - Fixed deposits 420 1,134 330 889 - Associated companies 50 40 50 40 - Subsidiary companies - - 39 4 - Others 63 53 53 - Exchange differences, net - 512 - 29Write back of provision for doubtful debts 47 - - -

6. Taxation

Group Company 2002 2001 2002 2001 $’000 $’000 $’000 $’000

Provision for taxation in respect of profit for the year :-

Current taxation - Singapore 1,024 2,332 446 5,458 - Foreign 332 210 - -

Deferred taxation - Singapore 63 (31) - -

1,419 2,511 446 5,458 Overprovision in respect of previous years (45) - - - Associated companies 213 90 - - 1,587 2,601 446 5,458

46





6. Taxation (cont’d)

A reconciliation between the tax expense and the product of accounting profit multiplied by the applicable tax rate for the years ended 31 December was as follows :-

Group Company 2002 2001 2002 2001 $’000 $’000 $’000 $’000

Net profit before tax 3,688 9,847 764 22,333 Tax calculated at Singapore statutory income tax rate of 22% (2001 : 24.5%) 811 2,413 168 5,472Effect of tax rates in foreign jurisdiction (27) 10 - -Tax effect of expenses not deductible for tax purposes 822 635 716 471Tax effect of unrecognised deferred tax assets 25 56 - -Tax effect of capital allowances utilised (141) (460) (144) (214)Others (71) (143) (294) (271) 1,419 2,511 446 5,458

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 Singapore incorporate 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 Singapore incorporated company belonging to the same group, to be deducted against the assessable income of the latter company.

Certain subsidiary companies intend to transfer unutilised trade losses of $ 732,000 to other subsidiary companies under the group relief system, subject to compliance with the relevant rules and procedures and agreement of Inland Revenue Authority of Singapore.

7. Earnings per share

Basic earnings per share is calculated by dividing the Group’s net profit for the year attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share is calculated by dividing the net profit for the year attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year (adjusted for the effects of dilutive options).

The following reflects the income and share data used in the basis and diluted earnings per share computations for the years ended 31 December :-

2002 2001 $’000 $’000

Net profit attributable to ordinary shareholders for basis and diluted earnings per share 2,012 6,753 Weighted average number of ordinary shares on issue applicable to basic earnings per share 400,000 400,000 Effect of dilutive securities : Share options 116 1,399 Adjusted weighted average number of ordinary shares applicable to diluted earnings per share 400,116 401,399

Since the end of the financial year, no share option has been exercised. There have been no other transactions involving ordinary shares or potential ordinary shares since the reporting date and before the completion of these financial statements.

48





8. Fixed assets

Office equipment, Leasehold Leasehold Office furniture Motor Plant and Other Construction- land buildings renovations and fittings vehicles machinery assets in-progress TotalGroup $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

CostAt 1 January 2002 1,975 33,808 1,421 9,014 3,386 13,178 5,774 342 68,898Additions - 903 1 711 818 2,770 211 154 5,568Disposals - - (22) (868) (583) (4,770) (3) (29) (6,275)Currency realignment 67 331 (34) (5) (33) 125 (125) (18) 308 At 31 December 2002 2,042 35,042 1,366 8,852 3,588 11,303 5,857 449 68,499 Accumulated depreciationAt 1 January 2002 161 3,569 1,230 7,033 1,794 6,208 5,418 - 25,413Charge for the year 41 1,209 71 1,076 597 1,592 148 - 4,734Disposals - - (10) (574) (508) (2,173) (1) - (3,266)Currency realignment 17 70 (35) (12) (18) 31 (146) - (93) At 31 December 2002 219 4,848 1,256 7,523 1,865 5,658 5,419 - 26,788 Charge for 2001 38 866 72 1,203 663 1,702 292 - 4,836 Net book valueAt 31 December 2002 1,823 30,194 110 1,329 1,723 5,645 438 449 41,711

At 31 December 2001 1,814 30,239 191 1,981 1,592 6,970 356 342 43,485

Office equipment, Leasehold Office furniture Motor Plant and Other buildings renovations and fittings vehicles machinery assets TotalCompany $’000 $’000 $’000 $’000 $’000 $’000 $’000

CostAt 1 January 2002 11,112 271 6,802 1,050 1,269 1,975 22,479Additions - - 303 320 - - 623Disposals - - (718) (342) (656) - (1,716) At 31 December 2002 11,112 271 6,387 1,028 613 1,975 21,386 Accumulated depreciationAt 1 January 2002 2,220 207 5,891 663 905 1,970 11,856Charge for the year 233 22 667 161 119 3 1,205Disposals - - (518) (314) (571) - (1,403) At 31 December 2002 2,453 229 6,040 510 453 1,973 11,658 Charge for 2001 233 22 965 326 502 6 2,054 Net book valueAt 31 December 2002 8,659 42 347 518 160 2 9,728

At 31 December 2001 8,892 64 911 387 364 5 10,623

48





8. Fixed assets (cont’d)

(a) Other assets comprise electrical equipment, containers, air conditioners and hand tools.

(b) Group Company 2002 2001 2002 2001 $’000 $’000 $’000 $’000

Net book value of fixed assets acquired under hire purchase 608 3,288 200 -

(c) The followings are the major properties of the Group :

Located in Singapore:-

(i) A 3-hanger workshop building and a 3-storey office building located at 17 Tuas Avenue 20 on a leasehold land area of 19,863 sqm (60 years from 1 January 1992).

(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 (30 years from 6 August 1981).

(iii) A leasehold land with an area of 27,060 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 2,421.3 sqm in Fushun, People’s Republic of China for industrial use (30 years from 1994).

(ii) A leasehold land and building with a land area of 120,000 sqm in Batam, Indonesia for industrial use (30 years from 1996).

(iii) A freehold land with an area of 70,000 sqm in Huay Pong, Thailand for industrial use.

9. Subsidiary companies

Company 2002 2001 $’000 $’000

Unquoted equity shares at cost 37,890 37,815 Less : Provision for diminution in value of investments (305) (225) 37,585 37,590 Details on the subsidiary companies are set out in Note 3 to the financial statements.

50





9. Subsidiary companies (cont’d) Analysis of provision for diminution in value :-

Company 2002 2001 $’000 $’000

Balance at 1 January 225 225 Charge to profit and loss account 80 - Balance at 31 December 305 225

10. Associated companies

Group Company 2002 2001 2002 2001 $’000 $’000 $’000 $’000 Unquoted equity shares at cost 3,871 3,866 3,434 3,434 Share of results of associated companies (1,134) (350) - - 2,737 3,516 3,434 3,434

Details on the associated companies are set out in Note 3 to the financial statements.

11. Other investments

Quoted equity investments at cost 2,768 2,964 2,768 2,964 Less : Provision for diminution in value of investments (739) (739) (739) (739) 2,029 2,225 2,029 2,225 Unquoted equity investments at cost 2,156 1,588 1,220 867 Less : Provision for diminution in value of investments (592) (592) (592) (592) 1,564 996 628 275 Unquoted debts securities and bonds at cost 5,905 1,833 5,905 1,833 Total 9,498 5,054 8,562 4,333 Market value of quoted equity investments 1,229 2,750 1,229 2,750

50





12. Cash at banks and in hand

Group Company 2002 2001 2002 2001 $’000 $’000 $’000 $’000 Fixed deposits 23,273 28,879 20,683 24,730 Cash and bank balances 17,428 17,042 4,204 3,720 40,701 45,921 24,887 28,450

Fixed deposits pledged as securities for banking facilities 3,850 2,951 3,850 2,300

13. Debtors

Trade debtors, (a) 36,333 41,629 14,225 20,929 Associated/ related companies, (b) 5,223 7,443 33,855 33,817 Other debtors, (c) 5,037 5,617 1,011 716 Amounts due from director - related companies, (d) - 89 - 73 46,593 54,778 49,091 55,535 (a) Trade debtors include retention sum of :- 10,399 10,930 7,381 6,819

Trade debtors are stated after deducting provision for doubtful debts of :- 580 565 191 191

Analysis of provision for doubtful debts :- Balance at 1 January 565 467 191 191 Charge to profit and loss account 62 98 - - Write-back during the year (47) - - - Balance at 31 December 580 565 191 191 Bad debts written off directly to profit and loss account 6 - - -

52





13. Debtors (cont’d)

Group Company 2002 2001 2002 2001 $’000 $’000 $’000 $’000 (b) Associated/ related companies Amounts receivable on current account Trade balances Subsidiary companies - - 5,574 7,324 Associated companies 2,733 4,397 490 604 2,733 4,397 6,064 7,928 Non-trade balances Subsidiary companies - - 25,450 22,918 Associated companies 3,990 3,046 3,841 2,971 3,990 3,046 29,291 25,889 Less : Provision for doubtful debts (1,500) - (1,500) - 2,490 3,046 27,791 25,889 5,223 7,443 33,855 33,817

Amounts receivable from subsidiary companies on current account are interest free and unsecured with no fixed terms of repayment except for the following loans which are interest-bearing :-

Amounts receivable from associated companies on current account are interest-free and unsecured with no fixed terms of repayment with the exception of a loan amount of $660,000 (2001 : $660,000) which bears interest at SIBOR + 1% (2001 : SIBOR + 1%).

(c) Other debtors comprise the following:-

Group Company 2002 2001 2002 2001 $’000 $’000 $’000 $’000 Accrued interest 21 46 20 45 Staff loans 167 179 86 46 Sundry deposits 425 451 282 217 Prepayments 1,322 2,777 15 20 Recoverables 3,102 2,164 608 388

5,037 5,617 1,011 716

(d) Amounts due from director-related companies are trade in nature, unsecured, interest-free and have no fixed terms of repayment.

Amount Interest Rate 2002 2001 2002 2001 $ $

2,000,000 2,000,000 SIBOR + 1% SIBOR + 1% 55,415 - Prime Rate + 1% -

52





14. Contracts-in-progress

Group Company 2002 2001 2002 2001 $’000 $’000 $’000 $’000 Current asset Being costs and attributable profits in excess of progress billings 1,584 8,161 602 806 Current liability Being progress billings in excess of costs and attributable profits (18,350) (27,984) (8,008) (7,261) (16,766) (19,823) (7,406) (6,455)

This can be analysed as follows :-

Costs incurred and attributable profits 287,782 318,189 155,479 171,826 Less: Progress billings (304,548) (338,012) (162,885) (178,281) (16,766) (19,823) (7,406) (6,455)

15. Stocks

Group Company 2002 2001 2002 2001 $’000 $’000 $’000 $’000

Raw materials, supplies and consumables, at cost 3,244 2,291 - - Medical products, at cost 1,661 1,630 - - 4,905 3,921 - -

Amount Interest Rate 2002 2001 2002 2001 $ $

2,000,000 2,000,000 SIBOR + 1% SIBOR + 1% 55,415 - Prime Rate + 1% -

54





16. Creditors

Group Company 2002 2001 2002 2001 $’000 $’000 $’000 $’000

Related companies, (a) 510 1,490 36,301 42,496 Bank overdrafts, unsecured 1,782 490 - - Trade creditors and accruals 22,863 28,263 3,838 4,360 Advances from customers 2,695 530 2,354 517 Provision for taxation 2,240 3,739 406 460 Hire purchase creditors (Note 17) 347 484 89 27 30,437 34,996 42,988 47,860 (a) Related companies Amounts payable on current account Trade balances Subsidiary companies - - 17,964 22,104 Associated companies 299 1,474 24 98 299 1,474 17,988 22,202 Non-trade balances Subsidiary companies - - 18,285 20,280 Associated companies 211 16 28 14 211 16 18,313 20,294 510 1,490 36,301 42,496

The amounts payable to related companies are interest-free and unsecured with no fixed terms of repayment.

17. Hire purchase creditors

Present Present Minimum Value of Minimum Value of Group Payments Payments Payments Payments 2002 2002 2001 2001 $’000 $’000 $’000 $’000

Within one year 394 347 893 610 After one year but not more than five years 321 279 1,873 1,769 After five years - - 11 10 Total minimum lease payments 715 626 2,777 2,389 Less : Amounts representing finance charges (89) - (388) - Present value of minimum lease payments 626 626 2,389 2,389 Amount repayable within one year (Note 16) (347) (347) (484) (484) Amount repayable after one year 279 279 1,905 1,905

54





17. Hire purchase creditors (cont’d)

Present Present Minimum Value of Minimum Value of Company Payments Payments Payments Payments 2002 2002 2001 2001 $’000 $’000 $’000 $’000

Within one year 93 89 31 27 After one year but not more than five years 47 45 - - Total minimum lease payments 140 134 31 27 Less : Amounts representing finance charges (6) - (4) - Present value of minimum lease payments 134 134 27 27 Amount repayable within one year (Note 16) (89) (89) (27) (27) Amount repayable after one year 45 45 - -

18. Deferred taxation

The details are analysed as follows :-

Group Company 2002 2001 2002 2001 $’000 $’000 $’000 $’000

Deferred tax liabilities Differences in depreciation 2,037 1,015 735 735 Other deferred tax liabilities 43 43 43 43 Gross deferred tax liabilities 2,080 1,058 778 778 Deferred tax assets Other deferred tax assets 959 - - - Net deferred tax liabilities 1,121 1,058 778 778 Tax effect of temporary differences for which no deferred tax is recognised Unutilised tax losses 189 22 - - Unabsorbed capital allowances 689 877 - - 878 899 - - The unutilised tax losses and unabsorbed capital allowances are available for offset against future taxable profits of the Companies in which the losses arose.

The use of these unutilised tax losses and unabsorbed capital allowances are subject to the agreement of the tax authorities and compliance with certain provisions of the tax legislation.

No deferred tax assets have been recognised for all the above temporary differences because of the uncertainty of its recoverability.

56





19. Share capital

Group and Company 2002 2001 $’000 $’000 Authorised :- 1,000,000,000 ordinary shares of $0.10 each 100,000 100,000 Issued and fully paid :- 400,000,000 ordinary shares of $0.10 each 40,000 40,000

20. Reserves

Group Company 2002 2001 2002 2001 $’000 $’000 $’000 $’000 Revenue reserve - Balance at beginning of year as previously stated 42,912 37,065 29,003 15,365 Changes in accounting policies - Proposed dividend - 3,624 - 3,624 - Proposed dividend from subsidiaries - - - (2,756) - Accrual for unconsumed leave - (906) - (481) Balance at beginning of year as restated 42,912 39,783 29,003 15,752 Profit for the year 2,012 6,753 318 16,875 Dividends paid (3,120) (3,624) (3,120) (3,624) Balance at end of year 41,804 42,912 26,201 29,003 Exchange translation loss - Balance at 1 January (3,989) (3,865) - - Addition during the year (28) (124) - - Balance at 31 December (4,017) (3,989) - - Share premium account - Balance at 1 January and 31 December 15,869 15,869 15,869 15,869 Capital reserve - Balance at 1 January 28 83 - - Disposal of subsidiary - (55) - - Balance at 31 December 28 28 - - Total reserves 53,684 54,820 42,070 44,872 Made up of:- Distributable 37,787 38,923 26,201 29,003 Non-distributable 15,897 15,897 15,869 15,869 53,684 54,820 42,070 44,872

56





21. Dividends paid and proposed

Group and Company 2002 2001 $’000 $’000

Dividends for 2001 and 2000 - paid - First and final dividend of 0.8 cents (2000 : 0.8 cents) per share of $0.10 each, less tax of 22% (2000 : 24.5%) 2,496 2,416 - Special dividend of 0.2 cents per share (2000 : 0.4 cents) per share of $0.10 each, less tax of 22% (2000 : 24.5%) 624 1,208 3,120 3,624

The Directors propose a first and final dividend of 0.6 cents per share of $0.10 each less tax of 22% amounting to $1,872,000 be paid for the year ended 31 December 2002.

22. Related party transactions

The Group and the Company have significant transactions with related companies on terms agreed between the parties, as follows :-

Group Company 2002 2001 2002 2001 $’000 $’000 $’000 $’000

Subsidiary companies Purchase of services - - 35,326 68,865 Contract sales and services - - (5,675) (6,682) Interest received - - (39) (4) Rental received - - (73) (39) Recovery of administration expenses - - (6,526) (6,045) Accounting fee received - - (84) (114) Associated companies Purchase of goods and services 279 3,985 182 23 Contract sales and services (2,840) (4,437) - (53) Interest received (50) (40) (50) (40) Accounting fee received (40) (78) (40) (78) Rental received (269) (281) (77) (126)

58





23. Cash and cash equivalents

Cash and cash equivalents included in the consolidated statement of cash flows comprise the following balance sheet amounts :-

Group 2002 2001 $’000 $’000

Fixed deposits 23,273 28,879 Cash and bank balances 17,428 17,042 Bank overdrafts, unsecured (1,782) (490) 38,919 45,431

24. Operating leases

The Group and the Company lease certain properties under lease agreements that are non-cancellable. Future minimum lease payments are as follows :-

Group Company 2002 2001 2002 2001 $’000 $’000 $’000 $’000

Payable within 1 year 687 1,276 280 770 Payable between 2 to 5 years 2,956 5,563 1,352 3,608 Payable after 5 years 27,008 49,612 8,944 24,806 30,651 56,451 10,576 29,184

25. Capital commitments

Capital expenditure not provided for in the financial statements :- Capital commitments in respect of contracts placed - - - - Other amounts approved by Directors but not committed 49 253 - -

26. Contingent liabilities

Group Company 2002 2001 2002 2001 $’000 $’000 $’000 $’000

Guarantees of banking facilities of subsidiary companies - - 3,850 13,700 Guarantees and performance bonds - secured - - - - - unsecured 16,473 30,449 16,417 30,347 The guarantees and performance bonds are secured by pledge of fixed deposits of $NIL (2001 : $2,300,000).

58





27. Subsequent events

Subsequent to the end of the financial year,

a) the Company’s subsidiary company, Rotary IMC Pte Ltd, acquired the remaining 49% shareholding in its partly owned subsidiary company, IMC Equipment Pte Ltd. IMC Equipment Pte Ltd become a wholly-owned subsidiary of Rotary IMC Pte Ltd.

b) the Company’s subsidiary company, IMC Retrofitting Services Pte Ltd changed its name to IMC Heavy Equipment Pte Ltd.

28. Segment information

The following tables present revenue and profit information regarding industry segments for the years ended 31 December 2002 and 2001 and certain assets and liability information regarding industry segments at 31 December 2002 and 2001.

Business segments

Project Maintenance services and trading Eliminations Consolidated 2002 2001 2002 2001 2002 2001 2002 2001 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Segment revenue Sales to external customers 83,035 122,221 25,030 18,224 - - 108,065 140,445 Intersegment sales 1,565 670 15,120 9,397 (16,685) (10,067) - - Total revenue 84,600 122,891 40,150 27,621 (16,685) (10,067) 108,065 140,445 Segment result 22,083 28,196 7,675 6,019 - 684 29,758 34,899 Unallocated expenses (25,356) (24,941) Operating profit 4,402 9,958 Finance costs (143) (81) Share of loss of unconsolidated associates (571) (30) Profit before tax 3,688 9,847 Tax expenses (1,587) (2,601) Minority interests, net of taxes (89) (493) Profit after tax 2,012 6,753 Segment assets 100,204 125,610 46,215 35,710 146,419 161,320 Investment in associate 2,737 3,466 - 50 2,737 3,516 Total assets 102,941 129,076 46,215 35,760 149,156 164,836 Total liabilities 38,853 54,746 12,761 11,197 51,614 65,943 Other segment information :

Capital expenditures 1,486 4,398 4,082 7,588 5,568 11,986 Depreciation 2,929 3,538 1,805 1,297 4,734 4,836 Amortisation - 8 - - - 8

60





28. Segment information (cont’d)

Geographical segments

Sales to Other Geographical Information external Intersegment Total Segment Capital customers sales revenue assets expenditure 2002 2001 2002 2001 2002 2001 2002 2001 2002 2001 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Segment revenue Singapore 69,530 93,868 16,685 10,067 86,215 103,935 128,453 137,355 4,796 11,111 Malaysia 4,944 6,413 - - 4,944 6,413 - - - - Thailand 12,988 21,648 - - 12,988 21,648 8,989 8,307 772 710 China 3,089 3,161 - - 3,089 3,161 2,713 4,063 - 96 India 11,581 10,180 - - 11,581 10,180 5,990 8,917 - 69 Algeria 1,606 3,122 - - 1,606 3,122 - - - - Others 4,327 2,053 - - 4,327 2,053 3,011 6,194 - - Consolidated 108,065 140,445 16,685 10,067 124,750 150,512 149,156 164,836 5,568 11,986 Elimination (16,685) (10,067) 108,065 140,445

29. Directors’ fees, performance bonus and remuneration

Number of directors in remuneration bands :-

Company 2002 2001

$500,000 and above 2 2 $250,000 to $499,999 1 1 Below $250,000 5 5 8 8

30. Staff costs

Group Company 2002 2001 2002 2001 $’000 $’000 $’000 $’000

Salaries, wages, bonuses and other costs 10,790 11,003 4,319 4,700 Central Provident Fund 1,006 905 680 564 11,796 11,908 4,999 5,264

60





31. Employee benefits

The Company has an employee share incentive scheme for the granting of non-transferable options to full time employees, including executive and non-executive Directors. Options are granted for a term of 9 years to purchase Rotary Engineering Limited ordinary shares. Each share option entitles the employees of the Company to subscribe for one new ordinary share of $0.10 cents each in the Company.

The exercise price has been set at $0.1866 cents per share option, is based on the average of the last dealt price of the share for the three market days prior to the date of grant.

The number of shares to be offered to an eligible person under the scheme shall be determined at the discretion of the Remuneration Committee.

In the previous year, the following options were granted under the Scheme :-

Exercise Exercise Shares price Shares price 2002 2002 2001 2001

Outstanding at beginning and end of year 6,480,000 $0.1866 6,480,000 $0.1866 Exercisable at year end 6,480,000 $0.1866 6,480,000 $0.1866

The following table summaries information about options outstanding at 31 December 2002:-

Option Shares subject Exercise Date of grant period to options price $

26 October 2001 27 October 2001 - 26 October 2011 6,480,000 0.1866

There were no options granted at a discount.

32. Financial risk management objectives and policies

The main risks arising from the Group’s financial instruments are interest rate risk, credit risk, liquidity risk and foreign currency risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below.

Interest rate risk Surplus funds are placed with reputable banks and/or are invested in marketable securities.

Credit risk The carrying amount of related company receivables, trade and other receivables and cash represent the Group’s maximum exposure to credit risk. No other financial assets carry a significant exposure to credit risk.

The Group has no significant concentration of credit risk and cash is placed with reputable financial institutions.

Liquidity risk The Group does not foresee the necessity of raising any external funds in the near future as it has sufficient funds to finance its normal operating activities, unless there are any unforeseen future circumstances that require substantial funding.

62


63


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

Foreign currency riskThe Group operates in several countries and is exposed to movements in foreign currency exchange rates. It identifies foreign currency needs for all contracts. The currency outflows are matched against the inflows. Hedging is used only when there is a material discrepancy between the flow.

Fair valuesIn the Directors’ opinion, it is not practicable to determine the values of the unquoted equity investment held as long-term investments and carried at cost as disclosed in Note 10 and 11 of the financial statements. The expected cash flows from these investments are believed to be in excess of their carrying amounts.

The carrying amounts of financial assets and financial liabilities of the Group and Company approximate their fair values due to their short-term nature.

33. Comparative figures

Certain comparative figures have been reclassified to conform with the current year’s presentation.


62


63


Statistics of Shareholdings

ROTARY ENGINEERING LIMITED Class of Shares : “400,000,000 ordinary shares of $0.10 fully paid”

Voting Rights : One vote per share

Distribution of Shareholdings as at 7 April 2003 Size of Shareholdings No. of Shareholders % No. of Shares % 1 - 999 0 0.00 0 0.001,000 - 10,000 6,389 80.84 28,525,00 7.1310,001 - 1,000,000 1,503 19.02 54,504,000 13.631,000,001 and above 11 0.14 316,971,000 79.24 Total 7,903 100.00 400,000,000 100.00 Twenty Largest Shareholders as at 7 April 2003 Name No. of Shares %

1 REL Investments Pte Ltd 204,462,000 51.122 Chia Kim Piow 39,049,440 9.763 Wong Liang Feng 19,388,640 4.854 Chaung Swee Khim 13,259,680 3.315 Wong Oi Moi 13,148,640 3.29 6 United Overseas Bank Nominees Pte Ltd 9,018,000 2.257 DBS Nominees Pte Ltd 7,935,000 1.98 8 Chia Kim Chua 5,713,600 1.43 9 Oversea-Chinese Bank Nominees Pte Ltd 2,481,000 0.62 10 UOB Kay Hian Pte Ltd 1,264,000 0.32 11 Citibank Nominees Singapore Pte Ltd 1,251,000 0.31 12 Hoon Mai Hong 980,000 0.25 13 Quek Wee Hong 600,000 0.15 14 Phillip Securities Pte Ltd 587,000 0.15 15 OCBC Securities Private Ltd 524,000 0.13 16 Ang Chiap Heong 520,000 0.13 17 Hong Leong Finance Nominees Pte Ltd 445,000 0.11 18 Loh Eng Kee 440,000 0.11 19 Loh Nee Chuan 386,000 0.10 20 Raffles Nominees Pte Ltd 380,000 0.10 Total 321,833,000 80.46

Percentage of Shareholdings in Public’s Hands

25.89% of the Company’s shares are held in the hands of the public. Accordingly, the Company has complied with Rule 723 of the Listing Manual of the SGX-ST.

64


65


Statistics of Shareholdings

Substantial Shareholders as at 7 April 2003

Name Direct Interest Deemed Interest Chia Kim Piow 39,049,440 217,610,640 s Wong Liang Feng 19,388,640 217,721,680 s Chaung Swee Khim 13,259,680 223,850,640 s Wong Oi Moi 13,148,640 243,511,440 s REL Investments Pte Ltd 204,462,000 -

Spousess Deemed interest in REL Investments Pte Ltd and spouse’s direct interest

ROTARY ENGINEERING LIMITED

1

2

2

1

1 2

64


65


Notice of Annual General Meeting

(Resolution 1)

(Resolution 2)

(Resolution 3)

(Resolution 4)(Resolution 5)

(Resolution 6)

(Resolution 7)

(Resolution 8)

ROTARY ENGINEERING LIMITED

NOTICE IS HEREBY GIVEN that the 23rd Annual General Meeting of ROTARY ENGINEERING LIMITED (“the Company”) will be held at 17 Tuas Avenue 20, Singapore 638828 on Wednesday, 22 May 2003 at 10.00 am for the following purposes:

AS ORDINARY BUSINESS:

1. To receive and adopt the Directors’ Report and Audited Accounts of the Company for the year ended 31 December 2002 together with the Auditors’ Report thereon.

2. To declare a final dividend of Singapore cents 0.6 per share less tax for the year ended 31 December 2002. [2001:

Final & Special Dividends at Singapore 0.8 cents and 0.2 cents respectively]

3. To approve the payment of Directors’ Fees of S$110,000 for the, year ended 31 December 2002 (2001: S$140,000).

4. To re-elect the following Directors retiring pursuant to Article 100: (a) Mr Chia Kim Chua (b) Mdm Wong Oi Moi

5. To re-appoint Messrs Ernst & Young as Auditors and to authorise the Directors to fix their remuneration.

6. To transact any other business which may be properly transacted at an Annual General Meeting.

AS SPECIAL BUSINESS

To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions, with or without any modifications:

7. Authority to allot and issue shares up to 50 per centum (50%) of issued capital

That pursuant to Section 161 of the Companies Act, Cap. 50 and Rule 806(2) of the Listing Manual of the Singapore Exchange Securities Trading Limited, the Directors be empowered to allot and issue shares and convertible securities in the capital of the Company at any time and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit provided that the aggregate number of shares and convertible securities to be allotted and issued pursuant to this Resolution shall not exceed fifty per centum (50%) of the issued share capital of the Company at the time of the passing of this resolution, of which the aggregate number of shares and convertible securities to be issued other than on a pro rata basis to all shareholders of the Company shall not exceed twenty per centum (20%) of the issued capital of the Company and that such authority shall, unless revoked or varied by the Company in general meeting, continue in force until the conclusion of the Company’s next Annual General Meeting or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier. [See Explanatory Note (i)]

8. Authority to allot and issue shares under the Rotary Employees’ Share Option Scheme That pursuant to Section 161 of the Companies Act, Cap. 50, the Directors be and are hereby empowered to

allot and issue shares in the capital of the Company to the holders of options granted by the Company under the Rotary Employees’ Share Option Scheme (“the Scheme”) established by the Company upon the exercise of such options and in accordance with the terms and conditions of the Scheme provided always that the aggregate number of additional ordinary shares to be allotted and issued pursuant to the Scheme shall not exceed fifteen per centum (15%) of the issued share capital of the Company from time to time. [See Explanatory Note (ii)]

By Order of the Board

SHIRLEY LIMCOMPANY SECRETARY

Singapore, 5 May 2003

66


67


Notice of Annual General Meeting

Explanatory Notes on Ordinary Resolutions to be passed:

(i) The Ordinary Resolution 7 proposed in item 7 above, if passed, will empower the Directors from the date of the above Meeting until the date of the next Annual General Meeting, to allot and issue shares and convertible securities in the Company. The number of shares and convertible securities that the Directors may allot and issue under this Resolution would not exceed fifty per centum (50%) of the issued capital of the Company at the time of the passing of this resolution. For issue of shares and convertible securities other than on a pro rata basis to all shareholders, the aggregate number of shares and convertible securities to be issued shall not exceed twenty per centum (20%) of the issued capital of the Company.

The percentage of issued capital is based on the Company’s issued capital at the time this proposed Ordinary Resolution is passed after adjusting for (a) new shares arising from the conversion of convertible securities or employee share options on issue at the time this proposed Ordinary Resolution is passed and, (b) any subsequent consolidation or subdivision of shares.

(ii) The Ordinary Resolution 8 proposed in item (8) above, if passed, will empower the Directors of the Company, from the date of the above Meeting until the next Annual General Meeting, to allot and issue shares in the Company of up to a number not exceeding in total fifteen per centum (15%) of the issued share capital of the Company for the time being pursuant to the exercise of the options under the Scheme.

Notes:

1. A Member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote instead of him. A proxy need not be a Member of the Company.

2. If the appointor is a corporation, the proxy must be executed under seal or the hand of its duly authorised officer or attorney. 3. The instrument appointing a proxy must be deposited at the Registered Office of the Company at 17 Tuas Avenue 20, Singapore

638828 not less than forty-eight (48) hours before the time for holding the meeting.

66


67


Proxy Form

(Please see notes overleaf before completing this Form)

ROTARY ENGINEERING LIMITED(INCORPORATED IN THE REPUBLIC OF SINGAPORE)

I/We,

of

being a member/members of Rotary Engineering Limited (the “Company”), hereby appoint

of

or, failing him,

of or failing him/her, the Chairman of the meeting as my/our proxy to vote for me/us on my/our behalf at the Annual General Meeting of the Company to be held on Wednesday, 21 May 2003 and at any adjournment thereof. The proxy is to vote on the business before the meeting as indicated below. If no specific direction as to voting is given, the proxy will vote or abstain from voting at his/her discretion, as he/she will on any other matter arising at the Meeting:

No. Resolutions relating to: For Against

1 Directors’ Report and Accounts for the year ended 31 December 2002

2 Payment of proposed final dividend

3 Approval of Directors’ fees amounting to S$110,000

4 Re-election of Mr Chia Kim Chua

5 Re-election of Mdm Wong Oi Moi

6 Re-appointment of Ernst & Young as Auditors

7 Authority to allot and issue new shares

8 Authority to allot and issue shares under the Rotary Employees’ Share Option Scheme

(Please indicate with a cross [X] in the space provided whether you wish your vote to be cast for or against the Resolutions as set out in the Notice of the Meeting.)

Dated this day of May 2003

Total number of Shares in: No. of Shares

(a) CDP Register

(b) Register of Members

Signature of Shareholder(s)or, Common Seal of Corporate Shareholder

68


Notes :

1. Please insert the total number of Shares held by you. If you have Shares entered against your name in the Depository Register (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore), you should insert that number of Shares. If you have Shares registered in your name in the Register of Members, you should insert that number of Shares. If you have Shares entered against your name in the Depository Register and Shares registered in your name in the Register of Members, you should insert the aggregate number of Shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the Shares held by you.

2. A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxies to attend and vote instead of him.

3. Where a member appoints two proxies, the appointments shall be invalid unless he specifies the proportion of his shareholding (expressed as a percentage of the whole) to be represented by each proxy.

4. The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 17 Tuas Avenue 20, Singapore 638828 not less than 48 hours before the time appointed for the Annual General Meeting.

5. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its seal or under the hand of an officer or attorney duly authorised.

6. A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks fit to act as its representative at the Annual General Meeting, in accordance with Section 179 of the Companies Act, Chapter 50 of Singapore.

General :

The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies. In addition, in the case of Shares entered in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if the member, being the appointor, is not shown to have Shares entered against his name in the Depository Register as at 48 hours before the time appointed for holding the Annual General Meeting, as certified by The Central Depository (Pte) Limited to the Company.

Annual Report 2002

Beyond the

HORIZON ... .

RO

TA

RY

EN

GIN

EE

RIN

G L

IMIT

ED

An

nu

al R

ep

ort 2

00

2

designed and produced by Integral Com

munications (S) Pte Ltd

, 17 Tuas Avenue 20 Singapore 638828 Tel: 6861 1155 (19 lines)

Date post:	06-Feb-2018
Category:	Documents
Upload:	phungtram
View:	217 times
Download:	2 times

17 Tuas Avenue 20 Singapore 638828 Tel: 6861 1155 (19 ... · PDF fileROTARY ENGINEERING...

Documents