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OAKWELL ENGINEERING LIMITEDAnnual Report 2009

to Our• Customers • Community • Suppliers • Shareholders • Staff

Preferredthe

Partner

Oakwell Engineering Limited annual report 20094

01 Corporate Profile

03 Chairman’s Statement

04 Board of Directors

06 Senior Management

07 Operations Review

08 Corporate Information

09 Financial Report

Contents

To be The Preferred Partnerto our customers, community, suppliers, shareholders and staff

Vision statement

mission statement

To be Customer-foCused, innoVate and provide Quality engineering solutions & serViCes through PeoPle, PartnershiP and PerformanCe

Core ValuesownershiP - Account for what we do and deliver what we promise

integrity - Exercise honesty in our work

learning - Pursue continuous learning to excel

teamwork - Commmunicate and work as a team

emPowerment - Empower to perform

CreatiVity - Innovate and develop new ideas

Quality statementWe strive to be the Preferred Partner for our customers, suppliers and staff

To do this, we shall consciously promote and maintain quality relationship

Quality relationship means providing quality products andservices and evoking trust and confidence to achieve total satisfaCtion

Corporate Profile

This annual report has been reviewed by the Company’s sponsor, KW Capital Pte. Ltd., for compliance with the relevant rules of the Singapore Exchange Securities Trading Limited (“SGX-ST”). The sponsor has not independently verified the contents of this annual report.

This annual report has not been examined or approved by the SGX-ST and the SGX-ST assumes no responsibility for the contents of this annual report, including the correctness of any of the statements or opinions made or reports contained in this annual report.

The details of the contact person for the sponsor is Mr Yang Eu Jin (Registered Professional, KW Capital Pte. Ltd.) at 80 Raffles Place, #25-01 UOB Plaza 1, Singapore 048624 Tel: 6238 3377

oakwell engineering limited annual report 2009 1

Chairman’s statement

“2009 was a very challenging year for us. Despite a recession year, we have finished the year much better than we have anticipated due to operating efficiency and good order booking carried forward from 2008.”

oakwell engineering limited annual report 20092

Chairman’s statement

On behalf of the Board of Directors, I am pleased to report the performance of the Group for the financial year ended 31 December 2009 (“FY 2009”).

oVerView of PerformanCe

2009 was a very challenging year for us. Despite a recession year, we have finished the year much better than we have anticipated due to operating efficiency and good order booking carried forward from 2008.

Our Group’s revenue decreased by S$31.8 million or 15.5% from S$204.6 million in FY 2008 to S$172.8 million in FY 2009. The overall decrease in revenue from all business segments was a result of the slowdown caused by the global financial and economic uncertainty. Our conscious effort in containing costs and increase efficiency helps the Group to improve its profitability. Pre-tax profit of S$6.5 million was 80.6% higher compared to S$3.6 million in the previous year. After taking into account income tax expense and minority interests, the profit attributable to the Group of S$4.4 million was 340.0% higher compared to S$1.0 million achieved in FY 2008. Our net earnings and net asset value per ordinary share showed stronger financial numbers compared to FY 2008. The Group also showed a stronger cash position of S$15.2 million, an increase of S$5.9 million or 63.4% compared to S$9.3 million in FY 2008 mainly due to higher cash generated from operations.

Our Distributorship business contributed substantially to the overall Group turnover in FY 2009. This segment achieved higher operating profit of S$11.0 million in FY 2009 compared to S$9.1 million in FY 2008. Overseas sales accounted for 60.2% of the Group turnover although Singapore remained the single highest contributing segment in 2009.

During the year, we acquired a 51% stake in Biofuel Research Pte Ltd which specialises in the development of biofuel production process using inedible refining by-products. This is part of our Group’s effort in value-adding to our existing customers, providing total turn-key engineering solutions, particularly in the renewable energy sector to convert waste to energy.

ProsPeCts

We expect the outlook for the oil and gas industry to remain challenging in FY 2010. We continue to review our businesses and seek better operating efficiencies to maximise potential. We will also continue to leverage on the Group’s strengths and endeavour to exploit synergies across the Group, so as to identify possible new growth engines or platforms.

We will remain focused in strategically growing our core business in Distributorship, Engineering Design and Fabrication in FY 2010. To fulfill our role as a one-stop service provider, we will strive to increase our product range and engineering capability to provide complete engineering solutions to meet our customers’ requirements and needs.

Pursuing business excellence is a journey and we are glad to announce that we have received endorsement from the Business Excellence Assessment Committee for our renewal under the Singapore Quality Class in 2009.

For the shipbuilding business, the Group would continue to source and negotiate for new contracts.

diVidend

For shareholders, the Board has recommended a first and final cash dividend of 0.075 cent per ordinary share, to be paid for the financial year under review.

aCknowledgement

I would like to take this opportunity to express my appreciation to my fellow Board members for their valuable contributions and services. To our customers, shareholders and business associates, I record my sincere appreciation and heartfelt thanks for their continuing support and confidence in us. Finally, the Board and I are grateful to the management and our team of dedicated staff for their tireless efforts and continuous commitment.

low Beng tinChairman


Board of directors

low Beng tinChairman & Managing Director

Mr Low is the founder and Director of Oakwell since the date of its incorporation on 15 September 1984 and he was subsequently appointed as the Chairman of the Board of Directors and the Managing Director on 20 July 1992. He graduated with a Diploma in Electrical Engineering from the Singapore Polytechnic and a Diploma in Management Studies from the Singapore Institute of Management. He also holds a Masters in Business Administration (Chinese Programme) from the National University of Singapore. Mr Low has more than 30 years of working experience in the field of engineering related to oil, gas, petrochemical, chemical and marine industries. Prior to establishing Oakwell, Mr Low held positions in senior management in a group of local companies which were involved in the sales and services of marine equipment and shipping. In recognition of his contribution to the community, he was conferred the Pingat Bakti Masyarakat (Public Service Medal) and Bintang Bakti Masyarakat (Public Service Star) by the President of the Republic of Singapore in 2004 and 2009 respectively. Mr Low is an independent director of China Yongsheng Limited (formerly known as Global Ariel Limited) (a company listed on the Catalist). He is also the non-executive Chairman of Cosmosteel Holdings Limited (a company listed on the SGX Mainboard). Details of his shareholdings can be found on page 10 of the Annual Report. In accordance with Article 117 of the Company’s Articles of Association, Mr Low is not subjected to retirement by rotation at Annual General Meetings.

long yoke hian, aleXExecutive Director

Mr Alex Long joined the Board on 15 December 1984. Mr Long completed a course in Nautical Studies from the Singapore Polytechnic and has more than 28 years of working experience in the field of engineering. Prior to joining Oakwell, Mr Long held position as a product manager in a local company dealing in electrical cables and construction materials used in the oil, gas, petrochemical, chemical and marine industries within the region. Details of his shareholdings can be found on page 10 of the Annual Report. Mr Long was last re-elected as a Director of the Company on 29 April 2009.

lee mei fongExecutive Director

Ms Lee was appointed to the Board on 25 June 2002. She is a member of the Institute of Certified Public Accountant of Singapore, the Singapore Institute of Directors and an Associate of the Association of Chartered Certified Accountants (U.K.), and the Institute of Chartered Secretaries & Administrators. Ms Lee has many years of experience in the audit, corporate services, financial and business advisory

and risk management. Ms Lee was last re-elected as a Director of the Company on 29 April 2009.

koh tiak Chye Non-Executive Director

Mr Koh joined the Board on 27 December 2002 as an Executive Director and was subsequently re-designated as a Non-Executive Director on 10 August 2005. He is also a member of the Nominating Committee. Mr Koh received his Masters in Business Administration (Chinese Programme) from the National University of Singapore and has more than 25 years of working experience in the building construction and related industries. He is currently the Managing Director of Brothers (Holdings) Limited. Mr Koh was last re-elected as a Director of the Company on 29 April 2008.

yeo ah kiang, rennyIndependent Director

Mr Renny Yeo has been appointed as a Non-Executive Director on 12 August 2005, and has been re-designated to Independent Non-Executive Director with effect from 1 March 2010 and remains as a member of the Audit and Remuneration Committees. He holds a Higher National Diploma (HND) in Electrical & Electronic Engineering from Southampton College of Technology UK and a Master in Management from Asia Institute of Management, Philippines. He has more than 30 years of working experience in the field of electrical engineering and cable industries. He is currently the Chairman of Associated Cables Pvt Ltd, India, a joint venture between Draka Holding N.V. and Oman Cables, Director of Singapore Cables Manufacturers Pte Ltd, a subsidiary of Draka Holding N.V. He is also an Independent Non-Executive Director of Sin Heng Heavy Machinery Ltd and Venture Advisor of Seavi Venture Services Pte Ltd. He is a full member of the Singapore Institute of Directors. He was a former board member of Building and Construction Authority (3/05 – 3/07), member of the Productivity & Standards Board, director of PSB Corporation Pte Ltd (until 24/3/06). Mr Yeo also sits on several government committees, including as a Member of the Standard Council (Spring), the Deputy Chairman of The Singapore National Committee of The International Electrotechnical Commission, the Chairman of Electrical & Electronic Product Standards Committee (Spring) and Singapore Accreditation Council (SAC). Mr Yeo is also currently the President of Singapore Manufacturers’ Federation, the Chairman of SMa Services Pte Ltd and EPC Global Singapore and the Director of EDC@SMa, committee member of the Water Network, member of Customs Advisory committee and Board member of Singapore Green Building Council. He is also the President of Dunearn Tech-Greenridge Alumni Association and School Advisory Committee Member of Greenridge Secondary School. He was conferred the Pingat


Board of directors

Bakti Masyarakat (Public Service Medal) by The President of the Republic of Singapore in 2000. Details of his shareholdings can be found on page 10 of the Annual Report. Pursuant to Article 87 of the Company’s Articles of Association, Mr Yeo will offer himself for re-election at the forthcoming Annual General Meeting.

tay ah kong, BernardIndependent Director

Mr Bernard Tay has been appointed as an Independent Non-Executive Director of the Company on 15 December 2000. He is the Chairman of the Company’s Audit Committee and a Member of its Remuneration and Nominating Committees. Mr Tay is currently the Non-Executive Chairman of Horwath First Trust, which is a Certified Public Accountants firm and Chairman of the Risk Management Committee of KW Capital Pte. Ltd., an approved SGX Continuing Sponsor. Mr Tay is also an Independent Director of several public companies listed on the SGX Mainboard and Catalist. He is the Senior Advisor to the Government of Huzhou City, Zhejiang Province of the People’s Republic of China. He is also President of the Federation Internationale de l’Automobile – Asia Pacific Region 2, the Automobile Association of Singapore and Chairman of Singapore Road Safety Council. Mr Tay is also the Vice-President of the Singapore Productivity Association and a sub-committee member of the Singapore Institute of Directors. He is a recipient of the Service to Education Award and Community Service Medal and was conferred the Pingat Bakti Masyarakat (Public Service Medal) by the President of Singapore. In addition, he is a former member of the Resource Panel of the Government Parliamentary Committees for Home Affairs and Communications. He had also sat on several committees under the Accounting and Corporate Regulatory Authority which includes the Complaints and Disciplinary Panel - Public Accountants Oversight Committee, Standing Law Review Focus Group and Directors’ Duties Study Team. He was a member of the Singapore Corporate Awards Judging Panel for the Best Annual Report Award. Mr Tay is a Fellow of the Association of Chartered Certified Accountants (U.K.), the Institute of Certified Public Accountants of Singapore, the Taxation Institute of Australia and the Singapore Institute of Directors. He is also a Chartered Accountant of Malaysia. Mr Tay has a wide range of experience, from having worked in public accounting firms in the United Kingdom and Singapore, the Inland Revenue Authority of Singapore and companies in commerce, industry and management consulting for a period over 30 years. Pursuant to Article 87 of the Company’s Articles of Association, Mr Tay will offer himself for re-election at the forthcoming Annual General Meeting.

lai kwok sengAdvocate & Solicitor, SingaporeBarrister-at-Law, Lincoln’s InnIndependent Director

Mr Lai has served as an Independent Non-Executive Director of the Company since 12 August 2005. He is the Chairman of the Company’s Nominating Committee, and a Member of its Audit and Remuneration Committees. Mr Lai holds various degrees including Bachelor Degrees in Economics and Laws from the University of London, a Masters of Laws from the National University of Singapore and a Masters of Education from Australia. He also has vast experience and expertise in administration, management and business. Among other appointments, he has served as an Assistant Director of the Planning & Review Division with the Ministry of Education, a Vice-President of commercial banking with a large local bank, and a Dealing Director with a local stock-brokerage house. Pursuant to Article 87 of the Company’s Articles of Association, Mr Lai will offer himself for re-election at the forthcoming Annual General Meeting.

goh yeow tinIndependent Director

Mr Goh Yeow Tin has been appointed as an Independent Non-Executive Director of the Company on 1 September 2006. He holds a Bachelor Degree in Mechanical Engineering (Hons) and a Masters Degree in Industrial Engineering and Management. Mr Goh is currently the Chief Executive Officer of Sino-Sing Centre Pte Ltd which specialises in providing educational services and consultancy in Singapore and China. Mr Goh began his career with the Economic Development Board (“EDB”) where he headed the Local Industries Unit and was subsequently appointed as a Director of EDB’s Automation Applications Centre located in the Singapore Science Park. Mr Goh was the founding member of the Association of Small and Medium Enterprise (“ASME”) and founded International Franchise Pte Ltd, a pioneer in franchising business in Singapore. Mr Goh was previously the Deputy Managing Director of Tonhow Industries Ltd, the first SESDAQ listed plastic injection moulding company. Prior to his present business, Mr Goh was the Vice-President of Times Publishing Ltd and was responsible for the Group’s Retail and Distribution businesses. Mr Goh is also a member of the Singapore Institute of Directors and an Independent Director of Juken Technologies Limited, L and Lereno Bio-Chem Ltd. In recognition of his many years of social and community work, Mr Goh was awarded the Public Service Medal (1995) and the Public Service Star (2006) by the President of the Republic of Singapore. Mr Goh was last re-elected as a Director of the Company on 29 April 2009.


senior management

tan soy koon

Ms Tan joined Oakwell in 1985 as a Division Manager and was promoted to the position of General Manager of the Electrical Division in 1993. Ms Tan holds directorship in a subsidiary of Oakwell. Ms Tan graduated with a Bachelor of Science degree from the University of Singapore (now known as National University of Singapore) majoring in Physics, and a Diploma in Management Studies from the Singapore Institute of Management. Ms Tan has more than 25 years of working experience in the field of management. Prior to joining Oakwell, Ms Tan was a senior sales engineer with two local companies specializing in dealing with electrical cables for oil, gas, petrochemical, chemical and marine industries.

goh wee gee

Mr Goh joined Oakwell in 1992 as a Product/Technical Manager and was promoted to General Manager of the Mechanical Division in 2001. He holds directorship in a subsidiary of Oakwell. Mr Goh graduated with a Bachelor Degree in Mechanical Engineering from the University of Singapore (now known as National University of Singapore) and is also a Professional Engineer registered with the Professional Engineers Board of Singapore. Mr Goh has more than 29 years of working experience in engineering design, construction and project management. Prior to joining Oakwell, he worked as a senior engineer with multinational engineering companies specialising in the oil, gas and refining industries.

tan sai Chiong

Mr Tan joined M&I Electric Far East Pte Ltd (“M&I”), a subsidiary of Oakwell, since its incorporation in 1995 and was appointed as a Managing Director on 27 February 1995. He holds a Bachelor of Engineering degree and a Master of Science from the University of Singapore (now known as National University of Singapore). Mr Tan has more than 30 years of experience in electrical engineering, specializing in the design of power distribution, lighting and control system. Prior to joining M&I, he was a project manager with a local M&E engineering company and had worked as a senior engineer with multinational engineering companies majoring in design and fabrication of onshore and offshore facilities in the petrochemical, oil & gas industries.

tan Cheng Chai

Mr Tan joined Oakwell-Breen Pte Ltd (“Oakwell-Breen”), a subsidiary of Oakwell, in 1999. He was appointed as a Director in Oakwell-Breen on 13 December 2000 and was subsequently promoted to the position of Managing Director on 10 Feb 2006. He holds directorships in the subsidiaries of Oakwell. Mr Tan graduated with a Diploma in Marketing Management from Ngee Ann Polytechnic and a Diploma in Mechanical Engineering from Singapore Polytechnic. Mr Tan has more than 20 years of experience in water & wastewater, gas and energy markets. Prior to joining Oakwell-Breen, he worked as a Divisional Manager of a multi-national corporation specializing in industrial fittings and valves for water & sewage, oil, gas and marine industries.

ng Chuan yong

Mr Ng joined Oakwell in June 2007 as Deputy General Manager. He holds directorship in a subsidiary of Oakwell. Mr Ng graduated with a Master in Business Administration from University of East London in 1998. He also holds an honour degree in civil engineering from University of Newcastle Upon Tyne. Prior to returning to Oakwell (5 years with Oakwell from 1991-1996), Mr Ng was the Vice President of Reed Exhibitions Ltd for 11 years organizing exhibitions and conference in the Asia Pacific region covering the electronics, marine, retail, travel and building industries. He also spent 3 years (2004 to 2007) in Beijing and Shanghai, China focusing on managing existing and developing new events, international marketing and managing a JV with a state owned enterprise.

lim Chien Joo, deriCk

Mr Lim joined Oakwell in September 2001 as Finance Manager and was subsequently promoted to Group Financial Controller. Mr Lim holds directorships in subsidiaries of Oakwell. Mr Lim graduated with a Bachelor’s Degree in Accountancy from Nanyang Technological University of Singapore and is a non-practising member of the Institute of Certified Public Accountants of Singapore. Mr Lim has more than 15 years of experience in the auditing and accounting profession. He was an auditor with a public accounting firm from 1995 to 1998 before taking up a regional accountant position with a listed company on the Main Board of the Singapore Exchange. He later joined a local Multi-National Corporation as a senior accountant in 2000, a position he later vacated to join Oakwell.


The Group’s business is focused on two main business segments in the form of Distributorship and Engineering Design & Fabrication services. The core business support the requirements of the onshore and offshore, oil, gas petrochemical, chemical and marine industries.

Distributorship business which contributed 87.2% to the Group revenue in FY 2009 saw a dip of S$9.8 million or 6.1% from S$160.5 million in FY 2008 to S$150.7 million. Engineering Design and Fabrication business which contributed 11.9% to the Group revenue in FY 2009 was lower by S$9.9 million or 32.6% from S$30.4 million in FY 2008 to S$20.5 million. Shipbuilding business contributed the remaining 0.9% of the Group revenue, a decrease of S$12.0 million or 88.2% from S$13.6 million in FY 2008 to S$1.6 million in FY 2009.

The Group’s success in its core businesses has been mainly attributed to its ability to strengthen its marketing and engineering expertise, strong global selling network and provision of regular trainings which further contributed to the improvement in engineering capability.

distriButorshiP

The Group has established a name as an authorized and/or exclusive distributor of high quality Electrical and Mechanical equipment materials manufactured by reputable companies worldwide. To get more connected globally, the Group is constantly expanding its product range and seeking valuable partnerships with overseas manufacturers. In doing so, the Group hopes to expand its global presence and serves to become a one-stop service provider to meet the needs and requirements of the oil, gas, petrochemical, chemical and marine industries.

In addition to its normal supply of electrical and mechanical bulk materials, the Group also enhanced its in-house application engineering capability in order to offer value-added support to its customers. Distributorship business would continue to be a significant contributor to the Group’s core business.

In FY 2010, the Group would continue to remain focused in strategically growing its distributorship businesses via expansion in agency products, new customers and new geographically markets.

engineering design and faBriCation

The Group started its other core business in Engineering Design and Fabrication back in 1992 with the intent of providing a Total Concept in engineering solutions comprises of design and fabrication, installation and commissioning services.

Over the years, the Group has completed many projects within and outside the Asia-Pacific Region. Its proven engineering capability includes providing engineering system solutions from the conceptual stage to the design and fabrication of such specialized system packages. Because of its ability to excel in handling turnkey electrical systems and services that require customized design and engineering solutions, while maintaining high safety standards for hazardous environment requirements, the Group often secures repeated orders from both existing and new customers. The strong global support from related offices in Indonesia, Malaysia, Thailand, China and agents in other territories enable the Group to provide continual support to after sales and services.

As part of its effort in expanding its engineering solutions to its customers, the Group has injected value added expertise in the development of biofuel production process using inedible refining by-products to convert waste to energy.

The Group is optimistic in the development of this segment and will continue to enhance its engineering capabilities as well as strengthening its competitive edge.

shiPBuilding

The Group took a cautious view on its shipbuilding business in FY 2009 and managed to streamline its operating overheads during the year. With the positive growth initiatives in the maritime industry, the Group would continue to source and negotiate for new contracts in FY 2010.

operations review


Corporate information

China• Oakwell Engineering Equipment

(Shanghai) Co., Ltd (Formerly known as Oakwell

Engineering Services (Shanghai) Co., Ltd)

• Oakwell International Trading (Shanghai)

Co., Ltd

usa• Oakwell Inc.

oPerating segments

• Distributorship • Engineering Design and Fabrication

• Shipbuilding

oakwell

engineering limited

singaPore• Biofuel Research Pte Ltd

• Copas Coatings Pte Ltd

• FST Protection Pte Ltd

• M&I Electric Far East Pte Ltd

• Oakwell-Breen Pte Ltd

• Oakwell Engineering International Pte Ltd

• Oakwell Shipbuilding Engineering & Construction

Pte. Ltd.

• Oakwell Marine Services (S) Pte Ltd

• OID Pte. Ltd.

malaysia• Oakwell

Engineering (M) Sdn Bhd

• Oakwell-Breen Sdn Bhd

hong kong• Oakwell-Breen (HK) Company

Limited

Board of directors

Executive DirectorsLow Beng Tin(Chairman and Managing Director)Long Yoke Hian, AlexLee Mei Fong

Non-Executive DirectorKoh Tiak Chye

Independent DirectorsTay Ah Kong, BernardLai Kwok SengGoh Yeow TinYeo Ah Kiang, Renny

Company secretaries

Chia Luang Chew, Hazel (FCIS)Lim Chien Joo, Derick (CPA)

share registrar

Tricor Barbinder ShareRegistration Services(A division of Tricor Singapore Pte. Ltd.)8 Cross Street#11-00 PWC BuildingSingapore 048424

registered office

No. 8 Aljunied Ave 3Oakwell BuildingSingapore 389933Tel: 6742 8000Fax: 6742 3000Website: www.oakwell.com.sg

Principal Bankers

Citibank N.A., Singapore BranchRHB Bank BerhadStandard Chartered BankUnited Overseas Bank Limited

audit Committee

Tay Ah Kong, Bernard* (Chairman)Goh Yeow Tin*Lai Kwok Seng*Yeo Ah Kiang, Renny*

nominating Committee

Lai Kwok Seng* (Chairman)Goh Yeow Tin*Tay Ah Kong, Bernard*Koh Tiak Chye

remuneration Committee

Goh Yeow Tin* (Chairman)Lai Kwok Seng*Tay Ah Kong, Bernard*Yeo Ah Kiang, Renny*

auditors

Deloitte & Touche LLP6 Shenton Way#32-00 DBS Building Tower TwoSingapore 068809

Partner In-Charge: Mr Loi Chee Keong(Appointed on April 27, 2007)

*Independent Directors


Oakwell Engineering Limited annual report 2009 9

10 Report of the Directors

13 Statement of Directors

14 Independent Auditors’ Report

16 Statements of Financial Position

18 Consolidated Statement of Comprehensive Income

19 Statements of Changes in Equity

21 Consolidated Statement of Cash Flows

23 Notes to Financial Statements

89 Report on Corporate Governance

100 Shareholdings Statistics

102 Notice of Annual General Meeting

Proxy Form

Financial Report


Report of the Directors

The directors present their report together with the audited consolidated financial statements of the Group and statement of financial position and statement of changes in equity of the Company for the financial year ended December 31, 2009.

1 DIRECTORS

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

Low Beng Tin Long Yoke Hian, Alex Lee Mei Fong Koh Tiak Chye Tay Ah Kong, Bernard Yeo Ah Kiang, Renny Lai Kwok Seng Goh Yeow Tin

2 ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE BENEFITS BY MEANS OF THE ACQUISITION OF SHARES AND DEBENTURES

Neither at the end of the financial year nor at any time during the financial year did there subsist any arrangement whose object is to enable the directors of the Company to acquire benefits by means of the acquisition of shares or debentures in the Company or any other body corporate.

3 DIRECTORS’ INTERESTS IN SHARES AND DEBENTURES

The directors of the Company holding office at the end of the financial year had no interests in the share capital and debentures of the Company and related corporations as recorded in the Register of Directors’ Shareholdings kept by the Company under Section 164 of the Singapore Companies Act except as follows:

Names of directors and company in which interests are held

Shareholdings registered in names of directors

Shareholdings in which directors are deemed to have interests

At beginning At end At beginning At endof year of year of year of year

Oakwell Engineering Limited(Ordinary shares)

Low Beng Tin 1,448,754 1,448,754 28,000,000 28,000,000Long Yoke Hian, Alex 1,046,480 1,046,480 139,000* 139,000*Yeo Ah Kiang, Renny 265,000 265,000 - -

* 139,000 shares (2008 : 139,000 shares) were registered in the name of his spouse, Ms Shirley Long @ Lim Choo Joon.

The directors’ interests in the shares of the Company at January 21, 2010 were the same at December 31, 2009.



4 DIRECTORS’ RECEIPT AND ENTITLEMENT TO CONTRACTUAL BENEFITS

Since the beginning of the financial year, no director has received or become entitled to receive a benefit which is required to be disclosed under Section 201(8) of the Singapore Companies Act, by reason of a contract made by the Company or a related corporation with the director or with a firm of which he is a member, or with a company in which he has a substantial financial interest except for salaries, bonuses and other benefits as disclosed in the financial statements.

5 SHARE OPTIONS

a) Options to take up unissued shares

During the financial year, no options to take up unissued shares of the Company or any corporation in the Group were granted.

b) Options exercised

During the financial year, there were no shares of the Company or any corporation in the Group issued by virtue of the exercise of an option to take up unissued shares.

c) Unissued shares under option

At the end of the financial year, there were no unissued shares of the Company or any corporation in the Group under option.

6 AUDIT COMMITTEE

The Audit Committee of the Company, consisting all independent non-executive directors, is chaired by Mr Tay Ah Kong, Bernard and includes Mr Goh Yeow Tin, Mr Lai Kwok Seng and Mr Yeo Ah Kiang, Renny. The Audit Committee has met four times since the last Annual General Meeting (“AGM”) and has reviewed the following, where relevant, with the executive directors and external and internal auditors of the Company:

a) the audit plan and results of the internal auditors’ examination and evaluation of the Group’s system of internal accounting controls;

b) the audit plan of the external auditors;

c) the Group’s financial and operating results and accounting policies;

d) the statement of financial position and statement of changes in equity of the Company and the consolidated financial statements of the Group before their submission to the directors of the Company and external auditors’ report on those financial statements;

e) the half-yearly and annual announcements as well as the related press releases on the results and financial position of the Company and the Group;


f) the co-operation and assistance given by the management to the internal and external auditors; and

g) the re-appointment of the external auditors.

The Audit Committee has full access to and has the co-operation of the management and has been given the resources required for it to discharge its function properly. It also has full discretion to invite any director and executive officer to attend its meetings. The external and internal auditors have unrestricted access to the Audit Committee.

The Audit Committee has recommended to the directors the nomination of Deloitte & Touche LLP for re-appointment as external auditors at the forthcoming Annual General Meeting of the Company.

7 AUDITORS

The auditors, Deloitte & Touche LLP, have expressed their willingness to accept re-appointment.

ON BEHALF OF THE DIRECTORS

Low Beng TinDirector

Long Yoke Hian, AlexDirector

April 6, 2010



In the opinion of the directors, the consolidated financial statements of the Group and the statement of financial position and statement of changes in equity of the Company as set out on pages 16 to 88 are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at December 31, 2009, and of the results, changes in equity and cash flows of the Group and changes in equity of the Company for the financial year then ended and at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts when they fall due.

ON BEHALF OF THE DIRECTORS

Low Beng TinDirector

Long Yoke Hian, AlexDirector

April 6, 2010

Statement of Directors


We have audited the accompanying financial statements of Oakwell Engineering Limited (the “Company”) and its subsidiaries (the “Group”) which comprise the statements of financial position of the Group and the Company as at December 31, 2009, the statement of comprehensive income, statement of changes in equity and statement of cash flows of the Group and the statement of changes in equity of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 16 to 88.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Singapore Companies Act, Cap. 50 (the “Act”) and Singapore Financial Reporting Standards. This responsibility includes: devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss account and balance sheet and to maintain accountability of assets; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’ Responsibility

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

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

Independent Auditors’ ReportTo the Members of Oakwell Engineering Limited


Opinion

In our opinion,

a) the consolidated financial statements of the Group and the statement of financial position and statement of changes in equity of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at December 31, 2009 and of the results, changes in equity and cash flows of the Group and changes in equity of the Company for the year ended on that date; and

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

Emphasis of Matter

Without qualifying our opinion, we draw attention to the following disclosures in the notes to the financial statements concerning significant judgements, including the use of estimates, which have been made by the directors of the Company:

a) the Group and Company has receivables of $2.6 million from EnerNorth Industries Inc., a company incorporated in Canada and long outstanding receivables from 3 other parties with a carrying value of $4.4 million and $2.6 million for the Group and the Company respectively. Details are set out in Note 3(I)(a) and Note 3(II)(a) to the financial statements;

b) in 2009, the Group’s shipbuilding business incurred a loss of $4.1 million and as at December 31, 2009, has total assets of $8.2 million. Details are set out in Note 3(I)(b) and Note 3(II)(h) to the financial statements; and

c) as at December 31, 2009, the Group has outstanding receivables of $3.5 million from a customer which arose from variation orders recorded in the Group’s shipbuilding business. The amount of the variation orders has yet to be finalised with the customer. Details are set out in Note 3(I)(c).

Deloitte & Touche LLPPublic Accountants andCertified Public AccountantsSingapore

April 6, 2010

Independent Auditors’ ReportTo the Members of Oakwell Engineering Limited


Group CompanyNote 2009 2008 2009 2008

$’000 $’000 $’000 $’000ASSETS

Current assetsCash and bank balances 7 15,211 9,344 5,949 1,967Trade receivables 8 48,798 61,518 31,603 33,407Other receivables 9 6,645 6,295 33,114 35,290Inventories 11 27,586 25,357 12,424 10,721Total current assets 98,240 102,514 83,090 81,385

Non-current assetsTrade receivables 8 2,216 3,472 448 1,187Other receivables 9 832 1,326 832 1,326Subsidiaries 12 - - 4,032 4,032Associates 13 85 - - -Available-for-sale investments 14 358 372 342 356Property, plant and equipment 15 11,860 11,877 4,510 4,976Investment property 16 2,200 - - -Goodwill 17 32 222 - -Deferred tax assets 24 78 46 - -Total non-current assets 17,661 17,315 10,164 11,877

Total assets 115,901 119,829 93,254 93,262

LIABILITIES AND EQUITY

Current liabilitiesBank overdrafts and borrowings 18 12,134 17,655 12,134 16,785Trade payables 19 29,876 34,790 20,493 19,004Other payables 20 12,300 9,258 7,975 6,578Current portion of finance leases 21 607 773 128 157Income tax payable 615 1,181 192 450Current portion of bank loans 22 3,045 3,291 2,952 3,200Derivative financial instruments 23 69 3,559 69 3,559Provisions 20 912 1,178 - -Total current liabilities 59,558 71,685 43,943 49,733

Statements of Financial PositionDecember 31, 2009


Group CompanyNote 2009 2008 2009 2008

$’000 $’000 $’000 $’000Non-current liabilitiesFinance leases 21 611 1,084 81 209Bank loans 22 4,579 991 3,632 -Deferred tax liabilities 24 405 346 298 330Total non-current liabilities 5,595 2,421 4,011 539

Capital, reserves and minority interestsShare capital 25 32,444 32,444 32,444 32,444Currency translation reserve 26 163 186 - -Revaluation reserve 27 1,705 1,705 1,705 1,705Capital reserve 28 102 102 - -Retained earnings 10,593 6,573 11,151 8,841Equity attributable to owners of the Company 45,007 41,010 45,300 42,990Minority interests 5,741 4,713 - -Total equity 50,748 45,723 45,300 42,990

Total liabilities and equity 115,901 119,829 93,254 93,262

Statements of Financial PositionDecember 31, 2009

See accompanying notes to financial statements.


GroupNote 2009 2008

$’000 $’000

Revenue 29 172,806 204,605Cost of sales (134,728) (164,995)Gross profit 38,078 39,610Other operating income 30 1,991 1,547Distribution costs (13,938) (14,252)Administrative expenses (10,999) (11,856)Other operating expenses 31 (7,612) (10,043)Share of profit of associate 13 17 - Finance costs 32 (1,037) (1,366)Profit before tax 6,500 3,640Income tax expense 33 (849) (923)Profit for the year 34 5,651 2,717

Other comprehensive income: Exchange differences on translation of foreign operations (23) (8)

Total comprehensive income for the year 5,628 2,709

Profit attributable to: Owners of the Company 4,378 982 Minority interests 1,273 1,735

5,651 2,717

Total comprehensive income attributable to: Owners of the Company 4,355 991 Minority interests 1,273 1,718

5,628 2,709

Earnings per share (cents) 35 Basic 0.73 0.16

Diluted 0.73 0.16

Consolidated Statement of Comprehensive IncomeYear ended December 31, 2009



Share capital

Currency translation

reserve Revaluation

reserveCapital reserve

Retained earnings

Attributable to owners

of the Company

Minority interests Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000Group

Balance at January 1, 2008 32,444 177 1,705 102 5,949 40,377 3,240 43,617

Total comprehensive income for the year - 9 - - 982 991 1,718 2,709

Dividends (Note 37) - - - - (358) (358) - (358)

Dividends paid to minority interests - - - - - - (245) (245)

Balance at December 31, 2008 32,444 186 1,705 102 6,573 41,010 4,713 45,723

Total comprehensive income for the year - (23) - - 4,378 4,355 1,273 5,628

Dividends (Note 37) - - - - (358) (358) - (358)

Minority interest on acquisition of subsidiary (Note 43) - - - - - - 785 785

Minority interest on disposal of subsidiary (Note 42) - - - - - - (791) (791)

Proceeds from minority interest - - - - - - 6 6

Dividends paid to minority interests - - - - - - (245) (245)

Balance at December 31, 2009 32,444 163 1,705 102 10,593 45,007 5,741 50,748

Statements of Changes in EquityYear ended December 31, 2009



Share Revaluation Retainedcapital reserve earnings Total$’000 $’000 $’000 $’000

Company

Balance at January 1, 2008 32,444 1,705 7,159 41,308

Dividends (Note 37) - - (358) (358)

Total comprehensive income for the year - - 2,040 2,040

Balance at December 31, 2008 32,444 1,705 8,841 42,990

Dividends (Note 37) - - (358) (358)

Total comprehensive income for the year - - 2,668 2,668

Balance at December 31, 2009 32,444 1,705 11,151 45,300

Statements of Changes in EquityYear ended December 31, 2009



Group2009 2008$’000 $’000

Operating activitiesProfit before tax 6,500 3,640Adjustments for:

Depreciation of property, plant and equipment 2,247 2,181Allowance for inventories 455 64Allowance for doubtful trade receivables 317 268Bad debts recovered - trade (15) -Bad debts written off - trade 141 9Impairment of other receivables, net 7 38Impairment (Reversal) of trade receivables, net 140 (28)Impairment of club memberships 14 21Interest expense 1,037 1,366Interest income (357) (479)(Gain) Loss on disposal of property, plant and equipment (3) 9Gain on disposal of subsidiary (Note 42) (86) -Property, plant and equipment written off 15 91Negative goodwill on acquisition of subsidiary (Note 43) (366) -Provision for warranty 483 444Recognition of legal claim - (600)Share of profit of associate (17) -Fair value adjustment relating to financial derivative instruments (3,490) 3,171Fair value adjustment on recognition of investment property (863) -Net foreign exchange losses (gains) 285 (894)

Operating cash flows before movements in working capital 6,444 9,301

Trade receivables 13,184 (1,400)Other receivables 1,163 3,478Inventories (2,959) 184Trade payables (4,929) (2,742)Other payables 1,105 614Provisions (111) (235)

Cash generated from operations 13,897 9,200

Income tax paid (1,151) (1,270)Interest paid (1,004) (1,258)Interest received 357 479

Net cash from operating activities 12,099 7,151

Consolidated Statement of Cash FlowsYear ended December 31, 2009


Group2009 2008$’000 $’000

Investing activitiesAcquisition of investment in an associate (68) -Acquisition of subsidiary (Note 43) (435) -Disposal of subsidiary (Note 42) (857) -Purchase of property, plant and equipment (Note 38) (617) (1,042)Purchase of club membership - (16)Proceeds on disposal of property, plant and equipment 7 131Proceeds on disposal of available-for-sale investments - 150

Net cash used in investing activities (1,970) (777)

Financing activitiesRepayment of bank borrowings (2,428) (5,766)Repayment of bank loans (508) (1,760)Proceeds from bank loans 3,850 400Repayment of obligations under finance leases (698) (875)Dividends paid (358) (358)Dividends paid to minority interests (245) (245)Proceeds from minority interest on issue of shares in a subsidiary 6 -Restricted cash (306) 116

Net cash used in financing activities (687) (8,488)

Effect of exchange rate changes (1) 15

Net increase (decrease) in cash and cash equivalents 9,441 (2,099)Cash and cash equivalents at beginning of the year 5,457 7,845Effect of exchange rate changes on the balance of cash held in foreign currencies (512) (289)Cash and cash equivalents at end of the year 14,386 5,457

Cash and cash equivalents consist of:

Cash and bank balances (Note 7) 15,211 9,344Less: Restricted cash (Note 7) (706) (400)

14,505 8,944Bank overdrafts (Note 18) (119) (3,487)Cash and cash equivalents at end of the year 14,386 5,457

Consolidated Statement of Cash FlowsYear ended December 31, 2009



1 GENERAL

The Company (Registration Number 198403368H) is incorporated in Singapore with its principal place of business and registered office at No. 8, Aljunied Avenue 3, Singapore 389933. The Company is listed on Catalist. The financial statements are expressed in Singapore dollars.

The principal activities of the Company are that of investment holding, engineering, trading and contracting services.

The principal activities of the subsidiaries and associates are disclosed in Notes 12 and 13 to the financial statements respectively.

The consolidated financial statements of the Group and statement of financial position and statement of changes in equity of the Company for the year ended December 31, 2009 were authorised for issue by the Board of Directors on April 6, 2010.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF ACCOUNTING - The financial statements have been prepared in accordance with the historical cost basis, except as disclosed in the accounting policies below, and are drawn up in accordance with the provisions of the Singapore Companies Act and Singapore Financial Reporting Standards (“FRS”).

ADOPTION OF NEW AND REVISED STANDARDS - In the current financial year, the Group has adopted all the new and revised FRSs and Interpretations of FRS (“INT FRS”) that are relevant to its operations and effective for annual periods beginning on or after January 1, 2009. The adoption of these new/revised FRSs and INT FRSs does not result in changes to the Group’s and Company’s accounting policies and has no material effect on the amounts reported for the current or prior years except as disclosed below:

FRS 1 – Presentation of Financial Statements (Revised)

FRS 1 (2008) has introduced terminology changes (including revised titles for the financial statements) and changes in the format and content of the financial statements. In addition, the revised standard requires the presentation of a third statement of financial position at the beginning of the earliest comparative period presented if the entity applies new accounting policies retrospectively or makes retrospective restatements or reclassifies items in the financial statements.

Amendments to FRS 107 Financial Instruments : Disclosures – Improving Disclosures about Financial

Instruments

The amendments to FRS 107 expand the disclosures required in respect of fair value measurements and liquidity risk. The Group has elected not to provide comparative information for these expanded disclosures in the current year in accordance with the transitional reliefs offered in these amendments.

Notes to Financial StatementsDecember 31, 2009


2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)

FRS 108 – Operating Segments The Group adopted FRS 108 with effect from January 1, 2009. FRS 108 requires operating segments to

be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance. In contrast, the predecessor standard (FRS 14 Segment Reporting) required an entity to identify two sets of segments (Business and Geographical), using a risks and rewards approach, with the entity’s ‘system of internal financial reporting to key management personnel serving only as the starting point for the identification of such segments. Following the adoption of FRS 108, the identification of the Group’s reportable segments remain unchanged (Note 41).

At the date of authorisation of these financial statements, the following FRSs, INT FRSs and amendments to FRS that are relevant to the Group and the Company were issued but not effective:

• FRS24(Revised)Related Party Disclosures

• FRS27(Revised)Consolidated and Separate Financial Statements (Revised); and FRS 103 (Revised) Business Combinations

• ImprovementstoFinancialReportingStandards(issuedinJune2009)

Consequential amendments were also made to various standards as a result of these new/revised standards.

The management anticipates that the adoption of the above FRSs, INT FRSs and amendments to FRS in future periods will not have a material impact on the financial statements of the Group and of the Company in the period of their initial adoption except for the following:

FRS 24 (Revised) Related Party Disclosures

FRS 24 (Revised) Related Party Disclosures is effective for annual periods beginning on or after January 1, 2011. The revised Standard clarifies the definition of a related party and consequently additional parties may be identified as related to the reporting entity. In the period of initial adoption, the changes to related party disclosures, if any, will be applied retrospectively with restatement of the comparative information.

FRS 27 (Revised) Consolidated and Separate Financial Statements; and FRS 103 (Revised) Business Combinations

FRS 27 (Revised) is effective for annual periods beginning on or after July 1, 2009. FRS 103 (Revised) is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after July 1, 2009.

Apart from matters of presentation, the principal amendments to FRS 27 that will impact the Group concern the accounting treatment for transactions that result in changes in a parent’s interest in a subsidiary. It is likely that these amendments will significantly affect the accounting for such transactions in future accounting periods, but the extent of such impact will depend on the detail of the transactions, which cannot be anticipated. The changes will be adopted prospectively for transactions after the date of adoption of the revised Standard and, therefore, no restatements will be required in respect of transactions prior to the date of adoption.




FRS 27 (Revised) Consolidated and Separate Financial Statements; and FRS 103 (Revised) Business Combinations (cont’d)

Similarly, FRS 103 is concerned with accounting for business combination transactions. The changes to the Standard are significant, but their impact can only be determined once the detail of future business combination transactions is known. The amendments to FRS 103 will be adopted prospectively for transactions after the date of adoption of the revised Standard and, therefore, no restatements will be required in respect of transactions prior to the date of adoption.

FRS 28 (Revised) Investments in Associates

In FRS 28 (Revised), the principle adopted under FRS 27 (Revised) (see above) that a loss of control is recognised as a disposal and re-acquisition of any retained interest at fair value is extended by consequential amendment to FRS 28 (Revised); therefore, when significant influence is lost, the investor measures any investment retained in the former associate at fair value, with any consequential gain or loss recognised in profit or loss.

FRS 28 (Revised) will be adopted for periods beginning on or after July 1, 2009 and will be applied prospectively in accordance with the relevant transitional provisions and, therefore, no restatements will be required in respect of transactions prior to the date of adoption.

Amendments to FRS 7 Statement of Cash Flows

The amendments (part of Improvements to FRSs issued in June 2009) specify that only expenditures that result in a recognised asset in the statement of financial position can be classified as investing activities in the statement of cash flows. Consequently, cash flows in respect of development costs that do not meet the criteria in FRS 38 Intangible Assets for capitalisation as part of an internally generated intangible asset (and, therefore, are recognised in profit or loss as incurred) will be reclassified from investing to operating activities in the statement of cash flows. The amendments to FRS 7 will be adopted for periods beginning on or after January 1, 2010.

BASIS OF CONSOLIDATION - The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.




BASIS OF CONSOLIDATION (cont’d)

Minority interests in the net assets of consolidated subsidiaries are identified separately from the Group’s equity therein. Minority interests consist of the amount of those interests at the date of the original business combination (see below) and the minority’s share of changes in equity since the date of the combination. Losses applicable to the minority in excess of the minority’s interest in the subsidiary’s equity are allocated against the interests of the Group except to the extent that the minority has a binding obligation and is able to make an additional investment to cover its share of those losses.

In the Company’s financial statements, investments in subsidiaries and associates are carried at cost less any impairment in net recoverable value that has been recognised in the profit or loss.

BUSINESS COMBINATIONS - The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under FRS 103 are recognised at their fair values at the acquisition date, except for non-current assets (or disposal groups) that are classified as held for sale in accordance with FRS 105 Non-Current Assets Held for Sale and Discontinued Operations, which are recognised and measured at fair value less costs to sell.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in the profit or loss.

The interest of minority shareholders in the acquiree is initially measured at the minority’s proportion of the net fair value of the assets, liabilities and contingent liabilities recognised.

FINANCIAL INSTRUMENT - Financial assets and financial liabilities are recognised on the Group’s statement of financial position when the Group becomes a party to the contractual provisions of the instrument.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments (including all fees on points paid or received that form an integral part of the effective interest rate, transactions costs and other premiums and discounts) through the expected life of the financial instrument, or where appropriate, a shorter period. Income and expense is recognised on an effective interest basis for debt instruments other than those financial instruments “at fair value through profit or loss”.

Financial assets

Investments are recognised and de-recognised on a trade date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value plus transaction costs, except for those financial assets classified as at fair value through profit or loss which are initially measured at fair value.




Financial assets (cont’d)

Other financial assets are classified into the following specified categories: financial assets “at fair value through profit or loss”, “held-to-maturity investments”, “available-for-sale” financial assets and “loans and receivables”. The classification depends on the nature and purpose of financial assets and is determined at the time of initial recognition.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated or not classified as financial assets at fair value through profit or loss, loans and receivables or held-to-maturity investments.

For available-for-sale equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured, they are measured at cost less any identified impairment losses at the end of each reporting period subsequent to initial recognition (see accounting policy on impairment loss on financial assets below).

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and at bank, fixed deposits and net of bank overdrafts and restricted cash.

Trade and other receivables

Trade and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as “loans and receivables”. Loans and receivables are measured at amortised cost using the effective interest method less impairment. Interest is recognised by applying the effective interest method, except for short-term receivables when the recognition of interest would be immaterial.

Impairment of financial assets

Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at the end of each reporting period. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted.

For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of receivables where the carrying amount is reduced through the use of an allowance account. When a receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

When an available-for-sale financial asset is considered to be impaired, cumulative gains or losses previously recognised in other comprehensive income are reclassified to profit or loss.




Financial assets (cont’d)

Impairment of financial assets (cont’d)

With the exception of available-for-sale equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

In respect of available-for-sale equity instruments, impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any subsequent increase in fair value after an impairment loss is recognised directly in other comprehensive income.

Derecognition of financial assets

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

Financial liabilities and equity instruments

Classification as debt or equity

Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.

Financial liabilities

Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, using the effective interest method, with interest expense recognised on an effective yield basis except for short-term payables, when the recognition of interest would be immaterial.

Interest-bearing bank loans and overdrafts are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in accordance with the Group’s accounting policy for borrowing costs (see below).




Financial liabilities and equity instruments (cont’d)

Derecognition of financial liabilities

The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire.

Derivative financial instruments

The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate risk.

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in profit or loss.

A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and is not expected to be realised or settled within 12 months.

CONSTRUCTION CONTRACTS - Where the outcome of a contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the end of reporting period, as measured by the proportion that contract costs incurred for work performed to date relative to the estimated total contract costs or engineers’ professional estimate, except where this would not be representative of the stage of completion. Variations in contract work, claims and incentive payments are included to the extent that they have been agreed with the customer or certified by the engineers based on their professional estimate.

Where the outcome of a contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

INVENTORIES - Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Cost is calculated using the weighted average method. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

ASSOCIATES - An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.




ASSOCIATES (cont’d)

The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for under FRS 105 Non-current Assets Held for Sale and Discontinued Operations. Under the equity method, investments in associates are carried in the consolidated statement of financial position at cost as adjusted for post-acquisition changes in the Group’s share of the net assets of the associate, less any impairment in the value of individual investments. Losses of an associate in excess of the Group’s interest in that associate (which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate) are not recognised, unless the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate recognised at the date of acquisition is recognised as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for impairment as part of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognised immediately in profit or loss.

Where a Group entity transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group’s interest in the relevant associate.

PROPERTY, PLANT AND EQUIPMENT - Leasehold buildings are stated in the statement of financial position at their revalued amounts, being the fair value at the date of revaluation, less any subsequent accumulated depreciation and subsequent accumulated impairment losses where the recoverable amount of the asset is estimated to be lower than its carrying amount. An external professional valuation is made at least once every 3 years.

Any revaluation increase arising on the revaluation of such leasehold buildings is recognised in other comprehensive income and accumulated in revaluation reserve, except to the extent that it reverses a revaluation decrease for the same asset previously recognised in profit or loss, in which case the increase is credited to profit or loss to the extent of the decrease previously charged. A decrease in carrying amount arising on the revaluation of the leasehold buildings is charged to profit or loss to the extent that it exceeds the balance, if any, held in the asset revaluation reserve relating to a previous revaluation of that asset.

Properties in the course of construction for production, supply or administrative purposes, or for purposes not yet determined, are carried at cost, less any recognised impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Group’s accounting policy. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.

Plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses.




PROPERTY, PLANT AND EQUIPMENT (cont’d)

Depreciation is charged so as to write off the cost or valuation of assets, over their estimated useful lives, using the straight-line method, on the following bases:

Freehold buildings - 2% to 5% Leasehold buildings - 2% to 2 1/3% Plant and equipment - 10% to 331/3%

Depreciation is not provided on freehold land.

Fully depreciated assets are retained in the financial statements until they are no longer in use and no further charge for depreciation is made in respect of these assets.

The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis.

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, if there is no certainty that the lessee will obtain ownership by the end of the lease term, the asset shall be fully depreciated over the shorter of the lease term and its useful life.

The gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the profit or loss. On the subsequent sale or retirement of a revalued property, the attributable revaluation surplus remaining in the properties revaluation reserve is transferred directly to retained earnings. No transfer is made from the revaluation reserve to retained earnings except when an asset is derecognised.

INVESTMENT PROPERTY - Investment property, which is property held to earn rentals and/or for capital appreciation, including property under construction for such purposes, is measured initially at its cost, including transaction costs. Subsequent to initial recognition, investment property is measured at fair value. Gains or losses arising from changes in the fair value of investment property are included in profit or loss for the period in which they arise.

GOODWILL - Goodwill arising on the acquisition of a subsidiary represents the excess of the cost of acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the subsidiary recognised at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses.

For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.




GOODWILL (cont’d)

On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

The Group’s policy for goodwill arising on the acquisition of an associate is described under ‘Associates’ above.

IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS EXCLUDING GOODWILL - At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

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 the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

LEASES - Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.




LEASES (cont’d)

The Group as lessor

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which use benefit derived from the leased asset is diminished. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.

The Group as lessee

Assets held under finance leases are recognised as assets of the Group at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to the profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Group’s general policy on borrowing costs (see below). Contingent rentals are recognised as expenses in the periods in which they are incurred.

Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

REVENUE RECOGNITION - Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.

Sale of goods

Revenue from the sale of goods is recognised when all the following conditions are satisfied:

• theGrouphastransferredtothebuyerthesignificantrisksandrewardsofownershipofthegoods;

• theGroupretainsneithercontinuingmanagerial involvement to thedegreeusuallyassociatedwith ownership nor effective control over the goods sold;

• theamountofrevenuecanbemeasuredreliably;




REVENUE RECOGNITION (cont’d)

Sale of goods (cont’d)

• itisprobablethattheeconomicbenefitsassociatedwiththetransactionwillflowtotheentity;and

• thecostsincurredortobeincurredinrespectofthetransactioncanbemeasuredreliably.

Contract revenue

Revenue from contracts is recognised in accordance with the Group’s accounting policy on construction contracts (see above).

Commission income

Commission income is recognised when the services are rendered.

Dividend income

Dividend income from investments is recognised when the shareholders’ rights to receive payment have been established.

Interest income

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.

Administrative and management income

Administrative and management income is recognised when the services are rendered.

BORROWING COSTS - Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

RETIREMENT BENEFIT COSTS - Payments to defined contribution retirement benefit plans are charged as an expense as they fall due. Payments made to state-managed retirement benefit schemes, such as the Singapore Central Provident Fund, are dealt with as payments to defined contribution plans where the Company’s and Group’s obligations under the plans are equivalent to those arising in a defined contribution retirement benefit plan.

EMPLOYEE LEAVE ENTITLEMENT - Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the end of the reporting period.




INCOME TAX - Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are not taxable or tax deductible. The Group’s liability for current tax is calculated using tax rates (and tax laws) that have been enacted or substantively enacted in countries where the Company and subsidiaries operate by the end of the reporting period.

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised on taxable temporary differences arising on investments in subsidiaries and associates, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

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

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items credited or debited outside profit or loss (either in other comprehensive income or directly in equity), in which case the tax is also recognised outside profit or loss (either in other comprehensive income or directly in equity), or where they arise from the initial accounting for a business combination. In the case of a business combination, the tax effect is taken into account in calculating goodwill or determining the excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over cost.




FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION - The individual financial statements of each Group entity are measured and presented in the currency of the primary economic environment in which the entity operates (its functional currency). The consolidated financial statements of the Group and the statement of financial position of the Company are presented in Singapore dollars, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency are recorded at the rate of exchange prevailing on the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the end of the reporting period. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items are included in profit or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised in other comprehensive income. For such non-monetary items, any exchange component of that gain or loss is also recognised in other comprehensive income.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations (including comparatives) are expressed in Singapore dollars using exchange rates prevailing at the end of the reporting period. Income and expense items (including comparatives) are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in a separate component of equity. On the disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation accumulated in a separate component of equity, shall be reclassified from equity to profit or loss (as a reclassification adjustment) when the gain or loss on disposal is recognised.

On consolidation, exchange differences arising from the translation of the net investment in foreign entities (including monetary items that, in substance, form part of the net investment in foreign entities), and of borrowings and other currency instruments designated as hedges of such investments, are recognised in other comprehensive income and accumulated in foreign currency translation reserve (attributed to minority interest, as appropriate).

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



3 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group’s accounting policies, which are described in Note 2, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

(I) Critical judgements in applying the entity’s accounting policies

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

(a) Recognition of legal claim and collectibility of receivables

The Company was a party to a legal claim against EnerNorth Industries Inc. (“EnerNorth”), a company incorporated in Canada. The legal claim ended on January 18, 2007 when the Supreme Court of Canada dismissed EnerNorth’s application for permission to appeal. EnerNorth then went into bankruptcy and a Trustee was appointed under the directions of the Ontario Superior Court of Justice to realise the estate of EnerNorth.

The following relevant events have taken place since January 18, 2007:

(i) The Company received CAD1.5 million (approximately $2.2 million) representing a security sum held by Accountant of the Canadian Court on behalf from EnerNorth.

(ii) The Company through its lawyers filed a claim of CAD6.8 million (approximately $9.9 million), representing the balance of the judgement debt, on the estate of EnerNorth.

(iii) As part of the scheme to realise EnerNorth’s estate, the Trustee offered for sale, through a bidding process, shares in Konaseema Gas & Power Ltd (“KGPL”), a company incorporated in India.

On November 27, 2007, the Company and a third party entered into an agreement to jointly bid for the KGPL shares for a sum of US$5.7 million ($8.0 million). The Company’s share of the consideration would be paid by a partial discharge of EnerNorth’s judgement debt to the Company, whilst the third party’s share would be paid in cash. As a precondition to the bid, the Company agreed that notwithstanding the purchase of the KGPL shares, its overall recovery from the bankruptcy estate of EnerNorth will not be higher than any other unsecured creditors of EnerNorth.



3 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (cont’d)

(I) Critical judgements in applying the entity’s accounting policies (cont’d)

(a) Recognition of legal claim and collectibility of receivables (cont’d)

On December 21, 2007, the Canadian Court made a vesting order in favour of the Company for the sale of the KGPL shares and on January 28, 2008, the sale of the KGPL shares was completed.

On March 3, 2008, the Company entered into an agreement with the same third party to dispose its interest in the KGPL shares at a price of Indian Rupees 135.8 million ($4.9 million), resulting in a gain of $0.7 million, net of transaction costs of $0.2 million.

In 2008, the Company received US$3.4 million (approximately $4.7 million) from the sale of its interest in KGPL shares.

(iv) In 2008, in evaluating the extent of the expected recoverability of the balance of the judgement debt, the Company has obtained a non-binding draft schedule of the receipts and disbursements for the bankruptcy estate of EnerNorth from the Trustee and recorded an additional claim of $0.6 million (Note 30).

As at December 31, 2009, the Company’s trade and other receivables from EnerNorth amounted to $2.0 million and $0.6 million respectively (Notes 8 and 9).

On February 8, 2010, the Trustee re-confirmed that the Company’s share of the bankruptcy proceeds is approximately CAD2.3 million ($2.7 million).

In determining whether there is objective evidence of impairment loss, the Group takes into consideration the likelihood of collection. In this regard, the management is satisfied that no allowance for doubtful debts is required.

(b) Shipbuilding business

In 2006, the Group entered into a construction project (“Phase 1A”) for a contract sum of $20.5 million. The contract was completed in 2007 with a loss of $7.8 million incurred, net of variation orders, due to high start-up costs and costs overrun due to steep learning curve.

In 2007, the Group entered into a second construction project for a contract sum of $9.8

million. The contract was completed in 2008 with a loss of $2.8 million incurred.

In 2008, as a result of advanced negotiations with the customer, an additional variation order revenue of $2.0 million in respect of Phase 1A was recognised in the profit and loss.

As at December 31, 2009 and the date of this report, there are no contracts on hand. Management is currently in negotiations with several parties for future projects and contracts would be entered into when the management deems that the contractual terms and conditions are appropriate, considering the risks and returns that the Group would be willing to undertake. Management is confident that future contracts can be entered into and that the shipbuilding business is viable.




(I) Critical judgements in applying the entity’s accounting policies (cont’d)

(c) Shipbuilding business – variation orders recognised

In 2007 and 2008, as a result of advanced negotiations with a customer, variation order revenue of $5.1 million was recognised. A corresponding receivable from the customer was recorded. As at December 31, 2009, the Group’s receivables from the customer was $3.5 million. The amount of variation orders has yet to be finalised with the customer.

The management evaluated whether it would be appropriate to recognise variation orders considering that FRS 11 Construction Contracts, requires that variation orders are to be recognised to the extent that it is probable that they will result in revenue and that they are capable of being reliably measured.

In making its jugement, the management considered that it has met the requirements of FRS 11 Construction Contracts and considers that it would be more appropriate to record the variation order so as to match the revenue earned on the contract with its recorded costs. In fulfilling the requirements of FRS 11, management has obtained acknowledgement from its customer that there were variation orders on the contract. The management also engaged a construction claim consultant to further substantiate the value of the variation orders.

In determining whether there is objective evidence of impairment loss, the Group takes into consideration the likelihood of collection. In this regard, the management is satisfied that no allowance for doubtful debts is required.

(II) Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below:

(a) Impairment loss on receivables

FRS 39 Financial Instruments: Recognition and Measurement, requires that receivables be measured at amortised cost using the effective interest method less impairment losses. In applying the requirements of FRS 39, management has reviewed the Group’s and the Company’s trade and other receivables that may be impaired by way of an impairment allowance based on the present value of estimated future cash flows. The receivables below represent management’s best estimate based on past history and projected outcome.




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

(a) Impairment loss on receivables (cont’d)

Group Company2009 2008 2009 2008$’000 $’000 $’000 $’000

Trade receivables

Counter party A 371 432 371 432Less: Impairment loss (19) (26) (19) (26)

352 406 352 406

Counter party B 2,258 3,092 340 657Less: Impairment loss (186) (230) (35) (81)

2,072 2,862 305 576

Counter party C 581 795 581 795Less: Impairment loss (77) (140) (77) (140)

504 655 504 655

Net trade receivables after impairment loss 2,928 3,923 1,161 1,637

Other receivables

Counter party A 881 1,422 881 1,422Less: Impairment loss (45) (90) (45) (90)

836 1,332 836 1,332

Counter party B 667 675 667 675Less: Impairment loss (50) (84) (50) (84)

617 591 617 591

Net other receivables after impairment loss 1,453 1,923 1,453 1,923

Total trade and other receivables after impairment loss 4,381 5,846 2,614 3,560

Counter party A is a related party and the trade receivables originated in 1999. Management is of the opinion that the debts are recoverable as the Group has made certain arrangements to allow this related party to repay their debts over the next 2 years until 2011. Management believes that the arrangements are appropriate based on the history of transactions and repayments.





(a) Impairment loss on receivables (cont’d)

The other receivables from Counter party A originated in 1997. Management has assessed that these receivables would be collected over the next 2 years until 2011 based on the history of transactions and repayments.

Counter party B is a related party and the trade receivables originated in 1999. Management is of the opinion that the debts are recoverable as the Group has made certain arrangements to allow this related party to repay their debts over the next 2 years until 2011. Management believes that the arrangements are appropriate based on the history of transactions and repayments.

Counter party C is a third party and the trade receivables originated in 1999, with a carrying amount of $504,000 (2008 : $656,000), is expected to be repaid over 7 years starting from 2006. In determining the impairment loss, the management have discounted expected future cash flows over a period, which range from 2010 to 2012, using an appropriate discount rate. Management is of the opinion that the carrying amount is collectible based on collection history from the third party.

Management will continue to monitor the actual collections against the estimated collections and make adjustments in future periods if actual cash flows differ significantly from the expected cash flows.

(b) Allowances for bad and doubtful debts

The policy for allowances for bad and doubtful debts of the Company and the Group is based on the evaluation of collectibility and on management’s judgement. A considerable amount of judgement is required in assessing the ultimate realisation of these receivables, including the current creditworthiness, the past collection history of each customer and on going dealings with these parties. If the financial conditions of the counterparties were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. The carrying amounts of trade and other receivables at the end of the reporting period are disclosed in Notes 8 and 9 respectively.

(c) Allowances for inventories

At end of the reporting period, the Company and the Group reviewed the carrying value of their inventories to ensure that they are stated at the lower of cost and net realisable value. In assessing net realisable value and making appropriate allowances, the management identified inventories that are slow moving, considers their physical conditions, market conditions and market price for similar inventories. The carrying amount of inventories at the end of the reporting period is disclosed in Note 11.





(d) Impairment of investments in subsidiaries

Determining whether investments in subsidiaries are impaired requires an estimation of the value in use of those investments. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the investments and a suitable discount rate in order to calculate present value. The carrying amounts of investments in subsidiaries in the Company’s financial statements at the end of the reporting period are disclosed in Note 12.

(e) Available-for-sale investments

The Group follows the guidance of FRS 39 and FRS 36 in determining when its available-for-sale investments are other than temporarily impaired. This assessment requires significant judgement. The Group evaluates, among other factors, the duration and extent to which the fair value of an investment is less than its cost; and the financial health of and near-term business outlook for the investment, including factors such as industry and sector performance, changes in technology and operational and financing cash flows. The carrying amount of available-for-sale investments at the end of the reporting period is disclosed in Note 14.

(f) Impairment of investment property

The Group follows the guidance of FRS 36 in determining when its investment property is impaired. This assessment requires significant judgement. The Group evaluates, among other factors, the expected future market rentals and maintenance requirements. The carrying amount of investment property at the end of the reporting period is disclosed in Note 16.

(g) Impairment of goodwill

The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value in use of the cash-generating units to which the goodwill has been allocated. Determining the recoverable amounts based on value in use for cash-generating units relating to goodwill impairment review requires estimation of the future cash flows expected to be derived from the cash-generating units and also an appropriate discount rate to calculate the present value of those cash flows. The carrying amount of goodwill at the end of the reporting period is disclosed in Note 17.

(h) Shipbuilding business

In 2009, the Group’s shipbuilding business incurred a loss of $4.1 million (2008 : $5.5 million) and has total assets of $8.2 million (2008 : $8.9 million) as at December 31, 2009. Management has attributed the losses to costs required to develop the Group’s capabilities in the shipbuilding business.

In complying with FRS 36, management has reviewed the carrying amount of its shipbuilding assets to determine whether those assets have suffered an impairment loss. Consequently, management has engaged a professional valuer in determining the value of the shipbuilding business. The valuer’s report indicates that the shipbuilding business assets are not impaired.



4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT

(a) Categories of financial instruments

The following table sets out the financial instruments as at the end of the reporting period:

Group Company2009 2008 2009 2008$’000 $’000 $’000 $’000

Financial assets

Loans and receivables (including cash and bank balances) 72,994 80,979 71,741 72,947

Available-for-sale financial assets 358 372 342 356


Derivative financial instruments 69 3,559 69 3,559Amortised cost 60,150 64,324 44,933 43,118

(b) Financial risk management policies and objectives

The Group’s financial instruments comprise bank overdrafts and borrowings, finance leases, bank loans and cash and bank balances. It is management’s intent to maintain a balanced portfolio of financial instruments to finance the Group’s operations. The Group also has various other financial assets and liabilities such as trade receivables and trade payables which arise directly from its operations.

The Group entered into derivative financial instruments in the form of 5-Year US$ Callable CMS Spread Range Accrual Swap to manage its exposure to interest rate and foreign currency risk arising from its operations and its sources of financing.

The Group does not hold or issue derivative financial instruments for speculative purposes. Market risk exposures are measured using sensitivity analysis indicated below.

(i) Foreign exchange risk management

The Group transacts business in various foreign currencies and therefore is exposed to foreign exchange risk.



4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT (cont’d)

(b) Financial risk management policies and objectives (cont’d)

(i) Foreign exchange risk management (cont’d)

At the reporting date, the carrying amounts of monetary assets and monetary liabilities denominated in currencies other than the respective group’s entities’ functional currencies are as follows:

Group CompanyAssets Liabilities Assets Liabilities

2009 2008 2009 2008 2009 2008 2009 2008$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

United States dollar 41,138 43,331 30,548 28,485 40,967 40,691 27,892 24,580Euro 2,254 3,775 4,806 7,607 1,940 2,486 3,542 5,913Malaysian ringgit 619 591 59 21 617 591 - 2Thailand baht 1,600 3,099 941 1,948 504 660 - - Sterling pound 424 273 498 674 461 545 155 597Australian dollar 30 109 12 8 676 617 12 8Canadian dollar 52 106 64 57 52 106 64 57Chinese renminbi - - 183 - - - 183 - Hong Kong dollar 62 297 14 180 - - - - Norwegian kroner - 4 179 358 - 4 44 319Indonesian Rupiah - 1 2 1 - - - -

The Group used a variety of derivative financial instruments to manage its exposure to foreign currency risk. Further details on the derivative financial instruments are found in Note 23 to the financial statements.

The Company has a number of investments in foreign subsidiaries, whose net assets are exposed to currency translation risk. The Group does not currently designate its foreign currency denominated debt as a hedging instrument for the purpose of hedging the translation of its foreign operations.

Foreign currency sensitivity

The following table details the sensitivity to a 10% increase and decrease in the relevant foreign currencies against the functional currency of each group entity. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. The sensitivity analysis includes external loans as well as loans to foreign operations within the Group where they gave rise to an impact on the Group’s profit or loss and/or equity.





(i) Foreign exchange risk management (cont’d)

Foreign currency sensitivity (cont’d)

If the relevant foreign currency strengthens by 10% against the functional currency of each group entity, profit will increase (decrease) by:

Profit or lossGroup Company

2009 2008 2009 2008$’000 $’000 $’000 $’000

Impact of:

United States dollar 2,079 1,485 1,308 1,611Euro (255) (383) (160) (343)Malaysian ringgit 56 57 62 59Thailand baht 66 115 50 66Sterling pound (7) (40) 31 (5)Australian dollar 2 10 66 61Canadian dollar (1) 5 (1) 5Chinese renminbi (18) - (18) - Hong Kong dollar 5 12 - - Norwegian kroner (18) (36) (4) (32)

If the relevant foreign currency weakens by 10% against the functional currency of each group entity, the effects on profit or loss will be vice versa.

In 2009, no sensitivity analysis has been prepared for the target redemption forward contracts as the contracts have matured during the year.

In 2008, if the USD strengthens by 10% against the contracted forward rates of the outstanding target redemption forward contracts, profit will decrease by $4,629,000.

In 2008, if the USD weakens by 10% against the contracted forward rates of the outstanding target redemption forward contracts, profit will increase by $3,563,000.

(ii) Interest rate risk management

Summary quantitative data of the Group’s and the Company’s interest-bearing financial instruments can be found in Section (v) of this Note. The Group’s primary source of interest rate risk is from its borrowings from banks and other financial institutions.





(ii) Interest rate risk management (cont’d)

Interest rate sensitivity

The sensitivity analysis below has been determined based on the exposure to interest rates for both derivatives and non-derivative instruments at the end of the reporting period and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of instruments that have floating rates.

If interest rates had been 50 basis points higher or lower and all other variables were held constant, the Group’s and the Company’s profit for the year ended December 31, 2009 would decrease/increase by $96,000 and $90,000 (2008 : decrease/increase by $115,000 and $103,000) respectively. This is mainly attributable to the Group’s and the Company’s exposure to interest rates on its variable rate borrowings.

No sensitivity analysis has been prepared for the 5-year US$ Callable CMS Spread Range Accrual Swap as the impact is insignificant.

(iii) Investment risk management

The Group is exposed to investment risks arising from its investments classified as available-for-sale. Available-for-sale investments are held for strategic rather than trading purposes. The Group does not actively trade in available-for-sale investments.

Further details of these investments can be found in Note 14 to the financial statements.

(iv) Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group’s exposure to its counterparties are continuously monitored. Credit exposure is controlled by the counterparty limits that are reviewed and approved by the management on an on-going basis.

As of December 31, 2009, the Group and the Company do not have any significant concentration of credit risk to any counterparty except that 5 parties account for 16% (2008 : 15%) and 27% (2008 : 33%) of the Group’s trade receivables and other receivables respectively. The concentration of the same parties to the Company’s trade and other receivables is 10% (2008 : 11%) and 6% (2008 : 7%) respectively.

The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the Group’s maximum exposure to credit risk.

Further details of credit risks on trade and other receivables are disclosed in Notes 3, 8 and 9 to the financial statements.





(v) Liquidity risk management

The Group maintains sufficient cash and cash equivalents, and internally generated cash flows to finance their activities.

Liquidity and interest-risk analysis

Non-derivative financial liabilities

The following tables detail the contractual maturity for non-derivative financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group and the Company can be required to pay. The table includes both interest and principal cash flows. The adjustment column represents the possible future cash flows attributable to the instrument included in the maturity analysis which is not included in the carrying amount of the financial liability on the statement of financial position.

Weighted Onaverage demand Withineffective or within 2 to After

interest rate 1 year 5 years 5 years Adjustment Total% $’000 $’000 $’000 $’000 $’000

Group

2009Non-interest bearing - 39,174 - - - 39,174Variable interest

rate instruments 5.8 14,614 1,429 1,254 (783) 16,514Fixed interest rate

instruments 7.0 1,012 2,562 - (330) 3,244Finance lease

liability (fixed rate) 6.1 710 688 35 (215) 1,21855,510 4,679 1,289 (1,328) 60,150


rate instruments 5.6 21,449 534 881 (927) 21,937Finance lease

liability (fixed rate) 6.1 902 1,280 - (325) 1,85762,881 1,814 881 (1,252) 64,324





(v) Liquidity risk management (cont’d)

Weighted Onaverage demand Withineffective or within 2 to After

interest rate 1 year 5 years 5 years Adjustment Total% $’000 $’000 $’000 $’000 $’000

Company


rate instruments 5.4 14,473 1,332 - (331) 15,474Fixed interest rate

instruments 7.0 1,012 2,562 - (330) 3,244Finance lease

liability (fixed rate) 5.6 145 93 - (29) 20941,636 3,987 - (690) 44,933


rate instruments 6.0 20,436 - - (451) 19,985Finance lease

liability (fixed rate) 5.6 179 238 - (51) 36643,382 238 - (502) 43,118






Non-derivative financial assets

The following table details the expected maturity for non-derivative financial assets. The tables below have been drawn up based on the carrying value of the financial assets including interest that are expected to be earned on assets carried at amortised costs.

Weighted Onaverage demand Withineffective or within 2 to

interest rate 1 year 5 years Total% $’000 $‘000 $’000

Group

2009Fixed interest rate instruments 1.1 3,314 - 3,314Non-interest bearing - 66,632 3,048 69,680

69,946 3,048 72,994

2008Fixed interest rate instruments 1.8 910 - 910Non-interest bearing - 75,271 4,798 80,069

76,181 4,798 80,979

Weighted Onaverage demand Withineffective or within 2 to

interest rate 1 year 5 years Total% $’000 $‘000 $’000

Company

2009Non-interest bearing - 70,461 1,280 71,741

2008Non-interest bearing - 70,434 2,513 72,947






Derivative financial instruments

The following table details the liquidity analysis for derivative financial instruments. The table has been drawn up based on the undiscounted net cash outflows on the derivative instrument that settle on a net basis and the undiscounted gross outflows on those derivatives that require gross settlement. When the amount payable is not fixed, the amount disclosed has been determined by reference to the projected interest rates as illustrated by the yield curves existing at the reporting date.

On demand or within 1 year

Within 2 to 5 years After 5 years

$’000 $’000 $’000Group and Company

20095-Year US$ Callable CMS Spread Range Accrual Swap 69 - -

20085-Year US$ Callable CMS Spread Range Accrual Swap 115 - - Target Redemption Forward Contracts 3,444 - -

3,559 - -

(vi) Fair values of financial assets and financial liabilities

The carrying amounts of cash and cash equivalents, trade and other current receivables and payables and other liabilities approximate their respective fair values due to the relatively short-term maturity of these financial instruments. The fair values of other classes of financial assets and liabilities are disclosed in the respective notes to financial statements.

The fair values of financial assets and financial liabilities are determined as follows:

• the fair values of financial assets and financial liabilitieswith standard terms andconditions and traded on active liquid markets are determined with reference to quoted market prices;

• thefairvaluesofotherfinancialassetsandfinancialliabilities(excludingderivativeinstruments) are determined in accordance with generally accepted pricing models based on discounted cash flow analysis; and





(vi) Fair values of financial assets and financial liabilities (cont’d)

• thefairvaluesofderivativeinstrumentsarecalculatedusingquotedprices.Wheresuch prices are not available, discounted cash flow analysis is used, based on the applicable yield curve of the duration of the instruments for non-optional derivatives, and option pricing models for optional derivatives.

The Group classifies fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);

(b) inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) (Level 2); and

(c) inputs for the assets or liability that are not based on observable market date (unobservable inputs) (Level 3).

Financial instruments measured at fair value

Group and CompanyTotal Level 1 Level 2 Level 3$’000 $’000 $’000 $’000


2009Derivative financial instruments 69 - 69 - Total 69 - 69 -

There were no significant transfers between Level 1 and Level 2 of the fair value hierarchy during the financial year.

(c) Capital risk management policies and objectives

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance, and to ensure that all externally imposed capital requirements are complied with.

The capital structure of the Group consists of debt, which includes the borrowings disclosed in Notes 18, 21 and 22 to the financial statements and equity attributable to owners of the Company, comprising issued capital, reserves and retained earnings as disclosed in Notes 25 to 28 to the financial statements.

The Group’s overall strategy remains unchanged from 2008.



5 RELATED COMPANY TRANSACTIONS

Some of the transactions and arrangements are between members of the Group and the effect of these on the basis determined between the parties is reflected in these financial statements. The intercompany balances are unsecured, interest-free and repayable on demand unless otherwise stated.

Transactions between the Company and its subsidiaries, which are related companies of the Company, have been eliminated on consolidation and are not disclosed.

6 OTHER RELATED PARTY TRANSACTIONS

Related parties are entities with common direct or indirect shareholders and/or directors. Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions.

Some of the transactions and arrangements are with related parties and the effect of these on the basis determined between the parties are reflected in these financial statements. The balances are unsecured, interest-free and repayable on demand unless otherwise stated.

During the year, Group entities entered into the following trading transactions with related parties:

Group2009 2008$’000 $’000

Sales of goods to minority interests (36) (56)Sales of goods to a related party (2) (71)Services provided to a minority interest (57) (267)Purchase of goods from companies which have significant influence over the Company and Group 2,715 5,902Purchase of goods from minority interests 1,665 576Purchase of goods from a related party 1,391 2,798Fees paid to a company in which a Company’s director has an interest 266 249Charges for subcontracting work by an associate 3,266 6,661

Compensation of directors and key management personnel

The remuneration of directors and other members of key management during the year was as follows:

Group2009 2008$’000 $’000

Short-term benefits 2,939 2,403Post-employment benefits 70 92

3,009 2,495

The remuneration of directors and key management is determined by the Remuneration Committee having regard to the performance of individuals and market trends.



7 CASH AND BANK BALANCES

Group Company2009 2008 2009 2008$’000 $’000 $’000 $’000

Cash on hand 21 65 12 10Cash at bank 11,876 8,369 5,937 1,957Fixed deposits 3,314 910 - -

15,211 9,344 5,949 1,967

Included in fixed deposits and cash at bank is restricted cash of $706,000 (2008 : $400,000) pledged with banks by subsidiaries as security for trade credit lines and performance guarantees issued to third parties. The restricted fixed deposits bear interest ranging from 0.30% to 2.10% (2008 : 0.90% to 1.90%) per annum and for a tenure of 3 months (2008 : 3 months to 6 months).

The remaining fixed deposits bear interest ranging from 0.05% to 2.20% (2008 : 0.08% to 3.50%) per annum and for a tenure of approximately 7 days to 3 months (2008 : 7 to 14 days).

The carrying amounts of these assets approximate their fair values.

The Group’s and Company’s cash and bank balances that are not denominated in the functional currencies of the respective entities are as follows:

Group Company2009 2008 2009 2008$’000 $’000 $’000 $’000

United States dollar 6,659 3,725 4,225 1,655Euro 837 554 483 177Sterling pound 384 21 120 10Hong Kong dollar 62 114 - - Canadian dollar 52 2 52 2Australian dollar 1 109 1 109Thailand baht - 47 - -



8 TRADE RECEIVABLES

Group Company2009 2008 2009 2008$’000 $’000 $’000 $’000

Current portion:

Outside parties (a) 48,770 59,190 28,845 30,717Less: Allowance for doubtful debts (562) (478) (23) (152)Less: Impairment loss (50) (66) (50) (66)

48,158 58,646 28,772 30,499

Subsidiaries (Note 12) (b) - - 2,353 2,625

Associates (Note 13) (c) 185 185 185 185Less: Allowance for doubtful debts (185) (185) (185) (185)

- - - -

Related parties - companies in which the Company and Group have an interest (Note 6) (d) 948 758 526 334

Less: Allowance for doubtful debts (363) (363) - -Less: Impairment loss (48) (51) (48) (51)

537 344 478 283

Amounts due from construction contract customers (Note 10) 99 2,166 - -

Minority interest (Note 6) 4 362 - -

Total current portion 48,798 61,518 31,603 33,407

Non-current portion:

Related parties - companies in which the Company and Group have an interest (Note 6) (d) 2,104 3,189 185 755

Less: Impairment loss (157) (205) (6) (56)1,947 2,984 179 699

Outside parties 296 562 296 562Less: Impairment loss (27) (74) (27) (74)

269 488 269 488

Total non-current portion 2,216 3,472 448 1,187

Total 51,014 64,990 32,051 34,594



8 TRADE RECEIVABLES (cont’d)

(a) Included in current receivables is $1,979,000 (2008 : $2,024,000) due from EnerNorth (Note 3) for the Group and the Company.

(b) The amounts due from subsidiaries are unsecured, interest-free and repayable on demand.

(c) The amounts due from associates are unsecured, interest-free and repayable on demand.

(d) The amounts due from related parties are unsecured, interest-free and repayable from 2010 to 2011.

The average credit period on sales of goods is 60 days (2008 : 60 days). No interest is charged on the trade receivables.

The table below is an analysis of trade receivables as at December 31, 2009:

Group Company2009 2008 2009 2008$’000 $’000 $’000 $’000

Not past due and not impaired 26,014 41,643 12,233 21,599Past due but not impaired 20,093 17,400 16,678 9,334

46,107 59,043 28,911 30,933

Receivables 1,110 1,026 208 337Less: Allowance for doubtful debts (1,110) (1,026) (208) (337)

- - - -

Impaired receivables (Note 3) 3,210 4,319 1,292 1,884Less: Impairment loss (Note 3) (282) (396) (131) (247)

2,928 3,923 1,161 1,637

Receivables from EnerNorth (Note 3) 1,979 2,024 1,979 2,024Total trade receivables, net 51,014 64,990 32,051 34,594




The table below is an analysis of trade receivables which are past due for which no allowance has been made.

Group Company2009 2008 2009 2008$’000 $’000 $’000 $’000

<3 months 14,172 8,681 13,031 4,0963 months to 6 months 2,570 3,115 629 2,5386 months to 12 months 977 3,534 742 5591 to 2 years 2,273 1,849 99 552 to 5 years 101 201 262 2945 to 10 years 4,907 5,967 5,055 5,453

25,000 23,347 19,818 12,995

Before accepting new customers, the Group assesses the potentials customer’s credit quality and defines credit limit by customers.

Included in the Group’s and the Company’s trade receivable balance are debtors with a carrying amount of $25.0 million and $19.8 million (2008 : $23.3 million and $13.0 million) respectively which are past due at the reporting date for which the Group and the Company have not provided as there has not been a significant change in credit quality and the amounts are still considered recoverable.

In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The management do not believe that there has been a significant change in credit quality and no further credit provision is required in excess of the allowance for doubtful debts. The Group does not hold any collateral for these balances.

Movement in the allowance for doubtful debts

Group Company2009 2008 2009 2008$’000 $’000 $’000 $’000

Balance at beginning of the year 1,026 825 337 387Amounts written off during the year (164) (67) (152) (50)Amounts recovered during the year (15) - - - Disposal of subsidiary (54) - - -Increase in allowance recognised in profit or loss 317 268 23 - Balance at end of the year 1,110 1,026 208 337

The allowance made during the year is in respect of estimated irrecoverable amounts from the sale of goods.




Movement in the impairment loss

Group Company2009 2008 2009 2008$’000 $’000 $’000 $’000

Balance at beginning of the year 396 778 247 484Impairment loss during the year 151 76 - 76Reversal (11) (104) - (104)Interest recognised (254) (354) (116) (209)Balance at end of the year 282 396 131 247

The Group’s and Company’s trade receivables (net of allowance and impairment loss) that are not denominated in the functional currencies of the respective entities are as follows:

Group Company2009 2008 2009 2008$’000 $’000 $’000 $’000

Current: United States dollar 33,026 38,986 25,270 26,333 Euro 1,417 2,474 1,457 1,762 Thailand baht 235 168 235 168 Sterling pound 33 252 341 535 Australian dollar - - 646 508 Hong Kong dollar - 183 - - Norwegian kroner - 4 - 4

Non-current: Thailand baht 269 488 269 488 Euro - 474 - 474



9 OTHER RECEIVABLES

Group Company2009 2008 2009 2008$’000 $’000 $’000 $’000

Current portion:

Deposits receivable from banks for bankers guarantees given to customers - 55 - - Prepayments 708 921 205 230Deposits 275 218 59 51

983 1,194 264 281

Advances (a) 27 53 3 1

Other receivables (b) 3,328 2,893 2,873 1,644

Subsidiaries (Note 12) (c) - - 38,144 36,485Less: Allowance for doubtful debts - - (8,795) (3,722)

- - 29,349 32,763

Associates (Note 13) (d) 1,686 1,556 4 4

Related parties - companies in which the Company and Group have an interest (Note 6) (e) 3,709 3,717 3,709 3,717

Less: Allowance for doubtful debts (3,034) (3,034) (3,034) (3,034)Less: Impairment loss (54) (86) (54) (86)

621 597 621 597

Other related parties (Note 6) - 2 - -

Total current portion 6,645 6,295 33,114 35,290

Non-current portion:

Related parties - companies in which the Company and Group have an interest (Note 6) (e) 873 1,414 873 1,414

Less: Impairment loss (41) (88) (41) (88)

Total non-current portion 832 1,326 832 1,326

Total 7,477 7,621 33,946 36,616



9 OTHER RECEIVABLES (cont’d)

(a) Advances to outside parties are unsecured, interest-free and repayable on demand.

(b) Included in other receivables is the recognition of legal claim against EnerNorth (see Note 3) of $600,000 (2008 : $600,000), advance payment to certain suppliers amounting to $2,656,000 (2008 : $1,509,000) and expenses reimbursable from outside parties amounting to $72,000 (2008 : $755,000).

(c) The amounts due from subsidiaries are unsecured, interest-free and repayable on demand.

(d) The amounts due from associates are unsecured, interest-free and repayable on demand.

(e) In 2008, an amount of $839,000 due from a related party bore interest at the rate that the financial institution charged the Company, was secured by joint and severable guarantees of certain directors of the related party. The balance of the amounts due from related parties (see Note 3) are unsecured, interest-free and repayable on demand.

Movement in the allowance for doubtful debts

Group Company2009 2008 2009 2008$’000 $’000 $’000 $’000

Balance at beginning of the year 3,034 3,034 6,756 3,056Increase in allowance recognised in profit or loss - - 5,073 3,700Balance at end of the year 3,034 3,034 11,829 6,756

Movement in the impairment lossGroup Company

2009 2008 2009 2008$’000 $’000 $’000 $’000

Balance at beginning of the year 174 198 174 198Impairment loss 7 53 7 53Reversal - (15) - (15)Interest recognised (86) (62) (86) (62)Balance at end of the year 95 174 95 174



9 OTHER RECEIVABLES (cont’d)

The Group’s and Company’s other receivables (net of allowance and impairment loss) that are not denominated in the functional currencies of the respective entities are as follows:

Group Company2009 2008 2009 2008$’000 $’000 $’000 $’000

Current: United States dollar 1,453 620 11,472 12,703 Thailand baht 1,096 2,396 - 4 Malaysian ringgit 209 105 207 105 Australian dollar 29 - 29 - Sterling pound 7 - - - Euro - 273 - 73 Canadian dollar - 104 - 104 Indonesian rupiah - 1 - -

Non-current: Malaysian ringgit 410 486 410 486

10 CONSTRUCTION CONTRACTS

Group2009 2008$’000 $’000

Contracts in progress at end of the reporting period:Amounts due from contract customers included in trade receivables (Note 8) 99 2,166Amounts due to contract customers included in trade payables (Note 19) (1,618) (2,947)

(1,519) (781)

Contracts work-in-progress: Contract costs incurred plus recognised profits 4,494 16,195 Less: Progress billings (6,013) (16,976)

(1,519) (781)

At December 31, 2009, retention monies held by customers for contract work included in trade receivables (Note 8) amounted to $1,416,000 (2008 : $804,000). Advances received from customers for contract work included in trade payables (Note 19) amounted to $1,976,000 (2008 : $2,942,000).



11 INVENTORIES

Group Company2009 2008 2009 2008$’000 $’000 $’000 $’000

Raw materials, at net realisable value 4,754 3,894 - - Finished goods, at net realisable value 22,832 21,463 12,424 10,721

27,586 25,357 12,424 10,721

The cost of inventories recognised as an expense includes $455,000 (2008 : $64,000) in respect of write-downs of inventories to net realisable value.

12 SUBSIDIARIES

Company2009 2008$’000 $’000

Unquoted equity shares, at cost 6,839 6,839Less: Impairment loss (2,807) (2,807)Carrying amount 4,032 4,032

Details of all the subsidiaries at December 31, 2009 are as follows:

Name of subsidiary

Country ofincorporation

(or registration) and operation

Proportion of ownership interest and voting power

held Principal activities2009 2008

% %

FST Protection Pte Ltd (1) Singapore 100 100 Dormant

Oakwell Engineering International Pte Ltd (1)

Singapore 100 100 Providing design, fabrication, procurement, construction and supervisory services

Oakwell Engineering (M) Sdn Bhd (2)

Malaysia 70 70 Trading, engineering and contracting services

Oakwell Marine Services (S) Pte Ltd (1)

Singapore 100 100 Investment holding

M&I Electric Far East Pte Ltd (1)

Singapore 51 51 Engages in the supplying and servicing of switchgears and Motor Control Centre for oil and gas, chemical industries and offshore platform



12 SUBSIDIARIES (cont’d)

Name of subsidiary





% %

Oakwell-Breen Pte Ltd (1) Singapore 51 51 Trading, servicing and acts as an agent in industrial machinery

OID Pte. Ltd. (1) Singapore 100 100 Investment holding

Oakwell Shipbuilding Engineering and Construction Pte. Ltd. (1)

Singapore 100 100 Engages in shipbuilding

Subsidiary of Oakwell Engineering International Pte Ltd

Biofuel Research Pte Ltd (4) (9)

Singapore 51 - Research and development of advance technology, engineering and manufacturing and consultancy for biofuel industry

Subsidiary of Oakwell Marine Services (S) Pte Ltd

Oakwell Inc. (3) United Statesof America

100 100 Engages in trading, fabricating and servicing of engineering parts

Subsidiaries of Oakwell-Breen Pte Ltd

Copas Coatings Pte Ltd (1) (10) Singapore 51 26 Dormant

Oakwell-Breen Sdn Bhd (6) (11) Malaysia 38 43 Trading, servicing and acts as an agent in industrial machinery

K.A. Building Construction Pte Ltd (8)

Singapore - 26 Engages in building, civil and sanitary contracting works, manufacturing of building materials

Oakwell-Breen (HK) Company Limited (7) (12)

Hong Kong 48 - Trading, servicing and acts as an agent in industrial machinery



12 SUBSIDIARIES (cont’d)

Name of subsidiary





% %Subsidiaries of OID Pte. Ltd.

Oakwell Engineering Services (Shanghai) Co., Ltd (now known as Oakwell Engineering Equipment (Shanghai) Co., Ltd)

People’s Republic of China

100 100 Dormant

Oakwell International Trading (Shanghai) Co., Ltd (5)

People’s Republic of China

100 100 Engineering services, import and export of materials and equipment

(1) Audited by Deloitte & Touche LLP, Singapore.(2) Audited by overseas practice of Deloitte Touche Tohmatsu.(3) Audited by Deloitte & Touche LLP, Singapore for consolidation purposes (2008 : Audited by overseas

practice of Deloitte Touche Tohmatsu for consolidation purposes).(4) Audited by Nexia TS Public Accounting Corporation, Singapore.(5) Audited by Nexia TS Public Accounting Corporation, Singapore for consolidation purposes.(6) Audited by Roger Yue, Tan & Associates, Selangor, Malaysia.(7) Audited by Oliver Wong & Co., Hong Kong.(8) Disposed during the year (Note 42) (2008 : Audited by Deloitte & Touche LLP, Singapore).(9) Acquired during the year (Note 43).(10) During 2009, the Group’s interest in Copas Coatings Pte Ltd increased from 26% to 51%.(11) During 2009, the Group’s interest in Oakwell-Breen Sdn Bhd decreased from 43% to 38% due to the

additional shares subscribed by the minority interest.(12) Incorporated on March 11, 2009.

Although the Group does not own more than 50% of the equity shares of Oakwell-Breen Sdn Bhd (“OBSB”) and Oakwell-Breen (HK) Company Limited (“OBHK”), the Group controls more than half of the voting power, by virtue of having the majority of the voting rights at a general meeting, OBSB and OBHK are controlled by the Group and are consolidated in these financial statements.

The Audit Committee has reviewed the size, availability and experience of the professional staff of those auditors of the Group’s subsidiaries, in which Deloitte & Touche LLP, Singapore are not the auditors, and considers them as suitable pursuant to Rule 716 of the SGX-ST’s Listing Manual.

As part of the Company’s impairment assessment, the management concluded that the investments in OID Pte. Ltd. and FST Protection Pte Ltd are impaired and accordingly, an accumulated impairment loss of $2,807,000 (2008 : $2,807,000) had been recorded.



13 ASSOCIATES

Group Company2009 2008 2009 2008$’000 $’000 $’000 $’000

Unquoted equity shares, at cost 196 128 128 128Share of post-acquisition accumulated losses (111) (128) - - Impairment loss - - (128) (128)

85 - - -

Details of all the associates at December 31, 2009 are as follows:

Name of associate





% %

Oakwell Corporation Thailand Co., Ltd (1)

Thailand 49 49 Provide construction and repair services for marine vessel

Donbass Engineering India Pvt Ltd (2)

India 42.5 42.5 Dormant

Associate of M&I Electric Far East Pte Ltd

PT M&I Electric (Indonesia) (3) Indonesia 23 - Engages in the supplying and servicing of switchgears and Motor Control Centre for oil and gas, chemical industries and offshore platform

(1) Audited by VAT Accounting, Bangkok, Thailand.

(2) Not audited. This company is in the process of being liquidated.

(3) Audited by KAP Anwar & Rekan, Indonesia.

Summarised financial information in respect of the Group’s associates is set out below:

2009 2008$’000 $’000

Total assets 6,992 4,398Total liabilities (7,466) (4,827)Net liabilities (474) (429)

Revenue 3,785 6,661

(Loss) Profit for the year (184) 60



14 AVAILABLE-FOR-SALE INVESTMENTS

Group Company2009 2008 2009 2008$’000 $’000 $’000 $’000

Unquoted equity shares 319 319 303 303Club memberships 39 53 39 53

358 372 342 356

The investments in unquoted equity shares of the Group and the Company consist of the following:

a) Shares in a former associate of $303,000 (2008 : $303,000) that is engaged in the trading and servicing of engineering parts, and renting of plant and machinery to the oil and gas industry.

b) Shares in a company that is engaged in engineering sales, trading and servicing of metering instrumentation and control equipment and systems of $16,000 (2008 : $16,000).

The investments in unquoted equity shares are measured at cost less impairment at the end of each reporting period because management is of the opinion that their fair values cannot be measured reliably.

During the year, the Group and the Company carried out a review of the recoverable amount of its club memberships. An impairment loss (included in other operating expenses) of $14,000 (2008 : $21,000) has been charged against club memberships for the Group and the Company.

The Group’s and Company’s available-for-sale investments, net of impairment loss, that are not denominated in the functional currencies of the respective entities are as follows:

Group Company2009 2008 2009 2008$’000 $’000 $’000 $’000

Malaysian ringgit 303 303 303 303



15 PROPERTY, PLANT AND EQUIPMENT

Construction Freehold Freehold Leasehold Plant andin progress land buildings buildings equipment Total

$’000 $’000 $’000 $’000 $’000 $’000Group

Cost or Valuation: At January 1, 2008 - 344 1,578 5,537 13,169 20,628 Exchange differences - (14) (17) (3) (4) (38) Additions - - - - 1,066 1,066 Disposals - - (5) (117) (557) (679) At December 31, 2008 - 330 1,556 5,417 13,674 20,977 Exchange differences - (4) (27) - (20) (51) Additions 75 - - - 684 759 Acquisition of subsidiary - - - - 2,997 2,997 Disposals - - - - (257) (257) Disposal of subsidiary - - - - (508) (508) Reclassified as investment property (Note 16) - - - (1,417) - (1,417) At December 31, 2009 75 326 1,529 4,000 16,570 22,500

Comprising:December 31, 2009 At cost 75 326 1,529 - 16,570 18,500 At valuation - - - 4,000 - 4,000

75 326 1,529 4,000 16,570 22,500December 31, 2008 At cost - 330 1,556 1,417 13,674 16,977 At valuation - - - 4,000 - 4,000

- 330 1,556 5,417 13,674 20,977

Accumulated depreciation: At January 1, 2008 - - 708 669 6,007 7,384 Exchange differences - - (9) - (8) (17) Depreciation - - 57 151 1,973 2,181 Eliminated on disposals - - (5) (89) (354) (448) At December 31, 2008 - - 751 731 7,618 9,100 Exchange differences - - (12) - (16) (28) Depreciation - - 55 93 2,099 2,247 Eliminated on disposals - - - - (238) (238) Eliminated on disposal of subsidiary - - - - (361) (361) Reclassified as investment property (Note 16) - - - (80) - (80) At December 31, 2009 - - 794 744 9,102 10,640

Carrying amounts: At December 31, 2009 75 326 735 3,256 7,468 11,860

At December 31, 2008 - 330 805 4,686 6,056 11,877



15 PROPERTY, PLANT AND EQUIPMENT (cont’d)

Freehold Leasehold Plant andbuilding building equipment Total

$’000 $’000 $’000 $’000Company

Cost or Valuation: At January 1, 2008 250 4,000 5,206 9,456 Additions - - 351 351 Disposals - - (85) (85) At December 31, 2008 250 4,000 5,472 9,722 Additions - - 100 100 Disposals - - (132) (132) At December 31, 2009 250 4,000 5,440 9,690

Comprising:December 31, 2009 At cost 250 - 5,440 5,690 At valuation - 4,000 - 4,000

250 4,000 5,440 9,690December 31, 2008 At cost 250 - 5,472 5,722 At valuation - 4,000 - 4,000

250 4,000 5,472 9,722

Accumulated depreciation: At January 1, 2008 165 558 3,596 4,319 Depreciation 13 93 398 504 Eliminated on disposals - - (77) (77) At December 31, 2008 178 651 3,917 4,746 Depreciation 12 93 459 564 Eliminated on disposals - - (130) (130) At December 31, 2009 190 744 4,246 5,180

Carrying amounts: At December 31, 2009 60 3,256 1,194 4,510

At December 31, 2008 72 3,349 1,555 4,976

On December 16, 2009, an independent valuation of the Company’s leasehold building was carried out by a firm of independent valuers, Asian Appraisal Company Pte Ltd, on the leasehold building on an existing use basis. The management determined that no adjustment to the carrying value of the leasehold building was necessary based on the valuation.

The carrying amount of the Group’s and the Company’s plant and equipment includes an amount of $1,474,000 and $342,000 (2008 : $2,476,000 and $549,000) respectively, that are under finance leases (Note 21).



15 PROPERTY, PLANT AND EQUIPMENT (cont’d)

In 2008, the Group has pledged a leasehold building having a carrying amount of approximately $1,337,000 to secure bank loan granted to the Group (Note 22). In 2009, this leasehold building has been reclassified as investment property (Note 16).

At December 31, 2009, had the leasehold building been carried at historical cost less accumulated depreciation, the carrying amount would have been approximately $2,668,000 and $1,331,000 (2008: $2,746,000 and $1,409,000) for the Group and the Company respectively.

16 INVESTMENT PROPERTY

Group2009 2008$’000 $’000

At fair value

Balance at beginning of year - - Reclassified from property, plant and equipment at cost less accumulated depreciation 1,337 - Gain from fair value adjustments included in profit or loss (Note 30) 863 - Balance at end of year 2,200 -

The fair value of the Group’s investment property at December 31, 2009 and 2008 has been determined on the basis of valuation carried out by Asian Appraisal Pte Ltd, independent valuers having an appropriate recognised professional qualification and recent experience in the location and category of the property being valued. The valuation was arrived at by reference to market evidence of transaction prices for similar property, and was performed in accordance with International Valuation Standards.

The property rental income from the Group’s investment property leased out under operating leases amounted to $74,000. Direct operating expenses (including repair and maintenance) arising from the rental-generating investment property amounted to $9,000.

The Group has pledged the investment property to secure the bank loan granted to the Group (Note 22).



17 GOODWILL

Group$’000

Cost: At January 1, 2008 and December 31, 2008 305 Eliminated on disposal of a subsidiary (190) At December 31, 2009 115

Impairment: At January 1, 2008, December 31, 2008 and December 31, 2009 83

Carrying amount: At December 31, 2009 32

At December 31, 2008 222

Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (“CGUs”) that are expected to benefit from that business combination. Before recognition of impairment losses, the carrying amount of goodwill had been allocated as follows:

2009 2008$’000 $’000

Distributorship: Oakwell Inc. 32 32

Engineering Design and Fabrication: Copas Coatings Pte Ltd 83 83 K.A. Building Construction Pte Ltd - 190 83 273

Total 115 305

The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired.

The recoverable amounts of the CGUs are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the period. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGUs. The growth rates are based on industry growth forecasts. Changes in selling prices and direct costs are based on past practices and expectations of future changes in the market.

The Group prepared cash flow forecasts derived from the most recent financial budgets approved by management for the next five years based on an estimated growth rate of 10% (2008 : Nil%) per annum. The rate used to discount the forecast cash flows is 12% (2008 : 12%) per annum.



18 BANK OVERDRAFTS AND BORROWINGS

Group Company2009 2008 2009 2008$’000 $’000 $’000 $’000

Bills payable - unsecured 12,015 14,168 12,015 13,298Bank overdrafts - unsecured 119 3,487 119 3,487

12,134 17,655 12,134 16,785

The bills payable bear interest at rates ranging from 2.32% to 4.75% (2008 : 3.20% to 7.43%) per annum. The bills have maturity dates ranging from 1 to 5 months (2008 : 1 to 5 months) and their fair values approximate their book values because of their short-term nature.

The interest on the bank overdrafts was charged at 5.25% to 6.75% (2008 : 5.25% to 6.75%) per annum and is determined based on 0.25% to 1.00% (2008 : 0.25% to 1.00%) plus prime rate. The bank overdrafts are repayable on demand.

The Group’s and Company’s bank overdrafts and borrowings that are not denominated in the functional currencies of the respective entities are as follows:

Group Company2009 2008 2009 2008$’000 $’000 $’000 $’000

United States dollar 10,774 10,915 10,774 10,352Euro 518 2,336 518 2,191

19 TRADE PAYABLES

Group Company2009 2008 2009 2008$’000 $’000 $’000 $’000

Outside parties 26,565 28,706 20,200 17,908Subsidiaries (Note 12) - - 78 383Related parties - companies which have significant

influence over the Company and the Group (Note 6) - 700 - 700

Amounts due to construction contract customers (Note 10) 1,618 2,947 - -

Related parties - companies in which the Company and Group have an interest (Note 6) 967 13 215 13

Other related parties (Note 6) 726 2,424 - - Total 29,876 34,790 20,493 19,004

The average credit period on purchases of goods is 60 days (2008 : 60 days). No interest is charged on the trade payables.



19 TRADE PAYABLES (cont’d)

Trade creditors principally comprise amounts outstanding for trade purchases and ongoing costs.

The Group’s and Company’s trade payables that are not denominated in the functional currencies of the respective entities are as follows:

Group Company2009 2008 2009 2008$’000 $’000 $’000 $’000

United States dollar 17,256 13,555 14,633 10,259Euro 3,808 5,094 2,846 3,564Thailand baht 941 1,946 - - Sterling pound 497 605 154 528Norwegian kroner 179 358 44 319Canadian dollar 64 43 64 43Malaysian ringgit 59 21 - 2Hong Kong dollar 14 180 - - Australian dollar 12 8 12 8Indonesian rupiah 2 1 - -

20 OTHER PAYABLES AND PROVISIONS

Group Company2009 2008 2009 2008$’000 $’000 $’000 $’000

Accrued operating expenses 7,163 5,670 5,409 3,649Customer deposits 2,999 3,500 2,459 2,797Directors (Note 6) (a) 2,112 70 - 40Advance billing to customer 3 18 3 18

12,277 9,258 7,871 6,504

Related parties - company in which the director has an interest (Note 6) 23 - 23 -

Subsidiaries (Note 12) (b) - - 81 74

Total 12,300 9,258 7,975 6,578

(a) The amounts due to directors are unsecured, interest-free and repayable on demand.

(b) The amounts due to subsidiaries are unsecured, interest-free and repayable on demand.



20 OTHER PAYABLES AND PROVISIONS (cont’d)

Group Company2009 2008 2009 2008$’000 $’000 $’000 $’000

Warranty provision 912 1,178 - -

Movement in warranty provisionGroup Company

2009 2008 2009 2008$’000 $’000 $’000 $’000

Balance at beginning of the year 1,178 969 - - Increase in provision recognised in profit or loss 483 444 - - Amount utilised during the year (111) (235) - - Disposal of subsidiary (638) - - - Balance at end of the year 912 1,178 - -

The warranty provision represents management’s best estimate of the Group’s liability under “12-24 months” warranties granted on completed projects/designed and fabricated products/agency products and mechanical projects, based on past experience and industry averages for defective products.

The Group’s and Company’s other payables that are not denominated in the functional currencies of the respective entities are as follows:

Group Company2009 2008 2009 2008$’000 $’000 $’000 $’000

United States dollar 2,518 4,015 2,485 3,969Euro 480 177 178 158Chinese renminbi 183 - 183 - Sterling pound 1 69 1 69Canadian dollar - 14 - 14Thailand baht - 2 - -



21 FINANCE LEASES

Minimum lease payments

Present value of minimum lease

payments 2009 2008 2009 2008$’000 $’000 $’000 $’000

Group

Amounts payable under finance leases: Within one year 710 902 607 773 In the second to fifth years inclusive 688 1,280 581 1,084 After five years 35 - 30 -

1,433 2,182 1,218 1,857Less: Future finance charges (215) (325) - - Present value of lease obligations 1,218 1,857 1,218 1,857

Less: Amount due for settlement within 12 months (shown under current liabilities) (607) (773)Amount due for settlement after 12 months 611 1,084

Company

Amounts payable under finance leases: Within one year 145 179 128 157 In the second to fifth years inclusive 93 238 81 209

238 417 209 366Less: Future finance charges (29) (51) - - Present value of lease obligations 209 366 209 366

Less: Amount due for settlement within 12 months (shown under current liabilities) (128) (157)Amount due for settlement after 12 months 81 209

It is the Group’s and the Company’s policy to lease certain of its plant and equipment under finance leases. The average lease term is 5 years (2008 : 5 years). For the year ended December 31, 2009, the average effective borrowing rates ranged from 4.15% to 8.00% (2008 : 4.15% to 8.00%) and 4.15% to 7.00% (2008 : 4.15% to 7.00%) per annum for the Group and the Company respectively. Interest rates are fixed at the contract date, and thus expose the Group to fair value interest rate risk. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

All lease obligations are denominated in the functional currencies of the respective entities.

The fair value of the Group’s and the Company’s lease obligations approximates their carrying amount.

The Group’s and the Company’s obligations under finance leases are secured by the lessors’ title to the leased assets (Note 15).



22 BANK LOANS

Group Company2009 2008 2009 2008$’000 $’000 $’000 $’000

Short-term loans (unsecured) 6,584 3,200 6,584 3,200Long-term loan (secured) 1,040 1,082 - -

7,624 4,282 6,584 3,200

Amount due for settlement within 12 months (shown under current liabilities) 3,045 3,291 2,952 3,200Amount due for settlement after 12 months 4,579 991 3,632 -

7,624 4,282 6,584 3,200

Details of the bank loans are as follows:

a) Long-term loan of $1,040,000 (2008 : $1,082,000) is secured by a legal mortgage of an investment property (2008: property, plant and equipment) belonging to a subsidiary (Note 16). Interest is fixed at 3.75% and 4.25% per annum for the first and second year respectively and thereafter interest is charged at the bank’s prevailing lending rate less 2.375% for the third year and less 2.125% for the fourth year and thereafter. The loan is repayable in 240 monthly installments commencing from 2006 and ending in 2026.

b) Unsecured short-term loans of $6,584,000 (2008 : $3,200,000) bear interest ranging from 3.20% to 9.45% (2008 : 2.87% to 10.27%) per annum and are repayable on demand.

The fair value of the Group’s and the Company’s bank loans approximates their carrying amount.

23 DERIVATIVE FINANCIAL INSTRUMENTS

Group and Company2009 2008$’000 $’000

5-Year US$ Callable CMS Spread Range Accrual Swap, at fair value 69 115Target Redemption Forward Contract, at fair value - 3,444

69 3,559



23 DERIVATIVE FINANCIAL INSTRUMENTS (cont’d)

5-Year US$ Callable CMS Spread Range Accrual Swap

To manage its interest rate risks, the Group entered into a 5-Year US$ Callable CMS Spread Range Accrual Swap (“CMS”). The notional value of CMS is US$5 million and is callable every 3 months till maturity in 2012.

Under CMS, the financial institution pays the Group at a rate that range from Nil% to US$ 3-months London Interbank Offered Rate (“LIBOR”), on a daily accrued basis. The financial institution would pay US$ 3-months LIBOR when the US$ 30-year rate remains higher than the US$ 10-year rate and conversely Nil% when the US$ 10-year rate exceed the US$ 30-year rate.

The Group bears a cost at US$ 3-months LIBOR less 40 basis point and is capped at a maximum rate of 7.0%.

The fair value of CMS entered into at December 31, 2009 is estimated at a loss of $69,000 (2008 : $115,000). These amounts are based on quoted market prices for equivalent instruments at the end of the reporting period.

Target Redemption Forward Contracts

In 2008, the Group was a party to Target Redemption Forward Contract (“Target Redemption Contract”) in the management of its exchange rate exposure. The instruments purchased were primarily denominated in the currencies of the Group’s principal markets.

At December 31, 2008, the Group had entered into 2 Target Redemption Contracts with notional values of $54.0 million (US$28.0 million and Euro 7.0 million) which matured by July 2009.

One of the Target Redemption Contracts consists of a total 26 foreign exchange (“FX”) transactions with 14 transactions outstanding as at December 31, 2008. At each expiry date, the spot reference is compared to the contracted forward rate of 1.3860 SGD/USD. If the spot reference rate is more than or equal to forward rate, then the geared notional amount of US$2.0 million is applicable. On the other hand, if the reference rate is less than the forward rate, then the notional amount is US$1.5 million. The entire Target Redemption Contract is subject to a knock out condition. These transactions were completed by July 2009.

The other Target Redemption Contract consists of a total 26 transactions with 14 transactions outstanding

as at December 31, 2008. At each expiry date, the spot reference is compared to the contracted forward rate of 1.5360 USD/Euro. If the spot reference rate is more than or equal to forward rate, the notional amount of Euro 0.4 million is applicable. On the other hand, if the spot reference rate is less than the forward rate, then the notional amount of Euro 0.5 million is applicable. The entire Target Redemption Contract is subject to a knock out condition. These transactions were completed by July 2009.

In 2008, the fair value loss of the Target Redemption Contract was estimated to be approximately $3.4 million. The fair values are based on marked-to-market valuation provided by the financial institutions at the balance sheet date.



24 DEFERRED TAX ASSETS/LIABILITIES

The following are the major deferred tax liabilities and assets recognised by the Group and Company, and the movements thereon, during the current and prior reporting periods:

Group Accelerated Assetbook (tax) revaluation

Provisions depreciation reserve Total$’000 $’000 $’000 $’000

At January 1, 2008 (71) (88) 383 224Charge to profit and loss for the year (Note 33) 25 51 - 76At December 31, 2008 (46) (37) 383 300(Credit) Charge to profit and loss for the year

(Note 33) (81) 141 - 60Disposal of subsidiary (Note 42) (22) 6 - (16)Effect of change in tax rate 3 1 (21) (17)At December 31, 2009 (146) 111 362 327

Company Accelerated Assetbook (tax) revaluation

depreciation reserve Total$’000 $’000 $’000

At January 1, 2008 (98) 383 285Charge to profit and loss for the year 45 - 45At December 31, 2008 (53) 383 330Credit to profit and loss for the year (14) - (14)Effect of change in tax rate 3 (21) (18)At December 31, 2009 (64) 362 298

Certain deferred tax assets and liabilities have been offset in accordance with the Group’s and Company’s accounting policy. The following is the analysis of the deferred tax balances (after offset) for statement of financial position purposes:

Group Company2009 2008 2009 2008$’000 $’000 $’000 $’000

Deferred tax liabilities 405 346 298 330Deferred tax assets (78) (46) - -

327 300 298 330

At the end of the reporting period, the aggregate amount of temporary differences associated with undistributed earnings of subsidiaries for which deferred tax liabilities have not been recognised is $227,000 (2008 : $167,000). No liability has been recognised in respect of these differences because the Group is in a position to control the timing of the reversal of the temporary differences and it is probable that such differences will not reverse in the foreseeable future.

Temporary differences arising in connection with interests in associates are insignificant.



25 SHARE CAPITAL

Group and Company2009 2008 2009 2008’000 ’000 $’000 $’000

Number of ordinary sharesIssued and paid-up: At the beginning and end of the year 596,667 596,667 32,444 32,444

Fully paid ordinary shares, which have no par value, carry one vote per share and carry a right to dividends as and when declared by the Company.

26 CURRENCY TRANSLATION RESERVE

Exchange differences relating to the translation from the functional currencies of the Group’s foreign subsidiaries into Singapore dollars are brought to account by entries made directly to the foreign currency translation reserve.

27 REVALUATION RESERVE

The revaluation reserve arises on the revaluation of property. Where revalued property is sold, the portion of the property revaluation reserve that relates to that asset, and is effectively realised, is transferred directly to retained earnings.

The revaluation reserves are not available for distribution to the Company’s shareholders.

28 CAPITAL RESERVE

Capital reserve represents the Group’s share of retained earnings of a subsidiary which has been capitalised.

29 REVENUE

Group2009 2008$’000 $’000

Sale of goods 149,931 160,109Contract revenue 22,071 44,002Commission income 804 494

172,806 204,605



30 OTHER OPERATING INCOME

Group2009 2008$’000 $’000

Rental income 74 - Administrative and management income 44 44Interest income from third parties 17 64Interest income arising from financial assets carried at amortised cost 340 415Gain on disposal of property, plant and equipment 3 22Gain on disposal of subsidiary 86 - Recovery of bad debts previously written off 15 - Fair value adjustment on recognition of investment property 863 - Recognition of legal claim - 600Negative goodwill on acquisition of subsidiary 366 - Others 183 402

1,991 1,547

31 OTHER OPERATING EXPENSES

Group2009 2008$’000 $’000

Depreciation of property, plant and equipment 2,247 2,181Foreign currency exchange adjustment loss, net 2,345 5,365Rental expense 1,525 756Allowance for doubtful trade receivables 317 268Bad debts written off - trade 141 9Impairment of trade and other receivables, net 147 10Impairment of club memberships 14 21Utilities 174 323Property taxes 200 200Land lease expenses 146 340Property, plant and equipment written off 15 91Loss on disposal of property, plant and equipment - 31Repair and maintenance 172 323Others 169 125

7,612 10,043



32 FINANCE COSTS

Group2009 2008$’000 $’000

Interest expense on: Bank overdraft and borrowings 559 1,079 Bank loans 353 151 Finance leases 125 136

1,037 1,366

33 INCOME TAX EXPENSE

Group2009 2008$’000 $’000

Tax expense comprises: Current tax expense 845 1,006Adjustments recognised in the current year in relation to the current tax of

prior years (39) (159)Deferred tax expense (income) relating to the origination and reversal of

temporary differences 60 76Effect of change in tax rate (17) - Total tax expense 849 923

Domestic income tax is calculated at 17% (2008 : 18%) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions.

The total charge for the year can be reconciled to the accounting profit as follows:

Group2009 2008$’000 $’000

Profit before tax 6,500 3,640

Income tax expense calculated at 17% (2008 : 18%) 1,105 655Effect of (income) expenses that are (not taxable) not deductible in

determining taxable profit (93) 626Effect of utilisation of prior years’ tax loss not previously recognised as

deferred tax assets - (94)Effect of income that is exempt from taxation (115) (138)Effect of different tax rates of overseas jurisdictions 24 23Effect of change in tax rate (17) - Double tax relief - (15)Others (16) 25

888 1,082Adjustments recognised in the current year in relation to the current tax of

prior years (39) (159) 849 923



33 INCOME TAX EXPENSE (cont’d)

The Group has tax loss carryforwards, arising from 2 local subsidiaries and 3 (2008 : 2) overseas subsidiaries available for offsetting against future taxable income as follows:

Group2009 2008$’000 $’000

Amount at beginning of year 1,809 2,021Adjustment in respect of prior years (391) 71Amount in current year 660 - Currency realignment (21) (7)Amount utilised in current year - (276)Amount at end of year 2,057 1,809

Deferred tax benefit on above unrecorded 547 478

No deferred tax asset has been recognised due to unpredictability of future profit streams.

34 PROFIT FOR THE YEAR

Group2009 2008$’000 $’000

Profit for the year has been arrived at after charging:

Non-audit fees paid to auditors of the Company 79 45Non-audit fees paid to other auditors - 5Cost of inventories recognised as an expense – sale of goods 110,749 116,886Cost of inventories recognised as an expense – contract revenue 15,113 39,516Directors’ remuneration: Directors of the Company 1,505 709 Directors of the subsidiaries 645 839Fees paid to a company in which a Company’s director has an interest 266 249Foreign currency exchange adjustment loss, net 2,345 5,365Employee benefits expense (including directors’ remuneration) 17,879 16,854Costs of defined contribution plans included in employee benefits expense* 1,458 1,286

* This amount is the employers’ share of Central Provident Fund (for Singapore) and similar schemes that may be applicable to subsidiaries incorporated in other countries.



35 EARNINGS PER SHARE

The calculation of basic earnings per share is calculated on the Group’s profit attributable to owners of the Company of $4,378,000 (2008 : $982,000) divided by the number of ordinary shares of 596,667,000 (2008 : 596,667,000) in issue during the year.

There were no dilutive earnings per ordinary share for both 2009 and 2008.

36 RETIREMENT BENEFIT OBLIGATIONS

Defined contribution plans

The employees of Oakwell Engineering Limited and its subsidiaries that are located in Singapore are members of a state-managed retirement benefit plan, the Central Provident Board Fund, operated by the Government of Singapore. The Company and the subsidiaries are required to contribute a specified percentage of payroll costs to the retirement benefit scheme to fund the benefits. The only obligation of the Group with respect to the retirement benefit plan is to make the specified contributions.

The Group operates defined contribution retirement benefit plans for all qualifying employees in Hong Kong, Malaysia, People’s Republic of China and United States of America. The assets of the plans are held separately from those of the Group in funds under the control of trustees. Where employees leave the plans prior to the contributions fully vesting, the contributions payable by the Group are reduced by the amount of forfeited contributions.

The total expense recognised in the profit or loss of $1,458,000 (2008 : $1,286,000) represents contributions payable to these plans by the Group at rates specified in the rules of the plans. As at December 31, 2009, contributions of $387,000 (2008 : $330,000) due in respect of current financial year had not been paid over to the plans. The amounts were paid over subsequent to the end of the reporting period.

37 DIVIDENDS

In May 2009, a one-tier tax exempt dividend of 0.06 cents per share (total dividend $358,000) was paid to shareholders.

In May 2008, the dividend paid to shareholder was 0.06 cents per share (total dividend $358,000).

In respect of the current year, the directors propose that a one-tier tax exempt dividend of 0.075 cents per share will be paid to shareholders on May 25, 2010. This dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. The proposed dividend is payable to all shareholders on the Register of Members on May 11, 2010. The total estimated dividend to be paid is $448,000.



38 NON-CASH TRANSACTION

During the financial year, the Group acquired property, plant and equipment with an aggregate cost of $759,000 (2008 : $1,066,000) of which $142,000 (2008 : $24,000) were acquired through finance leases. Cash payments of $617,000 (2008 : $1,042,000) were made to purchase property, plant and equipment.

39 CONTINGENT LIABILITIES

The Company has agreed to provide continuing financial support to certain subsidiaries which have a combined deficit of shareholders’ funds as at December 31, 2009 of approximately $13,087,000 (2008 : $8,732,000).

40 OPERATING LEASE ARRANGEMENTS

The Group as lesseeGroup Company

2009 2008 2009 2008$’000 $’000 $’000 $’000

Minimum lease payments under operating leases recognised as an expense during the year 1,645 1,065 368 366

At the end of the reporting period, the Group and the Company has outstanding commitments under non-cancellable operating leases, which fall due as follows:

Group Company2009 2008 2009 2008$’000 $’000 $’000 $’000

Future minimum lease payments payable:

Within one year 841 870 260 346In the second to fifth year inclusive 676 986 479 739

1,517 1,856 739 1,085

Operating lease payments represent rentals payable by the Group and the Company for its equipment, office and warehouse property. The lease for its office, which is from the Housing Development Board, is for a 30 years period with an option to renew for another 30 years. The lease payment is subject to escalation adjustments from time to time and the above future lease payment has been computed based on the last escalation adjustment. The remaining leases are negotiated for an average term of 3 to 5 years.

The Group as lessor

The Group rents out its investment property under operating leases. Property rental income earned during the year was $74,000.



40 OPERATING LEASE ARRANGEMENTS (cont’d)

At the balance sheet date, the Group has contracted with the tenant for the following future minimum lease payments:

Group2009 2008$’000 $’000

Within one year 126 -In the second to fifth year inclusive 221 -

347 -

41 SEGMENT INFORMATION

Products and services from which reportable segments derive their revenues

The application of FRS 108 Operating Segments requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Group’s chief operating decision maker, in order to allocate resources to segments and to assess the segment performance. In contrast, the predecessor standard (FRS 14 Segment Reporting) required an entity to determine two sets of segments (primary and secondary reporting segments) using a risks and rewards approach, with the entity’s system of internal financial reporting to key management personnel serving only as the starting point for identification of such segments.

Following the adoption of FRS 108, the identification of the Group’s reportable segments remained the same. For the purpose of resource allocation and assessment of segment performance, the Group’s chief operating decision maker has focused on the operating divisions which in turn, are segregated based on their products and services. This forms the basis of identifying the operating segments of the Group under FRS 108.

The Group’s reportable segments under FRS 108 is organised into three reportable segments – Distributorship, Engineering Design and Fabrication, and Shipbuilding.

The accounting policies of the reportable segments are the same as the Group’s accounting policies described in Note 2. Segment revenue represents revenue generated from external and internal customers. Segment results represent the profit earned by each segment without allocation of corporate expenses, interest income, finance costs, share of profits of associate and income tax expense. This is the measure reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance.

For the purposes of monitoring segment performance and allocating resources between segments, the chief operating decision maker monitors the tangible, intangible and financial assets attributable to each segment.

All assets are allocated to reportable segments other than non-current trade and other receivables and deferred tax assets. Goodwill has been allocated to reportable segments as described in Note 17. Assets used jointly by reportable segments are allocated on the basis of the revenues earned by individual reportable segments.



41 SEGMENT INFORMATION (cont’d)

All liabilities are allocated to reportable segments other than bank overdrafts and borrowings, finance leases, income tax payable, bank loans and deferred tax liabilities.

Inter-segment transfers: Segment revenue and expenses include transfers between business segments. Inter-segment sales are charged at prevailing market prices. These transfers are eliminated on consolidation.

The Group’s segment information is as follows:

EngineeringDesign and

Distributorship Fabrication Shipbuilding Elimination Total$’000 $’000 $’000 $’000 $’000

2009

Revenue External sales 150,732 20,517 1,557 - 172,806 Inter-segment sales 178 2,348 - (2,526) - Total revenue 150,910 22,865 1,557 (2,526) 172,806

Results Segment result 10,957 283 (4,077) - 7,163 Interest income 357 Finance costs (1,037) Share of profit of associate 17 Profit before tax 6,500 Income tax expense (849) Profit for the year 5,651

Other information Capital additions 364 272 123 - 759 Depreciation 718 238 1,291 - 2,247

Statement of financial positionAssets Segment assets 81,803 22,782 8,190 - 112,775 Unallocated other assets 3,126 Consolidated assets 115,901

Liabilities Segment liabilities 32,850 8,897 1,410 - 43,157 Unallocated other liabilities 21,996 Consolidated liabilities 65,153




The Group’s segment information (cont’d)

EngineeringDesign and

Distributorship Fabrication Shipbuilding Elimination Total$’000 $’000 $’000 $’000 $’000

2008

Revenue External sales 160,527 30,444 13,634 - 204,605 Inter-segment sales 585 1,398 - (1,983) - Total revenue 161,112 31,842 13,634 (1,983) 204,605

Results Segment result 9,063 991 (5,527) - 4,527 Interest income 479 Finance costs (1,366) Profit before tax 3,640 Income tax expense (923) Profit for the year 2,717

Other information Capital additions 498 259 309 - 1,066 Depreciation 703 185 1,293 - 2,181

Statement of financial positionAssets Segment assets 77,681 28,430 8,874 - 114,985 Unallocated other assets 4,844 Consolidated assets 119,829

Liabilities Segment liabilities 33,681 13,488 1,615 - 48,784 Unallocated other liabilities 25,322 Consolidated liabilities 74,106

Geographical information

The Group operates in five principal geographical areas - Singapore (country of domicile), Thailand, Asia Pacific (excluding Singapore and Thailand), United States of America and Europe.




Geographical information (cont’d)

The Group’s revenue from external customers and information about its segment assets (non-current assets excluding goodwill and deferred tax assets) by geographical location are detailed below:

Revenue fromexternal customers

Non-currentassets

2009 2008 2009 2008$’000 $’000 $’000 $’000

Singapore 68,700 76,172 10,080 6,654Thailand 13,214 15,531 2,984 4,386Asia Pacific (excluding Singapore and Thailand) 59,023 57,670 3,681 5,114United States of America 22,223 30,406 806 893Europe 3,323 15,021 - -Others 6,323 9,805 - -

172,806 204,605 17,551 17,047

Information about major customer

The Group’s revenue included an amount of approximately $21,702,000 and $2,227,000 (2008: $19,598,000 and $1,214,000) which arose from sales to the Group’s largest customer in the Distributorship segment and Engineering Design and Fabrication segment respectively.

42 DISPOSAL OF SUBSIDIARY

As referred to in Note 12 to the financial statements, on April 8, 2009, the Company’s subsidiary, Oakwell-Breen Pte Ltd, entered into a sale and purchase agreement to sell its shares in K.A. Building Construction Pte Ltd. The disposal was completed on May 31, 2009.

Details of the disposal are as follows:

Book values of net assets disposed 2009$’000

Non-current assetPlant and equipment 147

Current assetsInventories 321Other receivables 35Trade receivables 1,064Cash and bank balances 1,957Total current assets 3,377

Non-current liabilitiesDeferred tax liability (16)Finance leases (64)Total non-current liabilities (80)



42 DISPOSAL OF SUBSIDIARY (cont’d)

Book values of net assets disposed (cont’d) 2009$’000

Current liabilitiesProvisions (638)Income tax payable (218)Current portion of finance leases (19)Other payables (393)Trade payables (561)Total current liabilities (1,829)

Attributable goodwill 190Minority interest (791)

1,014Gain on disposal 86Total consideration 1,100

Satisfied by: Cash 1,100

Net cash outflow arising on disposal: Cash consideration received 1,100 Cash and cash equivalents disposed of (1,957)

(857)

The impact of K.A. Building Construction Pte Ltd on the Group’s results and cash flows in the current and prior periods are disclosed below.

The results of the K.A. Building Construction Pte Ltd for the period from January 1, 2009 to May 31, 2009 and year ended December 31, 2008 are as follows:

2009 2008$’000 $’000

Revenue 2,226 6,740Cost of sales (1,371) (3,252)Other operating income 15 32Distribution costs (430) (1,197)Administrative expenses (265) (693)Other operating expenses (104) (392)Finance costs (2) (9)Profit before tax 69 1,229Income tax expense (44) (267)Profit for the year 25 962

During the year, K.A. Building Construction Pte Ltd contributed $440,000 (2008: $1,672,000) to the Group’s net operating cash flows, paid $7,000 (2008: $48,000) in respect of investing activities and paid $11,000 (2008: $27,000) in respect of financing activities.



43 ACQUISITION OF SUBSIDIARY

On July 8, 2009, the Group acquired 51% of the issued share capital of Biofuel Research Pte Ltd for cash consideration of $450,000. This transaction has been accounted for by the purchase method of accounting.

The net assets acquired in the transaction, and the goodwill arising, are as follows:

2009$’000

Net assets acquired:

Plant and equipment 2,997 Inventories 47 Other receivables 1,059 Trade receivables 30 Cash and bank balances 15 Trade payables (231) Other payables (2,316)

1,601 Minority interest (785) Negative goodwill arising from acquisition (366)Total consideration, satisfied by cash 450

Net cash outflow arising on acquisition: Cash consideration paid (450) Cash and cash equivalents acquired 15

(435)

Biofuel Research Pte Ltd contributed $978,000 revenue and $46,000 to the Group’s profit before tax for the period between the date of acquisition and the end of the reporting period.

If the acquisition had been completed on January 1, 2009, total Group revenue for the year would have been $172,999,000 and profit for the year would have been $5,391,000.



Report on Corporate Governance

The Company believes in maintaining high standards of corporate governance, and is committed to ensure that effective self-regulatory corporate practices are in place to protect the interests of its shareholders. The Company recognises the importance of practising good corporate governance and fully supports the recommendations of the Singapore Code of Corporate Governance (“the Code”).

The Company is pleased to disclose below, a description of its corporate governance processes and activities with specific reference to the Code. Other than deviations which are explained in this statement, the Company has generally, complied with the principles and guidelines of the Code, where applicable, relevant and practical to the Group.

1. BOARD OF DIRECTORS

Principle 1: Board’s Conduct of its Affairs

In managing the Group’s business, the principal functions of the Board include:

(1) Supervises the overall management of the business and affairs of the Group;

(2) Approves the Company’s key strategic and operational matters, financial and funding decisions;

(3) Regularly reviews business plans of the Company and the Group;

(4) Reviews and monitors financial performance of the Company and the Group;

(5) Establishes and maintains a sound system of internal controls, covering not only financial controls but also operational and compliance controls; and

(6) Reviews the adequacy and improvement of its internal controls systems.

The approval of the Board is required for any matters which are likely to have a material impact on the Group’s operating divisions and/or financial positions as well as matters other than in the ordinary course of business.

The Board has adopted internal guidelines that require Board approval, including appointment of Directors, major funding and investment proposals and material capital expenditures. To assist the Board in the discharge of its responsibilities, the Board delegates specific authority to three Board Committees which comprise the Audit Committee (“AC”), Nominating Committee (“NC”) and Remuneration Committee (“RC”). The roles and responsibilities of the Board Committees are set out separately in this statement.

The Board meets at least 2 times in a year and as warranted by circumstances. The Company’s Articles of Association allows Board Meetings to be conducted by way of telephone conferencing or any other electronic means of communications.

The Board is updated from time to time, to changes in relevant laws and regulations.


The attendance of the directors at meetings of the Board and Board Committees, as well as the frequency of such meetings for FY2009 are summarized in the table below:

BoardAudit

CommitteeRemuneration

CommitteeNominating Committee

No. of Meetings

held

No. of Meetings Attended

No. of Meetings

held


No. of Meetings

held


No. of Meetings

held


Mr Low Beng Tin 3 3

Ms Lee Mei Fong 3 3

Mr Long Yoke Hian, Alex 3 3

Mr Koh Tiak Chye 3 0 1 0

Mr Tay Ah Kong, Bernard 3 3 5 5 1 1 1 1

Mr Yeo Ah Kiang, Renny 3 3 5 4 1 1

Mr Lai Kwok Seng 3 3 5 4 1 1 1 1

Mr Goh Yeow Tin 3 3 5 5 1 1 1 1

Principle 2: Board Composition and Balance

The Board comprises 8 Directors of which 3 are executive Directors, 4 are Independent Non-executive Directors and 1 Non-executive Director. The NC has reviewed the independence of each director for the financial year ended 31 December 2009 in accordance with the Code’s definition of independence, and is satisfied that more than one-third of the Board continues to be independent.

Details of the Board members are set out in the “Board of Directors” section of the Annual Report. The Board is satisfied that its composition is effective and appropriate for decision making.

The Board is of the view that there exists a sufficiently strong element on the Board to enable independent exercise of objective judgement of corporate affairs of the Group by members of the Board, taking into account factors such as the number of Non-executive and Independent Non-executive Directors on the Board, as well as the size and scope of the affairs and operations of the Group. The Board derives its strength from the background, diversity, skills and experiences of the Board members. Together, the Directors have a wide range of corporate, business, law and financial experiences. The Board considers the combination of experience, knowledge and expertise of its members to be balanced and effective in carrying out its functions.

To keep abreast with developments in corporate, financial, legal and other compliance requirements, Directors are encouraged to attend relevant training courses funded by the Company.

Non-executive Directors contribute to the Board by monitoring and reviewing Management’s performance against goals and objectives. Their views and opinions provide different perspectives to the Group’s business. When challenging Management’s proposals or decision, they bring independent judgment to bear on business activities and transactions, involving conflicts of interest and other complexities.



Information required in respect of the academic and professional qualification, date of first appointment, date of last re-election and appointment on the respective specialised committees of the Company’s Board are set out in the “Board of Directors” section of the Annual Report.

Principle 3: Chairman and Chief Executive Officer

Currently, Mr Low Beng Tin holds the positions of both Chairman and Managing Director (“MD”) of the Company and plays an instrumental role in developing the business of the Group and provides the Group with strong leadership and vision. The Board is of the view that it is in the best interests of the Group to adopt a single leadership structure as the current scale of the Group’s business does not warrant a division of duties. As Chairman of the Board and with the assistance of the Company Secretary, Mr Low ensures that Board meetings are held when necessary, sets the Board meeting agenda and ensures that Directors receive adequate and timely information. He is also responsible for the day-to-day management of the Group’s affairs and ensures that the views of shareholders are considered appropriately. As Chairman of the Company, Mr Low facilities constructive relationship between the Board and the Management team, executes strategic plans and ensures that Directors are kept updated and informed of the Group’s business.

BOARD MEMBERSHIP

Principle 4: Nominating Committee (“NC”)

The NC comprises 4 Directors, a majority of whom is Independent Non-executive Directors. The current composition of the NC is as follows:-

Chairman: Mr Lai Kwok Seng (Independent Non-executive Director)

Members: Mr Goh Yeow TinMr Tay Ah Kong, BernardMr Koh Tiak Chye

(Independent Non-executive Director)(Independent Non-executive Director)(Non-executive Director)

The key objectives of the NC are to ensure that there is a formal and transparent process in the nomination, appointment and re-election of Directors to the Board and in the assessment of the effectiveness and contribution of the Board and its members to the welfare, strategic growth and development of the Company.



The NC’s written terms of reference include:

1) To review the structure, size and composition of the Board and to make recommendations to the Board;

2) To identify candidates and to review all nomination for the appointment or re-appointment of members of the Board of Directors;

3) To determine the independence of Board members and to assess the adequacy of Board members with multiple board representations;

4) To evaluate Board performance and to propose objective performance criteria for the Board’s approval; and

5) To assess the effectiveness of the Board as a whole, and the contribution by each member of the Board.

All Directors subject themselves for nomination and re-election. Pursuant to Article 87 of the Company’s Articles of Association, one third of the Board shall retire at every Annual General Meeting (“AGM”).

In accordance with the Company’s Articles of Association, the following Directors will retire at the forthcoming AGM and have offered themselves for re-election:

Mr Tay Ah Kong, Bernard Article 87Mr Lai Kwok Seng Article 87Mr Yeo Ah Kiang, Renny Article 87

The NC has recommended the nominations of the retiring directors for re-election at the forthcoming AGM.

The NC has also adopted an NC Procedures and Director Qualification Criteria. This provides the procedure for the identification of potential candidates, the evaluation of candidates’ skills, knowledge and experience, the assessment of candidates’ suitability and subsequent recommendation to the Board.

Upon appointment of each Director, a formal letter will be provided to the new Director, setting out his duties, obligations and terms of appointment. New Directors appointed would also be briefed on the Group’s business activities and its strategic directions as well as statutory and other responsibilities as a Director.

Principle 5: Board Performance

The Board conducted an assessment of its performance as a whole, for the financial year under review.

The evaluation on the performance of the Board as a whole, deals with matters on Board composition, information to the Board, Board procedures, Board accountability and Chief Executive Officer/Senior Management.



Principle 6: Access to Information

The members of the Board in their individual capacity, have access to complete information on a timely basis in the form and quality necessary for the discharge of their duties and responsibilities. Prior to each Board meeting, members of the Board are provided with the relevant documents and information to enable them to obtain a comprehensive understanding of the issues to deliberate upon, to enable them to arrive at an informed decision. Management provides Board members with half-yearly and full-year management accounts. Information on major developments and material transactions are also circulated to Directors, as and when they arise.

The Directors have direct access to management and the advice and services of the Company Secretary, who attends all Board Meetings, where required. The Company Secretary ensures that Board meeting procedures are followed and that applicable rules, acts and regulations are compiled with.

The appointment and removal of the Company Secretary are subject to the Board’s approval.

Should Directors, whether as a group or individually, require independent professional advice to fulfill their duties; such advice will be obtained from a professional entity of the Directors’ choice and the cost of such professional advice will be borne by the Company.

REMUNERATION COMMITTEE (“RC”)

Principle 7: Procedures for Developing Remuneration PoliciesPrinciple 8: Level and Mix of RemunerationPrinciple 9: Disclosure on Remuneration

The RC comprises 4 Directors, all of whom are Independent Non-executive Directors as follows:-

Chairman: Mr Goh Yeow Tin (Independent Non-executive Director)

Members: Mr Tay Ah Kong, BernardMr Lai Kwok SengMr Yeo Ah Kiang, Renny

(Independent Non-executive Director)(Independent Non-executive Director)(Independent Non-executive Director)

The RC’s written terms of reference include:

1) To recommend to the Board a framework of remuneration for the Directors;

2) To recommend the remuneration packages for each Director;

3) To review remuneration of senior management;

4) To review and recommend to the Board the terms of renewal of Directors’ service contracts;

5) To ensure that there is adequate disclosure for Directors’ remuneration; and

6) To carry out such other duties as may be agreed by the RC and the Board.



The RC is assisted by the Group’s human resource department. External professional advice may be sought by the RC, when required.

The role of the RC is to review and recommend to the Board a framework of remuneration for the Board of Directors, key executives of the Group as well as senior management. The RC considers amongst other things, their responsibilities and contribution to the Company’s performance and ensures that rewards are linked to corporate and individual performance.

In setting remuneration packages for Executive Directors and key executives of the Group, the pay and employment conditions within the industry and in comparable companies are taken into account to maintain an appropriate and competitive level of remuneration that will attract, retain and motivate key executives.

Two of the Executive Directors are on Employment Contracts which can be terminated by either party by giving not less than 6 months’ notice and are subject to review each year. The RC is of the view that the Executive Directors’ contracts are not excessively long or with onerous removal clauses.

Independent and Non-executive Directors receive directors’ fees, which takes into account their level of contribution and responsibilities. These fees are subject to shareholders’ approval at the Annual General Meeting.

No Director was involved in determining his own remuneration.

Breakdown (in percentage terms) of Directors’ remuneration and that of the Group’s top executives who are not Directors, for the financial year ended 31 December 2009 falling within broad bands are as follows:

Remuneration Band Name of Director

Salary and CPF

Bonus and other variable performance

components

Allowances and other benefits

Director’s Fee Total

Below S$250,000

Mr Koh Tiak Chye - - - 100% 100%

Ms Lee Mei Fong - - - 100% 100%

Mr Tay Ah Kong, Bernard - - - 100% 100%

Mr Goh Yeow Tin - - - 100% 100%

Mr Yeo Ah Kiang, Renny - - - 100% 100%

Mr Lai Kwok Seng - - - 100% 100%

S$250,000 - S$499,000

Mr Long Yoke Hian, Alex 87.6% 7.1% 5.3% - 100%

Above S$499,000

Mr Low Beng Tin 33.3% 63.0% 2.4% 1.3% 100%

Remuneration of top 5 Key Executives (who are not Directors)

For the financial year ended 31 December 2009, the top 5 key executives (who are not Directors) of the Group are Ms Tan Soy Koon, Mr Goh Wee Gee, Mr Tan Sai Chiong, Mr Tan Cheng Chai and Mr Ng Chuan Yong. Except for two of the key executives whose remuneration exceeded S$250,000, the remuneration of each of the other 3 key executives did not exceed S$250,000.



There are no employees in the Group who are immediate family member of a Director or the Managing Director.

The Company adopts a remuneration policy for staff comprising a fixed component and a variable component. The fixed component is in the form of a base salary. The variable component is in the form of a variable bonus that is linked to the Company and individual performance. Staff appraisals are conducted once a year.

The Company does not have an employee share option scheme.

Principle 10: Accountability

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 SGXNET.

Principle 11: Audit Committee

The AC comprises 4 Independent Non-Executive Directors as follows:-

Chairman: Mr Tay Ah Kong, Bernard (Independent Non-executive Director)

Members: Mr Goh Yeow Tin (Independent Non-executive Director)Mr Lai Kwok Seng (Independent Non-executive Director)Mr Yeo Ah Kiang, Renny (Independent Non-executive Director)

All four AC members bring with them invaluable managerial and professional expertise in the financial, legal and business management spheres. The Board is of the view that the AC has the requisite financial management expertise and experience to discharge its responsibilities, properly.

The AC performs the following functions:

1. Reviews the audit plans of both the external and internal auditors; 2. Reviews the result of the internal auditors’ examination and evaluation of internal controls of the Company

and its subsidiaries, to determine overall effectiveness of the Company’s internal audit functions;

3. Reviews the Group’s financial and operating results and accounting policies;

4. Reviews the financial statements of the Company, the consolidated financial statements and external auditors’ report on those financial statements, before submission to the Board for approval;

5. Reviews the half-yearly and annual announcements on results and financial position of the Company and the Group;

6. Reviews transactions with interested persons and related parties;

7. Reviews the co-operation and assistance given by management to the Group’s external and internal auditors and determines that no restrictions were imposed on the scope of the external and internal auditors’ examination;



8. Reviews the actions taken by the management on the external and internal auditors’ recommendation;

9. Reviews the suitability of external auditors appointed for the Group’s significant foreign-incorporated subsidiaries and associate companies;

10. Reviews and recommends the nomination of the external auditors.

The AC met 5 times in the year to carry out its functions and has direct access to, and full co-operation of the Company’s management. It has full discretion to invite any Director or executive officer to attend its meetings and has been given reasonable resources to enable it to discharge its functions. The AC met with the external auditors and internal auditors, without the presence of Management at least once a year and undertook a review of the nature and extent of all non-audit services performed by the external auditors to establish whether their independence had in any way been compromised. The AC is of the opinion that the provision of non-audit services did not affect the independence or objectivity of the external auditors.

The AC has unanimously nominated Deloitte & Touche LLP for reappointment as auditors of the Company at the forthcoming Annual General Meeting.

In line with the recommendation of the Code to put in place, arrangements to encourage and to provide a channel for staff of the Group to report and to raise in good faith and in confidence, any concerns about possible improprieties in matters of financial reporting or other matters, the AC has implemented a “Whistle-Blowing Policy” to ensure that there are arrangements in place, for independent investigation of such matters and concerns raise on financial or other improprieties, and for appropriate follow-up action.

Principle 12: Internal ControlsPrinciple 13: Internal Audit (“IA”)

The Board acknowledges that it is responsible for maintaining a sound system of internal controls to safeguard shareholders’ interests and maintain accountability of its assets. While no cost-effective internal control system can provide absolute assurance against loss or misstatement, the Group’s internal controls and systems have been designed to provide reasonable assurance that assets are safeguarded, operational controls are in place, business risks are suitably protected, proper accounting records are maintained and financial information used within the business and for publication are reasonable and accurate. There is a clearly defined delegation of authority from the Board to the operating companies and procedures are in place for the proper authorisation of transactions.

The AC has reviewed the cost-effectiveness and adequacy of the Group’s internal system with the internal and external auditors. The AC also reviews the adequacy of the IA’s resources.

The Company’s internal audit function is outsourced to a CPA firm who is independent of the business activities it audits and meets the standards set by internationally recognized professional bodies. The internal auditors reports directly to the AC Chairman and is tasked to oversee and review the adequacy of the overall systems of internal controls within the Group. The AC reviews the adequacy of the IA function at least annually. The scope of internal audit work is proposed after discussion with the external auditors and is approved by the AC. Based on the internal auditors’ reports submitted by the internal auditors and the various controls put in place by the management of the Company and its subsidiaries, the AC is satisfied that there are adequate internal controls.



Principle 14: Communication with Shareholders

The Board believes in timely communication of information to shareholders and the public. It is the Board’s policy that all shareholders and the public should be equally and timely informed of all major developments that impact the Group and Company.

Information is communicated to shareholders and the public through the following channels:

- annual reports that are issued to all shareholders. The Board makes every effort to ensure that these reports include all relevant information on the Group, including current developments, strategic plans and disclosures required under the Singapore Companies Act, Singapore Financial Reporting Standards, etc;

- announcements of results on the Singapore Exchange Securities Trading Limited’s (“SGX-ST”) SGXNET ;

- disclosures on the SGXNET;

- press releases;

- press and analysts’ briefings as may be appropriate; and

- the Group’s website (www.oakwell.com.sg) at which shareholders and the public may access information on the Group.

The Annual General Meetings are the principal forum for dialogue with shareholders. The Chairman of the Board and the Board committees, as well as the external auditors, are in attendance at the Annual General Meetings to address shareholders queries relating to the Group’s business and affairs, conduct of the audit and the preparation and content of auditors report.

Resolutions are, as far as possible, structured separately and may be voted on independently.

The Group fully supports the Code’s principle to encourage shareholders’ participation. The Company’s Articles of Association allows the appointment of one or two proxies by shareholders, to attend the AGM and vote in his/her place. The Articles however currently do not provide for shareholders to vote at the Company’s AGM in absentia, such as via mail, electronic mail or facsimile transactions.



INTERESTED PERSON TRANSACTIONS

The Company has established internal control policies to ensure that transactions with interested persons are properly reviewed and approved and are conducted at arms’ length basis.

The Company had disclosed the following interested person transactions for the financial year ended 31 December 2009, pursuant to Rule 907 of Section B: Rules of Catalist of the Listing Manual:-

Name of interested person

Aggregate value of all interested person transactions

(excluding transactions less than $100,000 and transactions conducted

under shareholders’ mandate pursuant to Catalist Rule 920)

Aggregate value of all interested person

transactions conducted under shareholders’ mandate pursuant to Catalist Rule 920 (excluding transactions less

than $100,000)

$’000 $’000

Transaction for the purchase of goods and services

Draka Comteq Singapore Pte Ltd - 412

Draka Distribution Singapore Pte Ltd - 1,480

Draka Marine Oil & Gas International LLC - 486

Singapore Cables Manufacturers Pte Ltd - 893

SECURITIES TRANSACTIONS

The Group has adopted a Code of Best Practice Guides for Dealings in Securities (the “Securities Code”) which sets out the policy on dealings in securities of the Company and implications of Insider Trading.

In line with the Securities Code, officers and employees of the Group who have access to price-sensitive and confidential information are not permitted to deal in securities of the Company, within one month before the release of half year and full year financial results to SGX-ST and ending on the date of announcement of such results, or when they are in possession of any unpublished material price sensitive information.

RISK MANAGEMENT AND PROCESSES

Information relating to risk management policies and processes are set out on pages 43 to 51 of the Annual Report.



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 other material contract subsist at the end of the financial year.

CODE OF BUSINESS CONDUCT

The Directors, officers and employees are required to observe and maintain high standards of integrity, as are in compliance with the law and the regulations and company policies.

SPONSORSHIP

Pursuant to Catalist Rules 1204 (20), the Company did not pay any non-sponsor fee to the sponsor.



Shareholdings Statistics

SHAREHOLDERS INFORMATION AS AT 15 MARCH 2010

No. of Shares : 596,666,667Class of Shares : Ordinary Shares Issued and fully paid-up capital : S$32,444,532Voting Rights : One Vote Per Share

TREASURY SHARESThe Company does not hold any Treasury Shares.

DISTRIBUTION OF SHAREHOLDERS BY SIZE OF SHAREHOLDINGS AS AT 15 MARCH 2010

Size of Shareholdings No. of Shareholders % No. of Shares %1 - 999 10 0.26 3,773 0.00

1,000 - 10,000 1,448 37.48 7,033,000 1.1810,001 - 1,000,000 2,358 61.04 228,199,671 38.25

1,000,001 and above 47 1.22 361,430,223 60.57Total 3,863 100.00 596,666,667 100.00

Based on information available to the Company as at 15 March 2010, approximately 75.6% of the ordinary shares of the Company is held by the public and, therefore Catalist Rule 723 is complied with.

TWENTY LARGEST SHAREHOLDERS AS AT 15 MARCH 2010

No. Name No. of Shares %

1 V. PLUS VENTURE CAPITAL PTE LTD 114,695,334 19.222 KIM ENG SECURITIES PTE. LTD. 31,699,000 5.313 HONG LEONG FINANCE NOMINEES PTE LTD 31,382,480 5.264 MERLION CAPITAL PTE LTD 25,000,000 4.195 NG SEOW YUEN (HUANG XIAOYAN) 18,450,000 3.096 OCBC SECURITIES PRIVATE LTD 18,114,000 3.047 KB NOMINEES PTE LTD 13,000,000 2.188 ANG YEW LAI 11,000,000 1.849 MAYBAN NOMINEES (SINGAPORE) PTE LTD 7,024,000 1.1810 AUW SIEW AI SERENE 6,911,000 1.1611 HOO LEN YUH 6,901,000 1.1612 UOB KAY HIAN PTE LTD 4,724,000 0.7913 UNITED OVERSEAS BANK NOMINEES PTE LTD 4,198,000 0.7014 JEFFREY HING YIH PEIR 3,850,000 0.6515 DBS NOMINEES PTE LTD 3,683,000 0.6216 TAN SOY KOON 3,565,575 0.6017 DBS VICKERS SECURITIES (SINGAPORE) PTE LTD 3,360,000 0.5618 PHILLIP SECURITIES PTE LTD 3,274,000 0.5519 NG BOON GUAT 3,001,000 0.5020 POH SOON KENG 3,000,000 0.50Total: 316,832,389 53.10


Shareholdings Statistics

Shareholdings of Substantial Shareholder as at 15 March 2010

NameRegistered in the name of substantial shareholders

Shareholdings in which substantial shareholders are deemed to have an interest

V. Plus Venture Capital Pte Ltd 114,695,334 -

Brothers (Holdings) Limited - 114,695,334

Notes:

Brothers (Holdings) Limited is deemed interested in the shares held by V. Plus Venture Capital Pte Ltd.


Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN that the Annual General Meeting of OAKWELL ENGINEERING LIMITED (the “Company”) will be held at The Conference Room, 8 Aljunied Avenue 3, Oakwell Building, Singapore 389933 on Wednesday, 28 April 2010 at 3.00 p.m. for the following purposes:

AS ORDINARY BUSINESS

1. To receive and adopt the Directors’ Report and the Audited Accounts of the Company for the year ended 31 December 2009 together with the Auditors’ Report thereon. (Resolution 1)

2. To declare a first and final Tax Exempt (One-Tier) dividend of 0.075 Singapore Cent per share for the year ended 31 December 2009 (2008: 0.06 Singapore Cent per share). (Resolution 2)

3. To re-elect the following Directors retiring pursuant to Article 87 of the Company’s Articles of Association: Mr Tay Ah Kong, Bernard (Resolution 3) Mr Lai Kwok Seng (Resolution 4) Mr Yeo Ah Kiang, Renny (Resolution 5) Mr Tay Ah Kong, Bernard will, upon re-election as a Director of the Company, remain as Chairman of the

Audit Committee and a member of the Nominating and Remuneration Committees respectively. Mr Tay will be considered Independent for the purposes of Rule 704(7) of the Listing Manual Section B: Rules of Catalist of the Singapore Exchange Securities Trading Limited (the “Catalist Rules”).

Mr Lai Kwok Seng will, upon re-election as a Director of the Company, remain as Chairman of the Nominating Committee and a member of the Audit and Remuneration Committees respectively. Mr Lai will be considered Independent for the purposes of Rule 704(7) of the Catalist Rules.

Mr Yeo Ah Kiang, Renny will, upon re-election as a Director of the Company, remain a member of the Audit and Remuneration Committees respectively and will be considered Independent for the purposes of Rule 704(7) of the Catalist Rules.

4. To approve the payment of Directors’ fees of S$252,000 payable quarterly in arrears, for the financial year

ending 31 December 2010 (2009: S$252,000). (Resolution 6)

5. To re-appoint Deloitte & Touche LLP as the Company’s Auditors and to authorise the Directors to fix their remuneration. (Resolution 7)

6. To transact any other ordinary business which may properly be 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. SHARE ISSUE MANDATE

That pursuant to Section 161 of the Companies Act, Cap. 50 and Rule 806 of the Catalist Rules, authority be given to the Directors of the Company to issue shares (“Shares”) whether by way of rights, bonus or otherwise, and/or make or grant offers, agreements or options (collectively, “Instruments”) that might or would require Shares to be issued, including but not limited to the creation and issue of (as well as adjustments to) warrants, debentures or other instruments convertible into Shares at any time and upon such terms and conditions and to such persons as the Directors may, in their absolute discretion, deem fit provided that:

(a) the aggregate number of Shares (including Shares to be issued in pursuance of Instruments made or granted pursuant to this Resolution) does not exceed one hundred per centum (100%) of the total number of issued shares (excluding treasury shares) in the 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 fifty per centum (50%) of the total number of issued shares (excluding treasury shares) in the share capital of the Company;

(b) for the purpose of determining the aggregate number of Shares that may be issued under sub-paragraph (a) above, the total number of issued shares (excluding treasury shares) shall be based on the total number of issued shares of the Company (excluding treasury shares) as at the date of the passing of this Resolution, after adjusting for:

(i) new shares arising from the conversion or exercise of convertible securities;(ii) new shares arising from exercising share options or vesting of Share awards outstanding or

subsisting at the time this Resolution is passed; and(iii) any subsequent bonus issue, consolidation or subdivision of shares;

(c) 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)] (Resolution 8)

8. Discount for Non Pro-Rata Share Issue

That authority be and is hereby given to the Directors of the Company to issue Shares other than on a pro-rata basis to shareholders of the Company, Shares (excluding convertible securities) at an issue price for each Share at a discount which is exceeding ten per centum (10%) but not more than twenty per centum (20%) to the weighted average price of a Share for trades done on the SGX-ST (as determined in accordance with the requirements of the SGX-ST), at any time and upon such terms and conditions and for such purposes and to such persons as the Directors of the Company may in their absolute discretion deem fit, provided that:-


(a) in exercising the authority conferred by this Ordinary Resolution, the Company shall comply with the requirements imposed by the SGX-ST from time to time and the provisions of the Catalist Rules for the time being in force (in each case, unless such compliance has been waived by the SGX-ST), all applicable legal requirements under the Companies’ Act, Cap. 50; and

(b) (unless revoked or varied by the Company in general meeting) the authority conferred by this Ordinary Resolution shall continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is the earlier.

[See Explanatory Note (ii)] (Resolution 9)

By Order of the Board

Hazel Chia Derick LimCompany SecretariesSingapore, 12 April 2010

Explanatory Notes on Resolutions to be passed:

(i) The Ordinary Resolution 8 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 up to an amount not exceeding one hundred per centum (100%) of the total number of issued shares (excluding treasury shares) in the capital of the Company, of which up to fifty per centum (50%) may be issued other than on a pro rata basis.

(ii) Ordinary Resolution 9 proposed in item 8 above, if passed, will enable Directors to issue new Shares on a non pro-rata basis, at a discount of not more than 20% to the weighted average market price of the Company’s shares, determined in accordance with the requirements of SGX-ST. The discount in issue price of non pro-rata new Share issue is one of the interim measures announced by the SGX to accelerate and facilitate the Company’s fund-raising efforts in a volatile and difficult market condition.

Notes –

1. A Member entitled to attend and vote at the Annual General Meeting (the “Meeting”) is entitled to appoint a proxy to attend and vote in his/her stead. A proxy need not be a Member of the Company.

2. If the appointor is a corporation, the instrument appointing a 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 8

Aljunied Avenue 3, Oakwell Building, Singapore 389933 not less than forty-eight (48) hours before the time appointed for holding the Meeting.



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OAKWELL ENGINEERING LIMITED(Incorporated in Singapore)(Co. Reg. No: 198403368H)

Proxy Form(Please see notes overleaf before completing this Form)

I/We, (Name)

of (Address)

being a member/members of OAKWELL ENGINEERING LIMITED (the “Company”), hereby appoint:

Name Address NRIC/ Passport No.

Proportion of Shareholdings

No. of shares %

and/or (delete as appropriate)

Name Address NRIC/ Passport No.

Proportion of Shareholdings

No. of shares %

or failing him/her, the Chairman of the Meeting as my/our proxy/proxies to vote for me/us on my/our behalf at the Annual General Meeting (the “Meeting”) of the Company to be held on Wednesday, 28 April 2010 at 3.00 p.m. and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for or against the Resolutions proposed at the Meeting as indicated hereunder. If no specific direction as to voting is given or in the event of any other matter arising at the Meeting and at any adjournment thereof, the proxy/proxies will vote or abstain from voting at his/her discretion. The authority herein includes the right to demand or to join in demanding a poll and to vote on a poll.

(Please indicate your vote “For” or “Against” with a tick [√] within the box provided.)

No. Resolutions relating to: For Against

1 Directors’ Report and Audited Accounts for the year ended 31 December 2009

2 Payment of proposed first & final dividend

3 Re-election of Mr Tay Ah Kong, Bernard as a Director

4 Re-election of Mr Lai Kwok Seng as a Director

5 Re-election of Mr Yeo Ah Kiang, Renny as a Director

6 Approval of Directors’ fees amounting to $252,000, payable quarterly in arrears, for the financial year ending 31 December 2010

7 Re-appointment of Deloitte & Touche LLP as Auditors

8 Share Issue Mandate

9 Discount on Non Pro-Rata Share Issue

*Delete where inapplicable

Dated this day of 2010

________________________________Signature(s) of Shareholder(s)or Common Seal of Corporate Shareholder

IMPORTANT:

1. For investors who have used their CPF monies to buy Oakwell Engineering Limited’s shares, this Report is forwarded to them at the request of the CPF Approved Nominees and is sent solely FOR INFORMATION ONLY.

2. This Proxy Form is not valid for use by CPF investors and shall be ineffective for all intents and purposes if used or purported to be used by them.

3. CPF investors who wish to vote should contact their CPF Approved Nominees.

Total number of Shares in: No. of Shares

(a) CDP Register

(b) Register of Members

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 in his/her stead. A proxy need not be a member of the Company.

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

4. The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 8 Aljunied Avenue 3, Oakwell Building, Singapore 389933 not less than forty-eight (48) hours before the time appointed for the 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. Where the instrument appointing a proxy or proxies is executed by an attorney on behalf of the appointor, the letter or power of attorney or a duly certified copy thereof must be lodged with the instrument.

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 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 forty-eight (48) hours before the time appointed for holding the Meeting, as certified by The Central Depository (Pte) Limited to the Company.


An

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AK

WELL EN

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To our• Customers • Suppliers • Shareholders • Community • Staff

www.oakwell.com.sg

Oakwell Engineering LimitedRegistration No. 198403368H

No. 8 Aljunied Ave 3, Oakwell Building, Singapore 389933 Tel: 6742 8000 Fax: 6742 3000

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