Corporate Profile 1. Current Projects 2. Exhibition, Awards, Company Events 3. Managing Director s Message 4. Operations Review 6

Transcription

1 NEW BUSINESS FOR NEW GROWTH ANNUAL REPORT 2013

2 CONTENTS Corporate Profile 1 Current Projects 2 Exhibition, Awards, Company Events 3 Managing Director s Message 4 Operations Review 6 Board of Directors 8 Key Management 10 Corporate Information 12 Corporate Governance Report 13 Directors Report 28 Statements by Directors 31 Independent Auditor s Report 32 Consolidated Statement of Comprehensive Income 34 Balance Sheets 35 Consolidated Statement of Changes in Equity 36 Consolidated Statement of Cash Flows 37 Notes to Financial Statements 38 Statistics of Shareholdings 79 Notice of Annual General Meeting 81 Proxy Form

3 CORPORATE PROFILE Swee Hong Limited, a First World City Builder, is acclaimed for it s ground-breaking construction techniques and early adoption of innovative construction technologies. Since our inception in 1962 as a provider of logistics services and supplier of building materials and subsequent incorporation as a civil engineering services company in 1980, we have evolved to become a main contractor registered with Building and Construction Authority (BCA) as A1 civil engineering contracting firm. The A1 registration allows us to tender for public sector projects without limitations in value. As a future-oriented organization, our focus continues to be in identifying and adopting innovative technologies which we believe will contribute towards developing a better future for the Company and our community. As a First World City Builder, our core strengths reside with our strong heritage in civil engineering and this is driven by innovation and our dedicated teams. These have enabled us to grow from strength to strength and extend our presence within the industry over the years. Our operations principally involve being engaged as a main contractor in civil engineering and micro-tunnelling works in Singapore, where projects vary in complexity and scale. Our major customers are mainly government and government-related bodies. Our spectrum of construction services has grown over the years to encompass: a) Parks and services in the architectural, mechanical and electrical, civil and structure, soil improvement and landscaping sectors; b) Infrastructure construction services which includes roads, bridges, flyovers and canals; and c) Tunnelling in both micro and macro scales, whereby our own MTBMs (Micro-Tunnelling Boring Machines) from Germany are deployed. By leveraging on our expertise, we look towards forming collaborations with the view of exporting our competencies to neighbouring economies as they too, aspire to become First World Cities. The Group continuously seeks opportunities in related and prospective businesses which can boost it s value over the longer term. We are currently exploring the adoption of modular pre-fabrication technology for prefabrication building application, which we believe will drive the building and construction industry in the future. We have also started to explore into the market for construction and management of worker dormitories, an area where we observe much revenue potential. We continue to seek out innovation within our area of expertise to widen opportunities. This personifies us as Builders of First World Cities for First World Living. On the operational front, we continue to adopt best practices to ensure accurate and timely completion of projects. These, in combination, will help us further ensure client satisfaction. SWEE HONG LIMITED ANNUAL REPORT

4 CURRENT PROJECTS Presently, Swee Hong is involved in a few projects. Two road construction projects are highlighted here: Widening of Upper Paya Lebar Road (from Upper Serangoon Road to Bartley Road) In July 2012, Swee Hong secured a construction contract from the Land Transport Authority (LTA) worth approximately $12.8 million for the widening of Upper Paya Lebar Road from 3 lanes to 4 lanes in both directions for the stretch from Upper Serangoon Road to Bartley Road. Construction works started in July 2012 and is expected to complete by January The widening will help ease the heavy traffic along Upper Paya Lebar Road and will also cater to the expected increase in traffic. New road between MacRitchie Viaduct and Adam Upper Paya Lebar Project In August 2013, Swee Hong secured a contract from the Land Transport Authority ( LTA ) worth $134.7 million in relation to the proposed construction of a new dual four-lane road between MacRitchie Viaduct and Adam Flyover. Cutting across the Bukit Brown Cemetery, the proposed road includes a bridge over existing streams. The new road will alleviate the congestion currently experienced along Lornie Road and the Pan-Island Expressway ( PIE ) during peak hours as well as cater to expected growth in traffic demand. Work to be carried out in this contract started in August 2013 and will be done in stages. A moderate level of work will be carried out in the first year once exhumation is completed, with the bulk of the work to be performed in the second and third year. Construction is expected to complete in October Swee Hong Limited is honoured to be a part of the City Developments Limited (CDL) Green SBG Heritage Museum project, located within the Singapore Botanic Gardens (SBG). As Singapore s first zero energy Green Gallery, the CDL Green Gallery will be an eco-friendly building featuring botanical or green-related exhibits. Swee Hong s contribution to this project is in the area of supplying and installing prefabricated building structures, installing and coordinating building related works. CDL Green SBG Heritage Museum 2 ANNUAL REPORT 2013 SWEE HONG LIMITED

5 EXHIBITION Buildtech Asia 2013 Swee Hong participated in BuildTech Asia 2013 from 31 July 2013 to 2 August 2013, a well-regarded trade show for the building and construction industry. This trade show aims to present the industry with the latest technologies, products and trends. It is also a platform for networking, knowledge sharing and potential business opportunities. The event was well participated by various exhibitors showing their latest innovative projects, ranging from IT and Building Information Modelling (BIM) concepts, building materials, electrical and mechanical engineering processes, to the newest machines used in the building and construction industry. This year, our staff worked together to set up a booth comprising a comfortable and creative living space within a box, presenting Swee Hong as a Technology-driven Construction and Engineering Company Filled with Trusted People. AWARDS Asia Excellent Award 2013 Asia Excellence Award 2013 is a prestigious business accolade which recognizes the entrepreneurial elite in Asia. It features many successful Small-to-Medium Enterprises whose brand is attributed to the entrepreneur. Swee Hong Limited was accorded this award based on its excellent track record in product and service quality, and other merits in leadership, innovation and branding. COMPANY EVENTS There is no better way to build our relationships with one another than an event filled with laughter, dancing and an enthralled Swee Hong staff. On the 17 May 2013, Swee Hong Limited had its First Anniversary Dinner and Dance which was held at the Holiday Inn Singapore Orchard City Centre. Emcee Malcolm stirred everyone with his activities and jokes while the 8-course dinner was served. During an activity, our new members displayed their creativity by dancing blindfolded. Others danced and sang to Joan Jett's 'I Hate Myself for Loving You' and Bon Jovi's 'It's My Life'. To add on to the excitement, 50 lucky draw prizes were given, ranging from vouchers to a 41" Toshiba Smart TV. The entire evening was filled with food, speeches, interactive activities and lucky draw prizes. It was a night to be remembered. SWEE HONG LIMITED ANNUAL REPORT

6 MANAGING DIRECTOR S MESSAGE Dear Stakeholders, It has been an eventful year for Swee Hong s financial year ended 30 June 2013 ( FY2013 ). As a public listed company, we aim to grow our business to enhance shareholder value in the long term. In FY2013, we secured a few construction projects and also explored a few new businesses. I am delighted to share these progress with you. Overview and Business Updates We continued to work hard in tendering for more construction projects as Singapore s construction demand for 2013 is projected to reach between $26.0 billion to $32.0 billion, with $14.0 billion to $17.0 billion coming from public sector. Most notable is the civil engineering construction demand led by various infrastructure improvement contracts awarded by the LTA, for example, construction contracts for the Thomson MRT line and contracts for the expansion of the KPE/TPE interchange and the new North-South expressway. The Government also announced that Singapore will have two new MRT lines by 2030, namely the Cross Island Line and the Jurong Region Line. In my message last year, I mentioned our tenders for a few infrastructure construction projects. I am happy to report that we have secured a few contracts in FY2013 and August 2013, boosting our construction order book to $183.0 million in August In October 2012, we secured a contract from the Public Utilities Board (PUB) worth approximately $3.4 million for the dredging of Sungei Peng Siang and Sungei Tengah. In December 2012, we secured a contract from Gardens by the Bay worth approximately $4.9 million for constructing the proposed tadpole play garden and other ancillary works at Bay South Garden. As we crossed into 2013, we secured a $9.7 million contract in January 2013 from PUB for the dredging of Sungei Sembawang. In June 2013, we were awarded a contract from the LTA worth approximately $14.0 million for the proposed sewer diversion at the proposed Springleaf MRT station along the future Thomson MRT line. The icing on the cake came as we entered the new financial year. We secured a $134.7 million contract in August 2013 from LTA for the construction of the much-anticipated new dual four-lane road between MacRitchie Viaduct and Adam Flyover. Cutting across the Bukit Brown Cemetery, this new road includes a bridge over existing streams will alleviate the congestion experienced along Lornie Road and the PIE during peak hours. The construction projects secured in FY2013 will keep us busy through till Nonetheless, we will continue to tender for more projects. 4 ANNUAL REPORT 2013 SWEE HONG LIMITED

7 Financial Performance The Group recorded a revenue of $28.0 million for FY2013 as compared to $97.3 million for FY2012. In FY2012, the revenue was higher because of the $75.6 million revenue from Gardens by the Bay, while in FY2013, revenues from both our civil engineering segment and tunnelling segment were lower. In FY2013, there was a reversal of $3.5 million of revenue from Gardens by the Bay due to the rejection of variation claims, and also a reversal of revenue from a tunnelling project of $0.5 million due to rejection of variation claims and cost overruns on several tunnelling projects amounting to $4.4 million due to unforeseen poor soil conditions, which were not previously allowed during the project tender. As a result, the Group suffered a gross loss of $(6.3) million. The Gardens by the Bay project was substantially completed in FY2013 with finalisation and variation claims still underway. Revenue from tunnelling was lower than that of FY2012 as some of the newly secured projects have only just started. FY2013 administrative expenses increased approximately 50% to $11.5 million mainly due to allowances for impairment of construction contracts due from a customer as well as increased staff costs. Consequently, the Group reported a net loss of $(16.3) million. These notwithstanding, we can still look forward with cautious optimism as our new projects enter into the mature stages and our dormitory project gets underway in the near future. With our strong order book on hand, we are cautiously confident that our revenue can grow and we can turn our business around. We may still face challenges in the financial year ending 30 June 2014 (FY2014), however, we are already paving the path towards better years in the longer term. We will continue to execute the projects on hand with timely precision and participate selectively in the civil engineering and infrastructure project tenders called by the Singapore Government in the coming months. Outlook The construction demand in Singapore remains strong. The Government s plans to improve infrastructure and build more homes to cater to the growing population augurs well for construction companies in the long run. We are optimistic that we will benefit from the planned expansion of the MRT network and the construction of new expressways and tunnels. We can look forward with greater confidence in the knowledge that we have the capability and expertise to execute projects of a similar or larger scale should such opportunity arise. We will also continue to explore other opportunities such as joint ventures and/or strategic alliances to expand our business. Appreciation On behalf of the Board, I would like to thank all of you, our shareholders for your support. I would also like to personally thank my fellow Board members for their counsel towards the Group s long term strategy. The journey to grow our business remains on-going. I look forward to reporting positive progress in the coming year. Ong Hock Leong Managing Director SWEE HONG LIMITED ANNUAL REPORT

8 OPERATIONS REVIEW Financial Performance For FY2013, the Group s revenue declined by $69.3 million to $28.0 million. This was mainly attributed to a $62.6 million decline in the civil engineering segment, arising mainly from the substantial completion of and a reversal of $3.5 million due to the rejection of variation claims in our Gardens by the Bay projects, while revenue from the tunnelling segment had declined by $6.7 million mainly because the Group has not been able to secure enough projects to replace the ones which have been completed. Revenue Civil Engineering Segment Tunnelling Segment Total FY2013 ($ 000) FY2012 ($ 000) Change ($ 000) 16,886 79,500 (62,614) 11,080 17,797 (6,717) 27,966 97,297 (69,331) The Group had incurred gross losses of $(6.3) million as compared to the $14.0 million profit in FY2012, mainly due to the substantial reductions in revenue for both the civil engineering and tunnelling segments and reversal of revenues for the Gardens by the Bay project of $3.5 million and a tunnelling project of $0.5 million, as well as around $4.4 million in addition costs being incurred, arising from unforeseen poor soil conditions encountered during the execution of several of our tunneling projects which were not previously allowed for during the project tender. Gross Profit Civil Engineering Segment Tunnelling Segment Total FY2013 ($ 000) FY2012 ($ 000) (1,208) 14,330 (5,047) (356) (6,255) 13,974 Change ($ 000) (15,538) (4,691) (20,299) 6 ANNUAL REPORT 2013 SWEE HONG LIMITED

9 Administrative expenses for FY2013 had increased by $2.8 million after adjusting for a write-back in FY2012 of bonus provision of $1.0 million. The increase in administrative expenses was mainly attributed to allowances for impairment of construction contracts due from a customer amounting to $2.3 million and an increase in staff costs of $0.6 million. After an adjustment for write-back of provisions for deferred taxes of 1.2 million, net losses for the Group was $(16.3) million, due to the factors mentioned above. Balance Sheet Total assets had declined from $85.7 million as at 30 June 2012 to $59.5 million as at 30 June 2013 mainly due to: a decline in cash and cash equivalents by $12.0 million, mainly attributed to cash used in operations and investing of $12.6 million, partially off-set by net borrowings of $0.6 million; a decline of trade and other receivables by approximately $14.5 million to $28.7 million as at 30 June 2013, mainly due to the reduction in construction contracts due from customers, which was attributed to collections from the finalisation of various portions and rejection of certain variation claims with the Gardens by the Bay project; and a decline in construction contract work-in-progress of $1.6 million, which relates to material on hand, attributed to the completion of most of our projects in FY2012 and as well as having large portions of new projects received during the year being subcontracted out to third-party sub-constructors. These were partially off-set by net increases (after depreciation) in property, plant and equipment by approximately $1.9 million due to additions in building under construction, office equipment, motor vehicles and plant and machinery. Total liabilities declined to $23.0 million as at 30 June 2013 due to: a decline in trade and other payables of $11.3 million; which was attributed mainly to lower business volume; conversion of other payables of $2.4 million relating to plant and equipment to hire purchases and a decline in accrued operating expenses of $0.1 million; which were partially off- set by an increase in construction contracts due to customers of $1.6 million; a reduction in tax liabilities of $1.2 million attributed to taxes paid during the year in respect of prior year and no provisions being necessary for the current year; and an adjustment for deferred taxes provisions of $1.2 million as mentioned above. These were partially off-set by increased borrowings in the form of trade and lease financing of $4.9 million, utilised for our projects and purchases of plant and machinery. As a result of the changes in Total Assets and Liabilities, net assets had declined to $36.5 million as at 30 June 2013 from $53.9 million as at 30 June Cash Flow Net cash flow used in the Group s operating activities was $9.0 million, as compared to the cash inflow of $6.6 million during the previous year. This was attributed to cash flow utilised in operations of $15.1 million; which were partially off-set by net changes in working capital of $7.5 million due mainly to decreases in trade receivables as mentioned above. Net cash used in investing activities of $3.5 million pertains mainly to purchases of property, plant and equipment (FY2012: $4.0 million). The decline in purchases during FY2013 was in line with reduced operational requirements. The release of bank deposits pledged of $2.6 million subsequent to the Group s listing and an increase in net short-term borrowings of $3.4 million for trade financing, which were partially offset by dividends paid of $1.1 million in respect of FY2012 and repayments of finance lease liabilities of $1.7 million, led to the cash flow from financing activities of $3.2 million. Overall, as a result of the cash flows used in and from the various activities above, cash and cash equivalents stood at $13.7 million as at 30 June Use of IPO Proceeds As at the date of this Annual Report, the utilisation of the net IPO proceeds of $13.6 million are as follows: Intended Use of Proceeds Acquisition of construction equipment and machinery Funding our expansion by way of acquisitions, joint ventures and/or strategic alliances to expand into other construction businesses Amount Allocated ($ 000) 10,000 3,000 Amount Utilised as at 30 June 2013 ($ 000) 1,621 Amount Balance ($ 000) 8,379 3,000 Working capital Total ,580 1, ,959 SWEE HONG LIMITED ANNUAL REPORT

10 BOARD OF DIRECTORS Mr Ong Hur Seng is our Non-Executive Chairman and Non-Executive Director. He is one of the founders of our Group and has been a director of our Company since 1980, with a hiatus from 14 August 1992 to 25 August He has more than 44 years of experience in the civil engineering industry and advises the Company on the possible challenges and difficulties that may be faced by the Board in undertaking projects and/or in developing business strategies for the Group. In the Company s early years, he secured for the Company various sub-contractor registrations and projects with JTC, HDB and PWD which laid the foundation for the Company s growth and success today. Since then, he has been instrumental in developing the Company s portfolio and reputation over the past 32 years. He secured for the Company most of its major projects and also secured the higher BCA classifications which have enabled the Company to tender for much larger projects over the years. In addition to his involvement with our Group, he is also the chairperson of the South View Primary School Alumni since 1998, the vicechairperson of the Bukit Panjang Hokkien Kong Huay since 2009 and an Honorary Committee Member of the Singapore Lam Ann Association since Mr Ong Hock Leong is our Managing Director. He has been our Managing Director since his appointment to the Board on 31 March He has more than 17 years of experience in the civil engineering industry and is responsible for the formulation of strategies and steering the directions for the business development of our Group as well as the overall management and day-to-day operations of our Group especially in the preparation of tenders and management of projects (including contractual, technical and project operation matters). Prior to becoming our Managing Director, he worked with our Company as a contracts manager from 1998 to 2008, and as a quantity surveyor from 1994 to He obtained a Diploma in Building from Singapore Polytechnic in In April 2011, he was appointed as the BCA s Industry Ambassador for Construction Productivity, to work together with BCA to raise the industry s awareness of the need to boost productivity and build capability in order to remain competitive. Mr Ong Keng Huat is our Executive Director and has been a director of the Company since 31 March He is responsible for managing several of the Company s projects. He joined our Company in May 1994 and has more than 20 years of experience in the civil engineering industry. He has managed and brought to completion several of the Company s milestone projects such as the SLE/Upper Thomson Road Interchange Project, the Gardens by the Bay projects, which have contributed to the Company s growth and success. He is in charge of the Group s Civil Engineering segment projects and is currently overseeing the dual four-lane road between MacRitchie Viaduct and Adam Flyover project. Mr Ong Kah Lam is our Executive Director and has been a director of the Company since 21 December He has more than 32 years of experience in the civil engineering industry and is responsible for managing several of the Company s projects. He has managed and brought to completion several of the Company s milestone projects, such as the Tuas View Extension Project, which have contributed to the Company s growth and success. He has overseen the successful completion of the Company s PUB (Contract 1) Project, PUB (Contract 3) Project, Jurong East Project, Eng Neo Avenue Project and Seletar Aero Drive Project. He is in charge of the Group s Tunnelling segment projects and is currently overseeing the Nee Soon pumping station project. 8 ANNUAL REPORT 2013 SWEE HONG LIMITED

11 Mr Ong Hoi Lian is our Non-Executive Director and has been a director of the Company since 5 June He has more than 32 years of experience in the civil engineering industry and was responsible for overseeing several of the Company s projects. He has overseen, directed and brought to completion several of the Company s milestone projects, such as the One-North Project, the HDB (Road Repair and Re-surfacing) Project and the contract for the road, sewer, drainage and communications networks at Changi East (Phase 1), which have contributed to the Company s growth and success. In addition to his involvement with our Group, he is also the vice-president of the Tai Guan Ong See Association since 2009, the public relations manager of the Bukit Panjang Kong Huay since 2009, and the vice-treasurer of the South View Primary School Alumni since Mr Yeo Wee Kiong is our Lead Independent Director and was appointed to the Board on 27 March He has 22 years of practice experience as a corporate finance lawyer. Prior to that, he was an investment banker with NM Rothschild & Sons (Singapore) Limited in Singapore for five years specialising in capital markets and corporate finance transactions between 1984 and His first work experience was with the Singapore Economic Development Board ( EDB ) in investment promotion from 1980 to He holds a Bachelor of Engineering (First Class Honours) degree from the University of Singapore, a Bachelor of Laws (Honours) degree from the University of London, and a Master of Business Administration degree from the National University of Singapore. He currently sits on the board of several public and private companies. He retired from legal practice on 1 April Mr Wong Soong Kit is our Independent Director and was appointed to the Board on 27 March He is currently the finance director of Sheng Siong Group Ltd. Before joining Sheng Siong Group Ltd. in June 2011, he was a financial consultant advising on financial management, corporate governance and business strategies (including mergers & acquisitions) from August 2009 to May From 1989 to July 2009, he was an executive director / group finance director of BRC Asia Limited, a company listed on the SGX. Between 1978 to 1989, he was with Guthrie Berhad (now known as Guthrie GTS Ltd), which is also listed on the SGX, and was its group financial controller at the time of his departure. He started his career as an audit clerk with Pricewaterhouse (as it was then known) in 1974 and left to join Comex Far East Pte Ltd as an accountant in He has been a Fellow of the Association of Chartered Certified Accountants (UK) since 1983 as well as a Fellow of the Institute of Singapore Chartered Accountants. Dr Chew Huat Chye Wilson is our Independent Director and was appointed to the Board on 27 March He is the group principal consultant and chief executive officer of StrategiCom Pte Ltd, a corporate and brand strategy consulting company, since March He was previously the managing director of Effective Concepts Asia Pte. Ltd., a marketing communications company, from December 1994 to March He obtained a Master of Business Administration from the University of Strathclyde in 2004, a Doctor of Business Administration from the University of South Australia in 2010, and an Executive Diploma In Directorship from Singapore Management University / Singapore Institute of Directors in He is currently a visiting facilitator for the ileap Professional Course for Non-Profit Leaders and served as a faculty advisor for the Wharton-SMU-IBM Business & Industry Insight Program (2012) at the Singapore Management University. He is also a visiting lecturer at the University of Strathclyde Business School and was appointed as the University s Business Fellow for Asia for a 2 year term commencing August Dr Chew serves on the executive committee of the National Arthritis Foundation, a charity for arthritic patients. SWEE HONG LIMITED ANNUAL REPORT

12 KEY MANAGEMENT Mr Lim Tiong Hian, Kenneth, our Assistant Director, is responsible for investor relations, corporate communications and technology capability development of the Group. He joined Swee Hong in 2009 to spearhead the Company s technology capability development and has since transformed the Company into a high technology company that deploys innovative techniques at the workplace. He is instrumental in the implementation of BIM and productivity technology to facilitate better co-ordination in the planning, design and construction phases of the company s projects. He plays a pivotal role in helping the Company achieve innovation awards and also assists the board in strategic planning, direction setting and corporate development. Kenneth s career spans across technical, project, marketing and business development roles over 15 years in infocomm technology. He began his career at Television Corporation of Singapore (now known as Mediacorp Singapore) where he worked extensively in the area of multimedia development. His creative project Enable Disable was shortlisted and presented at the Forum On Creativity in The Arts of Science and Technology jointly organized by Tan Kah Kee Foundation, National Arts Council and Singapore National Academy of Science in His experience and involvement with all the creative projects led him to join the academics to share his expertise. He joined Republic Polytechnic (School of Information and Communications Technology) as Academic Manager (Media) and was a key in anchoring the 3D Computer Graphics Technology, Audio and Video Production aspects in the DIDM diploma. Kenneth is a graduate from the University Of Huddersfield, UK with a Bachelor of Arts (Multimedia Design). He has been appointed by BCA Academy as a member on the Board of Examiners in BCA s program of Specialist Diploma in BIM. He is frequently invited as key note speaker on BIM in numerous global conferences and local seminars. Mr Lee Yu Leung is our Financial Controller. He joined our Group in February He oversees all of our financial, accounting and tax-related matters. Prior to joining our Group, he was the group financial controller of Koon Holdings Limited, a construction and transportation conglomerate listed on both the Australian Stock Exchange as well as the SGX-ST, from October 2005 to April From November 2004 to July 2005, he worked with Ernst & Young as an audit senior, and from January 2003 to November 2004, he worked as a freelance consultant for various financial services projects with Corporate Advisory Partners and Low Chee Chen & Co.. From January 2001 to December 2002 he worked as an audit assistant, and subsequently an audit senior, in Deloitte & Touche. He graduated from the University of New England, New South Wales, Australia in 1997 with a Bachelor of Financial Administration and in 1999 with a Master of Accountancy. He has been a member of the Institute of Internal Auditors Singapore since January 2003, a member of the Institute of Singapore Chartered Accountants since January 2010 and a member of CPA Australia since July ANNUAL REPORT 2013 SWEE HONG LIMITED

13 Mr Loh Peng Kiam, Kenneth is our Commercial Manager since He joined our Group in January 2009 as the Contracts Manager. After overseeing the completion of our Group s branding project, which resulted in the launch of our new logo, he has moved on to coordinating the project to build our Group s factory, dormitory and office building at Kranji using environmentallyfriendly practices. He has been pioneering the Group s adoption of the modular and volumetric construction technology for building construction. He has been coordinating with the principal of such volumetric technology known as UB Systems through tendering for projects. He has been marketing this technology to the industry and building up interest through our Group s business development activities in this business area. He has facilitated the Singapore Botanic Gardens Art Museum project, which is one of the innovative projects that have adopted this technology. Prior to joining our Group, he was a marketing senior manager with Electronic Realty Associates Pte Ltd (Singapore) from October 2004 to October From June 2000 to September 2004, he worked with various subsidiaries of CPG, which is involved in construction and facilities management services. From October 2003 to September 2004, he was the regional general manager of CPG FM (Shaanxi) Co. Ltd and the general manager and country representative of CPGCorp Philippines, Inc (formerly known as PWDCorp Philippines, Inc) from June 2000 to October He was also the business development manager of PWD EMS Pte Ltd from April 1999 to May He graduated from the National University of Singapore in 1997 with a Bachelor of Science (Building), a Graduate Diploma in Technopreneurship and Innovation Program from Nanyang Technological University and the University of Washington in 2006 and a Master of Science (Environmental Management) from the National University of Singapore in He has also been selected by the BCA to join its Young Leaders Programme, which aims to nurture young professionals to lead in the construction industry by engaging them in policy-making and facilitating their training and upgrading. Dr Wong Siew Moh is our Technical Manager. He joined our Group in July He is in charge of managing projects and assisting in tender submissions. He also performs structural analysis and design, resolves technical issues, performs geotechnical and finite element analysis, and reviews design proposals from consultants and sub-contractors. From July 2009 to March 2010, he was an assistant technical manager with our Company. Prior to joining our Group, he has worked as an assistant project manager at Lifa Engineering Pte Ltd from May 2009 to June 2009, as a senior engineer at Engineering & Marine Services (Pte) Ltd from July 2007 to April 2009, as a structural engineer at Arup Singapore Pte Ltd from November 2005 to June 2007, and a design engineer at FELS Cranes Pte Ltd from January 2005 to October He graduated from the University of Leeds with Bachelor of Engineering (Honours Class I) (Civil Engineering) in 1997, from Nanyang Technological University with Master of Engineering in 2000 and from the Imperial College of Science, Technology and Medicine with Doctor of Philosophy and Diploma of Imperial College (Structural Engineering) in 2004 and 2005 respectively. He research works have been published in several international journals and conferences. He was also awarded the UK Overseas Research Scholarship (ORS) from 2002 to He has been selected by the BCA to join the Young Leaders Programme, which aims to nurture young professionals to lead in the construction industry by engaging them in policy-making and facilitating their training and upgrading. He has overseen the successful completion of the Company s projects such as the PUB-North Coastal Sewer Extension-Contracts 1 and 3, Jurong East Project, Eng Neo Avenue Project, Seletar Aero Drive Project, LTA-C9081A Sewer Diversion at Kallang Bahru and Desilting of Stamford Canal. He is currently in charge of T2136 Project (Sewer Diversion at Springleaf Station), Dredging of Sungei Peng Siang and Sungei Tengah, and Dredging of Sungei Sembawang, and supporting Thomson Line Tender team in technical submissions. SWEE HONG LIMITED ANNUAL REPORT

14 CORPORATE INFORMATION BOARD OF DIRECTORS: REMUNERATION COMMITTEE: Ong Hur Seng Non-Executive Chairman and Non-Executive Director Ong Hock Leong Managing Director Yeo Wee Kiong Chairman Wong Soong Kit Dr. Chew Huat Chye Wilson Ong Keng Huat Executive Director Ong Kah Lam Executive Director Ong Hoi Lian Non-Executive Director Yeo Wee Kiong Lead Independent Director Wong Soong Kit Independent Director Dr. Chew Huat Chye Wilson Independent Director AUDIT COMMITTEE: PRINCIPAL BANKERS: DBS BANK LTD RHB Bank Berhad, Singapore Branch COMPANY SECRETARY: Tan Swee Gek LLB (Hons) Ong Beng Hong LLB (Hons) REGISTERED OFFICE: 190A Choa Chu Kang Avenue 1 Comfort Garden, Singapore SHARE REGISTRAR AND SHARE TRANSFER OFFICE: Wong Soong Kit Chairman Yeo Wee Kiong Dr. Chew Huat Chye Wilson NOMINATING COMMITTEE: Yeo Wee Kiong Chairman Boardroom Corporate & Advisory Services Pte. Ltd. 50 Raffles Place #32-01 Singapore Land Tower, Singapore AUDITOR: Nexia TS Public Accounting Corporation 100 Beach Road #30-00, Shaw Tower, Singapore Director-in-charge: Lee Look Ling (Appointed since financial year ended 30 June 2013) Wong Soong Kit Dr. Chew Huat Chye Wilson 12 ANNUAL REPORT 2013 SWEE HONG LIMITED

15 The Board of Directors of Swee Hong Limited ( the Company ) and together with its subsidiaries (the Group ), are committed to high standards of corporate governance and adopting the corporate governance practices contained in the Code of Corporate Governance 2005 ( Code ) so as to ensure greater transparency and protection of shareholders interests. The Board recognizes the need for accountability, creating and preserving shareholder value and achieving its corporate vision for the Group. This report describes the Group s corporate governance practices and activities with specific reference to the Code, during the financial year ended 30 June BOARD MATTERS Principle 1: Every company should be headed by an effective Board to lead and control the company. The Board is collectively responsible for the success of the company. The Board works with Management to achieve this and the Management remains accountable to the Board. 1.1 The Role of the Board The Board oversees the management of the Group. It reviews the Group s strategies and policies and financial performance; assesses key risks provided by Management; as well as the adequacy of internal control. Dayto-day management and implementation of business strategies are delegated to the Executive Directors. Each Director is expected, during the course of carrying out his duties, to act in good faith and make decisions objectively at all times, as fiduciaries in the best interest of the Company. The principal functions of the Board, apart from its statutory responsibilities, are to: (a) (b) (c) (d) (e) (f) set strategic objectives, and ensure that the necessary financial and human resources are in place for the Company to meet its objectives; establish a framework of prudent and effective controls which enables risks to be assessed and managed, including safeguarding of the Company s assets and shareholders interests; review management s performance; set the company s values and standards and ensure that obligations to shareholders and other stakeholders are understood and met; identify the key stakeholder groups of the Company; and consider any sustainability issues. 1.2 Board Processes The Board has established three board committees ( Board Committees ) to assist in the execution of its responsibilities. These are the: Audit Committee ( AC ), Nominating Committee ( NC ), and Remuneration Committee ( RC ). The establishment of these Board Committees, however, does not relieve the Board of its responsibilities. Each of these committees has its own written terms of references and the minutes of meetings of these committees are circulated among the Board. SWEE HONG LIMITED ANNUAL REPORT

16 Fixed Board meetings will be held at least once every quarter to review the business affairs of the Group and approve the announcement of the quarterly financial results. When necessary, additional Board meetings will be held to deliberate on other substantive matters. The Board also approves transactions through circular resolutions which are circulated to the Board together with all relevant information relating to the proposed transaction. The agenda for meetings is prepared in consultation with the Group MD (designated as Group CEO). The advice of the Chairman is also sought on matters to be discussed in relation to strategic issues and business plans where needed in relation to the agenda for meetings. The agenda for meetings are circulated in advance of the scheduled meetings. 1.3 Directors meeting held During the financial year ended 30 June 2013 and up to the date of this report, the Board held six Board meetings, eight AC meetings, two NC meetings and two RC meetings. The attendances of the Directors at scheduled meetings of the Board and Board Committees during the financial year ended 30 June 2013 and up to the date of this report were as follows: Committee Board Audit Nominating Remuneration Number of Meetings held: Name of Director Mr. Ong Hur Seng 5 5 (invited) Mr. Ong Hoi Lian 4 4 (invited) Mr. Ong Hock Leong 6 8 (invited) Mr. Ong Keng Huat 5 6 (invited) Mr. Ong Kah Lam 6 6 (invited) 2 (invited) 1 (invited) 2 (invited) 2 (invited) 2 (invited) 2 (invited) 1 (invited) 2 (invited) 2 (invited) 2 (invited) Mr. Yeo Wee Kiong Mr. Wong Soong Kit Dr. Chew Huat Chye, Wilson The dates of fixed Board, Board committee and Annual General Meetings are scheduled in advance in consultation with the Directors to assist the Directors in planning their schedules and attendance. A Director who is unable to attend a Board or Board Committee meeting in person, can alternatively still participate in the meeting via telephone conference, video conference, audio visual or other electronic means of similar communication. Telephonic attendance and conference via audio communication at Board meetings are allowed under Article 104(4) of the company s Articles of Association. 14 ANNUAL REPORT 2013 SWEE HONG LIMITED

17 1.4 Matters Requiring Board Approval Matters for which Board approval is required include: (a) (b) (c) (d) (e) the financial plans of the Group; major investments, divestment, capital expenditure, funding proposals; Interested Persons Transactions (IPTs); new appointments to the Board; and remuneration packages of the Directors and Management. 1.5 Training of Directors No new Director was appointed by the Company for the financial year ended 30 June However, if a new Director had been appointed, the newly appointed Director will be given a formal letter setting out his duties and obligations upon his appointment and he will undergo a comprehensive orientation program to be familiar with the Group s business and governance practices. Regular update on new laws, regulations and best practices are made available to the Directors, who are encouraged to participate in these training sessions. 1.6 Board Composition and Balance Principle 2: There should be a strong and independent element on the Board, which is able to exercise objective judgement on corporate affairs independently in particular, from Management. No individual or small group of individuals should be allowed to dominate the Board s decision making. The Board consists of 8 members. More than one-third of the Board comprises of Independent Non-Executive Directors, who are independent of the Management. Our Independent Non-Executive Directors possess invaluable diversified experiences and competencies which enable them to contribute effectively to the Board. As of the date of this report, the Board comprises of the following Directors: EXECUTIVE DIRECTORS Mr. Ong Hock Leong (Managing Director) Mr. Ong Keng Huat (Executive Director) Mr. Ong Kah Lam (Executive Director) NON-EXECUTIVE DIRECTORS Mr. Ong Hur Seng (Non-Executive Chairman and Non-Executive Director) Mr. Ong Hoi Lian (Non-Executive Director) INDEPENDENT DIRECTORS Mr. Yeo Wee Kiong (Lead Independent Director) Mr. Wong Soong Kit (Independent Director) Dr. Chew Huat Chye, Wilson (Independent Director) The profiles of the Directors are found under the Board of Directors section of this Annual Report. SWEE HONG LIMITED ANNUAL REPORT

18 The Board regularly examines its size and, with a view to determining the impact of its number upon effectiveness, decides on what it considers an appropriate size for itself, taking into account the scope and nature of the Group s business operations. The composition of the Board is reviewed on an annual basis by the NC to ensure that the Board has the appropriate mix of diversity, expertise and experience, and collectively possess the necessary core competencies for effective functioning and informed decision-making. The NC is of the view that the Board comprises Directors capable of exercising objective judgment on the corporate affairs of the Group independently of Management and that no individual or small group of individuals dominate the Board s decision-making process. Particulars of interests of directors who held office at the end of the financial year in shares and share options in the Company and in related corporations (other than wholly-owned subsidiaries) are set out in the Directors Report. 1.7 Independent Members of the Board of Directors Mr. Yeo Wee Kiong is the Lead Independent Director ( LID ). The LID aids the Independent Directors to constructively challenge and engage the directors in Board discussions. The LID is available to shareholders where they have concerns for which contact through the normal channels of the Group Chairman or Group MD or the Financial Controller has failed to resolve or for which such contact is inappropriate. As Mr Yeo Wee Kiong has indicated that he will be retiring as a Director and will not be seeking re-election at the forthcoming Annual General Meeting, a new LID will be identified and appointed amongst the Independent Directors in due course. The Board has identified and considered each of the Company s Independent Directors to be independent, after determining, taking into account the views of the NC, whether the director is independent in character and judgment and whether there are relationships or circumstances which are likely to affect, or could appear to affect, the director s judgment. Each director is required to disclose to the Board any such relationship as and when it arises. None of the Company s Independent Directors has been: (a) (b) (c) a director being employed by the company or any of its related companies for the current or any of the past three financial years; a director who has an immediate family member who is, or has been in any of the past three financial years, employed by the company or any of its related companies as a senior executive officer whose remuneration is determined by the remuneration committee; a director, or an immediate family member, accepting any compensation from the company or any of its subsidiaries other than compensation for board service for the current or immediate past financial year; or (d) a director, or an immediate family member, being a substantial shareholder of or a partner in (with 5% or more stake), or an executive officer of, or a director of any for-profit business organisation to which the company or any of its subsidiaries made, or from which the company or any of its subsidiaries received, significant payments in the current or immediate past financial year. As a guide, payments aggregated over any financial year in excess of $200,000 should generally be deemed significant. 16 ANNUAL REPORT 2013 SWEE HONG LIMITED

19 1.8 Chairman and Chief Executive Officer Principle 3: There should be a clear division of responsibilities at the top of the company the working of the Board and the executive responsibility of the company s business which will ensure a balance of power and authority such that no one individual represents a considerable concentration of power. The positions of Group Chairman and Group CEO, are held by Mr. Ong Hur Seng and Mr. Ong Hock Leong respectively. Mr. Ong Hock Leong is the nephew of Mr. Ong Hur Seng. Mr. Ong Hur Seng is a Non-Executive Director. As Group Chairman, Mr. Ong Hur Seng, with the assistance of the Group CEO, has the function of supervising the working of the Board and because of his experience, provides guidance, from time-to-time, to the other Directors on the Group s business. Mr. Ong Hur Seng is not involved in the day-to-day management of the Group, which is the responsibility of the Group CEO. Board papers are reviewed by the Group CEO who seeks the advice of the Group Chairman when the Group Chairman s expertise and experience is required on the matter concerned before such board papers are presented to the Board. 1.9 Board Membership Principle 4: There should be a formal and transparent process for the appointment of new directors to the Board. The Board has delegated to the NC the functions of developing and maintaining a transparent and formal process for the appointment of new directors, making recommendations for directors who are due for retirement by rotation to seek re-election at general meeting and determining the independent status of each director. A retiring director is eligible for re-election by the shareholders of the Company at general meeting, and prior to nominating a retiring director for re-election, the NC will evaluate the director s contribution and performance taking into consideration factors such as attendance, competencies, commitment, preparedness, participation and candour. The NC also reviews the independence of each of the Independent Directors annually. As part of their review process, the NC requires the Independent Directors to complete and execute declaration forms in relation to their independence. These declaration forms are drawn up based on the guidelines in the Code. The NC reviewed declaration forms executed by the Independent Directors as well as any declaration which they may make to determine their respective independence. Pursuant to its review, the NC is of the view that Mr Yeo Wee Kiong, Mr Wong Soong Kit and Dr Chew Huat Chye, Wilson are independent of the Group and the Management. The NC comprises entirely of Independent Directors, namely: Mr. Yeo Wee Kiong (Chairman); Mr. Wong Soong Kit (Member); and Dr. Chew Huat Chye, Wilson (Member) None of the members of the NC had any association with any substantial shareholder. The main terms of reference of the NC are as follows: to determine the process for search, nomination and appointment of new Board members; and assessing candidates for appointment to the Board. SWEE HONG LIMITED ANNUAL REPORT

20 to review and recommend the re-nomination of our Directors retiring by rotation; having regard to our Director s competency, contribution and performance; to determine on an annual basis whether or not a Director is independent; in respect of a Director who has multiple board representations on various companies, review and decide whether or not such Director is able to and has been adequately carrying out his duties as a Director, having regard to the competing time commitments that are faced by the Director when serving on multiple boards; to review training and professional development programs for the Board; to decide how the Board s performance is to be evaluated and will propose objective performance criteria, subject to the approval of the Board, which address how the Board has enhanced long-term shareholders value; to implement a process to be carried out by the Nominating Committee for assessing the effectiveness of the Board as a whole and for assessing the contribution of each individual Director to the effectiveness of the Board. Each Member of the Nominating Committee shall abstain from voting any resolutions in respect of his assessment of his performance or re-nomination as a Director; and to review the size, structure and composition of the Board. In the event that there is a need to change the structure of the Board, the chairmanship of the Company or the membership of the Board Committees, the NC would also review the change to be implemented and make recommendations to the Board accordingly. For the appointment of new Directors, the NC would, in consultation with the Board, examine the existing Board s strengths, capabilities and the existing Directors contribution of skills, knowledge and experience to the Group and the Board. Further to the above, the NC will take into account the future needs of the Group and, together with the Board, it will seek candidates who are able to contribute to the Group. As Mr Yeo Wee Kiong has indicated that he will not be seeking re-election at the forthcoming Annual General Meeting, the NC shall, in consultation with the Board, identify and appoint a new Independent Director as soon as practicable Board Performance Principle 5: There should be a formal assessment of the effectiveness of the Board as a whole and the contribution by each director to the effectiveness of the Board. Based on the recommendations of the NC, the Board has established processes and objective performance criteria for evaluating the effectiveness of Directors as a whole in the Board as well as individually. (i) Evaluation of the effectiveness of the Board as a whole The Board s effectiveness as a whole is assessed by the NC through completing a Board Assessment checklist. The Board Assessment checklist takes into consideration factors such as the Board s structure, conduct of meetings, risk management and internal control, and the Board s relationship with Management. The Board s performance is also assessed by the NC based on a set of quantitative criteria and financial performance indicators. These performance criteria will remain unless changes are deemed necessary and justified by the Board. 18 ANNUAL REPORT 2013 SWEE HONG LIMITED