Strengthening
for
Growth
Annual Report 2012
This annual report has been prepared by the Company and
reviewed by the Company’s sponsor, CNP Compliance
Pte. Ltd. (“Sponsor”), for compliance with the Singapore
Exchange Securities Trading Limited (“SGX-ST”) Listing
Manual Section B: Rules of Catalist. The Sponsor has
not verified the contents of this annual report including
the accuracy or completeness of any of the information
disclosed or the correctness of any of the statements or
opinions made or reports contained in this annual report.
This annual report has not been examined or approved
by the SGX-ST. The Sponsor and the SGX-ST assume 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 contact person for the Sponsor is Mr. Thomas Lam
at 36 Carpenter Street, Singapore 059915, telephone:
(65) 6323 8383; email: tlam@cnplaw.com.
01 02
05
07
08
10
11
12
13
26
29
30
32
33
34
35
36
78
80
85
Corporate Profile
Chairman’s Statement
Operations & Financial Review
Financial Highlights
Board of Directors
Executive Officers
Corporate Structure
Corporate Information
Corporate Governance Report
Directors’ Report
Statement by Directors
Independent Auditor’s Report
Balance Sheets
Consolidated Statement of
Comprehensive Income
Consolidated Statement of Changes
in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Analysis of Shareholdings
Notice of Annual General Meeting
Proxy Form
Corporate Profile
Annual Report 2012
EMS Energy Limited 01
Listed in 2003, EMS Energy Limited
(EMS Energy), an established provider of
engineering solutions has delivered and
built its name with its global customers
with solutions that span over the entire
energy supply chain.
Today, EMS Energy through its subsidiary, EMS Energy Solutions Pte Ltd (EES), a ‘One-stop Solutions Provider’,
designs, manufactures and fabricates engineering solutions and products for the marine, oil & gas industries.
EES also provides project management and custom fabrication services that leverage on its strong capabilities
in design, engineering fabrication, and supply chain management. Its engineering solutions and products include
drilling and well intervention systems, deck machinery, offshore cranes and other mechanical load handling systems.
In addition, EES also provides aftermarket services to its customers, such as commissioning, inspection, training,
conversion, retrofitting, maintenance, repair and overhaul as well as spare parts procurement.
With a strong emphasis on the quality of its equipment, operations and management, EES holds the following
API Certifications: API Specification Q1, API Specification 2C for Offshore Pedestal Mounted Cranes and API
Specification 4F for Substructures at PSL 1 (refers to Drilling and Well Servicing Structures).
EMS Energy now serve customers across China, Europe, India, Indonesia, Malaysia, Russia, Singapore, South
Africa, Thailand, United Arab Emirates, United States and Vietnam, and is well poised to be a global engineering
solutions provider.
02 Annual Report 2012
EMS Energy Limited
Chairman’s Statement
Dear Shareholders,
On behalf of my fellow board of directors, I present
to you the Annual Report for the Financial Year
ended 31 December 2012 (“FY2012”).
The global economic environment has
been challenging. Global economic growth
has weakened during 2012 and economic
recovery has proven to be more difficult
than originally anticipated. The ongoing
Eurozone debt crisis has created further
financial and economic uncertainty.
Against this backdrop and plagued by stiff
competition during FY2012, the Group
encountered a 62.5% decline in revenue
as negotiations for a handful of sizeable
contracts did not yield the intended
results. In addition, the Group posted a net
loss of S$15.42 million mainly attributable
to S$1.65 million of allowance for doubtful
debts and non-recurring impairment
of S$10.22 million associated with the
disposal of an operating segment of the
Group. As we come to terms with this
reality, we recognize that there are some
hard lessons to learn from this setback
and we need to re-evaluate and revamp
the way we do business.
Reinventing Ourselves
In order to turnaround the Group, we
need to embrace change. This entails all
aspects of our business, including our
organization structure, strategy, systems,
processes and culture, as well as acquiring
and managing our valuable human
resource talent in light of the changing
industry and economic environment. We
will strengthen our capabilities and the
things we do well alongside improving on
our shortcomings.
Underscoring the changes required I am
quoting Harvard Business Review as it
says “It’s tough when markets change
and your people within the company
don’t.” Continuous improvement requires
innovation. This is the key thing that we
are embarking on and thus, encouraging
each and every employee to think beyond
the usual with the company’s objectives in
mind. With our diversified pool of talent,
innovation is the Group’s new direction
– catering not only to customization of
products and projects but also finding new
ways to build and deepen relationships
with internal and external stakeholders.
Innovation is not just to modify and elevate
the quality of machines and technology; it
is also to learn new ways and techniques
to foster customer loyalty and trust.
In line with our goal to promote continuous
improvement, the Group has been
inviting and attracting new talent. The
recent changes to the management team
provides the much needed fresh blood to
the Group, bringing a good mix of skills,
experiences and best practices from their
respective fields. To the new management
team that is prepared to work with sheer
determination, perseverance and courage
to take on the challenge, I welcome you all
to the Group and look forward to working
closely with the team.
Armed with a new management team, the
Group is introducing a series of measures
that are expected to deliver the desired
improvements in the performance of
the Group. Major tasks at hand include
intensify sales efforts and enhancing
our relationship with major customers,
overhaul key processes to improve
efficiency and productivity, enhance
project management capabilities, instill
performance culture and develop positive
corporate culture while empowering staff
through training and development, and
effective cost management that includes
tackling wastage and leakages, review of
outsourced activities and management of
subcontractors without compromising on
quality and customer satisfaction.
In addition, the tough operating
conditions have directly affected the
financial performance of the Group. On
this front, we would exercise prudence in
Annual Report 2012
EMS Energy Limited 03
cash management, enhancing our balance sheet in the
process and continuously seek support from various
stakeholders, including existing and prospective
shareholders, creditors and bankers in our quest to
weather through the current challenging times and
to fund potential investment opportunities that will
strengthen and complement our current business.
The industry that we are part of is a global industry.
Acting on our strategy to widen our reach regionally,
the Group plans to pursue regional markets with
clear potential, such as China. We are determined to
channel resources in seizing stratum in the Asia Pacific
region which have mounting growth prospects for the
foreseeable future. The Group also plans to acquire
infrastructure and facilities that optimize returns to the
Group and provide flexibility in scaling our operations
according to opportunities and demand. This is also to
overcome the physical limitation of the existing factory
premise and reduce the need to incur subcontractor
and leasing costs, as well as exercise tighter control
over production quality for projects that are managed
in-house.
Collaborated effort
I acknowledge that it will be a tough period of
adjustment for the Group. Change would not happen
overnight and uncertainties continue to cloud our
journey ahead. Therefore, we seek strong support from
all stakeholders who are willing to partner us through
this transformational journey. With commitment to our
objectives, and the injection of fresh blood and ideas,
04 Annual Report 2012
EMS Energy Limited
I believe we are in good shape to stay resilient
and overcome the obstacles that will be coming
our way. Returning the Group to profitability is
our top and immediate priority to which the Board
and I and the entire management team are fully
immersed and engaged into. We would not rest on
our laurels but rise to the occasion of challenge and
work diligently to enhance our competitive edge
and continue to evolve to ensure the Group’s longterm survival and sustainability. We will review
our business from time to time to ensure greater
robustness and resilience and we look forward to
stable progress and growth.
Appreciation
The Board of Directors would like to thank our
shareholders, customers and other stakeholders for
keeping the faith in us, and also for the continued
support and encouragement, which motivates us
to walk the extra mile. The Board of Directors also
wishes to extend its gratitude to the management
and employees of the Group for their leadership,
contribution and commitment to the success of the
Group.
Ting Teck Jin
Executive Chairman & CEO
30 March 2013
Operations &
Financial Review
Annual Report 2012
EMS Energy Limited 05
The Group secured several sizeable projects
with contracts value aggregating US$13.2
million (approximately S$16.1 million)
towards the end of FY2012 where substantial
part of the revenue is expected to be
recognised in FY2013.
leasing of extra work site due to the
limitation of the existing factory premise.
Financial Performance
The Group’s revenue had reduced by
S$31.18 million or 62.5% from S$49.87
million in FY2011 to S$18.69 million in
FY2012 as certain significant contracts
under negotiation did not materialise in
FY2012. The turnover was further affected
by the slowing demand from the oil and
gas exploration segment and globally
subdued economic conditions. Despite
these, the Group secured several sizeable
projects with contracts value aggregating
US$13.2 million (approximately S$16.1
million) towards the end of FY2012 where
substantial part of the revenue is expected
to be recognised in FY2013.
Gross profit was S$0.36 million at 1.9%
gross margin compared to S$7.35 million
at 14.7% gross margin in FY2011 mainly
attributed to the reduction in revenue and
the increase in logistic costs, in particular,
the need to incur additional subcontractor
and direct manpower cost and cost for
Other operating income fell by S$0.80
million or 82.4% from S$0.97 million in
FY2011 to S$0.17 million in FY2012 due to
the recognition of income from the reversal
of loss on impairment of property, plant
and equipment of $0.81 million in FY2011.
Administrative expenses excluding the
allowance for doubtful debts of S$1.65
million and non-recurring impairment of
Income tax expense in FY2012 was
incurred for prior year income.
Cash Flows and Financial Positions
The Group’s cash and cash equivalents
reduced by S$2.23 million in FY2012.
Net cash of S$1.24 million was used in
operating activities in FY2012 compared
to net cash of S$3.46 million provided by
operating activities in FY2011 mainly due
to the operating losses incurred in FY2012
coupled with less favourable changes in
working capital in FY2012.
Cash used in investing activities reduced
by S$4.39 million mainly attributed to
the reduction in net cash utilised in
the investment in property, plant and
equipment.
S$10.22 million in goodwill attributed
to the disposal of an operating segment
of the Group incurred in FY2012 have
remained stable compared to FY2011.
Cash provided by financing activities
reduced by S$2.02 million compared to
FY2011. FY2011 registered higher cash
06 Annual Report 2012
EMS Energy Limited
provided by financing activities as a result of
proceeds from the issuance of ordinary shares of
S$4.28 million and lower dividends paid to noncontrolling shareholders of the Group which are
being offset by lower net proceeds from loans
and borrowings obtained from bank and financial
institutions compared to FY2012.
Overall, the Group’s cash and cash equivalents
excluding bank overdraft was S$3.11 million as at
end FY2012 compared to S$5.34 million as at end
FY2011.
The Group’s gearing ratio has increased to 52% in
FY2012 compared to 46% in FY2011 and net assets
has reduced to S$14.44 million as at end FY2012
compared to S$33.79 as at end FY2011 mainly
attributed to the net losses incurred in FY2012.
Financial Highlights
07 Annual Report 2012
EMS Energy Limited
Revenue / Gross Profit / Net Profit
45,883
2010
12,057
1,744
49,873
2011
17,187
7,346
6,216
500
2,709
2012
359
(19,398)
Revenue
•
Continuing operations
•
Discontinuing operations
Gross Profit
18,689
21,709
9,187
3,978
•
Continuing operations
•
Discontinuing operations
Net Profit
60,000
40,000
20,000
0
-10,000
-20,000
•
Continuing operations
•
Discontinuing operations
Revenue / Gross Profit by Business Segments (EES/OSS)
EES
OSS
Revenue (S$’000)
Goss profit (S$’000)
28,239
49,873
2012
2012
18,689
21,709
5,461
6,596
2011
2011
17,187
2010
2010
17,644
7,346
6,216
359
9,187
11,000
8,500
6,000
3,500
0
45,000
30,000
15,000
0
08 Annual Report 2012
EMS Energy Limited
MR TING TECK JIN
Executive Chairman and
Chief Executive Officer
Board of Directors
MR LIM POH BOON
Non-Executive and
Independent Director
Mr Ting Teck Jin joined the Board of EMS Energy
on 8 January 2007 as Executive Chairman and
assumed the role of Chief Executive Officer on 19
June 2007.
Mr Lim Poh Boon joined the Board on 1 June
2007 as Non-Executive and Non-Independent
Director, and was re-designated as Independent
Director beginning FY2012.
Mr Ting is responsible for the strategic corporate
direction and development of the Group. He also
oversees business development and operations
in his role as Director of EMS Energy Solutions
Pte Ltd. Mr Ting is also Managing Director of
Koastal Industries Pte Ltd, a Singapore-based
group dealing in trading and marine projects in
the region, with a network of offices in Vietnam
including a subsidiary Koastal Eco Industries Co
Ltd (in Vietnam) where he is General Director.
Mr Lim is involved in many international advisory
and consultancy investment projects and
also operating a money services business in
Malaysia. He has more than 30 years’ experience
in operational and risk managements in the
manufacturing business and is an associate
member of the Malaysian Institute of Chemistry.
Mr Ting has some 20 years’ experience in the
offshore and marine engineering industry. He spent
a few years in Keppel Group shipyard operations
in Singapore and Vietnam before founding Koastal
Industries Pte Ltd in 1997. An engineer by training,
Mr Ting holds a Bachelor of Engineering in Marine
Technology (First Class Honours) degree from
Newcastle University, United Kingdom.
Mr Lim is currently the Honorable Advisor of the
Malaysian Knitting Manufacturers Association;
the Honorary Treasurer of Chinese Chamber
of Commerce Batu Pahat, Johor, Malaysia; a
National Council Member and Deputy Chairman of
Agriculture and Primary Industries Committee of
The Associated Chinese Chambers of Commerce
and Industry of Malaysia; a Fellow of the Institute
of Chartered Secretaries and Administrators,
United Kingdom; a Fellow of the Institute of
Financial Accountants, United Kingdom; and a
senior associate member of the Australian and
New Zealand Institute of Insurance and Finance.
Mr Lim holds a Bachelor’s degree in Chemistry
from Universiti Sains Malaysia and a MBA from
Heriot-Watt University.
Annual Report 2012
MR UNG GIM SEI
Non-Executive and
Independent Director
Mr Ung Gim Sei joined the Board on 31 August
2007 as our Non-Executive and Independent
Director. Mr Ung is currently a partner of Singapore
law firm, Messrs. RHTLaw Taylor Wessing LLP,
specializing in the area of Intellectual Property
practice.
Prior to taking up Law, Mr Ung started his
career with key positions at Nanyang Siang Pau,
Singapore Press Holdings and Hong Kong Sing
Tao Newspaper Group. He is the Vice President
of the Singapore – China Friendship Association,
the Aw Boon Haw Foundation (PRC), and Tan
Kah Kee Foundation where he is also the Legal
Advisor. Mr Ung is also currently an Independent
Director of Informatics Education Ltd, a public
listed company in Singapore.
Mr Ung holds a Bachelor of Arts in Economics
degree from the National University of Singapore,
a Common Professional Examination in Law from
the UK, a graduate Diploma in Singapore Law
from the National University of Singapore and a
Master of Law from the City University of Hong
Kong.
EMS Energy Limited 09
MR LIM SIONG SHENG
Non-Executive and
Independent Director
Mr Lim Siong Sheng joined the Board on 1 June
2008 as our Non-Executive and Independent
Director.
Mr Lim is presently a director of Shangyew Public
Accounting Corporation where he is responsible
for audit, tax, liquidation and consulting matters
undertaken by the corporation and has over 20
years of experience in related fields.
Mr Lim is a Fellow of the Association of Chartered
Certified Accountants, United Kingdom and
a Fellow of the Institute of Certified Public
Accountants of Singapore. He is also a Fellow
of CPA Australia and a Fellow of Insolvency
Practitioners Association of Singapore. In addition,
Mr Lim also holds membership as an Accredited
Tax Advisor (Income Tax & GST) in Singapore
Institute of Accredited Tax Professionals Limited
(SIATP).
10 Annual Report 2012
Executive Officers
EMS Energy Limited
MR TING TECK JIN
Executive Chairman and
Chief Executive Officer
EMS Energy Limited
Mr Ting Teck Jin joined the Board of
EMS Energy on 8 January 2007 as
Executive Chairman and assumed the
role of Chief Executive Officer on 19
June 2007.
Mr Ting is responsible for the strategic
corporate direction and development of
the Group. He also oversees business
development and operations in his role
as Director of EMS Energy Solutions
Pte Ltd. Mr Ting is also Managing
Director of Koastal Industries Pte Ltd,
a Singapore-based group dealing in
trading and marine projects in the
region, with a network of offices in
Vietnam including a subsidiary Koastal
Eco Industries Co Ltd (in Vietnam)
where he is General Director.
Mr Ting has some 20 years’ experience
in the offshore and marine engineering
industry. He spent a few years in Keppel
Group shipyard operations in Singapore
and Vietnam before founding Koastal
Industries Pte Ltd in 1997. An engineer
by training, Mr Ting holds a Bachelor of
Engineering in Marine Technology (First
Class Honours) degree from Newcastle
University, United Kingdom.
MS PATSY MAH
Chief Financial Officer
EMS Energy Limited
Ms Patsy Mah is the Chief Financial
Officer (CFO). She joined the Company
in February 2013, and oversees the
Company’s financial matters.
Ms Mah has over 20 years of
experience dealing with bankers,
auditors and statutory boards and
was also involved in business merger
and acquisitions, group restructuring
matters and securing capital and
funding for businesses. She previously
held senior management positions at
several public-listed and privately held
companies in Singapore.
Ms Mah is a member of the Institute
of Certified Public Accountants
Singapore.
Corporate Structure
11 Annual Report 2012
EMS Energy Limited
EMS
Energy
Limited
100%
EMS
Oil & Gas
Ltd (Labuan)
100%
EMS
Energy
Solutions
Pte Ltd
100%
EMS
Offshore
Pte Ltd
100%
EMS
Energy
Services
Sdn Bhd
100%
EMS
Pioneer
Pte Ltd
20%
Oilfield
Services &
Supplies
Pte Ltd
12 Annual Report 2012
EMS Energy Limited
Corporate Information
BOARD OF DIRECTORS
SHARE REGISTRAR AND SHARE TRANSFER OFFICE
Mr Ting Teck Jin
Executive Chairman and Chief Executive Officer
M & C Services Private Limited
112 Robinson Road
#05-01
Singapore 068902
Mr Lim Poh Boon
Non-Executive and Independent Director
Mr Ung Gim Sei
Non-Executive and Independent Director
Mr Lim Siong Sheng
Non-Executive and Independent Director
COMPANY SECRETARY
Ms Gwendolyn Gn. LLB (Hons)
REGISTERED OFFICE
1 Robinson Road
#17-00 AIA Tower
Singapore 048542
T +65 6861 2722
F +65 6861 5655
E info@EMSenergy.com.sg
W www.EMSenergy.com.sg
PRINCIPAL PLACE OF BUSINESS
10 Tuas Avenue 11
Singapore 639076
AUDITORS
Nexia TS Public Accounting Corporation
Certified Public Accountants
100 Beach Road, Shaw Tower, #30-00
Singapore 189702
Director in charge: Ms Kristin YS Kim
Appointed since FY2012
SOLICITORS
Shook Lin & Bok LLP
ChrisChong & CT Ho Partnership
PRINCIPAL BANKERS
CIMB Bank Berhad
DBS Bank Ltd
Hongkong and Shanghai Banking Corporation Limited
Oversea-Chinese Banking Corporation Limited
United Overseas Bank Limited
Annual Report 2012
EMS Energy Limited and its Subsidiaries 13
Corporate Governance Repor t
The Board of Directors (the “Board”) of EMS Energy Limited (the “Company”) and together with its subsidiaries (the
“Group”) recognises the importance of corporate governance in ensuring transparency, protecting the interests of its
shareholders and strengthening investors’ confidence in its management and financial reporting. The Board is responsible
for the overall corporate governance of the Group and is committed to maintaining a high standard of corporate governance
within the Group by establishing stringent internal control measures and monitoring mechanisms.
Rule 710 of the Listing Manual (Section B: Rules of Catalist) of the Singapore Exchange Securities Trading Limited (the “SGXST”) (“Catalist Rules”) requires an issuer to outline the corporate governance practices adopted by the Company as set out
in the Code of Corporate Governance 2005 (the “Code”).
This statement outlines the key corporate governance practices that were in place throughout the financial year, with
specific references made to each of the principles and Guidelines of the Code for the financial year ended 31 December
2012 (“FY2012”).
In line with the Code, the Board of Directors hereby confirms that the Company has adhered to the principles and guidelines
of the Code and each area of non-compliance is disclosed and explained.
A.
BOARD MATTERS
Principle 1: Board’s Conduct of its Affairs
The Group is led by an effective Board, which comprises one Executive Director and three Independent Directors, all
having the right competencies and diversity of experience to effectively lead, control and contribute to the Group. The
Board is collectively responsible for the success of the Group. The Board works with the management of the Company
(“Management”) to achieve this and Management remains accountable to the Board.
The principal functions of the Board include:
1.
providing entrepreneurial leadership, setting strategic objectives and ensuring that the necessary financial and human
resources are in place for the Group to meet its objectives;
2.
setting, reviewing and approving key business goals and strategies, and financial plans and monitoring the
organisational and Management’s performance;
3.
establishing a framework of prudent and effective controls which enables risks to be assessed and managed,
including safeguarding of shareholders’ interests and the company’s assets;
4.
reviewing the adequacy and integrity of the Group’s internal controls, risk management systems and financial
reporting and compliance;
5.
approving major investments and divestments, and funding proposals;
6.
setting the Group’s values and standards (including ethical standards); and
7.
ensuring accurate, adequate and timely reporting to, and communication with shareholders such that obligations to
shareholders and other stakeholders are understood and met.
The Board meets regularly, with at least two scheduled meetings within each financial year to review the Group’s key
activities, business strategies, funding decisions, financial performance and to approve the release of half yearly and annual
results of the Group. When circumstances require, ad-hoc meetings are convened. All Directors objectively make decisions
in the interests of the Group.
14 Annual Report 2012
EMS Energy Limited and its Subsidiaries
Corporate Governance Repor t
The Company has adopted internal guidelines setting forth matters that require Board approval, examples of which include
corporate plans and budgets, material acquisitions and disposals of assets, share issuances, dividends and other returns to
shareholders.
To assist in the execution of its responsibilities, the Board is supported by three board committees; namely the Nominating
Committee (“NC”), Remuneration Committee (“RC”) and Audit Committee (“AC”) (collectively, the “Board Committees”).
The Directors are also regularly updated on the Group’s development via email correspondence facilitating participation
and view sharing. Board meetings are conducted in Singapore and regularly attended by Directors either in person or via
telephone conference if they are unable to attend the meetings in person. The attendance of the Directors at meetings of
the Board and Board Committees, as well as the frequency of such meetings are disclosed in Table 1 below.
Table 1: Attendance of Directors at Board and Board Committee Meetings
Audit
Committee
Board
Remuneration
Committee
Nominating
Committee
No. of
Meetings
Held
No. of
Meetings
Attended
No. of
Meetings
Held
No. of
Meetings
Attended
No. of
Meetings
Held
No. of
Meetings
Attended
No. of
Meetings
Held
No. of
Meetings
Attended
Ting Teck Jin
3
3
3
3^
1
1^
1
1^
Lim Poh Boon
3
3
3
3
1
1
1
1
Ung Gim Sei
3
3
3
3
1
1
1
1
Lim Siong Sheng
3
3
3
3
1
1
1
1
Name
^ Attendance by invitation
Notes:
Upon appointment of each director, the Company provides a formal letter to such director, setting out his duties and obligations upon
appointment. The Company has in place an orientation program to ensure that new directors are familiar with the Company’s business and
governance practices, and training for first-time directors in areas such as accounting, legal and industry-specific knowledge. All Directors are
updated regularly concerning any changes in company policies, risk management, accounting standards, relevant new laws, regulations and
changing commercial risks. Directors are encouraged to attend, at the Group’s expense, relevant and useful training or seminars conducted
by external organisations. The Company also provides on-going education on Board processes, governance and best practices.
Principle 2: Board Composition
The Board comprises one Executive Director, Mr. Ting Teck Jin, and three Independent Directors, Mr. Ung Gim Sei and
Mr. Lim Siong Sheng and Mr. Lim Poh Boon. Key information regarding the Directors is given in the section on “Board of
Directors” of this annual report. The independence of each Independent Director will be reviewed annually by the Nominating
Committee. The Board considers an “independent” director as one who has no relationship with the Company, its related
companies or its officers that could interfere or be reasonably perceived to interfere with the exercise of the director’s
independent business judgment of the conduct of the Group’s affairs.
The NC is of the view that the current Board, with Independent Directors making up at least half of the Board, has a strong
and independent element to exercise objective judgment on corporate affairs independently from Management. The NC is
also of the view that no individual or small group of individuals dominates the Board’s decision making process.
Annual Report 2012
EMS Energy Limited and its Subsidiaries 15
Corporate Governance Repor t
The Board is of the view that the current size of the Board of four Directors is appropriate to facilitate effective decision
making, taking into account the size, nature and scope of the Company’s operations.
The Board members, collectively, have the diverse mix of knowledge, business networks and successful business and
commercial experience as well as core competencies including accounting, finance, business and management. This
balance ensures strategies proposed by Management are fully discussed and examined, taking into account the long term
interests of the Group. None of the Independent Directors have any relationship with the Company, its related companies
or its officers that could interfere, or be perceived to interfere, with the exercise of their independent business judgment
in the best interests of the Company. The Non-Executive Directors are also involved in strategy decisions, constructively
challenging, advising and developing these proposals. They also review the performance of Management in meeting goals
and objectives, and monitor the reporting of performance. We also encourage our Non-Executive Directors to meet without
the presence of Management to review Management’s performance and monitor reports thereof.
Principle 3: Role of Chairman and Chief Executive Officer
According to the Code, the Chairman and Chief Executive Officer should in principle be separate persons. However,
the Board is of the view that as it is redefining its business activities and is still in the stage of building up a cohesive
management team, it is in the interest of the Group to have the Chief Executive Officer assume the role of Chairman. The
Company will seek to separate the two roles as soon as it is appropriate to do so.
Our Chairman and Chief Executive Officer is Mr. Ting Teck Jin and his responsibilities include:1.
leading the Board to ensure effectiveness on all aspects of its role and setting its agenda;
2.
ensuring that the Directors receive accurate, timely and clear information;
3.
ensuring effective communication with shareholders;
4.
encouraging constructive relations within the Board and between the Board and Management;
5.
facilitating the effective contribution of Non-Executive Directors in particular; and
6.
promoting high standards of corporate governance.
Principle 4: Board Membership
Mr. Ung Gim Sei, an Independent Director, is the Chairman of the NC. The other members of the NC are our Independent
Directors, Mr. Lim Siong Sheng and Mr. Lim Poh Boon. The NC has written terms of reference that describe the
responsibilities of its members.
We believe that Board renewal must be an on-going process to ensure good governance and cater to the changing needs
of the Company and business. Our Articles of Association require at least one-third of our Directors (excluding the Group
Managing Director) to retire from office by rotation and be subject to re-nomination and re-election by shareholders at
every annual general meeting (“AGM”). No Director stays in office for more than three years without being re-elected by
shareholders.
16 Annual Report 2012
EMS Energy Limited and its Subsidiaries
Corporate Governance Repor t
The responsibilities of the NC are as follows:a.
to recommend to the Board on all Board appointments;
b.
to review and recommend to the Board annually, the Board’s structure, size and composition;
c.
to identify and make recommendations to the Board for Directors’ retirement, re-election and re-nomination at each
AGM of the Company, having regard to each Director’s contribution and performance;
d.
to determine the criteria (in particular, taking into account a Director’s independence and competing commitments) to
identify candidates and review nominations for the appointment of Directors to the Board;
e.
to determine annually if a Director is independent; and
f.
to decide how the Board’s performance may be evaluated and propose objective performance criteria for the Board’s
approval.
The NC Chairman, Mr. Ung Gim Sei, is not, and is not directly associated with, a substantial shareholder (with interest of 5%
or more in the voting shares of the Company).
In the selection and nomination for new Directors, the NC identifies the key attributes that an incoming Director should
have, based on existing or new requirements of the Group. After endorsement by the Board, the NC taps on the resources
of the Directors’ personal contacts for recommendations of potential candidates. Executive recruitment agencies may also
be appointed to assist in the search process where necessary. Interviews are then set up with the shortlisted candidates for
the NC to assess them before a decision is made.
New Directors are appointed by way of a board resolution, after the NC has approved their nominations. Such new Directors
submit themselves for re-election at the next AGM of the Company. Pursuant to the Articles of Association, all Directors are
required to submit themselves for re-election at least once every three years.
The NC recommended to the Board that Mr. Lim Siong Sheng and Mr. Ung Gim Sei be nominated for re-election at the
upcoming AGM. In making the recommendation, the NC had considered the Directors’ contributions to the Group. The
Directors’ profiles are presented in the “Board of Directors” section of this annual report.
The NC is satisfied that sufficient time and attention are being given by the Directors to the affairs of the Group, and there is
presently no need to implement internal guidelines to address their competing time commitments. This matter is reviewed
annually by the NC.
Principle 5: Board Performance
The NC will do its best to ensure that Directors appointed to our Board possess the relevant necessary background,
experience and knowledge, and bring to the Board independent and objective perspectives for balanced and well-considered
decisions to be made.
The NC will undertake a formal review of the effectiveness of the Board as a whole and the contribution by each Director to
the effectiveness of the Board on a yearly basis with inputs from the other Board members and the Chairman.
For the year under review, the NC assessed the effectiveness of the Board and the contribution of each individual Director
to the effectiveness of the Board. The Board’s performance was measured by its ability to support Management especially in
times of crisis, and to steer the Company towards profitability and the achievement of strategic and long-term objectives set
by the Board.
Annual Report 2012
EMS Energy Limited and its Subsidiaries 17
Corporate Governance Repor t
The NC adopted a formal policy to evaluate the Board’s performance. The performance criteria are not changed from year to
year except when deemed necessary and justifiable and include the following:
i.
timely guidance to management;
ii.
attendance at Board/Committee meetings;
iii.
participation at Board/Committee meetings;
iv.
commitment to Board activities;
v.
independence of Directors; and
vi.
appropriate complement of skill, experience and expertise on the Board.
Where the performance criteria are deemed necessary to be changed, the onus should be on the Board to justify this
decision.
The individual evaluation of the Company aims to assess whether each Director continues to contribute effectively and
demonstrates commitment to the role. The Chairman acts on the results of the performance evaluation and, where
appropriate and in consultation with the NC, proposes new members be appointed to the Board or seeks the resignation of
Directors.
Principle 6: Access to Information
All Directors receive a Board report issued prior to any Board meeting and on an on-going basis to provide contextual
information and to enable the Directors to obtain further information, where necessary, in order to be properly briefed before
any meeting. Such information provided to the Directors include background and explanatory information relating to matters
to be brought before the Board, copies of disclosure documents, budgets, forecasts and interim financial statements. In
respect of budgets, any material variance between the projects and actual results are also disclosed and explained.
In order to aid the discharge of duties by the Board, Management provides operational reports and management accounts
on a quarterly basis in FY2012. The Board is able to request for any information from Management at any point in time to
satisfy its needs.
The Board has separate and independent access to the senior management and the Company Secretary at all times. Should
Directors, whether as a group or individually, need independent professional advice, the Company Secretary will, upon
directions by the Board, appoint a professional advisor selected by the group or the individual to render the appropriate
professional advice. The cost of such professional advice will be borne by the Company.
Under the direction of the Chairman, the Company Secretary’s responsibilities include ensuring good information flows
within the Board and Board Committees, and between the senior management and Non-Executive Directors. The Company
Secretary also facilitates orientation and assists with professional development as required. The Company Secretary attends
all meetings of the Board and ensures that board procedures, applicable rules and regulations are followed. The Company
Secretary also attends all meetings of the Board and Board Committees. The appointment and removal of the Company
Secretary is a matter for the Board to decide as a whole.
Please refer to the “Corporate Information” section of the annual report for the composition of the Company’s Board of
Directors and Board Committees.
18 Annual Report 2012
EMS Energy Limited and its Subsidiaries
Corporate Governance Repor t
B.
REMUNERATION MATTERS
Principle 7: Procedures for Developing Remuneration Policies
Principle 8: Level and Mix of Remuneration
Mr. Ung Gim Sei, an Independent Director, is the Chairman of the RC. The other members of the RC are our Independent
Directors, Mr. Lim Siong Sheng and Mr. Lim Poh Boon. As such, the risk of potential conflict of interest is minimised.
The function of the RC is to review the procedure for developing the remuneration policy of the Executive
Directors of the Company, to establish the remuneration packages of individual Directors and to provide a greater degree of
objectivity and transparency in the setting of remuneration. No Director is involved in the decision for his own remuneration.
The responsibilities of the RC are:
a.
to recommend to the Board a framework of remuneration for the Executive Directors of the Group (where applicable),
all aspects of remuneration such as Directors’ fees, salaries, allowance, bonuses, options and benefits-in-kind and to
submit all such recommendations for endorsement by the entire Board;
b.
to determine the remuneration packages and terms of employment for each Executive Director; and
c.
to review the remuneration of senior management.
The RC has access to internal and external expert and/or professional advice on human resource and remuneration of all
Directors, amongst other matters, whenever there is a need for such consultation.
The RC ensures that the levels of remuneration for all Directors are appropriate to attract, retain and motivate them to run
the Group successfully and in this respect, the RC avoids paying more than necessary. In its deliberations, the RC takes
into consideration industry practices, practices of comparable companies and norms in compensation and employment
in addition to the Company’s performance and the performance of the individual Directors. However, any comparisons of
practices within the industry and with comparable companies are done with caution in view of the risk of an upward ratchet
of remuneration levels with no corresponding improvements in performance.
A significant proportion of the Executive Director’s remuneration is structured to link rewards to corporate and individual
performance. Therefore the performance of the Executive Director is measured by the achievement of corporate and
individual performance targets. The RC is of the view that such measurements are appropriate and meaningful. The
performance-related elements of remuneration are designed to align interests of the Executive Director with those of
shareholders.
The Executive Director has a service contract with a fixed appointment period that the Remuneration Committee reviews,
in particular its termination provisions. The service contract is not excessively long and does not contain onerous removal
clauses. In the event of early termination, the Executive Director or the Company may terminate the service agreement by
giving to the other party not less than three months’ notice in writing, or in lieu of notice, payment of an amount equivalent
to three months’ salary based on the Executive Director’s last drawn salary. Compensation is fair and the RC avoids
rewarding poor performance.
The remuneration of each Non-Executive Director is determined by his contribution to the Company, taking into account
factors such as effort and time spent as well as his responsibilities on the Board. The Non-Executive Directors are not
overcompensated to the extent that their independence may be compromised. The Board will recommend the remuneration
of the Non-Executive Directors for approval at the AGM.
Annual Report 2012
EMS Energy Limited and its Subsidiaries 19
Corporate Governance Repor t
As for long-term incentive schemes, the Group operates “EMS Energy Performance Share Plan” and “EMS Energy
Employee Share Option Scheme” (the “Schemes”) for its directors and employees. The Schemes are administered by the
RC. In FY2012, the two schemes have not been put into operation. The RC intends to operationalise the Schemes in the
financial year ending 31 December 2013 (“FY2013”). The RC shall review whether the Directors are eligible for benefits
under the Schemes and to evaluate the costs and benefits of other long-term incentive schemes, if necessary. The RC shall
also encourage that the offers of shares or granting of options or other forms of deferred remuneration under the Schemes
be vested over a period of time. Directors will be encouraged to hold their shares beyond the vesting period, subject to the
need to finance any costs of acquisition and associated tax liability.
Principle 9: Disclosure on Remuneration
The Company adopts a formal procedure in setting remuneration packages of individual Directors, taking into account pay
and employment conditions of comparable companies in the same or similar industries, as well as the Group’s relative
performance and the performance of individual Directors. The Company does not have any employee who is an immediate
family member of any Director and whose remuneration exceeded S$150,000 during the financial year under review.
The report on Directors’ Remuneration for FY2012 is disclosed in Table 2.
Table 2: The breakdown of the Directors’ remuneration for FY2012
Salary
%
Bonus
%
89
10
Stock-based
remuneration
%
Total
%
1
–
100
Directors’
fee
%
Name of Directors
Remuneration Band
Mr Ting Teck Jin
SS$250,000 to S$500,000
Mr Lim Poh Boon
Below S$250,000
–
–
100
–
100
Mr Ung Gim Sei
Below S$250,000
–
–
100
–
100
Mr Lim Siong Sheng
Below S$250,000
–
–
100
–
100
Remuneration of Key Employees
Details of remuneration paid to the top 5 Employees (who are not Directors of the Company) of the Group for FY2012 are
set out below:
Name of Key Executive*
Remuneration Band
Ong See Kong(1)
SS$250,000 to S$500,000
Salary
%
84
Bonus
%
Stock-based
remuneration
%
Total
%
16
–
100
Lim Beng Hwee Gavin
Below S$250,000
100
–
–
100
Koh Choon Kong(3)
Below S$250,000
100
–
–
100
Lei Cheng Yi
Below S$250,000
92
8
–
100
Xiao Fan
Below S$250,000
92
8
–
100
(2)
Remuneration amounts are inclusive of salary, bonus, allowances and Central Provident Fund contributions. There were no share options
granted to employees during the financial year.
Notes:
(1)
Mr. Ong See Kong is the Managing Director of Oilfield Services & Supplies Ptd Ltd (“OSS”). The Group has disposed off a 40% equity
interest in OSS on 2 January 2013 while retaining a 20% equity interest in OSS. Thus, as at 2 January 2013, OSS is an associated
company of the Group.
(2)
Mr. Lim Beng Hwee Gavin joined the Group as the General Manager of its EMS Energy Solutions (“EES”) Business Segment on 2
February 2012 and resigned on 15 December 2012.
(3)
Mr. Koh Choon Kong joined the Group as its Chief Financial Officer on 1 January 2012, and resigned on 28 September 2012.
20 Annual Report 2012
EMS Energy Limited and its Subsidiaries
Corporate Governance Repor t
C.
ACCOUNTABILITY AND AUDIT
Principle 10: Accountability
The Board believes that it should promote best practices and present a balanced and comprehensible assessment of the
Group’s performance, position and prospects, which extends to interim and price sensitive public reports, as a means to
build an excellent business for our shareholders as they are accountable to shareholders for the Company and the Group’s
performance.
The Board is mindful of its obligations to provide timely and fair disclosure of material information in compliance with
statutory reporting requirements. Price sensitive information is either first publicly released before the Company meets
with any group of investors or analysts or simultaneously with such meetings. Financial results and annual reports will
be announced or issued within the mandatory period. The Board also provides reports to regulators when required.
Management provides the Board with quarterly management accounts that present a balanced and understandable
assessment of the Group’s performance, position and prospects.
Principle 11: Audit Committee
Mr. Lim Siong Sheng, an Independent Director, is the Chairman of the AC. The AC comprises two other Independent
Directors, Mr. Ung Gim Sei and Mr. Lim Poh Boon. At least two members of the AC have the appropriate accounting or
related financial management expertise and experience. The AC has explicit authority to investigate any matter within its
terms of reference, full access to and co-operation by Management and reasonable resources to enable it to discharge its
functions properly, as well as full access to the Directors and Executives and discretion to invite any of them to attend its
meeting. The Board ensures that the members of the AC are appropriately qualified to discharge their responsibilities.
The AC holds periodic meetings and reviews primarily the following:
(a)
the audit plan of the Company’s external auditors;
(b)
the external auditors’ reports;
(c)
the co-operation given by our officers to the external auditors;
(d)
the effectiveness of the Group’s internal audit function;
(e)
the scope and results of the audit procedures and their cost effectiveness;
(f)
the financial statements of the Company and the Group, especially any significant financial reporting issues and
judgments so as to ensure their integrity, before submission to the Board;
(g)
all formal announcements relating to the Group’s financial performance;
(h)
the independence and objectivity of the external auditors on an annual basis;
(i)
the remuneration and terms of engagement of the external auditor;
(j)
nomination, re-nomination and removal of external auditors for appointment;
(k)
the adequacy and effectiveness of the Group’s internal controls;
Annual Report 2012
EMS Energy Limited and its Subsidiaries 21
Corporate Governance Repor t
(l)
the Group’s compliance with such functions and duties as may be required under the relevant statutes or the Listing
Manual, and by such amendments made thereto from time to time;
(m)
interested person transactions; and
(n)
capital expenditure transactions.
The AC meetings are also attended by the Executive Director and the external and internal auditors. During this financial
year, the Audit Committee has also met up with the external auditors and the internal auditors, without the presence of
Management.
The AC shall commission and review the findings of internal investigations into matters where there is any suspected fraud
or irregularity, failure of internal controls or infringement of any Singapore laws, rules or regulations which have or are likely
to have a material impact on the Group’s operating results and/or financial position. Each member of the AC shall abstain
from voting on any resolutions and making any recommendations and/or participating in any deliberations of the AC in
respect of matters in which he is interested.
The AC has undertaken a review of all non-audit services provided by the auditors during the year to balance the
maintenance of objectivity and value for money, and the AC is of the opinion that the provision of non-audit services would
not affect the independence of the auditors.
The AC has recommended Messrs Nexia TS Public Accounting Corporation for re-appointment as auditors of the Company at
the forthcoming AGM.
The Company confirms that it is in compliance with Rules 712 and 715 of the Catalist Rules in relation to its external
auditors.
The Company has a "Whistle-Blowing" policy in place which provides a well-defined and accessible channel for staff of
the Group through which the staff may, in confidence, raise concerns about possible fraudulent activities, malpractices or
improprieties in matters of financial reporting or other matters in a responsible and effective manner. Arrangements for
independent investigation of such matters and appropriate follow up actions were also provided for in the "Whistle-Blowing"
policy. There were no reports of whistle blowing received in FY2012.
Principle 12: Internal Controls
The Board acknowledges that it is responsible for the overall internal control framework and for ensuring that Management
maintains a sound system of internal controls to safeguard shareholders’ investments and the Group’s assets. The Board also
recognises that no cost effective internal control system will preclude all errors and irregularities, as a system is designed
to manage rather than eliminate the risk of failure to achieve business objectives, and can provide only reasonable and not
absolute assurance against material misstatement or loss.
During the year, the internal auditor (“IA”) has reviewed the effectiveness of the internal control system put in place by
Management. Based on the findings from and discussions with the IA and external auditors (with and without the presence
of management), as well as regular discussions with Management, the Board, with the concurrence of the AC, is of
the opinion that the Group has adequate internal controls to address financial, operational and compliance risks as at 31
December 2012.
22 Annual Report 2012
EMS Energy Limited and its Subsidiaries
Corporate Governance Repor t
Principle 13: Internal Audits
The Group outsourced its internal audit function to an external professional firm, BDO LLP, which reports directly to the
Chairman of AC and administratively works with the CFO. The AC’s responsibility in overseeing that the Company’s internal
controls and risk management systems are adequate will be complemented by the work of the IA.
In accordance with Guideline 13.2 of the Code, the IA meets the standards set by nationally or internationally recognised
professional bodies including the Standards for the Professional Practice of Internal Auditing set by The Institute of Internal
Auditors.
The AC meets with the IA at least twice during the year without the presence of Management, reviews the IA’s reports on
a half yearly basis and also reviews and approves the annual IA plans and resources to ensure that the IA has the necessary
resources and the appropriate standing within the Company to adequately perform its functions.
To ensure the adequacy of the internal audit function, the AC has reviewed the IA’s activities, the IA’s resources and standing
in the Company on a yearly basis and is satisfied that the internal audit function is adequate.
D. COMMUNICATION WITH SHAREHOLDERS
Principle 14: Communication with Shareholders
Principle 15: Greater Shareholder Participation
The Board believes in regular, effective, fair and timely disclosure of material information to its shareholders to enhance
the standard of corporate governance. To be in line with the provisions of the Catalist Rules and the Companies Act (Cap.
50 of Singapore), the Board’s policy requires that all shareholders are equally and in a timely manner informed of all major
developments that impact the Company or the Group. It is also the Board’s policy that all corporate news, strategies and
announcements be promptly disseminated through the SGXNET system as well as the corporate website (http://www.
emsenergy.com.sg), including press releases, annual reports and other various media. If there is inadvertent disclosure
made to a selected group, we will make the same disclosure publicly to all others as soon as practicable. We constantly
ensure that all information disclosed is as descriptive, detailed and forthcoming as possible such that boilerplate disclosures
are avoided.
The Board supports the Code’s principle to encourage shareholder participation. Shareholders are encouraged to attend,
to participate effectively and to vote in the AGM and to stay informed of the Company’s strategy and goals, to ensure
a high level of accountability. Notice of the AGM is despatched to shareholders, together with explanatory notes or
a circular on items of special business (if necessary), at least 14 days before the meeting. Shareholders may vote
in person or by proxy. Voting in absentia and electronic mail may only be possible following careful study to ensure the
integrity of the information and authentication of the identity of members through the web is not compromised
and is also subject to legislative amendment to recognise electronic voting. The Board welcomes questions from
shareholders who wish to raise issues either informally or formally before or at the AGM. The Chairpersons of the Board
Committees, and the external auditors, are normally available at the meeting to answer questions relating to the general
meetings, work of their committees, conduct of audit and the preparation and content of the auditors’ report.
Separate resolutions are provided at general meetings on each separate issue and the ‘bundling’ of resolutions is avoided
unless they are interdependent and linked so as to form one significant proposal and unless the Company explains the
reasons and material implications.
The Company’s Articles of Association allows a member of the Company to appoint one or two proxies to attend and vote
instead of the member. In addition, there is no limit on the number of proxies for nominee companies to attend general
meetings.
Annual Report 2012
EMS Energy Limited and its Subsidiaries 23
Corporate Governance Repor t
The Company prepares minutes of general meetings which include substantial comments, queries from shareholders and
responses from the Board and Management. The minutes are available to shareholders upon request.
E.
DEALING IN SECURITIES
The Company has adopted internal codes of conduct pursuant to Rule 1204(19) of the Catalist Rules applicable to all its
officers in relation to dealings in the Company’s securities. The Company refers to the Catalist Rules and is of the opinion
that these codes are appropriate. The Company is aware that it, its Directors and its employees are continuously subject to
requirements set out by applicable law. The Company believes that by observing these best practices and the applicable law,
the standard of corporate governance will be raised and investor confidence will be enhanced.
The Company and its officers are aware that it is an offence to deal in its securities as well as securities of other listed
issuers when in possession of unpublished material price-sensitive information in relation to those securities.
As required under Chapter 12 of the Catalist Rules, the Company and its officers do not deal in the Company’s securities
on short-term considerations and they are not allowed to deal in the Company’s shares during the period commencing one
month before the announcement of half-year or full year results and ending on the date of the announcement of these
results.
Directors and executives are also expected to observe insider trading laws at all times even when dealing with securities
within permitted trading period.
F.
CODE OF CORPORATE GOVERNANCE
The Board confirms that during FY2012, the Company has complied materially with the Code in accordance with Rule 710 of
the Catalist Rules by adopting internal controls and codes of conduct and that they are adequate for its current operations.
G.
MATERIAL CONTRACTS
In accordance with Rule 1204(8) of the Catalist Rules, there are no material contracts entered into by the Company or its
subsidiaries for the benefit of the Directors or controlling shareholders during FY2012.
H. RISK MANAGEMENT POLICIES AND PROCESSES
The Group regularly reviews and improves its business and operations to identify areas of significant business risks as well
as to take appropriate measures to control and mitigate these risks. The Group reviews all significant control policies and
procedures and highlights all significant matters to the AC and the Board.
The Company does not have a separate Risk Management Committee, and the risk management function of the Group
is undertaken by the AC of the Company. However, based on an independent review of our Enterprise Risk Management
done in FY2010 by a professional firm, BDO LLP, and its recommendations, Management has drawn up a Risk Management
policy. The following sets out some of the risks facing our Group, with a brief description of the nature and the extent of its
exposure to these risks.
24 Annual Report 2012
EMS Energy Limited and its Subsidiaries
Corporate Governance Repor t
Key Contracts / Projects Execution
The Group previously had 2 business segments, the Oilfield Services and Supplies (“OSS”) and the EMS Energy Solutions
(“EES”). Following the approval of the Company’s Management and shareholders on 2 January 2013, the Group had
disposed 40% out of its 60% interest in OSS (comprising the Group’s entire interest in the OSS business segment). The
Group's core business segment is currently undertaken by EES namely the design, manufacture, fabrication and installation
of engineering solutions and products for the marine, oil and gas industries.
EES secures projects from its customers. Some of its larger turnkey projects may stretch to two or even three years with
milestone payments, resulting in the heightened role of cash flow management in such projects. Unexpected delays in
project delivery during execution or delay in customers’ payment of any such key long-term contracts may have an adverse
effect on the financial condition and results of operations of the Group. The Group has taken the necessary approach to
mitigate this risk by securing project financing for its larger turnkey projects, ensuring adequate bank facilities to support
its execution of projects, and tight monitoring of its collections from customers. The Group would continue to pursue
diversification strategies to strengthen its operations and financial position.
Product liability risk
During the year, the Management has reviewed and deemed adequate its insurance coverage against common fire,
industrial, machinery, building, third party liability risks and so forth. With its range of offshore products, the Management
is assessing its potential product liability risks, and suitable insurance coverage for such product liability. The Board believes
that such insurance coverage of product liability will manage the Company’s exposure to such risks.
Financial risks
The nature of the Group businesses and activities exposes the Group to market risks (including currency risk and interest
rate risk), credit risk, liquidity risk and capital risk. The Group has a system of controls in place to ensure an acceptable
balance between the cost of risks occurring and the cost of managing such risks. The steps taken by the Group to manage
its exposure to financial risks are set out in the Financial Report on pages 74 to 80 of the Notes to the Financial Statements
in this annual report.
I.
INTERESTED PERSONS TRANSACTIONS
The Company has adopted an internal policy in respect of any transaction with interested persons and has set out the
procedures for review and approval of the Company’s interested person transactions.
In order to ensure that the Company complies with Chapter 9 of the Catalist Rules on interested person transactions, the
AC meets quarterly to review all interested person transactions of the Company. However, if the Company enters into an
interested person transaction, the AC seeks to ensure compliance with the relevant rules under Chapter 9 of the Catalist
Rules.
Annual Report 2012
EMS Energy Limited and its Subsidiaries 25
Corporate Governance Repor t
The following interested person transactions took place between the Group and interested persons during FY2012:
Name of Interested Person
Aggregate value of all interested
person transactions (excluding
transactions less than $100,000
and transactions conducted under
shareholders’ mandate pursuant
to Rule 920 of the Catalist Rules)
S$’000
Aggregate value of all interested
person transactions conducted
under Shareholders’ Mandate
pursuant to Rule 920 of the Catalist
Rules (excluding transactions less than
$100,000)
S$’000
Koastal Group*
Purchases
Nil
985
Sales
Nil
10,749
Aggregate
Nil
11,734
*
J.
Koastal Industries Pte. Ltd. and Koastal Marine Pte. Ltd. are subsidiaries of Koastal Pte. Ltd (“Koastal Group”). Koastal Industries Pte.
Ltd. is the legal and beneficial owner of 37.51% of the shares in the Company. Mr. Ting Teck Jin, being the controlling shareholder and
managing director of Koastal Group, is deemed to have an indirect interest in the shares of the Company.
CATALIST SPONSOR
The Company is currently under the SGX-ST Catalist sponsor-supervised regime. With effect from 27 August 2012, the
continuing sponsor of the Company is CNP Compliance Pte. Ltd., in place of KW Capital Pte. Ltd. In compliance with Rule
1204(21) of the Catalist Rules, there was no non-sponsor fee paid to CNP Compliance Pte. Ltd. and KW Capital Pte. Ltd. by
the Company for FY2012.
K.
NON-AUDIT FEES
The amount of non-audit fees paid to the external auditors during the financial year was S$11,200.
L.
USE OF PROCEEDS
$’000
Proceeds from disposal of OSS* (as at 31 December 2012, the Group has received 80% of total consideration
of S$8.5 million)
6,800
Use of Proceeds
Payment to banks:
Bills payable
(2,816)
Term loans & bank interests
Payment to trade creditors
Operational expenses
Balance
*
OSS – Oilfield Services & Supplies Pte Ltd.
(644)
(1,657)
(1,347)
(6,464)
336
26 Annual Report 2012
EMS Energy Limited and its Subsidiaries
Directors’ Repor t
The Directors present their report to the members together with the audited consolidated financial statements of the Group
for the financial year ended 31 December 2012 and the balance sheet of the Company as at 31 December 2012.
Directors
The Directors of the Company in office at the date of this report are as follows:
Mr Ting Teck Jin
Mr Lim Poh Boon
Mr Lim Siong Sheng
Mr Ung Gim Sei
Arrangements to Enable Directors to Acquire Shares or Debentures
Neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose object
was to enable the Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of,
the Company or any other body corporate.
Directors’ Interests in Shares or Debentures
(a)
According to the register of directors’ shareholdings, none of the Directors holding office at the end of the financial
year had any interest in the shares or debentures of the Company or its related corporations, except as follows:
Holdings registered in name of
director or nominee
At
At
1.1.2012
31.12.2012
Holdings in which director is
deemed to have an interest
At
At
1.1.2012
31.12.2012
The Company
(No. of ordinary shares)
Mr Ting Teck Jin
Mr Lim Poh Boon
–
–
–
–
247,726,275
–
247,726,275
10,000,000
(b)
Mr Ting Teck Jin, who by virtue of his interest of not less than 20% of the issued capital of the Company, is deemed
to have interests in the share capital of all subsidiaries at the beginning and at the end of the financial year.
(c)
There were no changes in any of the abovementioned Directors’ interests in ordinary shares of the Company between
the end of the financial year and 21 January 2013.
Directors’ Contractual Benefits
Since the end of the previous financial year, no Director has received or become entitled to receive a benefit by reason of a
contract made by the Company or a related corporation with the Director or with a firm of which he is a member or with a
company in which he has a substantial financial interest, except as disclosed in the accompanying financial statements and
in this report.
Annual Report 2012
EMS Energy Limited and its Subsidiaries 27
Directors’ Repor t
Share Scheme
The Group has adopted the new “EMS Energy Performance Share Plan” and “EMS Energy Employee Share Option Scheme”
(the “Schemes”) at the Extraordinary General Meeting dated 22 August 2009.
Under the Scheme, the following employees shall be eligible to participate:
(a)
full-time employees of the Company and/or its subsidiaries who have attained the age of twenty-one (21) years on or
before the offering date;
(b)
Executive Directors of the Company; and
(c)
Non-Executive Directors (including Independent Directors) of the Company.
Persons who qualify under (a), (b) or (c) under the paragraph above and who are also the Company’s Controlling Shareholders
can only participate in the Scheme if their participation is approved by independent shareholders of the Company in separate
resolutions for each such person and for each such grant.
Under the Plan, the following employees shall be eligible to participate:
(a)
confirmed full-time employees of the Company and/or its subsidiaries and associated companies who have attained
the age of twenty-one (21) years on or before the offering date; and
(b)
Executive Directors of subsidiaries or associated companies
During the financial year, no options or performance shares have been granted to the Directors and employees of the
Company or its subsidiaries.
No shares have been issued during the financial year by virtue of the exercise of options to take up unissued shares of the
Company and its subsidiaries.
There were no unissued shares of the Company and its subsidiaries under option at the end of the financial year.
Audit Committee
The members of the Audit Committee at the date of this report are:
Mr Lim Siong Sheng (Chairman)
Mr Lim Poh Boon
Mr Ung Gim Sei
All members of the Audit Committee are independent and non-executive Directors.
28 Annual Report 2012
EMS Energy Limited and its Subsidiaries
Directors’ Repor t
Audit Committee (Continued)
The Audit Committee carried out its functions in accordance with Section 201B (5) of the Companies Act (Chapter 50) of
Singapore. In performing those functions, the Audit Committee reviewed:
•
the scope and the results of internal audit procedures with the internal auditor;
•
the audit plan of the Company’s independent auditor and any recommendations on internal accounting controls arising
from the statutory audit;
•
the assistance given by the Company’s Management to the external auditor; and
•
the balance sheet of the Company and the consolidated financial statements of the Group for the financial year ended
31 December 2012 before their submission to the Board of Directors, as well as the independent auditor’s report on
the balance sheet of the Company and the consolidated financial statements of the Group.
The Audit Committee is satisfied with the independence and objectivity of the independent auditor.
The Audit Committee has recommended to the Board of Directors that Messrs Nexia TS Public Accounting Corporation be
nominated as independent auditor of the Company at the forthcoming Annual General Meeting.
Independent Auditor
The independent auditor, Nexia TS Public Accounting Corporation, has expressed its willingness to accept re-appointment.
On behalf of the Directors
Singapore
28 March 2012
Mr Ting Teck Jin
Director
Mr Lim Poh Boon
Director
Annual Report 2012
EMS Energy Limited and its Subsidiaries 29
Statement by Directors
In the opinion of the Directors,
(a)
the consolidated financial statements of the Group and the balance sheet of the Company as set out on pages 32 to
77 are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31
December 2012 and of the results of the business, changes in equity and cash flows of the Group for the financial
year then ended; and
(b)
at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts
as and when they fall due.
Singapore
28 March 2012
On behalf of the Directors
Mr Ting Teck Jin
Director
Mr Lim Poh Boon
Director
30 Annual Report 2012
EMS Energy Limited and its Subsidiaries
Independent Auditor ’s Repor t
to the Members of EMS Energy Limited
Report on the Financial Statements
We have audited the accompanying financial statements of EMS Energy Limited (the “Company”) and its subsidiaries (the
“Group”) set out on pages 32 to 77, which comprise the consolidated balance sheet of the Group and balance sheet of the
Company as at 31 December 2012, the consolidated statement of comprehensive income, statement of changes in equity
and statement of cash flows of the Group for the financial year then ended, and a summary of significant accounting policies
and other explanatory information.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the
provisions of the Singapore Companies Act (the “Act”) and Singapore Financial Reporting Standards, and for devising and
maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded
against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as
necessary to permit the preparation of true and fair profit and loss accounts and balance sheet and to maintain accountability
of assets.
Auditor’s 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 about 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 of financial statements that give a true and fair view in order
to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation
of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Annual Report 2012
EMS Energy Limited and its Subsidiaries 31
Independent Auditor ’s Repor t
to the Members of EMS Energy Limited
Opinion
In our opinion, the consolidated financial statements of the Group and the balance sheet of the Company are properly drawn
up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair
view of the state of affairs of the Group and of the Company as at 31 December 2012, and the results, changes in equity
and cash flows of the Group for the financial year ended on that date.
Report on Other Legal and Regulatory Requirements
In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiaries
incorporated in Singapore of which we are the auditors, have been properly kept in accordance with the provisions of the
Act.
Nexia TS Public Accounting Corporation
Public Accountants and Certified Public Accountants
Director-in-charge: Kristin YS Kim
Appointed from financial year ended 31 December 2012
Singapore
28 March 2012
32 Annual Report 2012
EMS Energy Limited and its Subsidiaries
Balance sheets
as at 31 December 2012
Group
Note
Company
2012
$’000
2011
$’000
2012
$’000
2011
$’000
1,130
8,035
75
2,741
11,981
23,487
35,468
5,677
11,225
3,228
7,045
27,175
–
27,175
29
6,890
–
–
6,919
–
6,919
9
6,843
–
–
6,852
–
6,852
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Due from customers on construction contracts
4
5
6
7
Disposal group classified as held-for-sale
8
Non-current assets
Property, plant and equipment
Investments in subsidiaries
Investments in associated companies
Intangible assets
Financial assets, available-for-sale
9
10
11
12
13
4,861
–
–
9,248
–
14,109
49,577
16,444
–
275
19,472
166
36,357
63,532
5
9,251
–
–
–
9,256
16,175
10
12,208
–
–
–
12,218
19,070
14
7
10,923
2,449
12,360
1,055
2,848
–
1,833
–
15
7,440
–
20,812
11,158
293
24,886
–
–
2,848
–
–
1,833
Liabilities directly associated with disposal group
classified as held-for-sale
8
14,324
35,136
–
24,866
–
2,848
–
1,833
Non-current liabilities
Borrowings
Deferred income tax liabilities
15
16
–
–
4,419
458
–
–
–
–
Total Liabilities
–
35,136
4,877
29,743
–
2,848
–
1,833
NET ASSETS
14,441
33,789
13,327
17,237
26,844
1,453
(17,634)
10,663
3,778
14,441
26,844
2,174
(1,271)
27,747
6,042
33,789
26,844
–
(13,517)
13,327
–
13,327
26,844
–
(9,607)
17,237
–
17,237
Total Assets
LIABILITIES
Current liabilities
Trade and other payables
Due to customers on construction contracts
Borrowings
Current income tax liabilities
EQUITY
Capital and reserves attributable to equity
holders of the Company
Share capital
Other reserves
Accumulated losses
Non-controlling interest
Total Equity
17
18
The accompanying notes form an integral part of these financial statements.
Annual Report 2012
EMS Energy Limited and its Subsidiaries 33
Consolidated Statement of Comprehensive Income
for the financial year ended 31 December 2012
Group
Note
2012
$’000
2011
$’000
Revenue
Cost of sales
Gross profit
20
18,689
(18,330)
359
49,873
(42,527)
7,346
Other income
21
Expenses
- Administrative
- Finance
22
Continuing operations
(Loss)/profit before income tax
Income tax expense
171
(19,361)
(498)
(7,191)
(498)
(19,329)
629
(69)
(129)
(19,398)
500
3,978
(15,420)
2,709
3,209
(48)
–
(48)
150
2,933
3,083
(15,468)
6,292
(16,910)
1,490
(15,420)
2,096
1,113
3,209
(17,084)
1,616
(15,468)
4,647
1,645
6,292
25
(Loss)/profit from continuing operations
Discontinued operations
Profit from discontinued operations
Total (loss)/profit for the year
8
Other comprehensive (loss)/income:
Foreign currency translation
Revaluation surplus on property
Other comprehensive (loss)/income, net of tax
Total comprehensive (loss)/income
(Loss)/profit attributable to:
Equity holders of the Company
Non-controlling interest
Total comprehensive(loss)/income attributable to:
Equity holders of the Company
Non-controlling interest
972
Earnings per share from continuing operations attributable to equity
holders of the Company (cents)
- Basic
- Diluted
26
26
(3.23)
(3.23)
0.08
0.08
Earnings per share from discontinued operations attributable to equity
holders of the Company (cents)
- Basic
- Diluted
26
26
0.66
0.66
0.46
0.46
The accompanying notes form an integral part of these financial statements.
34 Annual Report 2012
EMS Energy Limited and its Subsidiaries
Consolidated Statement of Changes in Equity
for the financial year ended 31 December 2012
Foreign
currency
translation Revaluation
reserve
reserve
$’000
$’000
Noncontrolling
interest
$’000
Share
capital
$’000
Accumulated
losses
$’000
2012
Beginning of financial year
26,844
(1,271)
(298)
2,472
27,747
6,042
33,789
Dividends paid by subsidiary
–
–
–
–
–
(3,880)
(3,880)
Note
Total
$’000
Total
equity
$’000
Total comprehensive (loss)/
income for the year
End of financial year
–
26,844
(16,363)
(17,634)
(30)
(328)
(691)
1,781
(17,084)
10,663
1,616
3,778
(15,468)
14,441
2011
Beginning of financial year
22,560
(3,367)
(377)
–
18,816
4,997
23,813
4,284
–
–
–
4,284
–
4,284
–
–
–
–
–
(600)
(600)
2,472
2,472
4,647
27,747
1,645
6,042
6,292
33,789
Issuance of shares
17
Dividends paid by subsidiary
Total comprehensive income for
the year
End of financial year
–
26,844
2,096
(1,271)
79
(298)
The accompanying notes form an integral part of these financial statements.
Annual Report 2012
EMS Energy Limited and its Subsidiaries 35
Consolidated Statement of Cash Flows
for the financial year ended 31 December 2012
Note
Cash flows from operating activities
Total (loss)/profit
2012
$’000
2011
$’000
(15,365)
3,209
887
10,224
2,296
(9)
781
(488)
–
1,653
–
(115)
37
(99)
204
–
1,853
(18)
656
(2)
(808)
–
38
(50)
168
5,250
Changes in working capital, net of effects from
disposal of subsidiaries
- Trade and other receivables
- Inventories
- Trade and other payables
- Bills payables
Cash (used in)/generated from operations
Income taxes paid
Income tax refunded
Interest paid
Interest received
Net cash (used in)/provided by operating activities
293
902
2,397
(3,583)
(90)
(378)
–
(781)
9
(1,240)
(7,428)
(871)
4
7,376
4,331
(710)
480
(656)
18
3,463
Cash flows from investing activities
Proceeds from disposal of property, plant and equipment
Purchases of property, plant and equipment
Purchases of financial assets, available-for-sale
Net cash used in investing activities
6,357
(7,065)
(698)
(1,406)
500
(6,196)
(95)
(5,791)
Cash flows from financing activities
Proceeds from issuance of ordinary shares
Dividends paid to non-controlling interest
Proceeds from term loan
Repayment of term loan
Repayment of finance lease liabilities
Net cash provided by financing activities
–
(2,680)
6,630
(3,620)
134
464
4,284
(600)
8,921
(9,961)
(166)
2,478
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of the financial year
Effects of currency translation on cash and cash equivalents
Cash and cash equivalents at end of the financial year
(2,182)
5,341
(47)
3,112
150
5,205
(14)
5,341
Adjustments for:
- Income tax expense
- Impairment loss on disposal of subsidiary
- Depreciation of property, plant and equipment
- Interest income
- Interest expense
- Gain on disposal of property, plant and equipment
- Reversal of impairment of property, plant and equipment
- Allowance for impairment of trade receivables
- Other receivables written-off
- Share of results of associated companies
- Currency translation differences
9
4
The accompanying notes form an integral part of these financial statements.
36 Annual Report 2012
EMS Energy Limited and its Subsidiaries
Notes to the Financial Statements
for the financial year ended 31 December 2012
These notes form an integral part of and should be read in conjunction with the accompanying financial statements.
1
General
EMS Energy Limited (the “Company”) is incorporated and domiciled in Singapore and is publicly traded on the
Catalist Board of Singapore Exchange Securities Trading Limited (“SGX-ST”). The address of its registered office is
at 1 Robinson Road, #17-00 AIA Tower Singapore 048542 and the principal place of business is at 10 Tuas Avenue 11,
Singapore 639076.
The principal activity of the Company is that of investment holding. The principal activities of the subsidiaries are
stated in Note 10 to the financial statements.
2
Significant Accounting Policies
(a)
Basis of Preparation
These financial statements have been prepared in accordance with Singapore Financial Reporting Standards
(“FRS”). The financial statements have been prepared under the historical cost convention, except as disclosed
in the accounting policies below.
The preparation of financial statements in conformity with FRS requires management to exercise its judgement
in the process of applying the Group’s accounting policies. It also requires the use of certain critical accounting
estimates and assumptions. There are no areas involving a higher degree of judgement or complexity, or areas
where assumptions and estimates are significant to the financial statements excepts as disclosed in Note 3.
Change in accounting policy
The accounting policies adopted are consistent with those of the previous financial. The Group has changed
its accounting policy on its leasehold land and buildings from cost model to revaluation model. Under FRS
8 paragraph 17 in financial year 2011, the initial application of a policy to revalue assets in accordance with
FRS 16 Property, Plant and Equipment is a change in an accounting policy to be dealt with as a revaluation
in accordance with FRS 16. Essentially, the change in policy is accounted for as a revaluation during the year,
rather than by means of a prior year adjustment.
Interpretations and amendments to published standards effective in 2012
On 1 January 2012, the Group adopted the new or amended FRS and Interpretations to FRS (“INT FRS”)
relevant to the Group that are mandatory for application from that date. Changes to the Group’s accounting
policies have been made as required, in accordance with the transitional provisions in the respective FRS and
INT FRS.
The adoption of these new or amended FRS and INT FRS did not result in substantial changes to the Group’s
and Company’s accounting policies and had no material effect on the amounts reported for the current or prior
financial years.
Annual Report 2012
EMS Energy Limited and its Subsidiaries 37
Notes to the Financial Statements
for the financial year ended 31 December 2012
2
Significant Accounting Policies (Continued)
(b)
Revenue Recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of goods and
rendering of services in the ordinary course of the Group’s activities. Revenue is presented, net of value-added
tax, rebates and discounts, and after eliminating sales within the Group. Revenue is recognised as follows:
(c)
(i)
Sale of Goods and Services Rendered
Revenue is recognised when the significant risks and rewards of ownership have been transferred to
the buyer which is taken to be the point when a Group entity has delivered the goods or rendered the
services to the customer, the customer has accepted the goods or services and the collectibility of the
related receivable is reasonably assured.
(ii)
Construction Contracts
When the outcome of a construction contract can be estimated reliably, contract revenue and expenses
are recognised in profit or loss by reference to the stage of completion of the contract activity at the
balance sheet date. The stage of completion is assessed by reference to the contract costs incurred to
date to the estimated total costs for the contract or surveys of work performed, as applicable. When it
is probable that total contract costs will exceed total contract revenue, the expected loss is recognised
as an expense immediately in profit or loss. Detailed accounting policy on construction contracts is
disclosed in Note 2(f).
(iii)
Interest Income
Interest income is recognised on a time proportion basis using the effective interest method.
Group Accounting
(i)
Subsidiaries
(1) Consolidation
Subsidiaries are entities over which the Group has power to govern the financial and operating
policies so as to obtain benefits from its activities, generally accompanied by a shareholding
giving rise to a majority of the voting rights. The existence and effect of potential voting rights
that are currently exercisable or convertible are considered when assessing whether the
Group controls another entity. Subsidiaries are consolidated from the date on which control is
transferred to the Group. They are de-consolidated from the date on which control ceases.
In preparing the consolidated financial statements, transactions, balances and unrealised gains
on transactions between group entities are eliminated. Unrealised losses are also eliminated
but are considered an impairment indicator of the asset transferred. Accounting policies
of subsidiaries have been changed where necessary to ensure consistency with the policies
adopted by the Group.
Non-controlling interests are that part of the net results of operations and of net assets of a
subsidiary attributable to the interests which are not owned directly or indirectly by the equity
holders of the Company. They are shown separately in the consolidated income statement,
statement of comprehensive income, statement of changes in equity and balance sheet. Total
comprehensive income is attributed to the non-controlling interests based on their respective
interests in a subsidiary, even if this results in the non-controlling interests having a deficit
balance.
38 Annual Report 2012
EMS Energy Limited and its Subsidiaries
Notes to the Financial Statements
for the financial year ended 31 December 2012
2
Significant Accounting Policies (Continued)
(c)
Group Accounting (Continued)
(i)
Subsidiaries (Continued)
(2) Acquisitions
The acquisition method of accounting is used to account for business combination by the Group.
The consideration transferred for the acquisition of a subsidiary comprises the fair value of
the assets transferred, the liabilities incurred and the equity interests issued by the Group.
The consideration transferred also includes the fair value of any contingent consideration
arrangement and the fair value of any pre-existing equity interest in the subsidiary.
Acquisition-related costs are expensed as incurred.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business
combination are, with limited exceptions, measured initially at their fair values at the acquisition
date.
On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the
acquiree at the date of acquisition at the non-controlling interest’s proportionate share of the
acquiree’s net identifiable assets.
The excess of the cost of an acquisition over the fair value of the Group’s share of the identifiable
net assets of the acquired subsidiary is recorded as goodwill. If the cost of an acquisition is less
than the fair value of the Group’s share of the identifiable net assets of the subsidiary acquired
and the measurement of all amounts has been reviewed, the difference is recognised directly in
profit or loss as a bargain purchase.
(3) Disposals
When a change in the Group’s ownership interest in a subsidiary results in a loss of control
over the subsidiary the assets and liabilities of the subsidiary including any goodwill are
derecognised. Amounts recognised in other comprehensive income in respect of that entity
are also reclassified to profit or loss or transferred directly to retained earnings if required by a
specific Standard.
Any retained interest in the entity is remeasured at fair value. The difference between the
carrying amount of the retained investment at the date when control is lost and its fair value is
recognised in profit or loss.
Please refer to note 2(g) for the Company’s accounting policy on investments in subsidiaries in
the separate financial statements of the Company.
(ii)
Transactions with Non-Controlling Interests
The Group applies a policy of treating transactions with non-controlling interests as transactions with
parties external to the Group. Disposals to non-controlling interests result in gains and losses for the
Group that are recognised in profit or loss. Purchases from non-controlling interests result in goodwill,
being the difference between any consideration paid and the Group’s incremental share of the carrying
of the value of identifiable net assets of the subsidiary.
Annual Report 2012
EMS Energy Limited and its Subsidiaries 39
Notes to the Financial Statements
for the financial year ended 31 December 2012
2
Significant Accounting Policies (Continued)
(c)
Group Accounting (Continued)
(iii)
Associated Companies
Associated companies are entities over which the Group has significant influence, but not control,
generally accompanied by a shareholding giving rise to between and including 20% and 50% of the
voting rights. Investments in associated companies are accounted for in the consolidated financial
statements using the equity method of accounting.
(1) Acquisitions
Investments in associated companies are initially recognised at cost. The cost of an acquisition
is measured at the fair value of the assets given, equity instruments issued or liabilities incurred
or assumed at the date of exchange, plus costs directly attributable to the acquisition.
(2) Equity method of accounting
In applying the equity method of accounting, the Group’s share of associated companies’ postacquisition profits or losses are recognised in profit or loss and its share of post-acquisition other
comprehensive income is recognised in other comprehensive income. These post-acquisition
movements and distributions received from the associated companies are adjusted against the
carrying amount of the investment. When the Group’s share of losses in an associate equals
or exceeds its interest in the associated company, including any other unsecured non-current
receivables, the Group does not recognise further losses, unless it has obligations to make or
has made payments on behalf of the associated company.
Unrealised gains on transactions between the Group and its associated companies are
eliminated to the extent of the Group’s interest in the associated companies. Unrealised
losses are also eliminated unless the transaction provides evidence of an impairment of the
asset transferred. The accounting policies of associated companies have been changed where
necessary to ensure consistency with the accounting policies adopted by the Group.
(3) Disposals
Investments in associated companies are derecognised when the Group loses significant
influence. Any retained equity interest in the entity is remeasured at its fair value. The difference
between the carrying amount of the retained interest at the date when significant influence is
lost and its fair value is recognised in profit or loss.
Gains and losses arising from partial disposals or dilutions in investments in associated
companies in which significant influence is retained are recognised in profit or loss.
Please refer to note 2(g) for the Company’s accounting policy on investments in associated
companies in the separate financial statements of the Company.
40 Annual Report 2012
EMS Energy Limited and its Subsidiaries
Notes to the Financial Statements
for the financial year ended 31 December 2012
2
Significant Accounting Policies (Continued)
(d)
Property, Plant and Equipment
(i)
Measurement
(1) Leasehold land and buildings
Land and buildings are initially recognised at cost. Leasehold land and buildings are subsequently
carried at the revalued amounts less accumulated depreciation and accumulated impairment
losses.
Land and buildings are revalued by independent professional valuers on a regular basis and
whenever their carrying amounts are likely to differ materially from their revalued amounts.
When an asset is revalued, any accumulated depreciation at the date of revaluation is eliminated
against the gross carrying amount of the asset. The net amount is then restated to the revalued
amount of the asset.
Increases in carrying amounts arising from revaluation, including currency translation differences,
are recognised in other comprehensive income, unless they offset previous decreases in
the carrying amounts of the same asset, in which case, they are recognised in profit or loss.
Decreases in carrying amounts that offset previous increases of the same asset are recognised
in other comprehensive income. All other decreases in carrying amounts are recognised in profit
or loss.
(2) Other property, plant and equipment
All other items of property, plant and equipment are initially recognised at cost and subsequently
carried at cost less accumulated depreciation and accumulated impairment losses.
(3) Components of costs
The cost of an item of property, plant and equipment initially recognised includes its purchase
price and any cost that is directly attributable to bringing the asset to the location and condition
necessary for it to be capable of operating in the manner intended by management.
(ii)
Depreciation
Work-in-progress is not depreciated. Depreciation on other items of property, plant and equipment is
calculated using a straight line method to allocate their depreciable amounts over their estimated useful
lives as follows:
Useful Lives
Leasehold land and buildings
Plant and machinery Office equipment
Motor vehicles
Furniture and fittings
Shorter of 50 years and the lease term
10 years
10 years
5 years
10 years
The residual values, estimated useful lives and depreciation method of property, plant and equipment
are reviewed and adjusted as appropriate, at each balance sheet date. The effects of any revision are
recognised in profit or loss when the changes arise.
Annual Report 2012
EMS Energy Limited and its Subsidiaries 41
Notes to the Financial Statements
for the financial year ended 31 December 2012
2
Significant Accounting Policies (Continued)
(d)
Property, Plant and Equipment (Continued)
(iii)
Subsequent Expenditure
Subsequent expenditure relating to property, plant and equipment that has already been recognised
is added to the carrying amount of the asset only when it is probable that future economic benefits
associated with the item will flow to the Group and the cost of the item can be measured reliably. All
other repair and maintenance expenses are recognised in profit or loss when incurred.
(iv)
Disposal
On disposal of an item of property, plant and equipment, the difference between the disposal proceeds
and its carrying amount is recognised in profit or loss. Any amount in revaluation reserve relating to that
asset is transferred to retained profits directly.
(e)
Intangible Assets
(i)
Goodwill on Acquisitions
Goodwill on acquisition of subsidiaries and businesses prior to 1 January 2010 and on acquisition of
associated companies represents the excess of the cost of the acquisition over the fair value of the
Group’s share of the net identifiable assets acquired.
Goodwill on subsidiaries is recognised separately as intangible assets and carried at cost less
accumulated impairment losses.
Gains and losses on the disposal of subsidiaries include the carrying amount of goodwill relating to
the entity sold. Such goodwill was adjusted against retained profits in the year of acquisition and not
recognised in profit or loss on disposal.
(ii)
Certificate
Certificate is stated in the balance sheet at cost less accumulated impairment losses.
Certificate is not amortised while its useful life is assessed to be indefinite. Any conclusion that the
useful life is indefinite is reviewed annually to determine whether events and circumstances continue
to support the indefinite life assessment for the asset. If it does not, the change in the useful life
assessment from indefinite to definite is accounted for prospectively from the date of change and is
charged to profit or loss on a straight-line basis over the asset’s estimated useful life.
42 Annual Report 2012
EMS Energy Limited and its Subsidiaries
Notes to the Financial Statements
for the financial year ended 31 December 2012
2
Significant Accounting Policies (Continued)
(f)
Construction Contracts
A construction contract is a contract specifically negotiated for the construction of an asset or a combination
of assets that are closely interrelated or interdependent in terms of their design, technology and functions or
their ultimate purpose or use.
When the outcome of a construction contract can be estimated reliably, contract revenue and contract costs
are recognised as revenue and expenses respectively by reference to the stage of completion of the contract
activity at the balance sheet date (“percentage-of-completion method”). When the outcome of a construction
contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred
that are likely to be recoverable. When it is probable that total contract costs will exceed total contract
revenue, the expected loss is recognised as an expense immediately.
Contract revenue comprises the initial amount of revenue agreed in the contract and variations in the contract
work and claims that can be measured reliably. A variation or a claim is recognised as contract revenue when
it is probable that the customer will approve the variation or negotiations have reached an advanced stage
such that it is probable that the customer will accept the claim.
The stage of completion is measured by reference to the contract costs incurred to date to the estimated total
costs for the contract or surveys of work performed, as applicable. Costs incurred during the financial year in
connection with future activity on a contract are excluded from costs incurred to date when determining the
stage of completion of a contract. Such costs are shown as construction contract work-in-progress on the
balance sheet unless it is not probable that such contract costs are recoverable from the customers, in which
case, such costs are recognised as an expense immediately.
At the balance sheet date, the cumulative costs incurred plus recognised profit (less recognised loss) on each
contract is compared against the progress billings. Where the cumulative costs incurred plus the recognised
profits (less recognised losses) exceed progress billings, the balance is presented as due from customers on
construction contracts, under current assets. Where progress billings exceed costs incurred plus recognised
profits (less recognised losses), the balance is presented as due to customers on construction contracts, under
current liabilities.
Progress billings not yet paid by customers and retentions are included within “trade and other receivables”.
(g)
Investments in Subsidiaries and Associated Companies
Investments in subsidiaries and associated companies are carried at cost less accumulated impairment losses
in the Company’s balance sheet.
On disposal of investments in subsidiaries and associated companies, the difference between disposal
proceeds and the carrying amounts of the investments are recognised in profit or loss.
Annual Report 2012
EMS Energy Limited and its Subsidiaries 43
Notes to the Financial Statements
for the financial year ended 31 December 2012
2
Significant Accounting Policies (Continued)
(h)
Impairment of Non-Financial Assets
(i)
Goodwill
Goodwill is tested for impairment annually and whenever there is any indication that the goodwill may
be impaired. Goodwill included in the carrying amount of an investment in associated company is
tested for impairment as part of the investment, rather than separately.
For the purpose of impairment testing of goodwill, goodwill is allocated to each of the Group’s cash
generating units (“CGU”) expected to benefit from synergies arising from the business combination.
An impairment loss is recognised when the carrying amount of a CGU, including the goodwill, exceeds
the recoverable amount of the CGU. Recoverable amount of a CGU is the higher of the CGU’s fair value
less cost to sell and value in use.
The total impairment loss of a CGU is allocated first to reduce the carrying amount of goodwill allocated
to the CGU and then to the other assets of the CGU pro-rata on the basis of the carrying amount of
each asset in the CGU.
An impairment loss on goodwill is recognised in profit or loss and not reversed in a subsequent period.
(ii)
Intangible Assets
Property, Plant and Equipment
Investments in Subsidiaries and Associated Companies
Goodwill, certificates, property, plant and equipment and investments in subsidiaries and associated
companies are tested for impairment whenever there is any objective evidence or indication that these
assets may be impaired.
For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost
to sell and value in use) is determined on an individual asset basis unless the asset does not generate
cash flows that are largely independent of those from other assets. If this is the case, recoverable
amount is determined for the CGU to which the asset belongs.
If the recoverable amount of the asset (or CGU) is estimated to be less than its carrying amount, the
carrying amount of the asset (or CGU) is reduced to its recoverable amount.
The difference between the carrying amount and the recoverable amount is recognised as an
impairment loss in profit or loss, unless the asset is carried at revalued amount, in which case, such
impairment loss is treated as a revaluation decrease.
An impairment loss for an asset other than goodwill is reversed if, and only if, there has been a change
in the estimates used to determine the asset’s recoverable amount since the last impairment loss
was recognised. The carrying amount of this asset other than goodwill is increased to its revised
recoverable amount, provided that this amount does not exceed the carrying amount that would have
been determined (net of amortisation or depreciation) had no impairment loss been recognised for the
asset in prior years.
A reversal of impairment loss for an asset other than goodwill is recognised in profit or loss, unless the
asset is carried at revalued amount, in which case, such reversal is treated as a revaluation increase.
However, to the extent that an impairment loss on the same revalued asset was previously recognised
as an expense, a reversal of that impairment is also credited to profit or loss.
44 Annual Report 2012
EMS Energy Limited and its Subsidiaries
Notes to the Financial Statements
for the financial year ended 31 December 2012
2
Significant Accounting Policies (Continued)
(i)
Financial Assets
The Group’s and Company’s financial assets which are within the scope of FRS 39 are classified as either
loans and receivables, or available-for-sale, as appropriate. The classification depends on the nature of asset
and the purpose for which the assets were acquired. Management determines the classification of its financial
assets at initial recognition.
(i)
Loans and receivables
Loans and receivables, which include “trade and other receivables” and “cash and cash equivalents”,
are initially recognised at fair value and subsequently at amortised cost less allowance for impairment.
An allowance for impairment of loans and receivables is recognised when there is objective evidence
that the Group will not be able to recover the financial assets. The amount of the allowance 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 amount of allowance is recognised in profit or
loss.
(ii)
Financial assets, available for sale
Financial assets, available-for-sale are non-derivatives that are either designated in this category or not
classified in any of the other categories. They are presented as non-current assets unless management
intends to dispose of the assets within 12 months after the balance sheet date.
(j)
Financial guarantees
The Company has issued corporate guarantees to banks for borrowings of its subsidiary. These guarantees
are financial guarantees as they are require the Company to reimburse the banks if the subsidiary fail to make
principal interest payments when due in accordance with the terms of their borrowings.
(k)
Borrowings
Borrowings are presented as current liabilities unless the Group has an unconditional right to defer settlement
for at least 12 months after the balance sheet date.
Borrowings are initially recognised at fair value (net of transaction costs) and subsequently stated at amortised
cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised
in profit or loss over the period of the borrowings using the effective interest method.
(l)
Trade and Other Payables
Trade and other payables are initially measured at fair value, and subsequently carried at amortised cost using
the effective interest method.
(m)
Fair Value Estimation of Financial Assets and Liabilities
The fair values of current financial assets and liabilities carried at amortised cost approximate their carrying
amounts.
Annual Report 2012
EMS Energy Limited and its Subsidiaries 45
Notes to the Financial Statements
for the financial year ended 31 December 2012
2
Significant Accounting Policies (Continued)
(n)
Leases
(i)
When the Group is the lessee:
(1) Lessee - Finance leases
Leases of property, plant and equipment where the Group assumes substantially the risks and
rewards incidental to ownership of leased assets are classified as finance leases.
The leased assets and the corresponding lease liabilities (net of finance charges) under finance
leases are recognised on the balance sheet as property, plant and equipment and borrowings
respectively, at the inception of the leases based on the lower of the fair values of the leased
assets and the present value of the minimum lease payments.
Each lease payment is apportioned between the finance expense and the reduction of the
outstanding lease liability. The finance expense is recognised in profit or loss on a basis that
reflects a constant periodic rate of interest on the finance lease liability.
(2)
Lessee - Operating leases
Leases of property, plant and equipment where substantially all risks and rewards incidental to
ownership are retained by the lessors are classified as operating leases. Payments made under
operating leases (net of any incentives received from the lessors) are recognised in profit or loss
on a straight-line basis over the period of the lease.
Contingent rents are recognised as an expense in profit or loss when incurred.
(ii)
When the Group is the lessor:
Lessor - Operating leases
Leases of property, plant and equipment where the Group retains substantially all risks and rewards
incidental to ownership are classified as operating leases. Rental income from operating leases (net of
any incentives given to the lessees) is recognised in profit or loss on a straight-line basis over the lease
term.
Contingent rents are recognised as an income in profit or loss when earned.
(o)
Inventories
Inventories are carried at the lower of cost and net realisable value. Cost is determined using first-in, first-out
method. The cost of finished goods and work-in-progress comprises raw materials, direct labour, other direct
costs and related production overheads (based on normal operating capacity) but excludes borrowing costs.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs
of completion and applicable variable selling expenses.
46 Annual Report 2012
EMS Energy Limited and its Subsidiaries
Notes to the Financial Statements
for the financial year ended 31 December 2012
2
Significant Accounting Policies (Continued)
(p)
Income Taxes
Current income tax for current and prior periods is recognised at the amount expected to be paid to or
recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantially
enacted by the balance sheet date.
Deferred income tax is recognised for all temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the financial statements except when the deferred income tax arises
from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination
and affects neither accounting nor taxable profit or loss at the time of the transaction.
A deferred income tax liability is recognised on temporary differences arising on investments in subsidiaries,
associated companies and partnership, except where the Group is able to control the timing of the reversal of
the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable
future.
A deferred income tax asset is recognised to the extent that it is probable that future taxable profit will be
available against which the deductible temporary differences and tax losses can be utilised.
Deferred income tax is measured:
(i)
at the tax rates that are expected to apply when the related deferred income tax asset is realised or
the deferred income tax liability is settled, based on tax rates and tax laws that have been enacted or
substantially enacted by the balance sheet date; and
(ii)
based on the tax consequence that will follow from the manner in which the Group expects, at the
balance sheet date, to recover or settle the carrying amounts of its assets and liabilities.
Current and deferred income taxes are recognised as income or expenses in profit or loss, except to the
extent that the tax arises from a business combination or a transaction which is recognised directly in equity.
Deferred tax arising from a business combination is adjusted against goodwill on acquisition.
(q)
Provisions
Provisions for warranty, legal claims and other costs are recognised when the Group has a present legal or
constructive obligation as a result of past events, it is more likely than not that an outflow of resources will be
required to settle the obligation and the amount has been reliably estimated.
The Group recognises the estimated liability to repair or replace products still under warranty at the balance
sheet date. This provision is calculated based on past historical experience of the level of repairs and
replacements.
Other provisions are measured at the present value of the expenditure expected to be required to settle the
obligation using a pre-tax discount rate that reflects the current market assessment of the time value of money
and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised
in profit or loss as finance expense.
Changes in the estimated timing or amount of the expenditure or discount rate are recognised in profit or loss
when the changes arise.
Annual Report 2012
EMS Energy Limited and its Subsidiaries 47
Notes to the Financial Statements
for the financial year ended 31 December 2012
2
Significant Accounting Policies (Continued)
(r)
Employee Compensation
Employee benefits are recognised as an expense, unless the cost qualifies to be capitalised as an asset.
Defined Contribution Plans
Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions
into separate entities such as the Central Provident Fund on a mandatory, contractual or voluntary basis. The
Group has no further payment obligations once the contributions have been paid.
(s)
Currency Translation
(i)
Functional and Presentation Currency
Items included in the financial statements of each entity in the Group are measured using the currency
of the primary economic environment in which the entity operates (“functional currency”). The
financial statements are presented in Singapore Dollar (“SGD”), which is the functional currency of the
Company.
(ii)
Transactions and Balances
Transactions in a currency other than the functional currency (“foreign currency”) are translated into
the functional currency using the exchange rates at the dates of the transactions. Currency translation
differences from the settlement of such transactions and from the translation of monetary assets
and liabilities denominated in foreign currencies at the closing rates at the balance sheet date are
recognised in profit or loss, unless they arise from borrowings in foreign currencies, other currency
instruments designated and qualifying as net investment hedges and net investment in foreign
operations. Those currency translation differences are recognised in the currency translation reserve
in the consolidated financial statements and transferred to profit or loss as part of the gain or loss on
disposal of the foreign operation.
Non-monetary items measured at fair values in foreign currencies are translated using the exchange
rates at the date when the fair values are determined.
(iii)
Translation of Group Entities’ Financial Statements
The results and financial position of all the group entities (none of which has the currency of a
hyperinflationary economy) that have a functional currency different from the presentation currency are
translated into the presentation currency as follows:
(a)
assets and liabilities are translated at the closing exchange rates at the reporting date;
(b)
income and expenses are translated at average exchange rates (unless the average is not a
reasonable approximation of the cumulative effect of the rates prevailing on the transaction
dates, in which case income and expenses are translated using the exchange rates at the dates
of the transactions); and
(c) all resulting currency transaction differences are recognised in the foreign currency translation
reserve.
48 Annual Report 2012
EMS Energy Limited and its Subsidiaries
Notes to the Financial Statements
for the financial year ended 31 December 2012
2
Significant Accounting Policies (Continued)
(t)
Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the executive
committee whose members are responsible for allocating resources and assessing performance of the
operating segments.
(u)
Cash and Cash Equivalents
For the purpose of the presentation in the consolidated statement of cash flows, cash and cash equivalents
include cash and bank balances, unencumbered fixed deposits at call that are readily convertible to known
amounts of cash and subject to insignificant risk of changes in value, net of outstanding bank overdrafts. Bank
overdrafts are presented as current borrowings on the balance sheet.
(v)
Share Capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary
shares are deducted against the share capital account.
(w)
Government Grants
Grants from the government are recognised as a receivable at their fair value when there is reasonable
assurance that the grant will be received and the Group will comply with all the attached conditions.
Government grants receivable are recognised as income over the periods necessary to match them with the
related costs which they are intended to compensate, on a systematic basis. Government grants relating to
expenses are shown separately as other income.
Government grants relating to assets are deducted against the carrying amount of the assets.
(x)
Dividends to Company’s Shareholders
Dividends to Company’s shareholders are recognised when the dividends are approved for payment.
(y)
Non-Current Assets (or Disposal Groups) Held-For-Sale and Discontinued Operations
Non-current assets (or disposal groups) are classified as assets held-for-sale and carried at the lower of
carrying amount and fair value less costs to sell if their carrying amount is recovered principally through a
sale transaction rather than through continuing use. The assets are not depreciated or amortised while they
are classified as held for sale. Any impairment loss on initial classification and subsequent measurement
is recognised as an expense. Any subsequent increase in fair value less costs to sell (not exceeding the
accumulated impairment loss that has been previously recognised) is recognised in profit or loss.
Annual Report 2012
EMS Energy Limited and its Subsidiaries 49
Notes to the Financial Statements
for the financial year ended 31 December 2012
2
Significant Accounting Policies (Continued)
(y)
Non-Current Assets (or Disposal Groups) Held-For-Sale and Discontinued Operations (Continued)
A discontinued operation is a component of an entity that either has been disposed of, or that is classified as
held for sale and:
3
(i)
represents a separate major line of business or geographical area of operations; or
(ii)
is part of a single coordinated plan to dispose of a separate major line of business or geographical area
of operations; or
(iii)
is a subsidiary acquired exclusively with a view to resale.
Critical Accounting Estimates, Assumptions and Judgements
Estimates, assumptions and judgements are continually evaluated and are based on historical experience and other
factors, including expectations of future events that are believed to be reasonable under the circumstances.
(a)
Estimated Impairment of Non-Financial Assets
Goodwill is tested for impairment annually and whenever there is indication that the goodwill may be
impaired. Property, plant and equipment, certificate and investments in subsidiaries, associated companies
and partnership are tested for impairment whenever there is any objective evidence or indication that these
assets may be impaired. The recoverable amounts of cash-generating units have been determined based on
value-in-use calculations. These calculations require the use of estimates. The carrying amount of goodwill and
certificates as at balance sheet date are disclosed in Note 12.
(b)
Income Taxes
The Group is subject to income taxes in numerous jurisdictions. In determining the income tax liabilities,
management is required to estimate the amount of capital allowances and the deductibility of certain
expenses at each tax jurisdiction. The carrying amount of income tax and deferred income tax is disclosed in
Note 25 and Note 16 respectively.
(c)
Construction Contracts
The Group uses the percentage-of-completion method to account for its contract revenue. The stage of
completion is measured by reference to the contract costs incurred to date compared to the estimated total
costs for the contract or surveys of work done, as applicable.
Significant assumptions are required to estimate the total contract costs and the recoverable variation works
that will affect the stage of completion and the contract revenue respectively. In making these estimates,
management has relied on past experience and the work of specialists. Revenue from construction contracts
is disclosed in Note 20.
If the revenue on uncompleted contracts at the balance sheet date increases/decreases by 10% from
management’s estimates, the Group’s revenue will increase/decrease by $1,432,200.
If the contract costs of uncompleted contracts to be incurred increase/decrease by 10% from management’s
estimates, the Group’s profit will decrease/increase by $1,329,000.
50 Annual Report 2012
EMS Energy Limited and its Subsidiaries
Notes to the Financial Statements
for the financial year ended 31 December 2012
3
Critical Accounting Estimates, Assumptions and Judgements (Continued)
(d)
Impairment of Loans and Receivables
Management reviews its loans and receivables for objective evidence of impairment at least quarterly.
Significant financial difficulties of the debtor, the probability that the debtor will enter bankruptcy, and default
or significant delay in payments are considered objective evidence that a receivable is impaired. In determining
this, management makes judgement as to whether there is observable data indicating that there has been a
significant change in the payment ability of the debtor, or whether there have been significant changes with
adverse effect in the technological, market, economic or legal environment in which the debtor operates in.
Where there is objective evidence of impairment, management makes judgements as to whether an
impairment loss should be recorded as an expense. In determining this, management uses estimates
based on historical loss experience for assets with similar credit risk characteristics. The methodology and
assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly to
reduce any differences between the estimated loss and actual loss experience. Details of trade and other
receivables and allowance for impairment are disclosed in Note 5.
If the net present values of estimated cash flows had been higher/lower by 10% from management’s
estimates for all past due loans and receivables, the allowance for impairment of the Group would have been
lower/higher by $665,000.
4
Cash and Cash Equivalents
Group
2012
$’000
Cash at bank and on hand
Short-term bank deposits
294
836
1,130
2011
$’000
4,726
951
5,677
Company
2012
2011
$’000
$’000
9
–
9
29
–
29
For the purpose of presenting the consolidated statement of cash flows, the consolidated cash and cash equivalents
comprise the following:
Group
2012
$’000
Continuing operations:
Cash and bank balances (as above)
Less: Bank overdraft (Note 15)
Less: Bank deposits pledged
1,130
(1,729)
(336)
(935)
Discontinued operations:
Cash and bank balances (Note 8)
4,047
Cash and cash equivalents per consolidated statement of cash flows
3,112
2011
$’000
5,677
–
(336)
5,341
–
5,341
Short-term bank deposits of approximately $336,000 (2011: $336,000) are pledged as security for overdraft and bank
guarantee purposes.
Annual Report 2012
EMS Energy Limited and its Subsidiaries 51
Notes to the Financial Statements
for the financial year ended 31 December 2012
5
Trade and Other Receivables
Group
2012
$’000
Trade receivables
- Non-related parties
- Related parties
Less: Allowance for impairment of receivables
– non-related parties [Note30(b)(ii)]
Trade receivables - net
Non-trade receivables
from subsidiaries
Deposits
Prepayments
Other receivables
Company
2011
$’000
2011
$’000
2012
$’000
2,869
5,028
7,897
7,944
2,358
10,302
–
–
–
–
–
–
(517)
7,380
–
10,302
–
–
–
–
–
23
417
215
8,035
–
171
283
469
11,225
6,858
–
32
6,792
6
15
30
6,843
6,890
The non-trade receivables from subsidiaries are unsecured, interest-free and repayable on demand.
Related parties are entities related by a common shareholder.
6
Inventories
Group
2012
$’000
Raw materials
Work-in-progress
75
–
75
2011
$’000
2,884
344
3,228
The cost of inventories recognised as an expense in “cost of sales” amounts to $13,439,000 (2011: $32,676,000).
52 Annual Report 2012
EMS Energy Limited and its Subsidiaries
Notes to the Financial Statements
for the financial year ended 31 December 2012
7
Construction Contracts
Group
2012
$’000
2011
$’000
144,427
(144,135)
292
126,689
(120,699)
5,990
2,741
(2,449)
7,045
(1,055)
Construction contract work-in-progress comprises:
Aggregate contract costs recognised and profits recognised (less recognised
losses) to date
Less: Progress billings
Presented on the balance sheet as:
Due from customers on construction contracts
Due to customers on construction contracts
292
5,990
8
Discontinued Operations and Disposal Group Classified as Held-For-Sale
Following the approval of the Company’s management and shareholders on 2 January 2013 to sell 40% out of its 60%
interest in Oilfield Services & Supplies Pte Ltd (“OSS”) (comprising the Group’s entire oilfield services and supplies
business segment), the entire assets and liabilities related to OSS are classified as a disposal group held-for-sale on
the balance sheet, and the entire results from OSS are presented separately on the statement of comprehensive
income as “Discontinued operations”. The transaction is completed on 25 February 2013.
(a)
The results of the discontinued operations and the remeasurement of the disposal group are as follows:
Group
Revenue
Cost of sales
Gross profit
Other income
Expenses
Finance expense
Share of results of associated companies (Note 11)
Profit from discontinued operations
Income tax expense
Net profit from discontinued operations
(Loss)/profit attributable to equity holders of the Company relates to:
- (Loss)/profit from continuing operations
- Profit from discontinued operations
Total
2012
2011
$’000
$’000
21,709
(12,522)
9,187
17,187
(10,971)
6,216
651
(4,874)
(283)
115
4,796
(818)
3,978
124
(3,448)
(158)
50
2,784
(75)
2,709
(19,343)
3,978
(15,365)
500
2,709
3,209
Annual Report 2012
EMS Energy Limited and its Subsidiaries 53
Notes to the Financial Statements
for the financial year ended 31 December 2012
8
Discontinued Operations and Disposal Group Classified as Held-For-Sale (Continued)
(b)
The impact of the discontinued operations on the cash flows of the Group is as follows:
Group
2012
$’000
Operating cash inflows
Investing cash (outflows)/inflows
Financing cash outflows
Total cash inflows
(c)
8,049
(1,315)
(5,294)
1,440
2011
$’000
6,407
5,662
(144)
601
Details of assets in disposal group classified as held-for-sale are as follows:
Group
2012
$’000
Cash and bank balances (Note 4)
Trade and other receivables
Inventories
Financial assets, available-for-sale (Note 13)
Investment in associated companies (Note 11)
Property, plant and equipment
(d)
4,047
5,500
2,300
864
334
10,442
23,487
Details of liabilities directly associated with disposal group classified as held-for-sale are as follows:
Group
2012
$’000
Trade and other payables
Borrowings
Current income tax liabilities
Deferred income tax liabilities (Note 25)
3,639
9,425
802
458
14,324
54 Annual Report 2012
EMS Energy Limited and its Subsidiaries
Notes to the Financial Statements
for the financial year ended 31 December 2012
9
Property, Plant and Equipment
Group
2012
Cost or Valuation
Beginning of financial year
Currency translation differences
Additions
Reclassification
Reclassified to disposal group
Disposals
End of financial year
Accumulated Depreciation
Beginning of financial year
Currency translation differences
Depreciation charge
- Continuing operations (Note 23)
- Discontinued operations
Reclassified to disposal group
Disposals
End of financial year
Net book value
End of financial year
Leasehold
land and Plant and
Office
buildings machinery equipment
$’000
$’000
$’000
Motor
vehicles
$’000
Furniture
and
Work-infittings progress
$’000
$’000
Total
$’000
11,113
–
4,003
1,506
(6,552)
(5,708)
4,362
7,103
(36)
2,728
(474)
(6,038)
(2,584)
699
829
–
101
(40)
(163)
–
727
103
(1)
10
–
(83)
–
29
267
(2)
223
365
(290)
(353)
210
1,708
–
–
(1,357)
(351)
–
–
21,123
(39)
7,065
–
(13,477)
(8,645)
6,027
220
–
3,784
(14)
356
(1)
81
–
238
(1)
–
–
4,679
(16)
231
183
(149)
(254)
231
38
1,614
(2,679)
(2,286)
457
59
59
(118)
–
355
–
9
(61)
–
29
20
83
(28)
(218)
94
–
–
–
–
–
348
1,948
(3,035)
(2,758)
1,166
4,131
242
372
–
116
–
4,861
Annual Report 2012
EMS Energy Limited and its Subsidiaries 55
Notes to the Financial Statements
for the financial year ended 31 December 2012
9
Property, Plant and Equipment (Continued)
Group
2011
Cost or Valuation
Beginning of financial year
Currency translation differences
Additions
Reclassification
Revaluation surplus
Elimination of accumulated
depreciation on revaluation
Reversal of impairment of
property
Disposals
End of financial year
Accumulated Depreciation
Beginning of financial year
Depreciation charge
- Continuing operations (Note 23)
- Discontinued operations
Reclassification
Elimination of accumulated
depreciation on revaluation
Reversal of impairment of
property
Disposals
End of financial year
Net book value
End of financial year
Leasehold
land and Plant and
Office
Motor
Furniture Work-inbuildings machinery equipment vehicles and fittings progress
$’000
$’000
$’000
$’000
$’000
$’000
Total
$’000
7,091
–
2,580
–
3,741
5,804
(4)
1,903
30
–
715
(1)
131
(16)
–
102
1
–
–
–
425
–
156
16
–
30
–
1,708
(30)
–
14,167
(4)
6,478
–
3,741
(1,491)
–
–
–
–
–
(1,491)
(808)
–
11,113
–
(630)
7,103
–
–
829
–
–
103
–
(330)
267
–
–
1,708
(808)
(960)
21,123
2,286
2,814
258
66
163
–
5,587
106
127
–
36
1,396
–
76
33
(11)
–
15
12
52
11
–
–
–
230
1,623
–
(1,491)
–
–
–
–
–
(1,491)
(808)
–
220
–
(462)
3,784
–
–
356
–
–
81
–
–
238
–
–
–
(808)
(462)
4,679
10,893
3,319
473
22
29
1,708
16,444
56 Annual Report 2012
EMS Energy Limited and its Subsidiaries
Notes to the Financial Statements
for the financial year ended 31 December 2012
9
Property, Plant and Equipment (Continued)
Equipment
$’000
Company
2012
Cost
Beginning and end of financial year
150
Accumulated Depreciation
Beginning of financial year
Depreciation charge
End of financial year
140
5
145
Net book value
End of financial year
5
2011
Cost
Beginning of financial year
145
Additions
End of financial year
5
150
Accumulated Depreciation
Beginning of financial year
Depreciation charge
End of financial year
116
24
140
Net book value
End of financial year
10
(a)
Included in additions in the consolidated financial statements is plant and machinery acquired under finance
leases amounting to $Nil (2011: $317,000).
Net book values of plant and machinery amounting to $Nil (2011: $432,000) at the balance sheet date are held
under finance leases.
(b)
Properties of the Group with carrying amounts of $3,469,000 (2011: $10,231,000) are pledged to financial
institutions for banking facilities (Note 15).
(c)
The leasehold land and buildings of the Group were valued by an independent professional valuer based on
the properties’ highest-and best-use using the Sales Comparison Method at the balance sheet date.
(d)
If the leasehold land and buildings stated at valuation were included in the financial statements at cost less
accumulated depreciation, their net book values would be:
Group
Leasehold land and buildings
2012
$’000
2011
$’000
1,111
19,472
Annual Report 2012
EMS Energy Limited and its Subsidiaries 57
Notes to the Financial Statements
for the financial year ended 31 December 2012
10
Investments in Subsidiaries
Company
2012
2011
$’000
$’000
Equity investments, at cost
Begining of financial year
Less: Disposal
End of financial year
18,668
(2,957)
15,711
18,668
–
18,668
6,460
9,251
6,460
12,208
Accumulated impairment
Begining and end of financial year
Net book value
Details of the subsidiaries are as follows:
Name of Companies
Held by the Company
EMS Offshore Pte Ltd (a)
EMS Oil & Gas Ltd (b)
EMS Pioneer Pte Ltd (b)
EMS Energy Solutions Pte Ltd (g)
Principal Activities
Country of
business/
incorporation
Effective Equity
Holding
2012
%
2011
%
Investment holding
Dormant
Dormant
Design, manufacture and installation
of engineering solution for oil & gas
and offshore marine industries
Singapore
Malaysia
Singapore
Singapore
100
100
100
–
100
100
100
25
Design, manufacture and installation
of engineering solution for oil & gas
and offshore marine industries
Singapore
100
75
Oilfield Services & Supplies
Pte Ltd (a) *
Manufacture, rental and servicing
of downhole tools and equipment
that are used primarily in oil and gas
exploration
Singapore
60
60
EMS Energy Services Sdn Bhd(c)
Dormant
Malaysia
100
100
Held by EMS Offshore Pte Ltd
EMS Energy Solutions Pte Ltd(a)
Held by Oilfield Services & Supplies
Pte Ltd
Oilfield Services & Supplies India
Private Limited (d)
Oilfield Services & Supplies (Tianjin)
Co. Ltd (e)
(a)
(b)
(c)
(d)
(e)
(f)
(g)
Repairing, renting and servicing of
down hole tools and drills stem that
are used primarily in the oil and gas
industries
India
99.99
99.99
Repairing, renting, servicing and
manufacturing of down hole tools
and drill stem used primarily in the
oil & gas industries
China
55
55
Audited by Nexia TS Public Accounting Corporation, Singapore, a member firm of Nexia International.
Audited by Nexia TS Public Accounting Corporation, Singapore, a member firm of Nexia International, for consolidation
purposes only.
Audited by C S Tan & Associates, Chartered Accountants, Malaysia.
Audited by Chaturvedi & Shah, India, a member firm of Nexia International.
Audited by Tianjin Jinhai United Certified Public Accountants, China.
In accordance to Rule 716 of the Listing Manual (Section B: Rules of Catalist) of the Singapore Exchange Securities Trading
Limited, the Audit Committee and Board of Directors of the Company confirmed that they are satisfied that the appointment
of different auditors for its subsidiaries and significant associated company would not compromise the standard and
effectiveness of the audit of the Company.
On 9 February 2012, the Company entered into a Sales and Purchases agreement with EMS Offshore to sell its 25%
interest, equivalent to 250,000 ordinary shares in the capital of EMS Energy Solutions for a consideration of $2.
58 Annual Report 2012
EMS Energy Limited and its Subsidiaries
Notes to the Financial Statements
for the financial year ended 31 December 2012
11
Investments in Associated Companies
Group
2011
$’000
2012
$’000
Beginning of financial year
Share of results (Note 8)
Dividend received from associated companies
Reclassified to disposal group (Note 8)
End of financial year
225
50
–
–
275
275
115
(56)
(334)
–
The summarised financial information of associated companies, not adjusted for the proportion ownership held by the
Group, are as follows:
Group
2012
$’000
2011
$’000
- Assets
- Liabilities
- Revenue
–
–
–
1,990
1,121
3,686
- Net profit
–
140
Details of the associated companies are as follows:
Name of Companies
Principal Activities
Country of
business/
incorporation
Effective Equity
Holding
2012
2011
%
%
Held by Oilfield Services & Supplies
Pte Ltd
SVP Equipment Repair and Supply
Company Limited (a)
Tianhe Oil (Singapore)
Pte Ltd (b)
Manufacturers, dealers, hirers, repairs
of dies, tools, jigs and precision
machines of all kinds
Trading of drilling and fishing tools
(a)
Audited by Advanced Auditing Co. Ltd, Thailand.
(b)
Audited by C.W.Thum & Co, Singapore.
Thailand
30
30
Singapore
20
20
Annual Report 2012
EMS Energy Limited and its Subsidiaries 59
Notes to the Financial Statements
for the financial year ended 31 December 2012
12
Intangible Assets
Group
2011
$’000
2012
$’000
Composition:
Goodwill arising on consolidation [Note (a)]
Certificate [Note (b)]
(a)
14,247
5,225
19,472
9,248
–
9,248
Goodwill arising on consolidation
Group
2012
$’000
2011
$’000
14,247
14,247
Accumulated impairment
Beginning of the year
Impairment charge (Note 23)
End of financial year
–
4,999
4,999
–
–
–
Net book value
9,248
14,247
Cost
Beginning and end of financial year
Impairment tests for goodwill
Goodwill is allocated to each of the Group’s cash-generating units (CGUs) expected to benefit from synergies
of the business combination.
A summary of the goodwill allocation is analysed as follows:
Cash Generating Units
EMS Energy Solutions
Oilfield Services and Supplies
Total
2012
$’000
2011
$’000
9,248
–
9,248
9,248
4,999
14,247
The recoverable amounts of the above balances are determined based on value-in-use calculations. Cash flows
projection used in these calculations were based on financial budgets approved by the management for 2013
and future projections based on expected gross margin of 15% to 20%, expected growth rates after forecast
period of five years of 5% and discount rate of 5%, considering past performance and expected market
conditions.
60 Annual Report 2012
EMS Energy Limited and its Subsidiaries
Notes to the Financial Statements
for the financial year ended 31 December 2012
12
Intangible Assets (Continued)
(b)
Certificate
Group
2011
$’000
2012
$’000
Cost
Beginning and end of financial year
5,225
5,225
Accumulated impairment
Beginning of the year
Impairment charge (Note 23)
End of financial year
–
5,225
5,225
–
–
–
–
5,225
Net book value
The identifiable intangible asset, representing the value of the Certificate in Oilfield Services and Supplies,
is approximately $5,225,000 based on the Report of Purchase Price Allocation on the Acquisition of Oilfield
Services and Supplies Pte Ltd and its subsidiaries issued by a professional firm on 30 April 2009.
Impairment tests for Certificate
Certificate is allocated to cash generating units (GCU) Oilfield Services and Supplies.
Following the approval of the Company’s management and shareholders on 2 January 2013 to sell 40% out of
its 60% interest in Oilfield Services & Supplies Pte Ltd (“OSS”), the Group made impairment to the intangible
assets held in relation to this cash generating unit.
13
Financial assets, available-for-sale
Group
2012
$’000
Beginning of financial year
Additions
Reclassified to disposal group (Note 8)
166
698
(864)
–
2011
$’000
71
95
–
166
Annual Report 2012
EMS Energy Limited and its Subsidiaries 61
Notes to the Financial Statements
for the financial year ended 31 December 2012
14
Trade and Other Payables
Group
2012
$’000
Trade payables
- Non-related parties
- Related parties
Other payables
Provision for warranty
Accruals for operating expenses
Amounts due to related parties
(non-trade)
Amounts due to subsidiaries (non-trade)
2011
$’000
Company
2012
2011
$’000
$’000
3,130
588
3,718
6,272
581
6,853
529
–
529
323
–
323
180
535
504
133
258
2,195
1
–
117
–
–
144
5,986
–
10,923
2,921
–
12,360
9
2,192
2,848
6
1,360
1,833
Non-trade amounts due to related parties and subsidiaries are unsecured, interest-free and are repayable on demand.
The Group gives warranties on certain projects and undertakes to repair those that fail to perform satisfactorily. A
provision is recognised at the balance sheet date for expected warranty claims based on past experience of the level
of repairs.
Movement in provision for warranty is as follows:
Group
15
2012
2011
$’000
$’000
Beginning of financial year
258
–
Provision made
End of financial year
277
258
535
258
Borrowings
Group
2012
$’000
Current
Bank overdrafts (Note 4)
Bank borrowings
Bills payables
Finance lease liabilities (Note 19)
Non-current
Bank borrowings
Finance lease liabilities (Note 19)
Total borrowings
2011
$’000
1,729
1,509
4,202
–
7,440
–
2,538
8,438
182
11,158
–
–
–
7,440
4,419
–
4,419
15,577
62 Annual Report 2012
EMS Energy Limited and its Subsidiaries
Notes to the Financial Statements
for the financial year ended 31 December 2012
15
Borrowings (Continued)
The exposure of the borrowings of the Group to interest rate changes and the contractual repricing dates at the
balance sheet dates are as follows:
Group
2012
$’000
6 months or less
6 – 12 months
1 – 5 years
6,709
731
–
7,440
2011
$’000
9,807
1,351
4,419
15,577
The effective interest rates during the financial year on term loan is 4.0% to 6.3% (2011: 3.1% to 4.6%) per annum.
The effective interest rates on bank overdrafts and bills payables ranges from 5.0% to 8.0% (2011: 1.0% to 5.0%) per
annum.
The term loans are secured by mortgage over certain property, plant and equipment of the Group amounting to
approximately $3,469,000 (2011: $10,231,000) and corporate guarantee of the Company.
The bank overdrafts are secured by the short-term deposits, joint and several guarantee of the directors and corporate
guarantee of the Company.
(a)
Fair value of non-current borrowings
The fair values of non-current portion of borrowings are determined from the discounted cash flows analysis,
using a discounted rate based on the borrowing rate from the financial institution at the balance sheet date.
Group
Discount rate
2012
2011
%
%
Term loan
–
6.3%
Fair value
2012
2011
$’000
$’000
–
4,159
As at 31 December 2012, the Group has not drawn borrowing facilities amounting to $9,500,000 (2011:
$7,800,000).
(b)
Breaches of loan covenant
Some of the Group’s loan agreements are subjected to covenant clauses, whereby the Company is required
to meet certain key financial ratios. As at the end of the financial year, the Group did not fulfill the key financial
ratios of certain banks.
Due to these breach of covenant clauses, the banks are contractually entitled to request for immediate
repayment of these outstanding loan. The outstanding balance is presented as a current liability as at 31
December 2012.
The management is cognisant of the above mentioned non-adherence of the financial ratios and has taken
steps subsequent to balance sheet date to obtain the approval from the relevant banks to waive the above.
Annual Report 2012
EMS Energy Limited and its Subsidiaries 63
Notes to the Financial Statements
for the financial year ended 31 December 2012
16
Deferred Income Tax
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current income
tax assets against current income tax liabilities and when the deferred income taxes relate to the same fiscal
authority. The amounts shown on the balance sheet relates to:
Group
2011
$’000
2012
$’000
Deferred income tax liabilities (to be settled after one year):
- Accelerated tax depreciation
(458)
–
The movement in deferred income tax account is as follows:
Group
2012
$’000
Beginning of financial year
Charged to profit or loss (Note 25)
Reclassified to disposal group (Note 8)
End of financial year
17
(458)
–
458
–
2011
$’000
(51)
(407)
–
(458)
Share Capital
Number of
ordinary
shares
‘000
Amount
$’000
Group and Company
2012
Beginning and end of financial year
600,355
26,844
2011
Beginning of financial year
Issuance of shares
516,355
84,000
22,560
4,284
End of financial year
600,355
26,844
All issued ordinary shares are fully paid. There is no par value for these ordinary shares.
The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary
shares carry one vote per share without restrictions.
64 Annual Report 2012
EMS Energy Limited and its Subsidiaries
Notes to the Financial Statements
for the financial year ended 31 December 2012
17
Share Capital (Continued)
EMS Energy Employee Share Scheme
The Company has adopted the new EMS Energy Employee Share Option Scheme (“the Scheme”) as well as the new
EMS Energy Performance Share Plan (“the Plan”) at the Extraordinary General Meeting on 22 August 2009.
Under the Scheme, the following employees shall be eligible to participate:
(a)
full-time employees of the Company and/or its subsidiaries who have attained the age of twenty-one (21) years
on or before the offering date;
(b)
executive directors of the Company; and
(c)
non-executive directors (including independent directors) of the Company.
Persons who qualify under (a), (b) or (c) under the paragraph above and who are also the Company’s controlling
shareholders, can only participate in the Scheme if their participation is approved by independent shareholders of the
Company in separate resolutions for each such person and for each such grant.
Under the Plan, the following employees shall be eligible to participate:
(a)
confirmed full-time employees of the Company and/or its subsidiaries and associated companies who have
attained the age of twenty-one (21) years on or before the offering date; and
(b)
executive directors of subsidiaries or associated companies.
During the financial year, no options or performance shares have been granted to the directors and employees of the
Company or its subsidiaries.
18
Other Reserves
Group
2012
$’000
(a) Composition:
Foreign translation reserve
Revaluation reverse
(b) Movements:
(i) Foreign translation reserve
Beginning of financial year
Net currency translation differences of
financial statements of foreign subsidiaries
End of financial year
(ii)
Revaluation reserve
Beginning of financial year
Revaluation gains
Disposal of property, plant and equipment
End of financial year
Other reserves are non-distributable.
2011
$’000
(328)
1,781
1,453
(298)
2,472
2,174
(298)
(377)
(30)
(328)
79
(298)
2,472
–
(691)
1,781
–
2,472
–
2,472
Annual Report 2012
EMS Energy Limited and its Subsidiaries 65
Notes to the Financial Statements
for the financial year ended 31 December 2012
19
Finance Lease Liabilities
The Group leases motor vehicles and plant and machinery which are classified as finance leases and expired over
various dates in 2012. The discount rates implicit in the leases is 5.6% (2011: 5.6%) per annum. Future lease
payments under finance leases together with the present value of the net minimum lease payments are as follows:
Group
Minimum
payments
$’000
20
2012
Present value
of payments
$’000
Minimum
payments
$’000
2011
Present value
of payments
$’000
Within one year
–
–
142
132
After one year but not more than five years
Total
Less: Future finance charges
–
–
–
–
–
–
–
–
53
195
(13)
182
50
182
–
182
Not later than one year (Note 15)
Between one and five years (Note 15)
–
–
182
–
Revenue
Group
Construction contracts
Sale of goods
21
2012
2011
$’000
$’000
17,758
931
47,504
2,369
18,689
49,873
Other Income
Group
2012
$’000
Bad debts recovered
Gain on disposal of property, plant and equipment
Interest income
Rental income
Reversal of impairment on property, plant and equipment
Other
20
–
3
46
–
102
171
2011
$’000
–
2
17
56
808
89
972
66 Annual Report 2012
EMS Energy Limited and its Subsidiaries
Notes to the Financial Statements
for the financial year ended 31 December 2012
22
Finance Expenses
Group
2011
$’000
2012
$’000
Interest expense
- Term loan
- Finance lease liabilities
- Bank overdraft
- Bills payable
23
233
2
4
259
498
115
–
54
329
498
Expenses by Nature
Group
Purchases of material and equipment
Allowance for impairment of trade receivables [(Note 30(b)(ii)]
Bank charges
Depreciation of property, plant and equipment (Note 9)
Employee compensation (Note 24)
Facilities of office and factory
Fees on audit services paid/payable to:
- Auditor of the Company
- Other auditors*
Fees on non-audit services paid/payable to:
- Auditor of the Company
Foreign exchange loss
Freight/transport charges
Impairment of intangible assets (Note 12)
Insurance
Marketing/consultancy fee
Office rental on operating leases
Professional fees
Repair and maintenance
Sub-contractor charges
Travelling
Upkeep of motor vehicles
Others
Total cost of sales and administrative expenses
*
Includes the network member firms of Nexia International.
2012
$’000
2011
$’000
13,428
1,468
141
348
5,329
1,313
29,291
–
274
230
5,719
1,469
52
1
50
1
11
208
817
10,224
103
976
99
406
144
1,204
125
9
1,285
37,691
11
573
1,104
–
34
8,365
61
408
92
1,481
106
11
438
49,718
Annual Report 2012
EMS Energy Limited and its Subsidiaries 67
Notes to the Financial Statements
for the financial year ended 31 December 2012
24
Employee Compensation
Group
2011
$’000
2012
$’000
Wages and salaries
Employer’s contributions to defined contribution plans
Other short-term benefits and allowances
25
5,241
329
149
5,719
4,857
344
128
5,329
Income Tax Expense
Group
2011
$’000
2012
$’000
Tax expense attributable to loss is made up of:
- Loss from current financial year
From continuing operations
Current income tax
From discontinued operations
Current income tax
Deferred income tax (Note 16)
- Under/(over) provision in prior financial years
From continuing operations
Current income tax
From discontinued operations
Deferred income tax
Tax expense is attributable to:
- continuing operations
- discontinued operations (Note 8)
–
129
818
–
818
126
407
533
69
–
–
887
(458)
204
69
818
887
129
75
204
68 Annual Report 2012
EMS Energy Limited and its Subsidiaries
Notes to the Financial Statements
for the financial year ended 31 December 2012
25
Income Tax Expense (Continued)
The income tax expense on profit differs from the amount that would arise using the Singapore standard rate of
income tax as explained below:
Group
2011
$’000
2012
$’000
(Loss)/profit before tax from
- continuing operations
- discontinued operations (Note 8)
Tax calculated at tax rate of 17% (2011: 17%)
Effects of:
- different tax rates in other countries
- expenses not deductible for tax purposes
- income not subject to tax
- tax relief and partial tax exemption
- utilisation of previously unrecognised capital allowances
- deferred tax assets not recognised
- other
(19,274)
4,796
3,413
–
(14,478)
3,413
(2,461)
580
(82)
1,992
–
(25)
104
1,290
–
818
(38)
554
(246)
(29)
–
–
(566)
255
The deferred tax assets not recognized relate to unutilised tax losses which can be carried forward and used to offset
against future taxable income subject to meeting certain requirements. These tax losses have no expiry date.
26
Earnings Per Share
Basic earnings per share is calculated by dividing the net profit attributable to equity holders of the Company by the
weighted average number of ordinary shares outstanding during the financial year.
For the purpose of calculating diluted earnings per share, profit attributable to equity holders of the Company and the
weighted average number of ordinary shares outstanding are adjusted for the effects of all dilutive potential ordinary
shares. There were no dilutive potential ordinary shares outstanding during the year and therefore basic and dilutive
earnings per share are the same.
Group
2012
Continuing operations
Net (loss)/profit attributable to equity holders of the Company ($’000)
Weighted average number of ordinary shares in issue
(19,398)
600,354,802
2011
500
589,998,638
Basic earnings per share (cents)
Diluted earnings per share (cents)
(3.23)
(3.23)
0.08
0.08
Discontinued operations
Net profit attributable to equity holders of the Company ($’000)
3,978
2,709
600,354,802
589,998,638
0.66
0.66
0.46
0.46
Weighted average number of ordinary shares in issue
Basic earnings per share (cents)
Diluted earnings per share (cents)
Annual Report 2012
EMS Energy Limited and its Subsidiaries 69
Notes to the Financial Statements
for the financial year ended 31 December 2012
27
Contingencies
The Company has issued financial guarantees to a bank for borrowing of a subsidiary amounting to $6,200,000 (2011:
$3,200,000). These bank borrowings of the subsidiary amounted to $6,200,000 (2011: $3,200,000) at the balance
sheet date. The subsidiary has not defaulted in the payment of borrowings in the financial years ended 31 December
2012 and 2011.
28
Commitments
The Group leases land, factories and warehouses from non-related parties under non-cancellable operating lease
agreements. The leases have varying terms, escalation clauses and renewal rights.
The future minimum lease payable under non-cancelable operating leases contracted for at the balance sheet date
but not recognised as liabilities, are as follows:
Group
2011
$’000
2012
$’000
Not later than one year
Between two to five years
More than five years
29
58
236
570
237
827
4,325
864
5,389
Related Party Transactions
In addition to the information disclosed elsewhere in the financial statements, the following transactions took place
between the Group and related parties at terms agreed between the parties:
(a)
Sales and purchases of goods and services
Group
Purchases of materials from a related corporation
Sales to a related corporation
2012
$’000
2011
$’000
985
474
10,749
5,513
Related corporation comprises mainly of a company which is controlled or significantly influenced by the
Group’s key management personnel and their close family members.
Outstanding balances at 31 December 2012 arising from related party transactions are disclosed in Notes 5
and 14.
70 Annual Report 2012
EMS Energy Limited and its Subsidiaries
Notes to the Financial Statements
for the financial year ended 31 December 2012
29
Related Party Transactions (Continued)
(b)
Key management personnel compensation
Group
2012
$’000
Wages and salaries
Employer’s contributions to defined contribution plans
2011
$’000
1,188
58
1,034
35
1,246
1,069
Included in the above is total compensation to directors of the Company amounting to $946,000 (2011:
$819,000).
30
Financial Risk Management
Financial risk factors
The Group’s activities expose it to market risk (including currency risk and interest rate risk), credit risk, liquidity
risk and capital risk. The Group’s overall risk management strategy seeks to minimise adverse effects from the
unpredictability of financial markets on the Group’s financial performance. As at 31 December 2012, the Group does
not hold or issue derivative financial instrument for trading purposes.
Risk management is integral to the whole business of the Group. Financial risk management is carried out by
the Board of Directors. The Group has a system of controls in place to create an acceptable balance between the
cost of risks occurring and the cost of managing the risks. The management continually monitors the Group’s risk
management process to ensure that an appropriate balance between risk and control is achieved. Risk management
policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities.
(a)
Market risk
(i)
Currency risk
The Group operates in Asia with dominant operations in Singapore, India and China. Entities in the
Group regularly transact in currencies other than their respective functional currencies (“foreign
currencies”) such as the United States Dollar (“USD”).
Currency risk arises when transactions are denominated in foreign currencies. The Group is exposed to
foreign currency risk on certain projects.
To manage the currency risk, individual Group entities manage as far as possible by natural hedges of
matching assets and liabilities.
In respect of other monetary assets and liabilities held in currencies other than the Singapore Dollar,
the Group ensures that the net exposure is kept to an acceptable level by buying or selling the foreign
currencies at spot rates, where necessary, to address short term imbalances.
Annual Report 2012
EMS Energy Limited and its Subsidiaries 71
Notes to the Financial Statements
for the financial year ended 31 December 2012
30
Financial Risk Management (Continued)
(a)
Market risk (Continued)
(i)
Currency risk (Continued)
The Group’s currency exposure based on the information provided to key management is as follows:
SGD
USD
Other
Total
$’000
$’000
$’000
$’000
At 31 December 2012
Financial assets
Cash and cash equivalents
Trade and other receivables
Due from customers on construction contracts
199
603
155
931
6,777
2,586
–
238
–
1,130
7,618
2,741
957
10,294
238
11,489
5,912
4,344
416
1,528
6,054
1,948
–
525
85
7,440
10,923
2,449
10,672
9,530
610
20,812
Net financial (liabilities)/assets
(9,715)
764
(372)
(9,323)
Less: Net financial liabilities denominated in
functional currency
9,715
–
–
9,715
–
764
(372)
392
–
1,592
3,428
1,202
6,222
–
3,955
6,941
5,843
16,739
166
130
573
–
869
166
5,677
10,942
7,045
23,830
2,328
10,518
866
13,712
13,117
1,488
189
14,794
132
354
–
486
15,577
12,360
1,055
28,992
Net financial (liabilities)/assets
(7,490)
1,945
383
(5,162)
Less: Net financial liabilities denominated in
functional currency
(7,490)
–
–
(7,490)
–
1,945
383
2,328
Financial liabilities
Borrowings
Trade and other payables
Due to customers on construction contracts
Net currency exposure
At 31 December 2011
Financial assets
Financial assets, available-for-sale
Cash and cash equivalents
Trade and other receivables
Due from customers on construction contracts
Financial liabilities
Borrowings
Trade and other payables
Due to customers on construction contracts
Net currency exposure
72 Annual Report 2012
EMS Energy Limited and its Subsidiaries
Notes to the Financial Statements
for the financial year ended 31 December 2012
30
Financial Risk Management (Continued)
(a)
Market risk (Continued)
(i)
Currency risk (Continued)
If the USD change against the SGD by 1% (2011:5%) with all other variables including the tax rate
being held constant, the effects arising from the net financial liability/asset position will be as follows:
2011
2012
Loss
after tax
$’000
Group
USD against SGD
- strengthened
- weakened
(ii) (8)
8
Increase / (Decrease)
Profit
Equity
after tax
$’000
$’000
8
(8)
97
(97)
Equity
$’000
97
(97)
Cash flow and fair value interest rate risks
Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate
because of changes in market interest rates. Fair value interest rate risk is the risk that the fair value of
a financial instrument will fluctuate due to changes in market interest rates.
The Group’s interest rate risk mainly arises from term loan and bank overdrafts. The Group monitors
interest rates on borrowings closely to ensure that the borrowings are maintained at favourable rates.
The Group’s borrowings at variable rates are denominated mainly in SGD. If the SGD interest rates
increase/decrease by 2% (2011: 2%) with variables including tax rate being held constant, the profit
after tax will be lower/higher by $10,000 (2011: $13,000) as a result of higher/lower interest expense on
these borrowings.
(b)
Credit risk
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial
loss to the Group. The Group has policies in place to ensure that sales of products and services are made to
customers with an appropriate credit history. The Group has no significant concentration of credit risk.
The Group has a credit policy in place which establishes credit limits for customers and monitors their balances
on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount.
If the customers are independently rated, these ratings are used. Otherwise, the credit quality of customers is
assessed after taking into account its financial position and past experience with the customers.
The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect
of trade receivables. The main component of this allowance is a specific loss component that relates to
individually significant exposures.
The allowance account in respect of trade receivables is used to record impairment losses unless the Group
is satisfied that no recovery of the amount owing is possible. At that point, the financial asset is considered
irrecoverable and the amount charged to the allowance account is written-off against the carrying amount of
the impaired financial asset.
Annual Report 2012
EMS Energy Limited and its Subsidiaries 73
Notes to the Financial Statements
for the financial year ended 31 December 2012
30
Financial Risk Management (Continued)
(b)
Credit risk (Continued)
Cash and fixed deposits are placed with banks and financial institutions which are regulated.
As the Group and the Company does not hold any collateral, the maximum exposure to credit risk for each
class of financial assets is the carrying amount of the class of financial assets presented on the balance sheet,
including:
Company
Financial guarantees provided to banks on subsidiaries’ loan (Note 27)
2012
S$’000
2011
S$’000
6,200
3,200
The Group’s and the Company’s major classes of financial assets are cash and cash equivalents and trade and
other receivables.
The credit risk for trade receivables based on the information provided to key management is as follows:
Group
2012
2011
$’000
$’000
By geographical areas
Singapore
5,679
3,632
Malaysia
–
210
United Arab Emirates
–
310
Indonesia
People’s Republic of China
Europe
2
240
162
–
94
Australia
–
238
Vietnam
1,429
1,029
Russia
–
3,559
32
1,066
7,380
10,302
Related parties
2,352
2,358
Non-related parties
5,028
7,944
7,380
10,302
Other countries
By types of customers
74 Annual Report 2012
EMS Energy Limited and its Subsidiaries
Notes to the Financial Statements
for the financial year ended 31 December 2012
30
Financial Risk Management (Continued)
(b)
Credit risk (continued)
(i)
Financial assets that are neither past due nor impaired
Bank deposits that are neither past due nor impaired are mainly deposits with banks with high creditratings assigned by international credit-rating agencies. Trade receivables that are neither past due nor
impaired are substantially customers with a good collection track record with the Group.
(ii)
Financial assets that are past due and/or impaired
There is no other class of financial assets that is past due and/or impaired except for trade receivables
and amount due from customers on construction.
The age analysis of trade receivables past due but not impaired is as follows:
Group
2012
$’000
Past due up to 3 months
Past due by 3 to 6 months
Past due over 6 months
64
1,621
3,239
4,924
2011
$’000
1,564
1,077
548
3,189
The carrying amount of trade receivables and amount due from customers on construction contracts
individually determined to be impaired and the movement in the related allowance for impairment is as
follows:
Group
2012
$’000
Gross amount
- Trade receivables
- Amount due from customers on construction contracts
Less: Allowance for impairment
- Trade receivables (Note 5)
- Amount due from customers on construction contracts
Beginning of financial year
Allowance made
- Trade receivables (Note 5)
- Amount due from customers on construction contracts
End of financial year
2011
$’000
1,724
3,170
4,844
–
–
–
(517)
(951)
(1,468)
3,426
–
–
–
–
–
–
517
951
1,468
–
–
The impaired trade receivables arise mainly from customers that have met with financial difficulties.
The impaired amount due from customers on construction contracts arise mainly from a customer in
Vietnam that has met with difficulties retrieving the goods from the port.
Annual Report 2012
EMS Energy Limited and its Subsidiaries 75
Notes to the Financial Statements
for the financial year ended 31 December 2012
30
Financial Risk Management (Continued)
(c)
Liquidity risk
The table below analyses the derivative financial instruments of the Group and the Company for which
contractual maturities are essential for an understanding of the timing of the cash flows into relevant maturity
groupings based on the remaining period from the balance sheet date to the contractual maturity date. The
amounts disclosed in the table are the contractual undiscounted cash flows.
Less than
1 year
$’000
Group
At 31 December 2012
Trade and other payables
Borrowings
At 31 December 2011
Trade and other payables
Borrowings
At 31 December 2011
Trade and other payables
Corporate guarantee
Between 2 and
5 years
$’000
10,923
7,040
17,963
–
400
400
–
–
–
12,360
11,158
23,518
–
2,225
2,225
–
2,194
2,194
Less than
1 year
$’000
Company
At 31 December 2012
Trade and other payables
Corporate guarantee
Between 1 and
2 years
$’000
Between 1 and
2 years
$’000
Between 2 and
5 years
$’000
2,848
6,200
9,048
–
–
–
–
–
–
1,833
3,200
5,033
–
–
–
–
–
–
The Group’s policy to manage the liquidity risk is by maintaining sufficient cash and cash equivalents to enable
the Group to meet its operating commitments, having an adequate amount of committed facilities and the
ability to close out market position.
76 Annual Report 2012
EMS Energy Limited and its Subsidiaries
Notes to the Financial Statements
for the financial year ended 31 December 2012
30
Financial Risk Management (Continued)
(d)
Capital risk
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going
concern and to maintain an optimal capital structure so as to maximise shareholder value. In order to maintain
or achieve an optimal capital structure, the Group may adjust the amount of dividend payment, return capital
to shareholders, issue new shares, buy back issued shares, obtain new borrowings or sell assets to reduce
borrowings.
Management monitors capital based on a gearing ratio. The gearing ratio is calculated as borrowings divided
by total equity.
Group
Company
2012
2011
$’000
$’000
2012
$’000
2011
$’000
Borrowings
Total equity
7,440
14,441
15,577
33,789
–
13,327
–
17,237
Gearing ratio
51.5%
46.1%
–
–
The Group and the Company are in compliance with all externally imposed capital requirements for the
financial year ended 31 December 2011.
31
Segment Reporting
Previously, the Group’s primary format for reporting segment information was based on business segment, with each
segment representing a strategic business segment that offers different products and services.
(a)
EMS Energy Solutions (“EES”)
This relates to the integrated design, construction and commissioning of engineering equipment and services.
(b)
Oilfield Services and Supplies (“OSS”)
This relates to provision of downhole drilling tools.
Common costs between EES and OSS segments are allocated primarily based on segment revenue. Segment
assets/liabilities do not include assets/liabilities that are generally shared and not identifiable by segment.
Capital expenditure has not been allocated to the segments as property, plant and equipment are generally shared
and therefore not identifiable by business segment.
For geographical segments, revenue is based on the location of customers. Assets and capital expenditure are based
on the location of those assets.
On 2 January 2013, the shareholders and management of the Company approved the sale of 40% out of the
Group’s 60% interest in OSS comprising the Group’s entire oilfield service and supplies business segment.
Accordingly the entire assets and liabilities related to OSS are classified as a disposal group held-for-sale
on the balance sheet date, and the entire results from OSS are presented separately on the statement of
comprehensive income as “Discontinued operations” (Note 8).
As the Group has only one reportable operating segment, which comprised entirely the EES segment and the Group’s
operation was predominantly based in Singapore, accordingly, no segmental information is presented.
Annual Report 2012
EMS Energy Limited and its Subsidiaries 77
Notes to the Financial Statements
for the financial year ended 31 December 2012
32
33
Events Occurring after Balance Sheet Date
(a)
On 25 February 2013, the Group completed the disposal of 40% interest in Oilfield Services & Supplies Pte
Ltd, which has been classified as discontinued operations (Note 8) as at 31 December 2012.
(b)
On 18 March 2013, the issued and paid up share capital of the Company has been increased from $26,844,000
to $29,364,000, through an allotment and issuance of 60,000,000 new ordinary shares at $0.042 per share, to
third parties. Following the allotment and issuance of 60,000,000 ordinary shares, the third parties will own
9.08% of the issued and paid up share capital of the Company.
New or Revised Accounting Standards and Interpretations
The mandatory standards and amendments to existing standards that have been published, and are relevant for the
Group’s accounting periods beginning on or after 1 January 2013 or later periods and which the Group has not early
adopted are:
•
Amendments to FRS 1 – Presentation of Items of Other Comprehensive Income (effective for annual periods
beginning on or after 1 July 2012)
•
FRS 18 (Revised) – Revenue (effective for annual period beginning on or after 1 January 2013)
•
FRS 19 (Revised) – Employee Benefits (effective for annual periods beginning on or after 1 January 2013)
•
FRS 24 (Revised) – Related Party Disclosure (effective for annual periods beginning on or after 1 January 2013)
•
FRS 27 (Revised) – Separate Financial Statements (effective for annual periods beginning on or after 1 January
2013)
•
FRS 28 (Revised) – Investments in Associates and Joint Ventures (effective for annual periods beginning on or
after 1 January 2013)
•
Amendments to FRS 32 – Financial Instruments: Offsetting of Financial Liabilities and Assets (effective for
annual periods beginning on or after 1 January 2014)
•
FRS 37 (Revised) – Provision, Contingent Liabilities and Contingent Assets (effective for annual periods
beginning on or after 1 January 2013)
•
FRS 110 (New) – Consolidated Financial Statements (effective for annual periods beginning on or after 1
January 2013)
•
FRS 111 (New) – Joint Arrangements (effective for annual periods beginning on or after 1 January 2013)
•
FRS 112 (New) – Disclosure of Interests in Other Entities (effective for annual periods beginning on or after 1
January 2013)
•
FRS 113 (New) – Fair Value Measurements (effective for annual periods beginning on or after 1 January 2013)
The management anticipates that the adoption of the above FRS and amendments to FRS in the future periods will
not have a material impact on the financial statements of the Group in the period of their initial adoption.
34
Authorisation of Financial Statements
These financial statements were authorised for issue in accordance with a resolution of the Board of Directors of
EMS Energy Limited on 28 March 2013.
78 Annual Report 2012
EMS Energy Limited and its Subsidiaries
Analysis of Shareholdings
as at 22 March 2013
NUMBER OF ISSUED SHARES
CLASS OF SHARES
VOTING RIGHTS
TREASURY SHARES
:
:
:
:
660,354,802
ORDINARY SHARES WITH EQUAL VOTING RIGHTS
1 VOTE PER SHARE
Nil
SIZE OF HOLDINGS
NUMBER OF
SHAREHOLDERS
%
NUMBER OF
SHARES
%
1 to 999
104
4.84
9,778
0.00
1,000 to 10,000
682
31.73
3,751,542
0.57
1,319
61.38
157,628,137
23.87
44
2.05
498,965,345
75.56
2,149
100.00
660,354,802
100.00
NUMBER OF
SHARES
%
247,726,275
37.51
10,001 to 1,000,000
1,000,001 AND ABOVE
TOTAL
TOP 20 SHAREHOLDERS AS AT 22 MARCH 2013
NO.
NAME OF SHAREHOLDERS
1
KOASTAL INDUSTRIES PTE LTD
2
ASIAN TRUST INVESTMENT PTE LTD
30,000,000
4.54
3
HUYNH TRUNG NAM
24,000,000
3.63
4
PHILLIP SECURITIES PTE LTD
20,020,220
3.03
5
PEI SIM KWEE
20,000,000
3.03
6
MORPH INVESTMENTS LTD
11,450,000
1.73
7
OCBC SECURITIES PRIVATE LTD
10,479,658
1.59
8
LIM POH BOON
10,000,000
1.51
9
CIMB SECURITIES (SINGAPORE) PTE LTD
9,909,000
1.50
10
SENG SOON HIANG
8,620,000
1.31
11
TAY SWEE LYE RONNIE
7,823,000
1.19
12
MAYBANK KIM ENG SECURITIES PTE LTD
7,778,000
1.18
13
TEO YONG PING (ZHANG RONGBIN)
6,200,000
0.94
14
TING TECK JIN
6,000,000
0.91
15
DBS NOMINEES PTE LTD
5,729,002
0.87
16
UNITED OVERSEAS BANK NOMINEES PTE LTD
5,161,500
0.78
17
PECK CHUAN YONG
5,000,000
0.76
18
ONG SEE KONG
4,902,000
0.74
19
JIANG HUIPING
4,594,000
0.70
20
UOB KAY HIAN PTE LTD
4,556,090
0.69
449,948,745
68.14
TOTAL
Shareholdings Held in Hands of Public
As at 22 March 2013, the percentage of shareholdings held in the hands of the public was approximately 60.06% and Rule
723 of the Catalist Rules is complied with.
Annual Report 2012
EMS Energy Limited and its Subsidiaries 79
Analysis of Shareholdings
as at 22 March 2013
Substantial Shareholders
As at 22 March 2013
No. of shares
held registered
in the names the
substantial
shareholders
Koastal Industries Pte Ltd
Ting Teck Jin
No. of shares in
which our the
substantial
shareholders
is deemed to
have an interest
247,726,275
6,000,000
247,726,275
Total Shareholding
Interest
% of Total Issued
Shares (1)
–
247,726,275
37.51
(2)
253,726,275
38.42
Notes
(1)
As a percentage of the total issued share capital of the Company, comprising 660,354,802 Shares.
(2)
These shares are held in the name of Koastal Industries Pte Ltd in which Mr Ting Teck Jin is a controlling shareholder and a director.
80 Annual Report 2012
EMS Energy Limited and its Subsidiaries
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN that the annual general meeting of EMS ENERGY LIMITED (the “Company”) will be held at 1
Robinson Road, #18-00 AIA Tower, Singapore 048542 on Saturday, 27 April 2013 at 9.00 a.m. for the following purposes:
AS ORDINARY BUSINESS
1.
To receive and adopt the Directors’ Report and Audited Accounts of the Company for the year ended 31 December
2012 together with the Auditors’ Report thereon.
(Resolution 1)
2.
To approve Non-Executive Directors’ fees of S$135,000 for the financial year ending 31 December 2013 (2012:
S$135,000).
(Resolution 2)
3.
To re-elect Mr Lim Siong Sheng as a Director retiring pursuant to Article 107 of the Company’s Articles of Association.
(Resolution 3)
Mr Lim Siong Sheng 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 and will be considered independent for the
purposes of Rule 704(7) of Section B: Rules of Catalist of the Listing Manual of the Singapore Exchange Securities
Trading Limited.
4.
To pass the following Ordinary Resolution pursuant to Section 153(6) of the Companies Act, Cap. 50:
“That pursuant to Section 153(6) of the Companies Act, Cap. 50, Mr Ung Gim Sei be re‑appointed a Director of the
Company to hold office until the next annual general meeting.”
[See Explanatory Note (i)]
(Resolution 4)
Mr Ung Gim Sei will, upon re-appointment as a Director of the Company, remain as Chairman of Nominating and
Remuneration Committees and a member of the Audit Committee and will be considered independent for the
purposes of Rule 704(7) of Section B: Rules of Catalist of the Listing Manual of the Singapore Exchange Securities
Trading Limited.
5.
To re-appoint Messrs Nexia TS Public Accounting Corporation as the Company’s auditors and to authorise the
Directors to fix their remuneration.
(Resolution 5)
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, with or without any modifications:
7.
Authority to allot and issue shares in the capital of the Company (“Shares”) - Share Issue Mandate
“That, pursuant to Section 161 of the Companies Act, Cap. 50 and Rule 806 of the Singapore Exchange Securities
Trading Limited (“SGX-ST”) Listing Manual Section B: Rules of Catalist (the “Catalist Rules”), authority be and is
hereby given to the Directors of the Company to:-
(a)
(i)
allot and issue shares in the capital of the Company (“Shares”) (whether by way of rights, bonus or
otherwise); and/or
Annual Report 2012
EMS Energy Limited and its Subsidiaries 81
Notice of Annual General Meeting
(ii)
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)
options, warrants, debentures or other instruments convertible into Shares,
at any time and upon such terms and conditions and for such purposes and to such persons as the Directors
may in their absolute discretion deem fit; and
(b)
notwithstanding that the authority conferred by this Resolution may have ceased to be in force, issue Shares
in pursuance of any Instrument made or granted by the Directors while this Resolution is in force,
provided that:-
(1)
the aggregate number of Shares (including Shares to be issued in pursuance of the Instruments made or
granted pursuant to this Resolution), to be issued pursuant to this Resolution does not exceed one hundred
per cent. (100%) of the total number of issued Shares excluding treasury shares of the Company (as calculated
in accordance with sub-paragraph (2) below), of which the aggregate number of Shares to be issued other
than on a pro-rata basis to existing shareholders of the Company (including Shares to be issued in pursuance
of Instruments made or granted pursuant to this Resolution) does not exceed fifty per cent. (50%) of the total
number of issued Shares excluding treasury shares of the Company (as calculated in accordance with subparagraph (2) below);
(2)
(subject to such manner of calculations as may be prescribed by the SGX-ST) for the purpose of determining
the aggregate number of Shares that may be issued under sub-paragraph (1) above, the percentage of the
total number of issued Shares excluding treasury shares shall be based on the total number of issued Shares
excluding treasury shares of the Company at the time this Resolution is passed after adjusting for:-
(i)
new Shares arising from the conversion or exercise of any Instruments or any convertible securities;
(ii)
new Shares arising from exercising of share options or vesting of share awards outstanding and/or
subsisting at the time of the passing of this Resolution, provided that the share options or share awards
were granted in compliance with Part VIII of Chapter 8 of the Catalist Rules; and
(iii)
any subsequent bonus issue, consolidation or sub-division of Shares;
(3)
in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of the
Catalist Rules for the time being in force (unless such compliance has been waived by the SGX-ST) and the
Articles of Association for the time being of the Company; and
(4)
(unless revoked or varied by the Company in general meeting, the authority conferred by this Resolution shall
continue in force until the conclusion of the 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 the earlier.
[See Explanatory Note (ii)]
(Resolution 6)
82 Annual Report 2012
EMS Energy Limited and its Subsidiaries
Notice of Annual General Meeting
8.
Authority to grant options and issue shares under the EMS Energy Employee Share Option Scheme and EMS
Energy Performance Share Plan
To consider and, if thought fit, to pass the following as an ordinary resolution, with or without modifications:-
“That, pursuant to Section 161 of the Companies Act, Cap. 50, the Directors of the Company be and are hereby
authorised to offer and grant options and share awards in accordance with the EMS Energy Employee Share Option
Scheme (the “Scheme”) and the EMS Energy Performance Share Plan (the “Plan”) and to issue such shares as may
be required to be issued pursuant to the exercise of the options under the Scheme and the Plan provided always that
the aggregate number of shares to be issued pursuant to the Scheme and the Plan shall not exceed fifteen per cent.
(15%) of the issued share capital of the Company from time to time.”
[See Explanatory Note (iii)]
(Resolution 7)
9.
Renewal of a Shareholders’ Mandate for the Company to Buy-back its own Shares (the “Share Purchase
Mandate”)
That:-
(a)
for the purposes of Sections 76C and 76E of the Companies Act, Cap. 50 (the “Companies Act”), the exercise
by the Directors of the Company of all the powers of the Company to purchase or otherwise acquire ordinary
shares in the capital of the Company (“Shares”) not exceeding in aggregate the Maximum Percentage (as
hereafter defined), at such price or prices as may be determined by the Directors from time to time up to the
Maximum Price (as hereafter defined), whether by way of:-
(i)
on-market purchase(s) on the Singapore Exchange Securities Trading Limited (“SGX-ST”); and/or
(ii)
off-market purchase(s) (if effected otherwise than on the SGX-ST) in accordance with any equal access
scheme(s) as may be determined or formulated by the Directors as they consider fit, which scheme(s)
shall satisfy all the conditions prescribed by the Companies Act, and otherwise in accordance with all
laws, regulations and rules of the SGX-ST as may for the time being be applicable, be and is hereby
authorised and approved generally and unconditionally;
unless varied or revoked by the Company in general meeting, the authority conferred on the Directors of the
Company pursuant to the Share Purchase Mandate may be exercised by the Directors at any time and from
time to time during the period commencing from the date of the passing of this Resolution and expiring on
the earlier of:-
(b)
(i)
the date of the next annual general meeting of the Company; or
(ii)
the date by which the next annual general meeting of the Company is required by law to be held; or
(iii)
the time when the Share Purchase Mandate is revoked or varied by the Shareholders of the Company
in general meeting.
in this Resolution:-
(c)
“Maximum Percentage” means the number of Shares representing ten per cent. (10%) of the issued
ordinary share capital of the Company as at the date of the passing of this Resolution; and
Annual Report 2012
EMS Energy Limited and its Subsidiaries 83
Notice of Annual General Meeting
“Maximum Price” in relation to a Share to be purchased or acquired, means the purchase price (excluding
brokerage, commissions, stamp duties, applicable goods and services tax and other related expenses) which
shall not exceed:-
(i)
in the case of a market purchase, one hundred and five per cent. (105%) of the average closing market
price. For this purpose, the average closing market price is the average of the closing market prices
of the Shares transacted on the SGX-ST over the last five (5) market days (on which transactions in
the Shares are recorded) immediately preceding the date of the market purchase by the Company
and deemed to be adjusted in accordance with the listing rules of the SGX-ST for any corporate action
which occurs after the relevant five (5) day period; and
(ii)
in the case of an off-market purchase, one hundred and twenty per cent. (120%) of the highest price a
Share is transacted on the SGX-ST on the market day (when transactions in the Shares are recorded)
immediately preceding the date on which the Company announces an off-market purchase offer stating
the purchase price and the relevant terms of the equal access scheme.
The Directors of the Company be and are hereby authorised to take all necessary steps and to negotiate,
finalise and enter into all transactions, arrangements and agreements and to execute all such documents
(including but not limited to the execution of application forms and transfers) with full and discretionary powers
to make or assent to any modifications or amendments thereto in any manner they may deem necessary,
expedient, incidental or in the interests of the Company and the Group for the purposes of giving effect to this
Resolution and the transactions contemplated thereunder.
[See Explanatory Note (iv)] (Resolution 8)
(d)
10.
Renewal of the Mandate for Interested Person Transactions
That:-
(a)
approval be and is hereby given, for the purposes of Chapter 9 of the Catalist Rules, for the Company, its
subsidiaries and associated companies (if any) (“Group”) or any of them that are deemed an entity at risk
as defined in Chapter 9 of the Catalist Rules, to enter into any of the transactions falling within the type of
Interested Person Transactions as defined and set out in the Company’s Letter to Shareholders dated 12
April 2013 (the “Letter”), with any party who falls within the classes of Interested Persons as defined and
set out in the Letter, provided that such Interested Person Transactions are carried out in the ordinary course
of business, on normal commercial terms and are not prejudicial to the interests of the Company and its
minority Shareholders, and is in accordance with the guidelines and review procedures for Interested Person
Transactions as set out in the Letter (“IPT Mandate”);
(b)
such approval given in paragraph (a) above shall, unless revoked or varied by the Company in general meeting,
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; and
(c)
the Audit Committee of the Company be and are hereby authorised to complete and do all such acts and
things (including, without limitation, executing all such documents as may be required) as they may consider
expedient or necessary or in the interests of the Company to give effect to the IPT Mandate and/or this
Ordinary Resolution.
[See Explanatory Note (v)] (Resolution 9)
84 Annual Report 2012
EMS Energy Limited and its Subsidiaries
Notice of Annual General Meeting
By Order of the Board
Gwendolyn Gn Jong Yuh
Company Secretary
12 April 2013
Singapore
Explanatory Notes:
(i)
The effect of the Ordinary Resolution 4 proposed in item 4 above, is to re-appoint a director who is over 70 years of age.
(ii)
The Ordinary Resolution 6 proposed in item 7 above, if passed, will empower the Directors from the date of the above annual general
meeting until the date of the next annual general meeting, to allot and issue Shares and convertible securities in the Company.
The aggregate number of Shares and convertible securities, which the Directors may allot and issue under this Resolution shall not
exceed 100% of the total number of issued Shares excluding treasury shares of the Company at the time of passing this Resolution.
For allotment and issue of Shares and convertible securities other than on a pro-rata basis to all shareholders of the Company, the
aggregate number of Shares and convertible securities to be allotted and issued shall not exceed 50% of the total number of issued
Shares excluding treasury shares of the Company. This authority will, unless previously revoked or varied at a general meeting, expire
at the next annual general meeting.
(iii)
The Ordinary Resolution 7 proposed in item 8 above, if passed, will empower the Directors of the Company, to grant options and to
allot and issue shares upon the exercise of such options in accordance with the Scheme and the Plan.
(iv)
The Ordinary Resolution 8 proposed in item 9 above is to renew the Share Purchase Mandate which was originally approved by
shareholders on 22 August 2009. Please refer to the Company’s Letter to Shareholders dated 12 April 2013 for details.
(v)
The Ordinary Resolution 9 in item 10 above, if passed, will empower the Group, from the date of this annual general meeting of
the Company until 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, or such authority is varied or revoked by the Company in a general meeting, whichever is
the earlier, enter into the Interested Person Transactions as described in the Company’s Letter to Shareholders and to do all acts
necessary to give effect to the IPT Mandate. In accordance with the requirements of Chapter 9 of the Catalist Rules, Mr Ting Teck
Jin will abstain, and has also undertaken that his associates will abstain, from voting on this Ordinary Resolution 9 in relation to the
proposed renewal of the IPT Mandate.
The Audit Committee of the Company has reviewed the terms of the IPT Mandate and is satisfied that the guidelines and review
procedures for the Interested Person Transactions as set out in the Annex A of the Company’s Letter to Shareholders have not
changed since the IPT Mandate was renewed at the annual general meeting of the Company held on 28 April 2012. The Audit
Committee of the Company is also of the view that the guidelines and review procedures for the Interested Person Transactions are
adequate to ensure that the Interested Person Transactions will be transacted on arm’s length basis and on normal commercial terms
and will not be prejudicial to the interests of the Company and its minority shareholders.
If during the periodic reviews by the Audit Committee of the Company, it is of the view that the established guidelines and review
procedures for the Interested Person Transactions are no longer appropriate or adequate to ensure that the Interested Person
Transactions will be transacted on arm’s length basis and on normal commercial terms and would not be prejudicial to the interests of
the Company and its minority shareholders, the Company will seek a fresh mandate from its shareholders based on new guidelines
and procedures.
Notes:
1.
A Member entitled to attend and vote at the annual general meeting is entitled to appoint a proxy to attend and vote instead of him.
A proxy need not be a Member of the Company.
2.
If the appointor is a corporation, the proxy must be executed under seal or the hand of its duly authorised officer or attorney.
3.
The instrument appointing a proxy must be deposited at the registered office of the Company at 1 Robinson Road, #17-00 AIA Tower,
Singapore 048542 not less than forty-eight (48) hours before the time for holding the annual general meeting.
EMS ENERGY LIMITED
IMPORTANT:
1. For investors who have used their CPF monies to buy EMS Energy
Limited’s shares, this Report is forwarded to them at the request of the
CPF Approved Nominees and is sent solely FOR INFORMATION ONLY.
Company No. 200300485D
(Incorporated in The Republic of Singapore)
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.
Proxy Form
(Please see notes overleaf before completing this Form)
3. CPF investors who wish to attend the Meeting as an observer must
submit their requests through their CPF Approved Nominees within the
time frame specified. If they also wish to vote, they must submit their
voting instructions to the CPF Approved Nominees within the time frame
specified to enable them to vote on their behalf.
with NRIC/Passport Number:
I/We,
of
(address)
being a member/members of EMS ENERGY LIMITED (the “Company”), hereby appoint:
Name
Address
NRIC/
Passport No.
Proportion of Shareholdings
No. of shares
%
and/or (delete as appropriate)
as my/our proxy/proxies to attend and to vote for me/us on my/our behalf at the Annual General Meeting of the Company
to be held at 1 Robinson Road #18-00, AIA Tower, Singapore 048542 on Saturday, 27 April 2013 at 9.00 a.m. and at any
adjournment thereof. I/We direct my/our proxy to vote for or against the Resolutions to be proposed at the Meeting as
hereunder indicated
(Please indicate your vote “For” or “Against” with a tick [√] within the box provided.)
No.
Resolutions relating to:
For
1.
Directors’ Report and Audited Accounts for the financial year ended 31 December 2012.
2.
Approval of the payment of Non-Executive Directors’ Fees of S$135,000 for the financial
year ending 31 December 2013.
3.
Re-election of Mr Lim Siong Sheng as a Director pursuant to Article 107.
4.
Re-appointment of Mr Ung Gim Sei as a Director in accordance to Section 153(6) of the
Companies Act, Cap. 50.
5.
Re-appointment of Messrs Nexia TS Public Accounting Corporation as Auditors and
authorise the Directors to fix their remuneration.
6.
Authority to allot and issue new shares.
7.
Authority to grant options and issue shares under the EMS Energy Employee Share
Option Scheme and EMS Energy Performance Share Plan.
8.
Renewal of a Shareholders’ Mandate for the Company to Buy-back its own Shares (the
“Share Purchase Mandate”).
9.
Renewal of the Mandate for Interested Person Transactions.
Dated this
day of
2013
Total number of Shares in:
(a) CDP Register
(b) Register of Members
&
Signature of Shareholder(s)
or, Common Seal of Corporate Shareholder
IMPORTANT: PLEASE READ NOTES OVERLEAF
Against
No. of Shares Held
Notes:
1.
A member should insert the total number of shares held by him. If the member has shares entered against his name in the
Depository Register (as defined in Section 130A) of the Companies Act, Chapter 50 of Singapore), he should insert that number of
shares. If the member has shares registered in his name in the Register of Members of the Company, he should insert that number
of shares. If the member has shares entered against his name in Depository Register and shares registered in his name in the
Register of Members, he should insert the aggregate number of shares. If no number is inserted, the instrument appointing a proxy
or proxies will be deemed to relate to all the shares held by the member.
2.
A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxies to
attend and vote instead of him.
3.
Where a member appoints two proxies, the appointments shall be invalid unless he specifies the proportion of his shareholding
(expressed as 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 1 Robinson Road, #17-00
AIA Tower, Singapore 048542 not less than 48 hours before the time appointed for the Annual General Meeting.
5.
The instrument appointing a proxy or proxies must be under the hand of the appointor or his attorney duly authorised in writing.
Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its seal or under
the hand of an officer or attorney duly authorised.
6.
Where an instrument appointing a proxy is signed on behalf of the appointor by the attorney, the letter or power of attorney or a duly
certified copy thereof must (failing previous registration with the Company) be lodged with the instrument of proxy, failing which the
instrument may be treated as invalid.
7.
A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks fit
to act as its representative at the Annual General Meeting, in accordance with Section 179 of the Companies Act, Chapter 50 of
Singapore.
General:
The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible or
where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing
a proxy or proxies. In addition, in the case of shares entered in the Depository Register, the Company may reject any instrument appointing
a proxy or proxies lodged if the member, being the appointor, is not shown to have shares entered against his name in the Depository
Register as at 48 hours before the time appointed for holding the Annual General Meeting, as certified by The Central Depository (Pte)
Limited to the Company.
(Co. Reg. No. 200300485D)
EMS Energy Limited
10 Tuas Avenue 11,
Singapore 639076
T +65 6861 2722
F +65 6861 5655
E mail@EMSenergy.com.sg
www.EMSenergy.com.sg