UOL GROUP UOL
L imited
Ann ua l
Repo rt
200
6 UOL GROUP LIMITED Annual Report 2006
UOL GROUP LIMITED
Company Registration No. 196300438C 101 Thomson Road #33-00 United Square Singapore 307591 Tel : (65) 6255 0233 Fax : (65) 6252 9822
2 UOL GROUP LIMITED Annual Report 2006
A CONGLOMERATE WITH DIVERSE INTERESTS AROUND THE WORLD UOL Group Limited has a successful track record of property development that dates back to 1963. Today, its business interests include property management, retail and hospitality. A conglomerate with business interests in Singapore, Malaysia, Australia, Vietnam and China, the Group has over 40 subsidiaries and associate companies.
Proposed service residences Odeon Towers United Square Novena Square at Somerset Road
Pavilion 11 one-north residences One Amber The Regency at Tiong Bahru UOL GROUP LIMITED 3 Annual Report 2006
Southbank Regency Suites Twin Regency Newton Suites
1 Moulmein Rise Parkroyal Residences South Tower, Residential project at No.2A Cosy Bedroom One Residency, KL Persiaran Hampshire, KL
Parkroyal Kuala Lumpur Hotel Sofi tel Plaza Negara on Claymore Parkroyal on Beach Road Saigon Deluxe Room Swimming Pool
CONTENTS 04 Group Structure 31 Segmental Performance Analysis 49 Statement of Changes in Equity 06 Financial Highlights 32 Quarterly Results & Simplifi ed 50 Consolidated Cash Flow & Financial Calendar Group Financial Position Statement 07 Corporate Data 33 Five-Year Financial Summary 52 Notes to the Financial Statements 08 Chairman’s Statement 36 Value-added Statement 120 Corporate Governance Report 11 Board of Directors 38 Report of the Directors 129 Interested Person Transactions & Material Contracts 14 Management Team 43 Statement by Directors 130 Shareholding Statistics 16 Key Management Executives 44 Independent Auditors’ Report 132 Share Price and Turnover 17 Calendar of Events 45 Income Statements 133 Notice of Annual 18 Operation Highlights 46 Balance Sheets General Meeting 28 Property Summary 2006 48 Consolidated Statement Proxy Form of Changes in Equity 4 UOL GROUP LIMITED Annual Report 2006
GROUP STRUCTURE As at 28 February 2007
UOL GROUP LIMITED
60% 60% 70% 80% 100% 77.71%
Novena Square Regency One UOL Property Novena Square Duchess Walk Development Development Investments HOTEL PLAZA Investments Ltd Pte. Ltd. Ltd Pte. Ltd. Pte Ltd LIMITED
60% 70% 100% 100% 100%
UOL Project Kings & Queens UOL Claymore United Regency Management Hotel Negara Development Investment Pte. Ltd. Services Limited Pte. Ltd. Pte. Ltd. Pte. Ltd.
22.67% 30% 30% 40% 50%
Marina Centre Vista Tampines Park Brendale Holdings Development Condominium Developments Pte Ltd Pte Ltd Pte Ltd Pte Ltd@ Pte. Ltd.
39.4%100% 60% 95% 100% 100% 100%
Pilkon Parkroyal Garden Plaza Success Venture Success City Success Venture Premium Development Hospitality Company Ltd Investments Pty Limited Investments (WA) Properties Company Management [VN] (Australia) [AU] Limited [BVI] Sdn Bhd [MY] Limited [BVI] Ltd [BVI] Pte Ltd***
65% 100% 48.9% 66.7%
Plaza Hotel Success Venture PPHR (Thailand) President Hotel Company (WA) Unit Trust Company Sdn Berhad Limited [VN] [AU] Limited [TH] [MY] 100% 100% 100%
Success Venture Success Venture Success (Parramatta) Unit (Darling Harbour) Venture Pty Trust [AU] Unit Trust [AU] Limited [AU]
Notes: [AU] : Incorporated in Australia Associated Companies [BVI] : Incorporated in The British Virgin Islands * Previously known as UOL Tiong Bahru Plaza Pte Ltd [HK] : Incorporated in Hong Kong ** Previously known as Dahua Xiamen Development Limited [MY] : Incorporated in Malaysia *** Previously known as Plaza Pacifi c Hotels and [MN] : Incorporated in Myanmar Resorts International Pte Ltd @ [PRC] : Incorporated in The People’s Republic of China Under voluntary liquidation [TH] : Incorporated in Thailand # In the process of deregistration [VN] : Incorporated in Vietnam UOL GROUP LIMITED 5 Annual Report 2006
100% 100% 100% 100% 100% 100%
UOL UOL UOL Overseas Parkroyal United Venture Development Mod.Living Development Investments Hospitality Furnishings (Novena) Pte Ltd Pte. Ltd. Pte Ltd Pte. Ltd. Pte Ltd Pte. Ltd.
100% 100% 100% 100% 100% UOL Secure UOL UOL Equity UOL Overseas Capital Venture Management Investments Development Investments Investments Services Pte Ltd Pte Ltd Pte. Ltd* Limited [HK] Pte Ltd
33.3% 60% 100% 25% 55% 80% 100% Chengdu Hua Ye Xiamen Aquamarina Suasana Simfoni Promatik Emas United Star Valuations Hotel Limited** Hotel Private Sdn Bhd [MY] Sdn. Bhd. [MY] Development Sdn. Bhd. [MY] [PRC] Limited Co. Ltd.# [PRC]
35% 50%
ORIX-UOL Ardenis Investments Pte Ltd 100% 100% 100% Pte. Ltd.
United HPL Overseas Lifestyle New Park Hotel Investments Holdings (1989) Pte Ltd Pte Ltd 97% 75% Pte Ltd Shanghai Xin Yue Real Estate VOU Investment 100% 100% Development Limited [VN] Co., Ltd. [PRC]
Dou Hua St Gregory Spa Restaurants Pte Ltd Pte Ltd 100% 100% 100% 100% Suten SGN Yangon PID Investment & Investment Investment Investments Development Pte Ltd@ Pte Ltd Pte Ltd Pte Ltd
100% 100% 95% 75% 100% Grand Elite Grand Elite Sdn. (Penang) Sdn. Bhd. [MY] Westlake Suzhou Bhd. [MY] Yangon Hotel International Wugong Hotel Limited [MN] Company [VN] Co., Ltd [PRC] 6 UOL GROUP LIMITED Annual Report 2006
FINANCIAL HIGHLIGHTS
% Increase/ In thousands of Singapore Dollars 2006 2005 (Decrease)
FOR THE YEAR Revenue 605,121 505,482 19.7 Profi t before income tax 406,799 149,835 171.5 Profi t after income tax 373,026 119,849 211.2 Net cash (used in) / from operating activities (143,696) 42,469 (438.4) Net cash from / (used in) investing activities 48,813 (130,372) 137.4 Net cash from / (used in) fi nancing activities 120,914 (535,048) 122.6 Dividend 59,492 47,583 25.0
AT 31 DECEMBER Share capital and share premium 1,071,987 1,068,264 – Reserves 1,170,697 662,567 76.7 Retained earnings 913,320 633,368 44.2 Share capital and reserves 3,156,004 2,364,199 33.5 Share capital, reserves and non-current loans 3,860,597 2,897,263 33.2 Total assets 4,651,912 3,520,185 32.1
PER ORDINARY SHARE Basic earnings (cents) 42.8 12.6 239.7 Gross dividend declared (cents) 15.0 7.5 100.0 Dividend cover (times) 2.8 1.7 64.7 Net tangible asset backing ($) before accounting for surplus on revaluation of hotel properties 3.95 2.96 33.4 Net tangible asset backing ($) after accounting for surplus on revaluation of hotel properties 4.44 3.23 37.5
FINANCIAL CALENDAR
2006 2005
Announcement of fi rst quarter results 11.05.06 22.04.05 Announcement of second quarter results 02.08.06 26.07.05 Announcement of third quarter results 01.11.06 25.10.05 Announcement of unaudited full year results 16.02.07 18.02.06 Annual General Meeting 25.04.07 19.04.06 Books closure dates 08.05.07 to 09.05.07 02.05.06 to 04.05.06 First and fi nal dividend payment date - 15.05.06 Final and special dividend payment date 17.05.07 -
UOL GROUP LIMITED 7 Annual Report 2006
CORPORATE DATA
BOARD OF DIRECTORS REMUNERATION COMMITTEE COMPANY SECRETARY Wee Cho Yaw Lim Kee Ming Foo Thiam Fong Wellington Chairman (Appointed as Chairman on 1 February 2007) Gwee Lian Kheng DEPUTY SECRETARY President & CEO Wee Cho Yaw Yeong Sien Seu
Alan Choe Fook Cheong Alan Choe Fook Cheong AUDITORS Lim Kee Ming PricewaterhouseCoopers MANAGEMENT 8 Cross Street Wong Yuen Weng Ernest Gwee Lian Kheng #17-00 PWC Building (Resigned on 12 March 2007) President & CEO Singapore 048424 Partner-in-charge: Wee Ee Chao Gn Hiang Meng Ms Tan Khiaw Ngoh (Appointed on 9 May 2006) Deputy President Year of appointment: 2005 (Hotels & Finance) James Koh Cher Siang Liam Wee Sin PRINCIPAL BANKERS Low Weng Keong Chief Operating Offi cer United Overseas Bank Limited
Wee Ee Lim Foo Thiam Fong Wellington DBS Bank Ltd (Appointed on 9 May 2006) Chief Financial Offi cer The Bank of Tokyo-Mitsubishi Kam Tin Seah UFJ, Ltd. EXECUTIVE COMMITTEE General Manager Wee Cho Yaw (Investments) Sumitomo Mitsui Chairman Banking Corporation Kwan Weng Foon Gwee Lian Kheng General Manager CIMB Bank Berhad (Development) Alan Choe Fook Cheong Public Bank Berhad Lee Choon Kok General Manager Wee Ee Chao REGISTERED OFFICE (Appointed on 15 February 2007) (Engineering & Maintenance) 101 Thomson Road Lian Ah Cheok Dolly #33-00 United Square AUDIT COMMITTEE General Manager Singapore 307591 Lim Kee Ming (Marketing) Telephone : 6255 0233 Chairman Facsimile : 6252 9822 Chin Ee Chen Jestine Website : www.uol.com.sg Alan Choe Fook Cheong General Manager (Furniture Division) SHARE REGISTRAR Wong Yuen Weng Ernest Lim Associates (Pte) Ltd (Resigned on 12 March 2007) Yeong Sien Seu Legal Manager 3 Church Street #08-01 Samsung Hub NOMINATING COMMITTEE Lim Chong Koon Singapore 049483 Alan Choe Fook Cheong Group Human Resource Manager Telephone : 6536 5355 Chairman Facsimile : 6536 1360 Yeo Bin Hong Wee Cho Yaw Senior Manager (Internal Audit) Lim Kee Ming 8 UOL GROUP LIMITED Annual Report 2006
CHAIRMAN’S STATEMENT
2006 REVIEW 2006 PERFORMANCE & DIVIDEND Singapore The Group recorded a pre-tax profi t of S$406.8 Singapore’s gross domestic product grew by 7.9% in million in 2006, representing an increase of 171.5% 2006 compared to 6.6% for 2005. Prices of private over the pre-tax profi t of S$149.8 million in 2005. residential properties increased by 10.2% in 2006 Included in the 2006 results is the exceptional compared to an increase of 3.9% in 2005. More than pre-tax profi t of S$146.1 million from the sale of 11,000 new homes were sold in 2006 compared to 65,700,002 shares in Cliff ord Development Pte Ltd almost 9,000 units in 2005. Driven by strong demand (“Cliff ord”) and the profi t of S$86.7 million from the and limited supply, rentals of offi ces surged by 30.3% sale of Hotel Plaza Limited’s (“Hotel Plaza”) 100%- as compared with a rise of 12.7% in 2005 while rentals owned subsidiary Hotel Grand Plaza (Singapore) Pte for retail space grew by 5.6% in 2006. Ltd (“HGP”). Excluding the exceptional items, the Group’s pre-tax profi t in 2006 was S$158.6 million Singapore received a record 9.7 million tourists representing a 6.2% increase over the comparable in 2006 compared to 8.9 million in 2005. Average pre-tax profi t of S$149.3 million in 2005. occupancy for the hotel industry in Singapore increased by 1.4 percentage points to 85% while Based on the latest independent valuation of the average room rate increased sharply by 19.6% to Group’s investment properties by professional S$164. The Group’s hotels in Singapore benefi ted valuers, the Group’s Asset Revaluation Reserve from the increased visitor arrivals and achieved increased from S$234.6 million at end 2005 to above average growth in room rates. S$429.8 million at end 2006. Refl ecting higher share prices, the Group’s Fair Value Reserve increased from Overseas S$356.5 million at end 2005 to S$626.3 million at Outside Singapore, the Group’s hotels in Malaysia end 2006. As a result, the shareholders’ funds of the and Vietnam continued to benefi t from improvements Group increased from S$2.36 billion to S$3.16 billion. in average room rates and occupancy. Our hotels Consequently, the net tangible asset per ordinary in Sydney and Perth, Australia achieved higher share of the Group increased from S$2.96 as at 31 average room rates while Sofi tel Plaza Xiamen in December 2005 to S$3.95 as at 31 December 2006. China managed to break-even in its fi rst full year of The Group’s debt equity ratio increased marginally operations. Notwithstanding increasing competition to 22% at 31 December 2006 from 21% as at 31 with the opening of new hotels, Sheraton Suzhou December 2005. in China managed to maintain its revenue per In view of the creditable performance, the Board available room. Performance of the Parkroyal Yangon recommends a fi rst and fi nal one-tier dividend of 7.5 remains a challenge given the continued diffi cult cents per share and a special one-tier dividend of 7.5 operating conditions. cents per share making a total dividend of 15.0 cents per share (2005: a fi rst and fi nal one-tier dividend of 7.5 cents per share). Total dividend payout will amount to S$119.2 million (2005: S$59.5 million) for the year ended 31 December 2006. UOL GROUP LIMITED 9 Annual Report 2006
“The Group recorded a pre-tax profi t of S$406.8 million in 2006, representing an increase of 171.5% over the pre-tax profi t of S$149.8 million in 2005. Included in the 2006 results is the exceptional pre-tax profi t of S$146.1 million from the sale of 65,700,002 shares in Cliff ord Development Pte Ltd (“Cliff ord”) and the profi t of S$86.7 million from the sale of Hotel Plaza Limited’s (“Hotel Plaza”) 100%-owned subsidiary Hotel Grand Plaza (Singapore) Pte Ltd (“HGP”).”
CORPORATE DEVELOPMENTS East Coast Ville at Upper East Coast Road, Singapore 2006 Development Projects In December 2006, UOL Development Pte Ltd, a During the year, the Group launched the sales of wholly-owned subsidiary, acquired the freehold Southbank (a mixed development comprising a property known as East Coast Ville at Upper East total of 273 residential, SOHO and retail units at Coast Road for a consideration of S$54.5 million. The North Bridge Road) and The Regency at Tiong Bahru acquisition is conditional upon the approval of the (a residential development with 158 units at Chay Land Dealings (Approval) Unit and the order for sale Yan Street). Response was good and all the units in from the Strata Titles Board. Upon completion of the these two projects have been sold. Similarly, all 562 purchase, this site is intended to be developed into a units at Amber Gardens in which the Group has a residential condominium. 30% equity interest have been fully sold. During the Acquisition of Hotel Negara Limited year, the Group also sold the remaining units of the During the year, the Company acquired 100% of 104-unit Regency Suites development at Kim Tian the issued and paid-up capital of Hotel Negara Road in Singapore. Limited (“HNL”) for an aggregate consideration of Acquisition of Development Properties S$134.6 million or S$6.45 per share and this was Duchess Court at Duchess Walk, Singapore arrived at through: In May 2006, Duchess Walk Pte Ltd, a 70%-owned (i) Acquisition of a 54.46% shareholding interest in subsidiary, successfully tendered on an en-bloc HNL from the United Overseas Bank Group; basis, for the freehold property known as Duchess Court at Duchess Walk for an aggregate (ii) A mandatory unconditional cash off er (“Off er”) to consideration of S$104 million. This site is intended acquire all the ordinary shares in the capital of HNL to be developed into approximately 120 units of (“Shares”) not already owned by the Company at condominium apartments. a price of S$6.45 per share. At the close of the Off er in August 2006, the Company’s interest Nassim Park at Nassim Road, Singapore in HNL increased from 54.46% to 99.46%; and In August 2006, Park Developments Pte Ltd, in which the Company has a 50% interest, successfully (iii) Exercise of the Company’s right of compulsory tendered on an en-bloc basis, for the freehold acquisition under Section 215 of the Companies property known as Nassim Park at Nassim Road, Act, Chapter 50 to acquire all the Shares of the for an aggregate consideration of S$380 million. shareholders of HNL, who had not accepted Order of the Strata Titles Board has been obtained the Off er. and the purchase is scheduled to be completed in fi rst half of 2007. It is intended that the site be Upon completion of the compulsory acquisition developed into approximately 100 units of luxurious in September 2006, HNL became a 100%-owned condominium apartments. subsidiary and was subsequently delisted from the Singapore Exchange. 10 UOL GROUP LIMITED Annual Report 2006
Acquisition of additional interests in Marina OUTLOOK FOR 2007 Centre Holdings Pte Ltd The economic outlook for Singapore remains In May 2006, the Company acquired an additional positive with GDP growth forecast at between 4.5% 10% shareholding interest, comprising 30,000,000 and 6.5% for 2007. The private residential market is ordinary shares in the capital of Marina Centre expected to remain buoyant, underpinned by a high Holdings Pte Ltd (“MCH”) at S$2.084 per share for a level of buying interests especially in the high-end net cash consideration of S$62,520,000. Following segment. Occupancy and rental rates for offi ce space this acquisition, UOL’s shareholding interest in MCH could improve further given the limited new supply, increased from 12.67% to 22.67%, thereby making while rentals for retail space should benefi t from MCH an associated company. the continued economic growth. The continued buoyancy in the tourism sector in Singapore and Sale of shareholding interest in Cliff ord the region will benefi t our subsidiary Hotel Plaza Development Pte Ltd though the hotels in Perth, Australia and Kuala In October 2006, the Company sold its entire 50% Lumpur, Malaysia may be aff ected by on-going shareholding interest in Cliff ord for an aggregate cash conversion works. consideration of S$212.3 million. The sale resulted in a gain of S$146.1 million for the Company. ACKNOWLEDGEMENTS Sale of Hotel Grand Plaza (Singapore) Pte Ltd I thank the Directors for their wise counsel and guidance during the past year. On 9 May 2006, Messrs In October 2006, 77.7%-owned listed subsidiary Wee Ee Chao and Wee Ee Lim joined the Board and Hotel Plaza entered into a conditional Sale and we welcome them. Purchase Agreement to sell its entire shareholding in HGP for a net cash consideration of approximately On behalf of the Board, I would like to thank Mr Wee S$141.2 million. The sale was completed in Ee Cheong for his contributions as a Director from December 2006 and the Hotel Plaza Group realised 18 May 1991 to 9 May 2006. My appreciation also an exceptional gain of S$86.7 million. goes to the management and staff members who have contributed towards the success of the Group Sale of Central Plaza in 2006. On 9 October 2006, wholly-owned subsidiary UOL Capital Investments Pte Ltd (formerly known as UOL Tiong Bahru Plaza Pte Ltd), entered into a Wee Cho Yaw conditional Sale and Purchase Agreement to sell its Chairman 20-storey offi ce known as Central Plaza at 298 Tiong Bahru Road Singapore for a total cash consideration Singapore, February 2007 of S$175 million (S$917 psf). The sale was completed in January 2007 and a gain of S$37 million will be refl ected in the results for the fi nancial year ending 31 December 2007. This gain does not include the surplus of S$42 million in the Asset Revaluation Reserve which has been transferred to retained earnings on 1 January 2007, following the adoption of Financial Reporting Standard 40, “Investment Property” for this property. UOL GROUP LIMITED 11 Annual Report 2006
BOARD OF DIRECTORS
12 3
Wee Cho Yaw, Chairman1 Gwee Lian Kheng, President & CEO2 A career banker with more than 40 years of experience. Mr Gwee is the President & CEO of UOL and Hotel Received Chinese high school education. Chairman Plaza, and has been with the UOL Group since 1973. An of the Company and its listed subsidiary, Hotel Plaza executive and non-independent Director. Appointed to Limited (“Hotel Plaza”) since 1973. Appointed to the the Board on 20 May 1987 and last re-elected on 19 April Board on 23 April 1973. Last re-appointed on 19 April 2006. Member of the Executive Committee. 2006. A non-executive and non-independent Director. Director of most subsidiaries in the UOL Group and Chairman of the Executive Committee and Member Hotel Plaza Group, including Hotel Negara Limited. of the Nominating and Remuneration Committees. Also director of United Industrial Corporation Limited Chairman & CEO of United Overseas Bank Limited and Singapore Land Limited. He was previously a (“UOB”) and Chairman of several listed companies Director of Overseas Union Enterprise Limited. including United Overseas Insurance Ltd, United Mr Gwee holds a Bachelor of Accountancy (Honours) International Securities Ltd, Haw Par Corporation degree from the University of Singapore. He is a Fellow Limited, United Industrial Corporation Limited and of the Chartered Institute of Management Accountants, Singapore Land Limited. He was previously Chairman Chartered Certifi ed Accountants and Institute of of Overseas Union Enterprise Limited. Chartered Secretaries and Administrators. He is also a Mr Wee is the President of the Singapore Federation member of the Institute of Certifi ed Public Accountants of Chinese Clan Associations, and the Chairman of of Singapore. the Board of Trustees of the Chinese Development Named Asia Pacifi c Hotelier of the Year in 2003. Assistance Council and several other civic organisations. He is also the Honorary President of Alan Choe Fook Cheong3 Singapore Chinese Chamber of Commerce & Industry. An architect and town planner by profession. He was appointed Pro-Chancellor of Nanyang Appointed to the Board on 28 March 1979. Last re- Technological University in 2004. appointed on 19 April 2006. An independent and Recipient of the Credit Suisse-Ernst & Young Lifetime non-executive Director. Chairman of the Nominating Achievement Award in 2006 and named Businessman Committee and Member of the Executive, Audit and of the Year in 1990 and 2001. Remuneration Committees. He is also a Director of Hotel Plaza. Mr Choe was the fi rst General Manager of the Urban Redevelopment Authority and a Senior Partner of one of the largest architectural practices in Singapore. He was the Chairman of Sentosa Development Corporation, Sentosa Cove Pte Ltd, Pasir Ris Resort Pte Ltd, a Trustee of NTUC Income and Member of Singapore Tourism Board. He was also a Director of Keppel Land Limited and is currently on the Board of Frasers Centrepoint Limited. 12 UOL GROUP LIMITED Annual Report 2006
45 6
Mr Choe holds a Bachelor of Architecture degree, a Wong Yuen Weng Ernest5 (resigned on 12 March 2007) Diploma in Town & Regional Planning from University Appointed to the Board on 16 January 1986. Last re- of Melbourne and a Fellowship Diploma from Royal elected on 22 April 2005. An independent and non- Melbourne Institute of Technology. He is a Fellow executive Director. Member of the Audit Committee. of the Singapore Institute of Architects, Singapore He is also a Director of Hotel Plaza. Institute of Planners and Royal Australian Institute of Architects. He is also a member of Royal Institute Mr Wong built his career with Economic Development of British Architects, Royal Town Planning Institute, Board in 1967 and then with the Ministry of Finance Royal Australian Planning Institute and American before joining UOB in 1972. He was the President Planning Association. of UOB from 1990 to 2000 and then Group CEO and Director of MediaCorp Pte Ltd from 2000 to 2005. Awarded the Public Administration Medal (Gold) in Mr Wong had served as Chairman of The Association 1967, the Meritorious Service Medal in 1990, and the of Banks in Singapore and Board Member of the Distinguished Service Order in 2001. Economic Development Board. He is a member of the Temasek Advisory Panel and also a Board Member of Lim Kee Ming4 Nanyang Technological University and Chairman of its Chairman of Lim Teck Lee Group of companies. Finance Committee and Investment Committee. He Appointed to the Board on 23 April 1973. Last was previously a Director of Raffl es Holdings Limited. re-appointed on 19 April 2006. An independent and non-executive Director. Chairman of the Audit He holds a Bachelor of Science (Chemical Engineering, and Remuneration Committees and Member of Honours) degree from University of Surrey, UK. the Nominating Committee. He is also a Director of Wee Ee Chao6 Hotel Plaza. Appointed to the Board on 9 May 2006. A non- A Director of Haw Par Corporation Limited. He is executive and non-independent Director. Member of the presently the President of Ngee Ann Kongsi and an Executive Committee. He is also a Director of Hotel Plaza. Honorary President of Singapore Chinese Chamber of Commerce & Industry. Member of the Advisory Having led the management of UOB-Kay Hian Committee of Lee Kuan Yew Distinguished Visitors Holdings Limited over the last 25 years, Mr Wee Programme, Advisor of Network China and Director of currently serves as Chairman and Managing Director Lee Kuan Yew Scholarship Fund. He was previously the of UOB-Kay Hian Holdings Limited. He is a Director of Chairman of the Preservation of Monuments Board. most of the UOB-Kay Hian Group of companies. Mr Wee also manages Kheng Leong Company (Private) Mr Lim holds a Master of Science (International Trade Limited which is involved in real estate development & Finance) degree from Columbia University, New York, and investments in the region and is a non-executive and a Bachelor of Science (Business Administration) director of Haw Par Corporation Limited. He had degree from New York University, USA. previously also served as Chairman of the Singapore Tourism Board between 2002 to 2004. Mr Wee holds a Bachelor of Business Administration degree from The American University, Washington DC. UOL GROUP LIMITED 13 Annual Report 2006
789
James Koh Cher Siang7 the Country Managing Partner and head of the Appointed to the Board on 23 November 2005. Last Singapore fi rm. Prior to that, he held the position of re-elected on 19 April 2006. An independent and non- Far East Tax Manager in a US Fortune 500 oil and gas executive Director. He is also a Director of Hotel Plaza. service company, as well as practised with a number of public accounting practices in London. He is also Mr Koh joined the Housing & Development Board a Director and Vice President of CPA Australia and a as its Deputy Chairman in July 2005 after retiring Director of Riverstone Holdings Limited and Unionmet from 35 years of distinguished service in the civil (Singapore) Limited. service. His prior appointments included Permanent Secretary, Ministry of National Development (1979), Mr Low is a Singapore Certifi ed Public Accountant, Ministry of Community Development (1987) and a Fellow of CPA Australia, Institute of Chartered Ministry of Education (1994) as well as Commissioner Accountants in England & Wales, Institute of Certifi ed of Inland Revenue and Chief Executive Offi cer of Public Accountants of Singapore and an Associate Inland Revenue Authority of Singapore. Member of Chartered Institute of Taxation (UK). He is also the Chairman of Singapore Deposit Wee Ee Lim9 Insurance Corporation Limited and a Director of Appointed to the Board on 9 May 2006. A non- CapitaLand Limited, Singapore Airlines Limited and executive and non-independent Director. He is also Singapore Cooperation Enterprise. a Director of Hotel Plaza. Mr Koh holds a Bachelor of Philosophy, Political He joined Haw Par Corporation Limited (“Haw Par”) Science and Economics (Honours) degree, Master in 1986 and is currently the President and Chief of Arts degree from University of Oxford, UK and Executive Offi cer of Haw Par. He is also a director Master in Public Administration degree from Harvard of Singapore Land Limited, United Industrial University, USA. Corporation Limited, Hua Han Bio-Pharmaceutical Awarded the Public Administration Medal (Gold) in Holdings Limited (a company listed on the Hong 1983 and the Meritorious Service Medal in 2002. Kong Stock Exchange) and Sentosa Development Corporation. Mr Wee was previously a Director of Low Weng Keong8 Transit-Mixed Concrete Limited. Appointed to the Board on 23 November 2005. Last Mr Wee holds a Bachelor of Arts (Economics) degree re-elected on 19 April 2006. An independent and non- from Clark University, USA. executive Director. He is also a Director of Hotel Plaza. Mr Low retired as a senior partner of Ernst & Young in June 2005 after 19 years of practice with the fi rm. His appointments during his career with the fi rm included Head of Tax Practice, Member of the Management Committee and culminating in being 14 UOL GROUP LIMITED Annual Report 2006
MANAGEMENT TEAM
From left to right Mr Gwee Lian Kheng 1 Mr Gn Hiang Meng 2 Mr Liam Wee Sin 3 President & CEO Deputy President Chief Operating Offi cer (Hotels & Finance)
Mr Lee Choon Kok 4 Mr Lim Chong Koon 5 Mr Foo Thiam Fong Wellington 6 General Manager Group Human Resource Manager Chief Financial Offi cer / Company Secretary (Engineering & Maintenance)
3
1 2
5 6
4 UOL GROUP LIMITED 15 Annual Report 2006
From left to right Mr Yeong Sien Seu 7 Mr Kam Tin Seah 8 Mr Kwan Weng Foon 9 Legal Manager/Deputy Secretary General Manager General Manager (Investments) (Development)
Mr Yeo Bin Hong 10 Ms Chin Ee Chen Jestine 11 Ms Lian Ah Cheok Dolly 12 Senior Manager General Manager General Manager (Internal Audit) (Furniture Division) (Marketing)
8 7 9
10 11 12 16 UOL GROUP LIMITED Annual Report 2006
KEY MANAGEMENT EXECUTIVES
Mr Gwee Lian Kheng property groups, namely Parkway Properties and Information concerning Mr Gwee is found under the Centrepoint Properties. In both groups, Mr Kam was “Board of Directors” section of this Report. also involved in business development, primarily in the property sector, as well as corporate planning, Mr Gn Hiang Meng project/development management, property/retail Mr Gn joined the UOL Group in 2001 as the Deputy management as well as sales and marketing. Mr Kam President (Hotels & Finance), and oversees the strategic graduated from the National University of Singapore development of the hotel operations and fi nancial with an Honours Degree in Estate Management. management of the UOL Group. He is a director of Mr Kwan Weng Foon most of the subsidiaries of Hotel Plaza and UOL. Mr Gn was previously a senior banker with the UOB Group Mr Kwan was appointed the General Manager from 1973 to 2001 and has extensive experience in (Development) for the UOL Group in June 2006. He investment banking and stockbroking businesses. He oversees the Group’s property development projects. holds a Bachelor of Business Administration (Honours) He brings with him more than 29 years of experience degree from the University of Singapore. in construction and property development, having worked in various capacities in the construction and Mr Liam Wee Sin property development industries involving residential, Mr Liam joined the UOL Group in 1993 and is commercial, retail and hotel developments. His previous currently the Chief Operating Officer. He oversees employers include GuocoLand and Equus Land Pte the UOL Group’s business in property investment, Ltd. Mr Kwan holds a Bachelor of Science degree in development and maintenance. Mr Liam sits on Building Science from the University of Singapore the boards of several of UOL’s subsidiaries. Prior to and a Master of Business Administration from the joining the UOL Group, Mr Liam was practising with University of Hull, UK. an architectural fi rm and had also spent 8 years in Mr Lee Choon Kok the public sector handling architectural works and facilities management, and 2 years with Jones Lang Mr Lee has been with the UOL Group since 1981 Wootton undertaking project management and and is currently the General Manager (Engineering consultancy works. Mr Liam holds a Bachelor of & Maintenance). He has more than 25 years of Architecture degree from the National University of experience in property and maintenance management Singapore and is a Registered Architect. He is a Council within the UOL Group, and is responsible for the UOL Member of the Real Estate Developers’ Association of Group’s engineering, property maintenance and Singapore, Member of Preservation of Monuments security management. He is a director of a number Board and National Crime Prevention Council. of subsidiaries of UOL. Mr Lee was previously with PWD (Building Control Division) for 5 years where he Mr Foo Thiam Fong Wellington was responsible for checking M&E plans and carrying Mr Foo joined the UOL Group in 1977 after graduating out building inspections. Mr Lee graduated from from the University of Singapore with a Bachelor of the University of Singapore in 1973 with a Bachelor Accountancy (Honours) degree, and currently holds of Engineering (Honours) degree, and is a Senior the position of Chief Financial Offi cer. He oversees Member of the Institute of Engineers of Singapore and the fi nancial management and corporate secretarial a Registered Professional Engineer. matters of the UOL Group and is the Company Ms Lian Ah Cheok Dolly Secretary of Hotel Plaza and UOL. He is a director of several of the subsidiaries of Hotel Plaza and UOL. Ms Lian has been with the UOL Group for 15 Mr Foo is a Fellow of the Institute of Certifi ed Public years and currently holds the position of General Accountants of Singapore, a Fellow of CPA Australia Manager (Marketing). She is responsible for the and an Associate of the Institute of Chartered entire Group’s marketing activities which cover Secretaries and Administrators and the Chartered residential, commercial and service apartments. Institute of Management Accountants. Before joining UOL Group, Ms Lian worked with other major employers in Singapore, including a Mr Kam Tin Seah statutory board, DBS Land Ltd, Citibank NA, Knight Mr Kam joined the UOL Group towards the end Frank Pte Ltd, performing duties such as land/ of 2005 as General Manager (Investments) and facility management, property valuation, business he is responsible for identifying, evaluating and development and marketing. She graduated from recommending suitable property investment the National University of Singapore in 1981 with a opportunities for the Group, both in Singapore Bachelor’s Degree in Estate Management. She is a and overseas. Prior to joining the UOL Group, Mr Licensed Appraiser and a Member of the Singapore Kam spent about 16 years with two other major Institute of Surveyors and Valuers. UOL GROUP LIMITED 17 Annual Report 2006
CALENDAR OF EVENTS
JANUARY JUNE 1 Moulmein Rise, a project by UOL Development Pte Offi cial launch of Southbank. Ltd, received the ARCASIA Award 2005-2006 – Special UOL entered into a sale and purchase agreement to Recognition, given by the Architects Regional Council purchase 11,369,260 ordinary shares in the capital of Asia (ARCASIA), a council consisting of the Presidents Hotel Negara Limited (“HNL”) and made a mandatory of National Institutes of Architects in the Asian region, unconditional cash off er for all the remaining HNL to acknowledge exemplary work done by architects shares not already owned, controlled or agreed to be working in Asia. acquired by UOL. UOL Development (Novena) Pte Ltd acquired a freehold site at Akyab Road. AUGUST Park Developments Pte Ltd, a 50%-owned associated FEBRUARY company of UOL, entered into a conditional sale and Completion of purchase of the freehold property at purchase agreement for the en-bloc acquisition of Minbu Road. Nassim Park.
MARCH SEPTEMBER Launch of One Amber. UOL completed the compulsory acquisition of HNL. Joint venture with Overseas Union Enterprise Limited whereby UOL agreed to subscribe for up to 50% OCTOBER share in the joint venture company, Cliff ord Hotel Plaza Limited (“Hotel Plaza”), a subsidiary of Development Pte Ltd. UOL, entered into a conditional sale and purchase agreement to sell 100% of Hotel Plaza’s shareholding in APRIL Hotel Grand Plaza (Singapore) Pte Ltd. Change of name of Dahua Xiamen Development UOL Capital Investments Pte. Ltd., a wholly-owned Limited to Hua Ye Xiamen Hotel Limited. subsidiary, entered into a conditional sale and purchase agreement to sell all its interest in the property Annual General Meeting and Extraordinary General comprising a 20-storey offi ce block known as Central Meeting held on 19 April. Plaza at 298 Tiong Bahru Road, Singapore. Completion of purchase of the freehold property at Offi cial launch of The Regency at Tiong Bahru located Akyab Road. on Chay Yan Street.
MAY UOL disposed of its entire 50% shareholding interest in Cliff ord Development Pte Ltd. Change of name of “United Overseas Land Limited” to “UOL Group Limited” on 2 May. UOL acquired a 4.67% shareholding interest in OUB Centre Limited. Duchess Walk Pte Ltd was incorporated as a 70%- owned subsidiary to acquire the freehold property known as Duchess Court of Duchess Walk, Singapore. NOVEMBER Offi cial launch of Velocity@Novena Square, the retail Acquisition of an additional 30,000,000 ordinary mall (with a new 3-storey extension) at Novena Square. shares in Marina Centre Holdings Pte Ltd.
DECEMBER Completion of sale of Hotel Grand Plaza (Singapore) Pte Ltd. UOL Development Pte Ltd entered into a conditional sale and purchase agreement to acquire the freehold property known as East Coast Ville, Singapore. 18 UOL GROUP LIMITED Annual Report 2006
OPERATION HIGHLIGHTS
123
1. United Square 2. Velocity@Novena Square 3. Central Plaza
PROPERTY INVESTMENTS Commercial Properties The average occupancy of the Group’s major commercial properties in 2006 compared to those in 2005 were as follows: 2006 2005 Building Description % %
Odeon Towers 23-storey commercial building and a 2-storey podium block at North Bridge Road/Cashin Street 93 89 United Square 30-storey offi ce tower and a 4-storey retail podium with a basement at Thomson Road 94 94 Faber House 12-storey building at Orchard Road 97 96 Novena Square 18 and 25-storey offi ce towers and a 3-storey retail podium at Thomson Road (excluding #01-38) 95 99 Central Plaza 20-storey offi ce building at Tiong Bahru Road 95 95 The Plaza Retained interest in a 32-storey tower block and an adjacent 4-storey commercial building at Beach Road 76 89
United Square Central Plaza In August 2006, additions and alterations works were The property comprises a 20-storey offi ce block carried out at the fi rst storey to convert an anchor with a net lettable area of 58,153 sq metres at 298 tenant space into a cluster of food and beverage Tiong Bahru Road, Singapore 168730. On 9 October outlets and specialty shops called Connectz. This 2006, UOL Capital Investments Pte. Ltd. (formerly was done for better rental yields. With the revamp, known as UOL Tiong Bahru Plaza Pte Ltd), a wholly- the lettable offi ce space is now 27,186 sq metres and owned subsidiary, entered into a sale and purchase the retail space is 18,579 sq metres. agreement with Bakersfi eld Pte Ltd to sell all its interest in Central Plaza for a total cash consideration Novena Square of S$175 million. The sale was completed on Construction work to add a new 3-storey extension 9 January 2007. commenced in July 2005 and Temporary Occupation Permit for the project was obtained on 17 Residential Properties November 2006. The retail mall has been branded Parkroyal Residences, Singapore as “Velocity@Novena Square”, a sports and lifestyle The “Parkroyal Residences”, held by subsidiary Hotel hall. With the revamp, the lettable offi ce space is Plaza Limited (“Hotel Plaza”) comprises 90 units of now 37,786 sq metres and the retail space is 15,923 service apartments at The Plaza located at Beach sq metres. Road. Its average occupancy had increased to 95% in 2006 as compared with 93% in 2005. The average monthly rental rate (excluding domestic service and other charges) increased by 12% in 2006. UOL GROUP LIMITED 19 Annual Report 2006
1 2 3
1. South Tower, One Residency, Kuala Lumpur 2. Newton Suites 3. Southbank
UOL Building accessory basement carparks and approximately The works to convert UOL Building at Somerset Road 622 sq metres of commercial space on the ground into a new 16-storey offi ce cum-service apartment fl oor, in the South Tower of the One Residency block is in progress. The proposed development development was obtained on 20 February 2006. will comprise 126 units of studio, 1-bedroom and The property is located at Jalan Nagasari, off Jalan 2-bedroom apartments with small-offi ce-home-offi ce Raja Chulan, Kuala Lumpur. A sum equivalent to (“SOHO”) concept. The development is targeted to 30% of the purchase price has been paid to the complete by 3rd quarter 2007. vendor and the remaining 70% shall be payable in stages in accordance with the construction progress. South Tower, One Residency, Kuala Lumpur, Malaysia Upon completion of the development expected Approval of the Foreign Investment Committee in 2008, it is intended that the properties will be Malaysia, for the acquisition of all 290 units of operated as service apartments by the Group. service apartments, together with 290 parcels of
PROPERTY DEVELOPMENTS Singapore Sale Status Year of as at Name of Project No. of Units Completion Tenure 31.12.2006
Twin Regency 234 2007 Freehold 100% sold Newton Suites 118 2007 Freehold 100% sold Regency Suites 84 apartments 2008 Freehold 100% sold 20 SOHO units Southbank 197 apartments 2010 99-year leasehold 100% sold 60 SOHO units commencing 27.1.2006 16 retail units The Regency at 158 apartments 2009 Freehold 100% sold Tiong Bahru one-north residences 405 apartments 2009 99-year leasehold - 20 retail units commencing 15.9.2005 Pavilion 11 180 2009 Freehold - One Amber 562 2009 Freehold 100% sold Site currently known 120 (estimated) 2009 999-year leasehold - as Duchess Court commencing 27.12.1875 Site currently known 100 (estimated) 2010 Freehold - as Nassim Park Site currently known - - Freehold - as East Coast Ville 20 UOL GROUP LIMITED Annual Report 2006
1234
1. The Regency at Tiong Bahru 2. Regency Suites
Twin Regency The Regency at Tiong Bahru (formerly Bo Bo Tan Sites) Twin Regency is a residential development comprising In June 2005, United Regency Pte Ltd, a 60%-owned 234 units of condominium apartments. All 234 subsidiary of UOL, acquired the freehold properties units of freehold apartments in Twin Regency have known as Bo Bo Tan Gardens and Bo Bo Tan Mansion been sold. Temporary Occupation Permit (“TOP”) as well as substation at Chay Yan Street Singapore. was obtained on 22 February 2007. The site will be developed into 158 apartment units in two 35-storey blocks called “The Regency at Tiong Newton Suites Bahru”. All 158 apartment units have been sold during All of the 118 units of freehold apartments in Newton the year. Demolition is expected to commence soon Suites have been sold. The project is 74% completed and TOP is expected in late 2009. as at December and TOP is expected to be obtained in June 2007. one-north residences (formerly Central Xchange, one-north) Regency Suites In September 2005, Vista Development Pte Ltd, Regency Suites, a project undertaken by Regency a 30%-owned associated company, successfully One Development Pte. Ltd., an 80%-owned tendered for this leasehold site from Jurong Town subsidiary of UOL, comprises 84 apartments in Corporation. This site, which is located near the a 36-storey block and 20 SOHO units in a 7-storey one-north Park and within the Central Xchange, block. All of the apartment units and SOHO units will be developed into a residential-cum-commercial in Regency Suites have been sold. As at 31 December project called “one-north residences”. The project 2006, the project was 16% completed and TOP comprises approximately 20 retail units and 405 is expected in late 2008. units of residential apartments. As at December Southbank (formerly Eng Cheong Tower Site) 2006, piling has commenced and TOP is targeted for 2009. The project is expected to be launched In January 2005, Kings & Queens Development Pte in 2007. Ltd, a 70%-owned subsidiary of UOL, acquired a leasehold property known as Eng Cheong Tower Pavilion 11 (formerly Minbu and Akyab Road Sites) at North Bridge Road, Singapore. The site will be In October 2005, UOL Development (Novena) Pte developed into a 40-storey residential block with Ltd (“UDN”) successfully tendered for the en-bloc 197 apartments, a 20-storey SOHO block with 60 acquisition of the freehold properties at Minbu Road SOHO units and 16 retail units and the development and in January 2006, UDN also acquired an adjoining is named “Southbank”. All units in the development site at Akyab Road and this purchase was completed have been sold. Piling is in progress and TOP is in February 2006. The combined sites will be expected in 2010. developed into 180 apartment units for sale and the development is called “Pavilion 11”. As at December 2006, demolition and piling have been completed and the project is expected to be launched in the fi rst half of 2007. UOL GROUP LIMITED 21 Annual Report 2006
one-north residences UOL is part of the joint venture that is building a New Economy Condominium in one-north that boasts a fl oating clubhouse, an infi nity-edged pool, a sky gymnasium, a star-gazing jacuzzi and a sky bridge, among other distinctive features. 22 UOL GROUP LIMITED Annual Report 2006
12
1. One Amber 2. No.2A Persiaran Hampshire, Kuala Lumpur
One Amber (on the site of the former Maryland Park) Site currently known as East Coast Ville In March 2005, Brendale Pte Ltd, in which the In December 2006, UOL Development Pte Ltd Company has a 30% interest, acquired a freehold (“UOLD”), a wholly-owned subsidiary, entered into a property known as Maryland Park at Amber Gardens. conditional sale and purchase agreement to acquire The freehold property will be developed into four 23- the freehold property known as East Coast Ville, storey blocks with 562 apartment units. All the units Singapore, for a total cash consideration of S$54.5 have been sold. As at December 2006, the project is million. The sale and purchase of the property is 7.5% completed and TOP is expected in late 2009. subject to certain conditions including the obtaining of approval of the Land Dealings (Approval) Unit and Site currently known as Duchess Court the order for sale from STB. Completion is scheduled In August 2006, Duchess Walk Pte Ltd, in which to take place within 12 weeks from the date of the the Company has a 70% interest, completed its sale and purchase or 12 weeks from the date of the acquisition of the property currently known as STB order, whichever is later. Duchess Court at Duchess Walk at a purchase price of S$104 million. The 999-year leasehold property Kuala Lumpur, Malaysia will be developed into approximately 120 apartment No. 2A Persiaran Hampshire units for sale. Sale of the project is expected to be launched in 2007. The purchase of the freehold property at No. 2A Persiaran Hampshire, Kuala Lumpur, was completed Site currently known as Nassim Park in April 2005 by Promatik Emas Sdn Bhd, a In August 2006, Park Developments Pte Ltd (“PDPL”), 55%-owned subsidiary. The site, which is located near in which the Company has a 50% interest, acquired the Kuala Lumpur City Centre, will be developed into the freehold property known as Nassim Park for a approximately 223 luxury apartment units. total cash consideration of S$380 million. The order for sale from the Strata Titles Board (“STB”) was Shanghai, The People’s Republic of China obtained in January 2007. The freehold property will Le Marquis be developed into approximately 100 apartment Shanghai Xin Yue Real Estate Development Co. Ltd, units for sale. Sale of the project is expected to be in which the Group has an eff ective interest of 37%, launched in 2007. is building 169 luxury apartment units known as Le Marquis located at 384 ZhaoJia Bang Road, Xuhui District Shanghai, The People’s Republic of China. Since its launch in October 2005, a total of 144 units have been sold as at 31 December 2006. As at December 2006, the project was 89% completed and construction is expected to be completed in 2007. UOL GROUP LIMITED 23 Annual Report 2006
PAVILION 11 Two 33-storey towers rising majestically in Prime District 11 and off ering 270º stunning view of Orchard Road, Raffl es Place and the lush greenery of MacRitchie Reservoir. 24 UOL GROUP LIMITED Annual Report 2006
123
1. Grand1. Plaza Parkroyal Parkroyal on Beach Penang Road 2. Hotel2. Sofi Negara tel Plaza on Hanoi, Claymore Hanoi 3. Hotel3. Sofi Crowne tel Plaza Plaza Saigon Parramatta, and Central Sydney Plaza, Ho Chi Minh City 4. Therapeutic pool at St. Gregory
HOTEL AND RELATED OPERATIONS Negara on Claymore (formerly Meritus Negara Singapore) Hotel Operations Negara on Claymore is a 21-storey, 198-room hotel Singapore located along Claymore Road. Acquired in 2006, the Negara on Claymore comprises approximately Singapore received 9.7 million visitors in 2006, 17,597 sq metres of gross fl oor area. The average room representing an increase of 9% over the previous year. rate of the hotel improved by 26% when compared The increase in arrivals increased hotel occupancy to the preceding year. The average occupancy was in Singapore to 85% compared to 84% in 2005. 80% in 2006. The management contract for the The average room rate was S$164, an increase of hotel with Singapore Meritus International Hotels 19.6% over the previous year. Pte Ltd was terminated at the end of 2006 and with Parkroyal on Beach Road (formerly Plaza Parkroyal) eff ect from 1 January 2007, the hotel was managed The average occupancy of the 341-room Parkroyal on by UOL Group. Beach Road was 84% in 2006. The average room rate Marina Mandarin Singapore improved by 24% when compared to 2005. During the The Marina Mandarin Singapore is a 22-storey 575- year, the hotel refurbished the ballrooms and the spa. room hotel at Raffl es Boulevard Singapore, owned Parkroyal on Kitchener Road (formerly New Park Hotel) by Aquamarina Hotel Private Limited, in which UOL The Parkroyal on Kitchener Road, which is located Group has a 25% interest. Completed in 1987, the within walking distance of Mustafa Centre and the Marina Mandarin Singapore comprises a gross fl oor Farrer Park MRT, achieved an average occupancy of area of approximately 60,529 sq metres. During the 85% in 2006, the same as that for 2005. The average year, the hotel improved on its average room rate room rate improved by 27% when compared to 2005. by 32% when compared to the preceding year. The average occupancy of the hotel was 75% in 2006. A programme to refurbish the hotel commenced in September 2006 and is expected to complete in June Australia 2007. Areas that will be refurbished include the public Crowne Plaza Darling Harbour, Sydney spaces, food and beverage outlets, all the guestrooms and the re-cladding of the external façade. Hotel Plaza has a 60% interest in the 345-room Crowne Plaza Darling Harbour which is located at Day Street Parkroyal on Coleman Street (formerly Grand Plaza near the Darling Harbour waterfront. The average Parkroyal) occupancy of the hotel improved 5 percentage-points Occupancy for Parkroyal on Coleman Street was to 89% with slight improvement of 1% in average 87% in 2006 while average room rate improved by room rate. 23% when compared to 2005. Crowne Plaza Parramatta, Sydney On 3 October 2006, Hotel Plaza entered into a The 196-room Crowne Plaza Parramatta, in which Hotel conditional sale and purchase agreement with Park Plaza has a 60% interest, is located at Phillip Street in Hotel Strategic Investments Limited to sell its 100% the heart of the business district of Parramatta. Despite shareholding in Hotel Grand Plaza (Singapore) Pte a generally softer market in Parramatta in 2006, the Ltd (“HGP”). HGP owns the Parkroyal on Coleman hotel was able to maintain its occupancy at 81% and Street. The sale was completed on 28 December 2006. achieve a 2% increase in average room rate. UOL GROUP LIMITED 25 Annual Report 2006
1 23
1. Sheraton Perth Hotel 2. Sofi tel Plaza Xiamen 3. Sheraton Suzhou Hotel & Towers
Sheraton Perth Hotel, Perth Vietnam Hotel Plaza has a 100% interest in the 390-room Hotel Sofi tel Plaza Hanoi, Hanoi Sheraton Perth Hotel which is located at Adelaide Hotel Plaza has a 75% interest in the 317-room Hotel Terrace, Perth, Western Australia. The hotel’s 2006 Sofi tel Plaza Hanoi located at 1 Thanh Nien Road, average occupancy improved slightly from 70% in Ba Dinh District. The hotel commands a scenic view 2005 to 72% while average room rate increased by of the West Lake and Red River in Hanoi with 10% during the year. convenient access to the central business district. Conversion of the existing offi ce space at Sheraton During the year, the club rooms and F&B outlets Court into 96 additional guestrooms, with a new were renovated over a three-month period and Business Centre and Executive Lounge commenced the renovation was completed in September 2006. in 2006 and is expected to be completed in the Average occupancy for the year increased from 77% second half of 2007. in 2005 to 79% in 2006, while average room rate improved signifi cantly by 27% during the year. The People’s Republic Of China Novotel Garden Plaza Saigon, Ho Chi Minh City Sofi tel Plaza Xiamen, Xiamen The 191-room Novotel Garden Plaza Saigon is The Company has a 100% interest in the 394 room located near the airport and the HCMC International Sofi tel Plaza Xiamen which is located along Hubin Exhibition and Convention Centre. The average Bei Road. During the year, it achieved an average occupancy in 2006 had increased from 74% in occupancy of 67%. 2005 to 81% in 2006, while average room rate A 250 sq metres banqueting extension to the hotel increased by 17% compared to 2005. is being planned. Construction work scheduled to Hotel Sofi tel Plaza Saigon and Central Plaza, commence in early 2007, is expected to be completed Ho Chi Minh City by 4th quarter 2007. Hotel Plaza has a 26% interest in the 287-room Sheraton Suzhou Hotel & Towers, Suzhou Hotel Sofi tel Plaza Saigon at 17 Le Duan Boulevard, Hotel Plaza has a 100% interest in the 397-room District 1, which is conveniently located within Sheraton Suzhou Hotel & Towers which is located at the major commercial and diplomatic precinct. The Xinshi Road within the city precinct of Suzhou. 2006 average occupancy of the hotel increased from saw a signifi cant increase in the 5-star hotel supply 75% in 2005 to 77% in 2006, while the average in the city with the opening of Shangri-la, Shilla room rate improved by 22% during the year. Hotel and the Sofi tel during the year. Refl ecting the The Central Plaza, an adjoining 16-storey offi ce stiff er competition, the hotel’s average occupancy block with a total lettable area of approximately declined marginally from 70% in 2005 to 68% in 7,895 sq metres was fully let out during the year. 2006. Average room rate also showed a decline of 2% during the year. Plans are underway to add 99 guestrooms to the hotel and construction works will commence shortly and are expected to complete by end 2007. 26 UOL GROUP LIMITED Annual Report 2006
1 23
1. Parkroyal Penang 2. Cool Bananas, Parkroyal Penang 3. Parkroyal Yangon
Malaysia close proximity to the central business district and Our two hotels in Malaysia, in which Hotel Plaza has famous cultural attractions. The average occupancy a 100% interest, continue to improve their revenue for the hotel improved to 52% in 2006 from 38% per available room in 2006. achieved in 2005 while the average room rate declined marginally by 4% during the year. Parkroyal Kuala Lumpur (formerly Grand Plaza Parkroyal Kuala Lumpur) and President House, Kuala Lumpur Spa/Lifestyle-Related Operations The 348-room Parkroyal Kuala Lumpur, with the United Lifestyle Holdings Pte Ltd (“ULH”), a adjoining President House, is strategically located 100% subsidiary of Hotel Plaza, operates a chain of at the Golden Triangle, the capital’s main commercial “St. Gregory” spa outlets, through its wholly-owned and retail district. The average occupancy of the subsidiary, St Gregory Spa Pte Ltd (“SGS”). Following hotel remained at 81% in 2006 while the average a re-structuring exercise, the operations of the spa room rate improved by 10% during the year. outlets at the Parkroyal on Beach Road and the Construction work to convert a major portion of Parkroyal on Coleman Street were transferred to the the existing offi ce spaces at President House into 78 respective hotels. The spa outlet at Novena Square Orchid Club guestrooms commenced in September ceased business due in part to the redevelopment 2006 and is scheduled to be completed in June exercise undertaken by owners of the Novena Square 2007. Construction of a new Orchid Club lounge property. SGS continues to provide services to local and a bar and grill restaurant are also underway. licensees at Marina Mandarin Singapore and Conrad Centennial Singapore as well as overseas ones in Occupancy for the remaining net lettable space Japan and Malaysia. of 38,515 sq feet at the 6-storey President House was 77%. Its average monthly rental rate was RM3.50 ULH also operates the Si Chuan Dou Hua Restaurant per sq foot during the year. located on the 60th fl oor of UOB Plaza 1 through its subsidiary, Dou Hua Restaurants Pte Ltd. Performance Parkroyal Penang (formerly Grand Plaza Parkroyal of the restaurant improved during the year under Penang), Penang review. Other Si Chuan Dou Hua outlets are located The 324-room Parkroyal Penang is located at the at the Parkroyal on Beach Road and the Parkroyal Batu Ferringhi Beach. The hotel’s average occupancy Kuala Lumpur. improved to 72% in 2006 as compared to 67% in 2005. The average room rate improved by 38% during INVESTMENTS IN SECURITIES the year. The UOL Group has current and non-current “Available-for-sale” fi nancial assets that are stated Myanmar at fair value. These fi nancial assets comprise both Parkroyal Yangon (formerly Grand Plaza Parkroyal quoted and unquoted securities in both property and Hotel), Yangon non-property related sectors. Refl ecting higher share Hotel Plaza has a 95% interest in the 329-room prices, an unrealized gain of S$334.5 million arising Parkroyal Yangon which is located at the corner from changes in the fair value of investments was of Alan Pya Phaya Road and Yaw Min Gyi Road, in recognized in the fair value reserve during the year. UOL GROUP LIMITED 27 Annual Report 2006
123
1. St. Gregory 2. Stylish & Trendy Mod.Living 3. Si Chuan Dou Hua Restaurant
Investments in quoted securities include United Another wholly-owned subsidiary, United Venture Overseas Bank Limited , United Industrial Corporation Furnishings Pte Ltd (“UVF”), continued its operations Limited (“UIC”), United International Securities focusing in the contracts furniture division. UVF Ltd and Haw Par Corporation Limited. During the completed Singapore Changi Airport Terminal year, the Group increased its shareholding in UIC 2 project, supplying public seating to 4 gate-holds. to 13.92%. It also acquired a 4.67% interest in the share capital of OUB Centre Limited which owns HUMAN RESOURCES the OUB Centre at Raffl es Place, Singapore. At the end of 2006, mainly taking into account the sale of the Parkroyal on Coleman Street and MANAGEMENT SERVICES the acquisition of Negara on Claymore, the Group As in previous years, UOL Management Services employed 1,134 employees in Singapore compared Pte Ltd continued to provide property management to 1,214 employees at the end of 2005. services for the various properties of the Group in Singapore and to act as marketing agent and property During the year, the Group organised social and recreational activities to meet the employees’ manager for Novena Square. interests. These included short holiday trips to UOL Project Management Services Pte Ltd, a West Malaysia and Batam, karaoke nights, durian wholly-owned subsidiary, continued to provide party and a bowling competition. Being mindful project management services and related services to the need to support the community, the staff to the Group’s commercial development projects at Parkroyal on Beach Road hosted a Christmas and properties. Lunch for children from the Henderson Student Care Centre. Another 100%-owned subsidiary, Parkroyal Hospitality Pte Ltd (formerly known as Plaza Pacifi c The Group’s employees continued to distinguish Service Apartment Pte Ltd), continued to provide themselves by winning recognition for excellent hospitality management services for the Parkroyal service, courtesy, security consciousness and honesty Residences at The Plaza at Beach Road. awarded by relevant organisations. In October, a total of fi fty-six Excellent Service awards (including FURNITURE OPERATIONS the prestigious Superstar (Hotel) Award 2006 for Mod.Living Pte Ltd (“Mod.Living”), a wholly-owned the hospitality sector) were awarded to the staff subsidiary, off ers a complete range of furniture, of the Group’s hotels at the 12th Excellent Service lightings and accessories from Europe’s leading Award Presentation Ceremony 2006. brands. This year, Mod.Living added 2 new brands to its collection, “Arfl ex” and “Seven”. Both brands have a long tradition in furniture-making and in realising products with modern designs, and high quality in materials. Mod.Living has improved sales performance and is profi table for 2006. 28 UOL GROUP LIMITED Annual Report 2006
PROPERTY SUMMARY 2006
Approximate Present Net Lettable/ Capital Tenure Gross Floor* Car Park Value Completed Purchased of Land Area (SQ M) Facilities (S$Million) Faber House, a 12-storey commercial building at 230 Orchard Road, Singapore (excluding fi rst storey which was sold) 1973 – Freehold 3,817 49 41.8 Odeon Towers, a 23-storey commercial building with 3 basement levels and a 2-storey podium block at 999-Year Lease 331 North Bridge Road, Singapore 1992 & 2003 – from 1827 18,195 176 199.2 UOL Building, under construction to convert to 16-storey commercial development of 128 units of offi ce with service apartments and basement car parks at 96 Somerset Road, Singapore – 1979 Freehold 11,796* – 67.0 United Square, a commercial building comprising a 4-storey retail podium with a basement, a 30-storey offi ce tower and 7 carpark decks at 101 Thomson Road, Singapore Shops 1982 & 2002 1987 Freehold 45,765 658 528.5 Offi ces 1982
Eunos Warehouse Complex, retained interests in 2 units of a 4-storey fl atted 60-Year Lease warehouse at 1 Kaki Bukit Road 2, Singapore 1983 – from 1982 1,134 – 1.1 Central Plaza, a 20-storey offi ce 99-Year Lease block at 298 Tiong Bahru Road, Singapore 1994 – from 1991 17,725 – 137.8 Novena Square, an offi ce-cum-retail development above the Novena MRT station, comprising 2 blocks of 18- and 25- storey offi ce towers and a 3-storey retail podium with elevated car parks at 238/A/B Thomson Road, Singapore (excluding #01-38 which was sold) Offi ce Tower A & Retail Podium 2000 – 99-Year Lease 37,661 480.0 from 1997 477 Offi ce Tower B & Retail Podium 2000 – 99-Year Lease 16,048 195.6 from 1997 The Plaza, retained interests in a 32-storey tower block comprising restaurants, hotel function rooms, shops, offi ces and service apartments, an adjacent 4-storey commercial building and a multi-storey carpark block at 7500 Beach Road, Singapore
Shops & Offi ces 1974 & 1979 – 99-Year Lease 18,439 from 1968 641 144.2 90 service apartments and 99-Year Lease 6,125 & 165 1 owner-occupied apartment 1979 – from 1968 respectively Plaza Parkroyal, a 7-storey hotel building with 341 rooms at 99-Year Lease 7500 Beach Road, Singapore 1971 & 1979 – from 1968 19,900* 47 92 Parkroyal on Kitchener Road and Shopping Arcade, comprising a 5-storey podium with a basement and a 16-storey Y-shaped tower at 181 Kitchener Road, Singapore Hotel with 531 rooms 1976 & 1981 1989 Freehold 37,811* 273 116.0 Shopping Arcade 1976 & 1981 1989 Freehold 1,543 UOL GROUP LIMITED 29 Annual Report 2006
PROPERTY SUMMARY 2006 (continued)
Approximate Present Net Lettable/ Capital Tenure Gross Floor* Car Park Value Completed Purchased of Land Area (SQ M) Facilities (S$Million) Negara on Claymore, a 21-storey hotel with 198 rooms at 10 Claymore Road, Singapore 1995 2006 Freehold 17,597* 76 120.0 Crowne Plaza Darling Harbour, a 13-level hotel with 345 rooms at 150 Day Street, Sydney, Australia 1991 1993 Freehold 24,126* 52 104.1 Crowne Plaza Parramatta, a 13-level hotel with 196 rooms at 30 Phillip Street, Parramatta, New South Wales, Australia 1986 1994 Freehold 16,694* 186 48.4 Sheraton Perth Hotel, comprising a 23-storey hotel with 390 rooms and a 4-level former offi ce complex at the corner of Adelaide Terrace and Hill Street, Perth, Australia 1973 1995 Freehold 31,513* 220 87.2 Parkroyal Kuala Lumpur and President House, comprising a 23-storey tower with a 6-storey podium together with an annexed 8-storey car park building, with the 348-room hotel occupying the tower and part of the podium at Jalan Sultan Ismail, Kuala Lumpur, Malaysia
Hotel and President House 1974 Freehold 56,707* – 1999 81.9 Car Park Annexe – Leasehold, 11,128* 320 expiring in 2080 Parkroyal Penang, a 324-room 8-storey beachfront resort hotel at Batu Ferringhi Beach, Penang, Malaysia 1990 1999 Freehold 31,502* 147 57.5 One Residency, under construction to build a 290-unit service apartment with car parks at Geran No. 26595, Lot 692 Seksyen 57, Kuala Lumpur, Malaysia – 2005 Freehold 21,359* 290 13.2 Novotel Garden Plaza Saigon, comprising a 10-storey hotel building with 191 rooms and a 4-storey annex offi ce building at Nguyen Van Troi Street, Ho Chi Minh City, 49-Year Lease Vietnam 1997 – from 1994 12,165* 25 32.4 Hotel Sofi tel Plaza Hanoi, a 20-storey hotel with 317 rooms and 36 serviced apartments 48-Year Lease at Thanh Nien Road, Hanoi, Vietnam 1998 2001 from 1993 39,250* 30 87.8 Parkroyal Yangon, a 8-storey V-shaped tower comprising 329 rooms at the corner of Alan Pya Phaya Road and Yaw Min Gyi Road, Yangon, 30-Year Lease Union of Myanmar 1997 2001 from 1997 17,700* 250 11.7 Sheraton Suzhou Hotel & Towers, comprising an establishment built in the Ming Dynasty style, with 397 rooms accommodated within a cluster of low-rise buildings at Xinshi Road, Suzhou, Jiangsu, 50-Year Lease The People’s Republic of China 1998 2001 from 1994 46,532* 100 143.0 Sofi tel Plaza Xiamen, comprising two towers of 19-storey and 29-storey each with 394 rooms, including a two-storey basement car park at Hubin North Road, Xiamen, 70-Year Lease The People’s Republic of China 1996 2001 from 1991 30,706* 100 63.4 30 UOL GROUP LIMITED Annual Report 2006
PROPERTY SUMMARY 2006 (continued)
Approximate Percentage Properties for Sale Under Type of Tenure Gross Floor Site Area Stage of Expected of Development Development of Land Area (SQ M) (SQ M) Completion Completion Interest Twin Regency, a residential development comprising 234 condominium apartment units 1st Quarter at Kim Tian Road Residential Freehold 29,696 9,675 96% 2007 70% Newton Suites, a residential development comprising 118 units of condominium apartments at 2nd Quarter Newton Road Residential Freehold 10,755 3,842 74% 2007 100% Persiaran Hampshire, a proposed residential development comprising 174 units of condominium 1st Quarter apartments at Kuala Lumpur Residential Freehold 32,578 4,573 – 2010 55% Southbank, a proposed development comprising 273 units of mixed offi ce and residential condominium Offi ce & 99 year 1st Quarter apartments at North Bridge Road Residential leasehold 24,161 3,852 – 2010 70% Regency Suites, a proposed development comprising 104 units of mixed offi ce and residential condominium apartments at Offi ce & 4th Quarter Kim Tian Road Residential Freehold 11,371 3,790 16% 2008 80% The Regency @ Tiong Bahru, a residential development comprising 158 units of condominium 4th Quarter apartments at Chay Yan Street Residential Freehold 18,201 6,129 – 2009 60% Pavilion 11, a proposed residential development comprising 180 units of condominium 2nd Quarter apartments at Minbu/Akyab Road Residential Freehold 21,237 7,585 – 2009 100% Duchess Walk, a proposed residential development comprising 120 units of condominium 2nd Quarter apartments at Duchess Walk Residential Freehold 19,802 14,144 – 2009 70%
ANALYSIS BY GEOGRAPHICAL ANALYSIS BY VALUE LOCATION & BY AREA $ million % sq m % ■ Commercial 1,788 62.5 ■ Singapore 253,907 42.8 ■ Residential 30 1.1 ■ Australia 72,333 12.2 ■ Hotel 1,039 36.4 ■ Vietnam 51,415 8.7 2,857 100.0 ■ Malaysia 120,696 20.3 ■ The People’s Republic of China 77,238 13.0 ■ Myanmar 17,700 3.0 ANALYSIS BY AREA 593,289 100.0 sq m % Net Lettable Area ANALYSIS BY GEOGRAPHICAL ■ Commercial 193,482 32.7 LOCATION & BY VALUE ■ Residential 6,290 1.1 $ million % 199,772 33.8 ■ Singapore 2,126 74.5 ■ Australia 240 8.4 Gross Floor Area ■ Vietnam 120 4.2 ■ Hotel 393,517 66.2 ■ Malaysia 153 5.3 593,289 100.0 ■ The People’s Republic of China 206 7.2 ■ Myanmar 12 0.4 2,857 100.0 ANALYSIS BY TENURE $ million % ■ Freehold 1,267 44.3 ANALYSIS OF COMMERCIAL ■ 999-year leasehold 199 7.0 PROPERTIES IN SINGAPORE BY ■ 99-year leasehold 1,052 36.8 PLANNING AREA* ■ 70-year leasehold 63 2.2 ■ 60-year leasehold 1 0.1 sq m % ■ 48 to 50-year ■ Novena 99,475 57.7 leasehold 263 9.2 ■ Orchard 15,613 9.1 ■ 30-year leasehold 12 0.4 ■ Downtown Core 18,195 10.6 ■ Bukit Merah 17,725 10.3 2,857 100.0 ■ Kallang 19,982 11.6 ■ Bedok 1,134 0.7 172,124 100.0 UOL GROUP LIMITED 31 Annual Report 2006
SEGMENTAL PERFORMANCE ANALYSIS
TOTAL REVENUE BY INDUSTRY SEGMENTS 2005 2006 $’000 % $’000 % Property development 104,411 20.6 169,297 28.0 Property investments 95,138 18.8 92,000 15.2 Hotel operations 259,576 51.4 300,062 49.6 %% Trading and retail operations Property 28.0 Trading and 1.8 development retail operations and management services 11,431 2.3 10,823 1.8 and management Property 15.2 services Investments 34,926 6.9 32,939 5.4 investments Investments 5.4 505,482 100.0 605,121 100.0 Hotel 49.6 operations
TOTAL ASSETS BY INDUSTRY SEGMENTS 2005 2006 $’000 % $’000 % Property development 263,147 7.5 582,164 12.5 Property investments 1,556,103 44.2 1,804,458 38.7 Hotel operations 662,126 18.8 720,243 15.5 % % Trading and retail operations Property 12.5 Trading and 0.1 development retail operations and management services 5,554 0.2 3,580 0.1 and management Investments 811,639 23.1 1,111,057 23.9 Property 38.7 services investments Associated co & other assets 221,616 6.2 430,410 9.3 Investments 23.9 Hotel 15.5 operations Associated co 9.3 3,520,185 100.0 4,651,912 100.0 & other assets
TOTAL REVENUE BY GEOGRAPHICAL SEGMENTS 2005 2006 $’000 % $’000 % Singapore 315,443 62.4 399,868 66.1 Australia 88,746 17.6 82,047 13.6 Vietnam 26,844 5.3 31,436 5.2 Malaysia 33,075 6.5 38,366 6.3 % % Singapore 66.1 Malaysia 6.3 The People’s Republic of China 36,640 7.3 47,792 7.9 Myanmar 4,734 0.9 5,612 0.9 Australia 13.6 The People’s 7.9 Republic of China 505,482 100.0 605,121 100.0 Vietnam 5.2 Myanmar 0.9
TOTAL ASSETS BY GEOGRAPHICAL SEGMENTS 2005 2006 $’000 % $’000 % Singapore 2,959,522 84.1 4,089,961 87.9 Australia 173,999 4.9 177,295 3.8 Vietnam 86,599 2.5 80,176 1.7 % % Malaysia 126,525 3.6 134,820 2.9 Singapore 87.9 Malaysia 2.9 The People’s Republic of China 159,936 4.5 157,620 3.4 Australia 3.8 The People’s 3.4 Myanmar 13,604 0.4 12,040 0.3 Republic of China 3,520,185 100.0 4,651,912 100.0 Vietnam 1.7 Myanmar 0.3 32 UOL GROUP LIMITED Annual Report 2006
QUARTERLY RESULTS
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total $’000 % $’000 % $’000 % $’000 % $’000 % REVENUE* 2006 132,286 22 162,867 27 149,922 25 160,046 26 605,121 100 2005 103,579 20 130,248 26 127,272 25 144,383 29 505,482 100 PROFIT BEFORE INCOME TAX* 2006 31,144 8 69,478 17 43,314 11 262,863 64 406,799 100 2005 26,688 18 47,991 32 45,521 30 29,635 20 149,835 100 NET PROFIT* 2006 25,664 7 59,500 16 34,900 9 252,962 68 373,026 100 2005 20,867 17 36,873 31 38,074 32 24,035 20 119,849 100 PROFIT ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY* 2006 21,275 7 54,935 16 31,468 9 231,766 68 339,444 100 2005 16,266 17 32,648 33 33,074 33 18,082 18 100,070 100 BASIC EARNINGS PER $1.00 ORDINARY SHARE (IN CENTS) 2006 2.7 6 6.9 16 4.0 9 29.2 69 42.8 100 2005 2.1 17 4.1 33 4.2 33 2.1 17 12.6 100 * 2005 comparatives are restated to conform with current fi nancial year’s presentation
SIMPLIFIED GROUP FINANCIAL POSITION
TOTAL ASSETS OWNED $Million 2006 2005 2006 2005 659 In $’Million %
1,658 616 ■ Property, plant and equipment 659 616 14 18 ■ Investment properties 1,658 1,545 36 44 1,545 ■ Available-for-sale fi nancial assets 1,111 812 24 23 1,111 ■ Associated companies 320 123 7 3
320 812 ■ Properties for sale under development 578 123 /Developed properties for sale 578 249 12 7 326 249 175 ■ Other assets & cash 326 175 7 5 2006 2005 4,652 3,520 100 100 TOTAL LIABILITIES OWED
& CAPITAL INVESTED
$Million 2006 2005 2006 2005 In $’Million % ■ Shareholders’ funds 3,156 2,364 68 67 3,156 2,364 ■ Minority interests 294 232 6 7 ■ Borrowings 822 602 18 17 ■ Trade and other payables 102 87 2 3 294 ■ Deferred income tax liabilities 159 119 3 3 232 822 602 ■ 102 87 Other liabilities 119 116 3 3 159 119 119 116 4,652 3,520 100 100 2006 2005 UOL GROUP LIMITED 33 Annual Report 2006
FIVE-YEAR FINANCIAL SUMMARY
2002 2003 2004 2005 2006 $’000 $’000 $’000 $’000 $’000 GROUP REVENUE Property development 155,904 125,179 69,590 104,411 169,297 Property investments 111,537 108,610 102,945 95,138 92,000 Hotel operations 183,184 179,561 231,854 259,576 300,062 Trading and retail operations and management services 19,943 18,104 12,473 11,431 10,823 Investments 43,433 34,438 44,341 34,926 32,939 514,001 465,892 461,203 505,482 605,121 GROUP INCOME STATEMENTS Property development 8,258 9,873 12,372 21,635 32,889 Property investments 166,060 80,746 64,079 65,468 217,752 Hotel operations 11,908 6,433 30,767 29,192 129,868 Trading and retail operations and management services (1,039) 70 (389) 1,192 2,957 Investments 39,504 41,272 399,955 51,361 34,112 224,691 138,394 506,784 168,848 417,578 Unallocated costs (4,406) (1,296) (4,381) (4,792) (5,709) Operating profi ts 220,285 137,098 502,403 164,056 411,869 Finance income 1,990 6,484 3,386 13,674 6,634 Finance expense (34,441) (30,570) (22,441) (26,694) (25,842) 187,834 113,012 483,348 151,036 392,661 Share of results of associated companies 12,281 2,885 2,278 (1,201) 14,138 Profi t before income tax 200,115 115,897 485,626 149,835 406,799 Profi t attributable to equity holders of the company 161,397 78,790 381,618 100,070 339,444
GROUP BALANCE SHEETS Property, plant and equipment 539,497 600,054 610,540 616,390 658,516 Investment properties 1,670,288 1,579,330 1,500,945 1,545,193 1,658,085 Associated companies and receivables (non-current) 65,966 42,206 47,238 115,391 309,392 Available-for-sale fi nancial assets (non-current) 302,916 303,914 296,309 410,639 544,129 Intangibles 1,389 13,972 13,491 14,516 14,663 Deferred tax assets - 590 6,652 9,154 10,360 Net current assets (excluding borrowings) 379,351 398,006 806,623 620,821 1,251,033 Non-current liabilities (excluding borrowings) (97,788) (86,763) (76,090) (133,366) (174,392) 2,861,619 2,851,309 3,205,708 3,198,738 4,271,786
Share capital and share premium 797,925 922,327 1,067,911 1,068,264 1,071,987 Reserves 900,881 848,184 849,787 1,295,935 2,084,017 Interests of the shareholders 1,698,806 1,770,511 1,917,698 2,364,199 3,156,004 Minority interests 204,594 226,059 227,467 232,237 293,547 Borrowings 958,219 854,739 1,060,543 602,302 822,235 2,861,619 2,851,309 3,205,708 3,198,738 4,271,786 34 UOL GROUP LIMITED Annual Report 2006
FIVE-YEAR FINANCIAL SUMMARY (continued)
2002 2003 2004 2005 2006 FINANCIAL RATIOS Basic earnings per share (cents) 26.3 12.8 50.7 12.6 42.8 Gross dividend declared Interim & Final (%) 7.5 7.5 6.0 7.5 7.5 Special (%) 2.5 - 40.1 - 7.5 Cover (times) 3.4 1.9 1.2 1.7 2.8 Net tangible asset backing per ordinary share ($) Before accounting for surplus on revaluation of hotel properties 2.77 2.52 2.40 2.96 3.95 After accounting for surplus on revaluation of hotel properties 2.87 2.62 2.54 3.23 4.44 Gearing ratio 0.53 0.42 0.17 0.21 0.22 Note: Basic earnings per share is calculated by reference to the weighted average number of ordinary shares in issue during the year.
SOURCES OF FINANCE $Million 5000 2002 2003 2004 2005 2006 $’Million $’Million $’Million $’Million $’Million 4000 ■ Borrowings 958 855 1,061 602 822 ■ Minority interests 205 226 227 232 294 3000 ■ Interests of the shareholders 1,699 1,771 1,918 2,364 3,156 2000 2,862 2,852 3,206 3,198 4,272
1000
0 2002 2003 2004 2005 2006
GROUP REVENUE
$Million 2002 2003 2004 2005 2006 700 $’Million $’Million $’Million $’Million $’Million
600 ■ Property development 156 125 70 104 169 ■ Property investments 112 109 103 95 92 500 ■ Hotel operations 183 180 232 260 300 400 ■ Trading and retail 300 operations and management services 20 18 12 11 11 200 ■ Investments 43 34 44 35 33 100 514 466 461 505 605 0 2002 2003 2004 2005 2006 UOL GROUP LIMITED 35 Annual Report 2006
NET TANGIBLE ASSETS (“NTA”) PER SHARE
$
5
4.44
4 3.95
3.47 3.31 3.23
2.86 3 2.96
2.77 2.52 2.40
2
2002 2003 2004 2005 2006
NTA per share (market value) NTA per share (book value)
NTA per share NTA per share (market value) (book value) Year $ $
2002 3.47 2.77 2003 3.31 2.52 2004 2.86 2.40 2005 3.23 2.96 2006 4.44 3.95
Note : NTA per share (market value) includes the market value of the Group’s hotel properties. NTA per share (book value) includes the book value of the Group’s investment properties which are carried at revalued amounts. 36 UOL GROUP LIMITED Annual Report 2006
VALUE-ADDED STATEMENT For the year ended 31 December 2006
2006 2005 $’000 $’000 Sales of goods and services 572,182 470,556 Purchase of materials and services (297,977) (219,839) Gross value added 274,205 250,717 Share of results of associated companies 14,138 (1,201) Income from investments and interest 39,300 45,008 Exceptional items 248,165 494 Exchange diff erence 212 3,592 Total value added 576,020 298,610
Distribution of value added: To employees and directors Employees’ salaries, wages and benefi ts 108,075 96,714 Directors’ remuneration 3,049 2,362 111,124 99,076 To government Corporate and property taxes 46,317 41,586
To providers of capital Interest expense 38,179 16,261 Net dividend attributable to minority shareholders 4,053 2,745 Net dividend to shareholders 59,492 47,583 101,724 66,589 Total value added distributed 259,165 207,251 Retained in the business: Depreciation 36,691 35,280 Retained earnings (7,017) 19,611 29,674 54,891 Non-production cost and income Bad debts (496) 241 Income from investments and interest 39,300 45,008 Exceptional items 248,165 494 Exchange diff erence 212 3,592 Amortisation of bond discount - (12,867) 287,181 36,468 576,020 298,610
Productivity ratios: $ $ Value added per employee 59,610 56,891 Value added per $ employment costs 2.47 2.53 Value added per $ investment in property, plant and equipment and investment properties (before depreciation) – at cost 0.12 0.11 – at valuation 0.10 0.10 Value added per $ net sales 0.48 0.53
FINANCIAL CONTENTS
38 Report of the Directors 43 Statement by Directors 44 Independent Auditors’ Report 45 Income Statements 46 Balance Sheets 48 Consolidated Statement of Changes in Equity 49 Statement of Changes in Equity 50 Consolidated Cash Flow Statement 52 Notes to the Financial Statements 38 UOL GROUP LIMITED Annual Report 2006
REPORT OF THE DIRECTORS For the financial year ended 31 December 2006
The directors have pleasure in submitting this report to the members together with the audited financial statements of the Company and of the Group for the financial year ended 31 December 2006.
The name of the Company was changed from United Overseas Land Limited to UOL Group Limited with effect from 19 April 2006.
Directors
The directors of the Company in office at the date of this report are:
Wee Cho Yaw - Chairman Gwee Lian Kheng - President and Chief Executive Officer Lim Kee Ming Alan F C Choe Wong Yuen Weng Ernest Wee Ee Chao (appointed on 9 May 2006) Koh Cher Siang James Low Weng Keong Wee Ee Lim (appointed on 9 May 2006)
Arrangements to enable directors to acquire shares and debentures
Neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose object is to enable the directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate, other than as disclosed under “Share Options” on pages 40 to 42.
Directors’ interests in shares or debentures
(a) The directors holding office at 31 December 2006 are also the directors holding office at the date of this report. Their interests in the share capital of and options to subscribe for ordinary shares of the Company and related corporations, as recorded in the register of directors’ shareholdings, were as follows: Holdings registered Holdings in which a director is in name of director deemed to have an interest At 1.1.2006 At 1.1.2006 or date of or date of appointment, appointment, At 31.12.2006 if later At 31.12.2006 if later
uol Group Limited (“UOL”)
- Ordinary Shares Wee Cho Yaw 3,388,151* 3,388,151* 213,768,442* 205,206,344* Gwee Lian Kheng 388,000 388,000 - - Lim Kee Ming 138,557 138,557 322,357 322,357 Wong Yuen Weng Ernest 5,000 5,000 - - Wee Ee Chao 30,748* 30,748* 80,820,597* 80,820,597* Koh Cher Siang James 385 385 - - Wee Ee Lim 241,489 241,489 80,553,452* 80,553,452* UOL GROUP LIMITED 39 Annual Report 2006
REPORT OF THE DIRECTORS (continued) For the financial year ended 31 December 2006
Directors’ interests in shares or debentures (continued) Holdings registered Holdings in which a director is in name of director deemed to have an interest At 1.1.2006 At 1.1.2006 or date of or date of appointment, appointment, At 31.12.2006 if later At 31.12.2006 if later
uol Group Limited (“UOL”) - Executives’ Share Options Gwee Lian Kheng 400,000 300,000 - -
hotel Plaza Limited (“HPL”) - Ordinary Shares Wee Cho Yaw - - 310,856,000 * 309,315,000* Gwee Lian Kheng 114,000 114,000 150,000 150,000 Lim Kee Ming 10,000 10,000 - - Wee Ee Chao - - 595,000 595,000
* Includes shares registered in the name of nominees.
(b) The directors’ interests in the share capital of and options to subscribe for ordinary shares of the Company and related corporations, as recorded in the register of directors’ shareholdings at 21 January 2007, were the same as those at 31 December 2006.
(c) Messrs Wee Cho Yaw, Wee Ee Chao and Wee Ee Lim are each deemed to have an interest in all the shares held by Kheng Leong Company (HK) Limited in the following partially owned subsidiaries of the Group, by virtue of their having an interest of not less than 20% each in the issued share capital of Kheng Leong Company (HK) Limited:
Holdings in which a director is deemed to have an interest At 1.1.2006 or date of appointment, At 31.12.2006 if later
success Venture Investments (Australia) Ltd - Ordinary Shares of US$1 each 2,059,500 2,059,500
success City Pty Limited - Ordinary Shares 1,720,834 1,720,834
(d) Save as disclosed above, none of the other directors holding office at 31 December 2006 has any interest in the ordinary shares and Executives’ Share Options of the Company and the ordinary shares of HPL and any other related corporations of the Company, as recorded in the register of directors’ shareholdings. 40 UOL GROUP LIMITED Annual Report 2006
REPORT OF THE DIRECTORS (continued) For the financial year ended 31 December 2006
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.
Share options UOL Group Executives’ Share Option Scheme (a) The UOL Group Executives’ Share Option Scheme (“the 2000 Scheme”) was approved by the shareholders of the Company at an Extraordinary General Meeting held on 23 May 2000.
(b) Under the terms of the 2000 Scheme, the total number of shares granted shall not exceed 15% of the issued share capital of the Company and the executives may exercise the options by giving notice in writing to the Company in the prescribed form during the option period, accompanied by remittance of the amount of the Offering Price.
The Offering Price is equal to the average of the last dealt prices per share as determined by reference to the daily official list published by the Singapore Exchange Securities Trading Limited for a period of 3 consecutive trading days immediately prior to the relevant offering date.
(c) On 18 May 2006, options were granted pursuant to the 2000 Scheme to the executives of the Company and its subsidiaries to subscribe for 1,444,000 ordinary shares in the Company (known as “the 2006 Options”) at the offer price of $3.21 per ordinary share. 1,432,000 options granted were accepted by the executives, including Mr Gwee Lian Kheng.
The details of the options accepted are as follows:
No. of At offer price employees of $3.21 per share Executive Director 1 100,000 Other Executives 64 1,332,000 65 1,432,000
(d) Statutory information regarding the 2006 Options is as follows:
(i) The vesting of granted options is conditional on the completion of one year of service from the grant date. The option period begins on 18 May 2007 and expires on 17 May 2016 or on the date of termination of employment or in the case of the executive director, on the date he ceases to be the executive director of the Company, whichever is earlier, subject to the provisions of Rule 13 of the Rules of the 2000 Scheme.
(ii) The options may be exercised in full or in respect of 1,000 shares or a multiple thereof, on the payment of the exercise price.
(iii) The persons to whom the options have been granted have no right to participate by virtue of the options in any share issue of any other company in the Group.
Details of options granted in previous financial years were set out in the Report of the Directors for the respective financial years. UOL GROUP LIMITED 41 Annual Report 2006
REPORT OF THE DIRECTORS (continued) For the financial year ended 31 December 2006
Share options (continued) UOL Group Executives’ Share Option Scheme (continued)
(e) Other information required by the Singapore Exchange Securities Trading Limited:
Pursuant to Rule 852 of the Listing Manual of the Singapore Exchange Securities Trading Limited, it is reported that during the financial year:
(i) The Remuneration Committee comprising the following directors administer the 2000 Scheme:
Wee Cho Yaw Chairman (Non-independent) Alan F C Choe Member (Independent) Lim Kee Ming Member (Independent)
(ii) The details of options granted to a director of the Company, Mr Gwee Lian Kheng, under the 2000 Scheme are as follows:
Aggregate options Aggregate options Aggregate options granted since granted since exercised since commencement commencement commencement of the 2000 Options granted of the 2000 of the 2000 Aggregate options Scheme to during the Scheme to Scheme to outstanding at 31.12.2005 financial year 31.12.2006 31.12.2006 31.12.2006 500,000 100,000 600,000 200,000 400,000
(iii) No options have been granted to controlling shareholders or their associates, parent group employees, and no employee has received 5% or more of the total options available under the 2000 Scheme. No options were granted at a discount during the financial year.
Outstanding Share Options At 31 December 2006, the holders of the Executives’ Share Options include a director of the Company as disclosed under “Directors’ interests in shares or debentures”.
The holders of the Executives’ Share Options have no right to participate by virtue of the options in any share issue of any other company in the Group.
During the financial year, 1,672,000 ordinary shares of the Company were issued upon the exercise of options by:
Exercise price per share Holders of Number of ordinary shares $ 2002 Options 30,000 1.81 2003 Options 134,000 2.05 2004 Options 617,000 2.28 2005 Options 891,000 2.23 2006 Options - 3.21 1,672,000 42 UOL GROUP LIMITED Annual Report 2006
REPORT OF THE DIRECTORS (continued) For the financial year ended 31 December 2006
Share options (continued) Outstanding Share Options (continued) Unissued ordinary shares under options at 31 December 2006 comprise:
Options Exercise/ At granted Options Options At Subscription Option 1.1.2006 in 2006 exercised lapsed 31.12.2006 price /$ period
Executives’ Share Options
2002 Options 84,000 - 30,000 12,000 42,000 1.81 27.06.2003 to 26.06.2012 2003 Options 354,000 - 134,000 12,000 208,000 2.05 27.06.2004 to 26.06.2013 2004 Options 1,071,000 - 617,000 6,000 448,000 2.28 21.05.2005 to 20.05.2014 2005 Options 1,324,000 - 891,000 24,000 409,000 2.23 09.05.2006 to 08.05.2015 2006 Options - 1,432,000 - 90,000 1,342,000 3.21 18.05.2007 to 17.05.2016 2,833,000 1,432,000 1,672,000 144,000 2,449,000
Audit committee The Audit Committee carried out its functions, in accordance with Section 201B(5) of the Singapore Companies Act, including a review of the financial statements of the Company and of the Group for the financial year and the auditors’ report thereon. The nature and extent of the functions performed by the Audit Committee are further described in the Annual Report under the heading “Corporate Governance”.
The Audit Committee has nominated PricewaterhouseCoopers for re-appointment as auditors of the Company at the forthcoming Annual General Meeting.
Auditors The auditors, PricewaterhouseCoopers, have expressed their willingness to accept re-appointment.
On behalf of the directors
WEE CHO YAW GWEE LIAN KHENG Chairman Director
16 February 2007 UOL GROUP LIMITED 43 Annual Report 2006
STATEMENT BY DIRECTORS For the financial year ended 31 December 2006
In the opinion of the directors,
(a) the income statement, balance sheet and statement of changes in equity of the Company and the consolidated financial statements of the Group as set out on pages 45 to 119 are drawn up so as to give a true and fair view of the state of affairs of the Company and of the Group at 31 December 2006, of the results of the business and the changes in equity of the Company and of the Group for the financial year then ended; and the 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.
On behalf of the directors
WEE CHO YAW GWEE LIAN KHENG Chairman Director
16 February 2007 44 UOL GROUP LIMITED Annual Report 2006
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF UOL GROUP LIMITED (PREVIOUSLY KNOWN AS UNITED OVERSEAS LAND LIMITED)
We have audited the accompanying financial statements of UOL Group Limited (the “Company”) and its subsidiaries (the “Group”) set out on pages 45 to 119 for the financial year ended 31 December 2006, which comprise the income statements, balance sheets and statement of changes in equity of the Company and of the Group and the consolidated cash flow statement of the Group, and a summary of the significant accounting policies and other explanatory notes.
Directors’ Responsibility for the Financial Statements The Company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Singapore Companies Act and Singapore Financial Reporting Standards. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether the financial statements are free from material misstatement.
An audit includes performing procedures to obtain evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ 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 auditors consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by directors, 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.
Opinion In our opinion,
(a) the accompanying income statements, balance sheets and statement of changes in equity of the Company and of the Group and the consolidated cash flow statement of the Group are properly drawn up in accordance with the provisions of the Companies Act, Cap 50 (the “Act”) and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Company and of the Group at 31 December 2006, the profits and the changes in equity of the Company and of the Group, and the cash flows of the Group for the financial year ended on that date; and
(b) the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.
PricewaterhouseCoopers Certified Public Accountants Singapore, 16 February 2007 UOL GROUP LIMITED 45 Annual Report 2006 income statements For the financial year ended 31 December 2006
The Group The Company 2006 2005 2006 2005 Notes $’000 $’000 $’000 $’000
Revenue 5 605,121 505,482 90,802 72,706 Cost of sales (326,682) (258,609) (3,482) (2,190) Gross profit 278,439 246,873 87,320 70,516
Other gains - Finance income 5 6,634 13,674 15,828 14,028 - Miscellaneous 5 5,115 25,884 746 16,824 - Exceptional items 8 248,165 494 213,775 16,420
Expenses - Marketing and distribution (24,184) (19,339) (110) (93) - Administrative (35,913) (32,445) (7,559) (6,719) - Finance 9 (25,842) (26,694) (17,136) (17,493) - Other operating (59,753) (57,411) (869) (789)
Share of profit/(loss) of associated companies 14,138 (1,201) - -
Profit before income tax 406,799 149,835 291,995 92,694
Income tax expense 10 (33,773) (29,986) (16,452) (14,602)
Net profit 373,026 119,849 275,543 78,092
Attributable to: Equity holders of the Company 339,444 100,070 275,543 78,092 Minority interests 33,582 19,779 - - 373,026 119,849 275,543 78,092
Earnings per share attributable to equity holders of the Company (expressed in cents per share) 11
- Basic (in cents) 42.75 12.62 - Diluted (in cents) 42.73 12.62
The accompanying notes form an integral part of these financial statements. Auditors’ Report - Page 44. 46 UOL GROUP LIMITED Annual Report 2006 balance sheets As at 31 December 2006
The Group The Company 2006 2005 2006 2005 Notes $’000 $’000 $’000 $’000
Assets Current assets Cash and bank balances 12 130,297 104,503 12 1,502 Trade and other receivables 13 31,645 29,348 6,292 2,184 Development properties 14 577,643 248,531 - - Inventories 15 4,962 5,132 - - Available-for-sale financial assets 16 566,922 400,968 566,922 400,968 Other current assets 17 7,294 18,972 1,756 298 Current income tax assets 10 156 1,448 - - 1,318,919 808,902 574,982 404,952
Investment property held for sale 18 137,848 - - - 1,456,767 808,902 574,982 404,952
Non-current assets Trade and other receivables 13 87,574 83,084 305,115 323,787 Available-for-sale financial assets 16 544,129 410,639 26,949 83,623 Associated companies 19 221,818 32,307 112,086 1,000 Subsidiaries 20 - - 1,049,114 844,205 Investment properties 21 1,658,085 1,545,193 278,691 224,236 Property, plant and equipment 22 658,516 616,390 903 1,227 Intangibles 23 14,663 14,516 - - Deferred income tax assets 29 10,360 9,154 - - 3,195,145 2,711,283 1,772,858 1,478,078
Total assets 4,651,912 3,520,185 2,347,840 1,883,030
LIAbilities Current liabilities Trade and other payables 24 101,719 87,303 10,326 6,619 Current income tax liabilities 10 101,803 100,778 79,114 79,530 Borrowings 25 117,642 69,238 99,134 4,000 321,164 257,319 188,574 90,149
Liabilities directly associated with investment property held for sale 18 2,212 - - - 323,376 257,319 188,574 90,149
The accompanying notes form an integral part of these financial statements. Auditors’ Report - Page 44. UOL GROUP LIMITED 47 Annual Report 2006
balance sheets (continued) As at 31 December 2006
The Group The Company 2006 2005 2006 2005 Notes $’000 $’000 $’000 $’000
Non-current liabilities Borrowings 25 664,700 518,504 - - Loans from subsidiaries 26 - - 188,493 200,130 Loans from minority shareholders of subsidiaries 27 39,893 14,560 - - Rental deposits 13,562 12,628 1,411 1,309 Provision for retirement benefits 28 1,875 1,659 - - Deferred income tax liabilities 29 158,955 119,079 94,555 65,630 878,985 666,430 284,459 267,069
Total liabilities 1,202,361 923,749 473,033 357,218
NET ASSETS 3,449,551 2,596,436 1,874,807 1,525,812
EQUITY Capital and reserves attributable to the Company’s equity holders Share capital and share premium 30 1,071,987 1,068,264 1,071,987 1,068,264 Reserves 31 1,170,697 662,567 489,121 359,900 Retained earnings 913,320 633,368 313,699 97,648 3,156,004 2,364,199 1,874,807 1,525,812 Minority interests 293,547 232,237 - - Total equity 3,449,551 2,596,436 1,874,807 1,525,812
The accompanying notes form an integral part of these financial statements. Auditors’ Report - Page 44. 48 UOL GROUP LIMITED Annual Report 2006 consolidated statement of changes in equity For the financial year ended 31 December 2006
Attributable to equity holders of the Company Share capital and share Retained Minority premium Reserves earnings interests Total Notes $’000 $’000 $’000 $’000 $’000
Balance at 1 January 2006 1,068,264 662,567 633,368 232,237 2,596,436
Fair value gains on available-for-sale financial assets 31(b) - 269,766 - 786 270,552 Net revaluation surplus on investment properties 31(c) - 196,525 - 34,043 230,568 Capital reserves arising from transfer of available-for-sale financial asset to investment in associated company 31(d) - 48,799 - - 48,799 Currency translation differences 31(c),(e) - (7,620) - (2,041) (9,661) Net gains recognised directly in equity - 507,470 - 32,788 540,258 Net profit for the financial year - - 339,444 33,582 373,026 Total recognised gains for the financial year - 507,470 339,444 66,370 913,284
Employee share option scheme - Value of employee services 31(a) - 660 - - 660 - Proceeds from shares issued 30 3,723 - - - 3,723 Acquisition of minority interest - - - (1,007) (1,007) Dividends relating to 2005 32 - - (59,492) (4,053) (63,545) Balance at 31 December 2006 1,071,987 1,170,697 913,320 293,547 3,449,551
Balance at 1 January 2005 1,067,911 543,220 580,881 228,981 2,420,993
Fair value gains on available-for-sale financial assets 31(b) - 83,069 - 347 83,416 Net revaluation surplus on investment properties 31(c) - 40,210 - 4,432 44,642 Currency translation differences 31(c),(e) - (4,771) - 1,016 (3,755) Net gains recognised directly in equity - 118,508 - 5,795 124,303 Net profit for the financial year - - 100,070 19,779 119,849 Total recognised gains for the financial year - 118,508 100,070 25,574 244,152
Employee share option scheme - Value of employee services 31(a) - 865 - - 865 - Proceeds from shares issued 30 353 - - - 353 Acquisition of minority interest - - - (19,573) (19,573) Liquidation of a subsidiary 31(d) - (26) - - (26) Dividends relating to 2004 32 - - (47,583) (2,745) (50,328) Balance at 31 December 2005 1,068,264 662,567 633,368 232,237 2,596,436
An analysis of movements in each category within “Reserves” is presented in Note 31. The accompanying notes form an integral part of these financial statements. Auditors’ Report - Page 44. UOL GROUP LIMITED 49 Annual Report 2006 statement of changes in equity For the financial year ended 31 December 2006
Share capital and share Retained premium Reserves earnings Total Notes $’000 $’000 $’000 $’000
Balance at 1 January 2006 1,068,264 359,900 97,648 1,525,812
Fair value gains on available-for-sale financial assets 31(b) - 81,882 - 81,882 Net revaluation surplus on investment properties 31(c) - 46,679 - 46,679 Net gains recognised directly in equity - 128,561 - 128,561 Net profit for the financial year - - 275,543 275,543 Total recognised gains for the financial year - 128,561 275,543 404,104
Employee share option scheme - Value of employee services 31(a) - 660 - 660 - Proceeds from shares issued 30 3,723 - - 3,723 Dividends relating to 2005 32 - - (59,492) (59,492) Balance at 31 December 2006 1,071,987 489,121 313,699 1,874,807
Balance at 1 January 2005 1,067,911 308,979 67,139 1,444,029
Fair value gains on available-for-sale financial assets 31(b) - 32,934 - 32,934 Net revaluation surplus on investment properties 31(c) - 17,122 - 17,122 Net gains recognised directly in equity - 50,056 - 50,056 Net profit for the financial year - - 78,092 78,092 Total recognised gains for the financial year - 50,056 78,092 128,148
Employee share option scheme - Value of employee services 31(a) - 865 - 865 - Proceeds from shares issued 30 353 - - 353 Dividends relating to 2004 32 - - (47,583) (47,583) Balance at 31 December 2005 1,068,264 359,900 97,648 1,525,812
An analysis of movements in each category within “Reserves” is presented in Note 31.
The accompanying notes form an integral part of these financial statements. Auditors’ Report - Page 44. 50 UOL GROUP LIMITED Annual Report 2006 consolidated CASH FLOW STATEMENT For the financial year ended 31 December 2006
2006 2005 Notes $’000 $’000
Cash flows from operating activities Net profit 373,026 119,849 Adjustments for: - Income tax 10 33,773 29,986 - Amortisation of bond discount - 12,867 - Negative goodwill taken to income statement 6 - (382) - Negative goodwill on acquisition of an associated company 8 (14,388) - - Amortisation of trademark and goodwill 6 100 100 - Depreciation of property, plant and equipment 6 36,691 35,280 - Property, plant and equipment written off and net loss on disposals 6 3,967 7,254 - Profit on development properties (38,172) (23,553) - Fair value reserve transferred to income statement on disposal of/return of capital from available-for-sale financial assets 8 (1,006) (60) - Gain on sale of available-for-sale financial assets 8 - (55) - Loss/(gain) on liquidation of subsidiaries/an associated company (net) 8 40 (379) - Gain on disposal of a subsidiary 8 (86,717) - - Gain on disposal of an associated company 8 (146,094) - - Share of results of associated companies (14,138) 1,201 - Unrealised translation gains (1,379) (5,325) - Interest expense 9 25,842 13,827 - Investment and interest income 5 (39,300) (45,008) - Deferred income 5 - (3,329) - Net provision for retirement benefits 7 292 285 - Share option expense 7 626 631 - Gain on option relating to Exchangeable Notes 5 - (15,908) - Write-back of provision for settlement of claim - (679) (239,863) 6,753
Operating cash flow before working capital changes 133,163 126,602 Change in operating assets and liabilities, net of effects from purchase and disposals of subsidiaries - Receivables 9,084 (1,391) - Inventories 92 (551) - Rental deposits 2,996 210 - Payables 7,630 3,317 19,802 1,585
Expenditure on development properties (326,316) (124,407) Progress billings 47,374 49,386 Cash generated from operations (125,977) 53,166 Income tax paid 10(b) (17,662) (11,821) Retirement benefits paid 28 (57) (102) Fixed deposits pledged as security - 1,226 Net cash (used in)/from operating activities (143,696) 42,469
The accompanying notes form an integral part of these financial statements. Auditors’ Report - Page 44. UOL GROUP LIMITED 51 Annual Report 2006
consolidated CASH FLOW STATEMENT (continued) For the financial year ended 31 December 2006
2006 2005 Notes $’000 $’000
Cash flows from investing activities Proceeds from return of capital from available-for-sale financial assets 1,056 281 Net proceeds from disposal of available-for-sale financial assets 5,933 716 Payment for interest in associated companies (128,373) (621) Proceeds from sale of interest in/ liquidation of associated companies 220,005 - Loans to associated companies (18,380) (77,683) Payment to minority shareholders for purchase of shares in subsidiaries (1,789) (22,002) Net payment for acquisition of a subsidiary 12(e) (133,412) - Purchase of available-for-sale financial assets 16 (47,037) (15,453) Net proceeds from disposal of property, plant and equipment and investment properties 681 351 Purchase of property, plant and equipment and investment properties 21,22 (70,713) (53,187) Proceeds from disposal of a subsidiary, net of cash disposed 12(e) 176,962 - Repayment of loans from associated company 5,922 320 Retention monies withheld/(released) 1,843 (2,785) Interest received 7,220 10,413 Dividend received 28,895 29,278 Net cash from/(used in) investing activities 48,813 (130,372)
Cash flows from financing activities Proceeds from issue of shares 30 3,723 353 Net proceeds from issue of shares to minority shareholders of subsidiaries 700 2,932 Net payment on Zero Coupon Exchangeable Notes due September 2005 - (497,716) Loans from minority shareholders of subsidiaries 25,347 9,868 Long-term borrowings 94,008 306,606 Short-term borrowings 93,175 (290,990) Expenditure relating to bank borrowings (345) (633) Interest paid (32,149) (15,140) Dividends paid to shareholders of UOL Group Limited (59,492) (47,583) Dividends paid to minority shareholders of subsidiaries (4,053) (2,745) Net cash from/(used in) financing activities 120,914 (535,048)
Net increase/(decrease) in cash and cash equivalents 26,031 (622,951) Cash and cash equivalents at the beginning of the financial year 100,635 723,586 Cash and cash equivalents at the end of the financial year 12(d) 126,666 100,635
The accompanying notes form an integral part of these financial statements. Auditors’ Report - Page 44. 52 UOL GROUP LIMITED Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2006
These notes form an integral part of and should be read in conjunction with the accompanying financial statements.
1. general information UOL Group Limited is incorporated and domiciled in Singapore and its shares are publicly traded on the Singapore Exchange. The address of its registered office is as follows:
101 Thomson Road #33-00 United Square Singapore 307591
The principal activities of the Company are investments in properties, subsidiaries, associated companies, listed and unlisted securities and property development. The principal activities of its subsidiaries are set out in Note 20.
With effect from 19 April 2006, the name of the Company was changed from United Overseas Land Limited to UOL Group Limited.
2. significant accounting policies 2.1 basis of preparation The 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 key accounting estimates and assumptions. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in Note 4.
interpretations and amendments to published standards effective in 2006 On 1 January 2006, the Group adopted the new or revised FRS and Interpretations to FRS (INT FRS) that are mandatory for application from that date, with the exception of the amendments to FRS 21 (Revised 2005) for which the Group has elected to early adopt in the previous financial year. Changes to the Group’s accounting policies have been made as required, in accordance with the relevant transitional provisions in the respective FRS and INT FRS.
The following are the FRS and INT FRS that are relevant to the Group:
FRS 19 (Amendment) Employee Benefits FRS 32 (Amendment) Financial Instruments: Disclosures and Presentation FRS 39 (Amendment) Financial Instruments: Recognition and Measurement (Amendments relating to financial guarantee contracts) INT FRS 104 Determining whether an Arrangement contains a Lease
The adoption of the above FRS or INT FRS did not result in any substantial changes to the Group’s accounting policies, except for the adoption of FRS 39 (Amendment), of which the effect is disclosed in Note 3. UOL GROUP LIMITED 53 Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
2. significant accounting policies (continued) 2.2 revenue recognition Revenue for the Group comprises the fair value of the consideration received or receivable for the sale of properties and goods and the rendering of services in the ordinary course of the Group’s activities. Revenue is presented net of goods and services tax, rebates and discounts, and after eliminating sales within the Group. Revenue is recognised as follows:
(a) Sale of properties
Profits from the sale of properties are recognised in the financial statements using the percentage of completion method based on the stages of completion. The stage of completion is measured by reference to the contract costs incurred to date to the estimated total costs for the contract or as per certification by architects. No revenue is recognised for unsold units.
(b) Sale of goods
Revenue from the sales of goods is recognised when a Group entity has delivered the products to the customer, the customer has accepted the products and collectibility of the related receivables is reasonably assured.
Component parts and furniture are often sold with a right of return. Accumulated experience is used to estimate and provide for such returns at the time of sale.
(c) Hotel operations and other services rendered
Revenue from the rental of hotel rooms, serviced apartments and other facilities is recognised when the services are rendered. Revenue from the sale of food and beverage is recognised when the goods are delivered to the customer. Revenue from the rendering of services is recognised when the service is rendered.
(d) Interest income
Interest income is recognised on a time proportion basis, using the effective interest method.
(e) Dividend income
Dividend income is recognised when the right to receive payment is established.
(f) Rental income
Rental income from operating leases on investment properties and property, plant and equipment is recognised on a straight-line basis over the lease term. 54 UOL GROUP LIMITED Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
2. significant accounting policies (continued) 2.3 group accounting (a) Subsidiaries
Subsidiaries are entities over which the Group has power to govern the financial and operating policies, generally accompanying a shareholding of more than one half 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.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as 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. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair value on the date of acquisition, irrespective of the extent of any minority interest. Please refer to the paragraph “Intangibles - Goodwill” for the accounting policy on goodwill on acquisition of subsidiaries.
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 companies 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.
Minority interests are that part of the net results of operations and of net assets of a subsidiary attributable to interests which are not owned directly or indirectly by the Group. It is measured at the minorities’ share of the fair value of the subsidiaries’ identifiable assets and liabilities at the date of acquisition by the Group and the minorities’ share of changes in equity since the date of acquisition, except when the losses applicable to the minority interests in a subsidiary exceed the minority interests in the equity of that subsidiary. In such cases, the excess and further losses applicable to the minority interests are attributed to the equity holders of the Company, unless the minority interests have a binding obligation to, and are able to, make good the losses. When that subsidiary subsequently reports profits, the profits applicable to the minority interests are attributed to the equity holders of the Company until the minority interests’ share of losses previously absorbed by the equity holders of the Company have been recovered.
Please refer to the paragraph “Investment in subsidiaries and associated companies” for the accounting policy on investments in associated companies in the separate financial statements of the Company.
(b) Transactions with minority interests
The Group applies a policy of treating transactions with minority interests as transactions with parties external to the Group. Disposals to minority interests, which result in gains and losses for the Group, are recorded in the income statement. The difference between any consideration paid to minority interests for purchases of additional equity interest in a subsidiary and the incremental share of the carrying value of the net assets of the subsidiary is recognised as goodwill. UOL GROUP LIMITED 55 Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
2. significant accounting policies (continued) 2.3 group accounting (continued) (c) Associated companies
Associated companies are entities over which the Group has significant influence, but not control, generally accompanied by a shareholding of 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. Investments in associated companies in the consolidated balance sheet include goodwill (net of accumulated impairment loss) identified on acquisition. Please refer to the paragraph “Intangibles – Goodwill” for the Group’s accounting policy on goodwill.
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.
In applying the equity method of accounting, the Group’s share of its associated companies’ post-acquisition profits or losses is recognised in the income statement and its share of post- acquisition movements in reserves is recognised in equity directly. These post-acquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associated company equals or exceeds its interest in the associated company, including any other unsecured receivables, the Group does not recognise further losses, unless it has obligations 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. Accounting policies of associated companies have been changed where necessary to ensure consistency with the accounting policies adopted by the Group.
Please refer to the paragraph “Investment in subsidiaries and associated companies” for the accounting policy on investments in associated companies in the separate financial statements of the Company.
2.4 Property, plant and equipment (a) Measurement
(i) Land and buildings
Land and buildings are initially recorded at cost. Certain leasehold land and buildings comprising hotel properties are subsequently stated at valuation carried out by an independent professional firm of valuers on their existing use basis. The valuation was done in 1985. However, a decision was then made that future valuations of hotel properties would not be incorporated in the financial statements but would be disclosed for information.
Freehold land is subsequently carried at cost less accumulated impairment losses. Leasehold land and buildings are subsequently carried at cost or valuation less accumulated depreciation and accumulated impairment losses. 56 UOL GROUP LIMITED Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
2. significant accounting policies (continued) 2.4 Property, plant and equipment (continued) (a) Measurement (continued)
(ii) Other property, plant and equipment
Plant, equipment, furniture and fittings and motor vehicles are initially recognised at cost and subsequently carried at cost less accumulated depreciation and accumulated impairment losses.
(iii) Component of costs
The cost of an item of property, plant and equipment 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. The projected cost of dismantlement, removal or restoration is also included as part of the cost of property, plant and equipment if the obligation for the dismantlement, removal or restoration is incurred as a consequence of acquiring or using the asset.
(b) Depreciation
Freehold land is not depreciated. Leasehold land is amortised evenly over the term of the lease.
Depreciation on other items of property, plant and equipment is calculated using the straight-line method to allocate their depreciable amounts over their estimated useful lives as follows:
Useful lives Buildings 50 years or period of the lease, whichever is shorter Plant, equipment, furniture and fittings 5 to 20 years Motor vehicles 5 to 7 years
The residual values and useful lives of property, plant and equipment are reviewed, and adjusted as appropriate, at each balance sheet date. The effects of any revision of the residual values and useful lives are included in the income statement for the financial year in which the changes arise.
(c) 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. Other subsequent expenditure is recognised as repair and maintenance expense in the income statement during the financial year in which it is incurred.
(d) Disposals
On disposal of an item of property, plant and equipment, the difference between the net disposal proceeds and its carrying amount is taken to the income statement. Any amount in revaluation reserve relating to that asset is transferred to retained earnings directly. UOL GROUP LIMITED 57 Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
2. significant accounting policies (continued) 2.5 Development properties Development properties are properties being developed for future sale.
Unsold development properties
Development properties that are unsold are carried at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less cost to complete development and selling expenses.
Sold development properties
Revenue and cost on development properties that have been sold are recognised using the percentage of completion method. The stage of completion is measured by reference to the development costs incurred to date to the estimated total costs for the property. When it is probable that the total development costs will exceed the total revenue, the expected loss is recognised as an expense immediately.
2.6 intangibles (a) Goodwill
Goodwill represents the excess of the cost of an acquisition of subsidiaries or associated companies over the fair value of the Group’s share of the identifiable net assets of the acquired subsidiaries or associated companies at the date of acquisition.
Goodwill on acquisitions of subsidiaries is included in intangible assets.
The Group also had acquisitions where the costs of acquisitions were less than fair value of the net identifiable assets acquired. Such differences (“negative goodwill”) were taken to income statement in the year of acquisition.
Goodwill recognised separately as intangible assets is tested at least annually for impairment and carried at cost less accumulated impairment losses.
Gains and losses on the disposal of the subsidiaries and associated companies include the carrying amount of goodwill relating to the entity sold.
(b) Trademark
Acquired trademark is initially recognised at fair value at the acquisition date and is subsequently carried at its fair value at initial recognition less accumulated amortisation and accumulated impairment losses. These costs are amortised to the income statement using the straight-line method over the estimated useful life of 10 years.
The amortisation period and amortisation method of intangible assets other than goodwill are reviewed at least once at each balance sheet date. The effects of any revision of the amortisation period or amortisation method are included in the income statement for the financial year in which the changes arise. 58 UOL GROUP LIMITED Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
2. significant accounting policies (continued) 2.7 borrowing costs Borrowing costs incurred to finance the development of properties are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Other borrowing costs are recognised on a time-proportion basis in the income statement using the effective interest method.
The cost capitalised is the actual borrowing costs incurred during the period less any investment income on the temporary investment of those borrowings.
2.8 investment properties Investment properties of the Group, are held for long-term rental yields and are not occupied by the Group. Investment properties are classified as non-current investments and are stated at their open market valuation each year based on the valuation exercise carried out by an independent professional firm of valuers. Investment properties are not subject to depreciation.
Increases in carrying amounts arising from revaluation are credited to the asset revaluation reserve, unless they offset previous decreases in the carrying amount of the same investment, in which case, they are credited to the income statement. Decreases in carrying amounts that offset previous increases of the same investment asset are charged against the asset revaluation reserve. All other decreases in carrying amounts are charged to the income statement.
If an investment property becomes owner-occupied, it is reclassified as property, plant and equipment and its fair value at the date of reclassification becomes its cost for accounting purposes.
On disposal of an investment property, the difference between the net disposal proceeds and the carrying amount is taken to the income statement; any amount outstanding in the asset revaluation reserve relating to that investment property is also transferred to the income statement.
2.9 investments in subsidiaries and associated companies Investments in subsidiaries and associated companies are stated at cost less accumulated impairment losses in the Company’s balance sheet. On disposal of investments in subsidiaries and associated companies, the difference between net disposal proceeds and the carrying amounts of the investments are taken to the income statement.
2.10 impairment of non-financial assets (a) Goodwill
Goodwill is tested annually for impairment, as well as when there is any indication that the goodwill may be impaired.
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. UOL GROUP LIMITED 59 Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
2. significant accounting policies (continued) 2.10 impairment of non-financial assets(continued) (a) Goodwill (continued)
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 the income statement and is not reversed in a subsequent period.
(b) Intangibles Property, plant and equipment Investments in subsidiaries and associated companies
Intangibles, property, plant and equipment and investments in subsidiaries and associated companies are reviewed for impairment whenever there is any indication that these assets may be impaired. If any such indication exists, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) of the asset is estimated to determine the amount of impairment loss.
For the purpose of impairment testing of these assets, recoverable amount 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 impairment loss is recognised in the income statement unless the asset is carried at revalued amount, in which case, such impairment loss is treated as a revaluation decrease. Please refer to the paragraph “Property, plant and equipment” for the treatment of 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 assets’ recoverable amount since the last impairment loss was recognised. The carrying amount of an 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 the income statement, 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 in the income statement, a reversal of that impairment is also recognised in the income statement. 60 UOL GROUP LIMITED Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
2. significant accounting policies (continued) 2.11 financial assets (a) Classification
The Group classifies its financial assets in the following categories: loans and receivables and available-for-sale. The classification depends on the purpose for which the assets were acquired. Management determines the classification of its financial assets at initial recognition and re-evaluates this designation at every reporting date.
(i) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except those maturing later than twelve months after the balance sheet date which are classified as non- current assets. Loans and receivables are classified within “trade and other receivables” and “cash and bank balances” on the balance sheet.
(ii) Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the assets within twelve months after the balance sheet date.
(b) Recognition and derecognition
Regular purchases and sales of financial assets are recognised on trade-date – the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.
On sale of a financial asset, the difference between the net sale proceeds and its carrying amount is taken to the income statement. Any amount in the fair value reserve relating to that asset is also taken to the income statement.
(c) Measurement
Financial assets are initially recognised at fair value plus transaction costs.
Available-for-sale financial assets are subsequently carried at fair value. Loans and receivables are carried at amortised cost using the effective interest method.
Changes in fair values of available-for-sale financial assets are recognised in the fair value reserve within equity.
Dividends on available-for-sale equity securities are recognised in the income statement when the Group’s right to receive payment is established. When financial assets classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognised in the fair value reserve within equity are included in the income statement as “gains and losses from investment securities”. UOL GROUP LIMITED 61 Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
2. significant accounting policies (continued) 2.11 financial assets (continued) (d) Impairment
The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired.
(i) Loans and receivables
An allowance for impairment of loans and receivables, including trade and other receivables, is recognised when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the receivable is impaired. 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 the allowance for impairment is recognised in the income statement within “Administrative expenses”.
(ii) Available-for-sale financial assets
In the case of an equity security classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator that the security is impaired.
When there is objective evidence that an available-for-sale financial asset is impaired, the cumulative loss that has been recognised directly in the fair value reserve is removed from the fair value reserve within equity and recognised in the income statement. The cumulative loss is measured as the difference between the acquisition cost (net of any principal repayments and amortisation) and the current fair value, less any impairment loss on that financial asset previously recognised in the income statement.
Impairment losses recognised in the income statement on equity instruments classified as available-for-sale financial assets are not reversed through the income statement.
2.12 financial guarantees The Company has issued corporate guarantees to banks for bank borrowings of its subsidiaries. These guarantees are financial guarantee contracts as they require the Company to reimburse the banks if the subsidiaries fail to make principal or interest payments when due in accordance with the terms of their borrowings.
Financial guarantee contracts are initially recognised at their fair values plus transaction costs, except when the fair value is determined to be insignificant.
Financial guarantee contracts are subsequently amortised to the income statement over the period of the subsidiaries’ borrowings, unless the Company has incurred an obligation to reimburse the bank for an amount higher than the unamortised amount. In this case, the financial guarantee contracts shall be carried at the expected amount payable to the bank. 62 UOL GROUP LIMITED Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
2. significant accounting policies (continued) 2.13 borrowings Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.
Borrowings which are due to be settled within twelve months after the balance sheet date are presented as current borrowings even though the original term was for a period longer than twelve months and an agreement to refinance, or to reschedule payments, on a long-term basis is completed after the balance sheet date and before the financial statements are authorised for issue. Other borrowings due to be settled more than twelve months after the balance sheet date are presented as non-current borrowings in the balance sheet.
2.14 trade and other payables Trade and other payables are initially recognised at fair value, and subsequently carried at amortised cost, using the effective interest method.
2.15 fair value estimation The carrying amounts of current financial assets and liabilities, carried at amortised cost, are assumed to approximate their fair values.
The fair values of financial instruments traded in active markets (such as exchange-traded and over-the- counter securities) are based on quoted market prices at the balance sheet date. The quoted market prices used for financial assets held by the Group are the current bid prices; the appropriate quoted market prices for financial liabilities are the current ask prices.
The fair values of financial instruments that are not traded in an active market are determined by using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance sheet date. Where appropriate, quoted market prices or dealer quotes for similar instruments are used. Valuation techniques, such as estimated discounted cash flows, are also used to determine the fair values of the financial instruments.
The fair values of financial liabilities carried at amortised cost are estimated by discounting the future contractual cash flows at the current market interest rates that are available to the Group for similar financial liabilities.
2.16 leases (a) When a group company is the lessee:
The Group leases certain property, plant and equipment from third parties.
Operating leases
Leases of property, plant and equipment where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are taken to the income statement on a straight-line basis over the period of the lease. UOL GROUP LIMITED 63 Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
2. significant accounting policies (continued) 2.16 leases (continued) (a) When a group company is the lessee: (continued)
When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the financial year in which termination takes place.
(b) When a group company is the lessor:
The Group leases out certain investment properties to third parties.
Operating leases
Assets leased out under operating leases are included in investment properties and are stated at revalued amounts and not depreciated.
Rental income from operating leases (net of any incentives given to lessees) is recognised in the income statement on a straight-line basis over the lease term.
Initial direct costs incurred by the Group in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised as an expense in the income statement over the lease term on the same basis as the lease income.
Contingent rents are recognised as income in the income statement in the financial year in which they are earned.
2.17 inventories Inventories are carried at the lower of cost and net realisable value. Cost is primarily determined using the first-in, first-out method and includes all costs in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the cost of completion and selling expenses.
2.18 income taxes Current income tax liabilities (and assets) for current and prior periods are recognised at the amounts 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 assets/liabilities are recognised for all deductible/taxable 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 assets/liabilities arise from the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither accounting nor taxable profit or loss.
Deferred income tax liability is recognised on temporary differences arising on investments in subsidiaries and associated companies, 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. 64 UOL GROUP LIMITED Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
2. significant accounting policies (continued) 2.18 income taxes (continued) Deferred income tax asset is recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
Deferred income tax assets and liabilities are measured at:
(i) 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) the tax consequence that would 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 tax are recognised as income or expenses in the income statement for the period, except to the extent that the tax arises from a business combination or a transaction which is recognised directly in equity. Deferred tax on temporary differences arising from the revaluation gains and losses on investment properties and property, plant and equipment and fair value gains and losses on available-for-sale financial assets are charged or credited directly to equity in the same period the temporary differences arise. Deferred tax arising from a business combination is adjusted against goodwill on acquisition.
2.19 Provisions for other liabilities and charges Provisions for asset dismantlement, removal or restoration, restructuring costs and legal claims 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. Restructuring provisions comprise lease termination penalties and employee termination payments. Provisions are not recognised for future operating losses.
The Group recognises the estimated costs of dismantlement, removal or restoration of items of property, plant and equipment arising from the acquisition or use of assets. This provision is estimated based on the best estimate of the expenditure required to settle the obligation, taking into consideration time value.
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 the income statement as interest expense.
Changes in the estimated timing or amount of the expenditure or discount rate are recognised in the income statement for the period the changes in estimates arise except for asset dismantlement, removal and restoration costs, which are adjusted against the cost of the related property, plant and equipment unless the decrease in the liability exceeds the carrying amount of the asset or the asset has reached the end of its useful life. In such cases, the excess of the decrease over the carrying amount of the asset or the changes in the liability is recognised in the income statement immediately. UOL GROUP LIMITED 65 Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
2. significant accounting policies (continued) 2.20 employee benefits (a) Post-employment benefits
The Group has various post-employment benefit schemes in accordance with local conditions and practices in the country in which it operates. These benefits plans are either defined contribution or defined benefit plans.
A defined contribution plan is a post employment benefit plan under which the Group pays fixed contributions into a separate entity (a fund) and will have no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees benefits relating to employee service in the current and prior periods. A defined benefit plan is a post employment benefit plan that defines an amount of post employment benefit to be provided, usually as a function of one or more factors such as age, years of service or compensation.
Defined contribution plan
The Group’s contributions to defined contribution plans are charged to the income statement in the period to which they relate. Once the contributions have been paid, the Group has no further payment obligations. For Singapore employees, the Group contributes to the Central Provident Fund and its obligation is limited to the amount it contributes as prescribed under the statutory regulations of Singapore.
Defined benefit plan
A subsidiary in Malaysia operates an unfunded defined benefit scheme under the Collective Union Agreement for unionised employees. Benefits payable on retirement are calculated by reference to the length of service and earnings over the employees’ period of employment; that benefit is discounted to determine the present value. The discount rate is the market yield at the balance sheet date on high quality corporate bonds or government bonds. Provision for employee retirement benefits is made in the financial statements so as to provide for the accrued liability at year end. An actuarial valuation, based on the projected credit unit method, of the fund is conducted by a qualified independent actuary once in every three years as the directors are of the opinion that yearly movements in provision for the defined benefit plan is not likely to be significant. The most recent valuation was at 31 December 2004.
When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is recognised as an expense in the income statement on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognised immediately in the income statement.
In calculating the Group’s obligation in respect of a plan, to the extent that any cumulative unrecognised actuarial gain or loss exceeds ten percent of the present value of the defined benefit obligation, that portion is recognised in the income statement over the expected average remaining working lives of the employees participating in the plan. Otherwise, the actuarial gain or loss is not recognised.
Where the calculation results in a benefit to the Group, the recognised asset is limited to the net total of any unrecognised actuarial losses and past service costs and the present value of any future refunds from the plan or reductions in future contributions to the plan. 66 UOL GROUP LIMITED Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
2. significant accounting policies (continued) 2.20 employee benefits(continued) (b) Employee leave entitlements
Employee entitlements to annual leave and long service leave are recognised when they accrue to employees. An accrual is made for the estimated liability for annual leave as a result of services rendered by employees up to the balance sheet date.
(c) Share-based compensation
The Group operates an equity-settled, share-based compensation plan under the 2000 Share Option Scheme. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense in the income statement with a corresponding increase in the share option reserve over the vesting period. The total amount to be recognised over the vesting period is determined by reference to the fair value of the options granted on the date of the grant. Non-market vesting conditions are included in the estimation of the number of shares under options that are expected to become exercisable on the vesting date. At each balance sheet date, the Group revises its estimates of the number of shares under options that are expected to become exercisable on the vesting date and recognises the impact of the revision of the estimates in the income statement, with a corresponding adjustment to the share option reserve over the remaining vesting period.
When the options are exercised, the proceeds received (net of any directly attributable transaction costs) and the related balance previously recognised in the share option reserve are credited to share capital, when new ordinary shares are issued, or to the “treasury shares” account within equity, when treasury shares purchased are re-issued to the employees.
(d) Termination benefits
Termination benefits are payable when employment is terminated before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to either: terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than twelve months after balance sheet date are discounted to present value.
2.21 currency translation (a) 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, which is the Company’s functional currency. UOL GROUP LIMITED 67 Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
2. significant accounting policies (continued) 2.21 currency translation (continued) (b) Transactions and balances
Transactions in a currency other than the functional currency (“foreign currency”) are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Currency translation gains and losses resulting 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 date are recognised in the income statement, except for currency translation differences on the net investment in foreign operations, borrowings in foreign currencies and other currency instruments qualifying as net investment hedges for foreign operations, which are included in the currency translation reserve within equity in the consolidated financial statements.
Non-monetary items that are measured at fair values in foreign currencies are translated using the exchange rates at the date when the fair values are determined. Currency translation differences on non-monetary items whereby the gains or losses are recognised directly in equity, such as equity investments classified as available-for-sale financial assets, investment properties and property, plant and equipment are included in the fair value reserve and asset revaluation reserve respectively.
(c) 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:
(i) Assets and liabilities are translated at the closing rates at the date of the balance sheet;
(ii) 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
(iii) All resulting exchange differences are taken to the currency translation reserve within equity.
Goodwill and fair value adjustments arising on the acquisition of foreign operations on or after 1 January 2005 are treated as assets and liabilities of the foreign operations and translated at the closing rates at the date of the balance sheet. For acquisitions prior to 1 January 2005, the exchange rates at the dates of acquisition are used.
(d) Consolidation adjustments
On consolidation, currency translation differences arising from the net investment in foreign operations, borrowings in foreign currencies, and other currency instruments designated as hedges of such investments, are taken to the currency translation reserve. When a foreign operation is sold, such currency translation differences recorded in the currency translation reserve are recognised in the income statement as part of the gain or loss on sale. 68 UOL GROUP LIMITED Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
2. significant accounting policies (continued) 2.22 segment reporting A business segment is a distinguishable component of the Group engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is a distinguishable component of the Group engaged in providing products or services within a particular economic environment that is subject to risks and returns that are different from those of segments operating in other economic environments.
2.23 cash and cash equivalents Cash and cash equivalents include cash and bank balances, short-term deposits with financial institutions, bank overdrafts and exclude fixed deposits pledged as security. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.
2.24 share capital Incremental costs directly attributable to the issuance of new ordinary shares are deducted against the share capital account.
2.25 Dividends Interim dividends are recorded in the financial year in which they are declared payable. Final dividends are recorded in the financial year in which the dividends are approved by the shareholders.
2.26 non-current assets (or disposal groups) held for sale 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. Any impairment loss on initial classification and subsequent measurement is recognised in the income statement. Subsequent increases in fair value less costs to sell (not exceeding the accumulated impairment loss that has been previously recognised) is recognised in the income statement.
3. effects on financial statements on adoption of new or revised FRS Financial Guarantee Contracts
Previously, financial guarantees issued by the Company to banks in relation to banking facilities granted to subsidiaries are accounted for as contingent liabilities of the Company and are not recognised in the financial statements until the Company has incurred an obligation to make payment under the guarantee.
FRS 39 (Amendment) Financial Guarantee Contracts, effective from 1 January 2006, requires financial guarantees to be accounted for in a manner as set out in Note 2.12.
The revised FRS 39 requires retrospective application and did not result in material adjustments to the balance sheet of the Company at 31 December 2005 and 1 January 2006. There are also no adjustments arising from the adoption on the balance sheet of the Company at 31 December 2006 as the effects of any such adjustments are not significant. UOL GROUP LIMITED 69 Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
4. Key accounting estimates and judgements The preparation of financial statements in conformity with FRS requires the exercise of judgement and the use of estimates by management.
The Group on its own or in reliance on third party experts, applies estimates and judgements in the following areas:
(i) the assessment of the stage of completion, extent of the construction costs incurred and the estimated total construction costs of development properties; (ii) the determination of the fair values of unquoted available-for-sale investments; (iii) the determination of investment property values by independent valuers; (iv) the determination of the fair value of options granted under the employee share option scheme; (v) the assessment of adequacy of provision for income taxes; and (vi) the level of impairment of goodwill.
These estimates and judgements are however not expected to have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
5. revenue, finance income and other miscellaneous gains (net) The Group The Company 2006 2005 2006 2005 $’000 $’000 $’000 $’000
Revenue from property development 169,297 104,411 - - Revenue from property investments 92,000 95,138 9,599 8,918 Gross revenue from hotel operations 300,062 259,576 - - Revenue from trading and retail operations and management services 10,823 11,431 - - Dividend income 32,939 34,926 81,203 63,788 total revenue 605,121 505,482 90,802 72,706
Interest income - fixed deposits with financial institutions 2,901 9,078 80 6,392 - loans to subsidiaries - - 13,111 7,300 - loans to associated companies 3,095 726 2,707 335 - others 365 278 17 1 Currency exchange gain/(loss) - net 273 3,592 (87) - finance income 6,634 13,674 15,828 14,028
Deferred income recognised - 3,329 - - Gain on option relating to Exchangeable Notes - 15,908 - 15,908 Other income 5,115 6,647 746 916 Other miscellaneous gains 5,115 25,884 746 16,824 616,870 545,040 107,376 103,558 70 UOL GROUP LIMITED Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
6. expenses by nature The Group The Company 2006 2005 2006 2005 $’000 $’000 $’000 $’000
Purchases 32,293 32,224 - - Depreciation of property, plant and equipment (Note 22) 36,691 35,280 492 485 Amortisation of trademark (included in ‘Other operating expenses’) [Note 23(a)] 100 100 - - Total depreciation and amortisation 36,791 35,380 492 485 Negative goodwill taken to income statement - (382) - - Property, plant and equipment written off and net loss on disposals 3,967 7,254 - 43 Auditors’ remuneration paid/payable to: - auditors of the Company 603 460 148 107 - other auditors 269 296 - - Other fees paid/payable to: - auditors of the Company 56 133 24 66 - other auditors 92 124 - - Employees compensation (Note 7) 110,176 99,076 5,018 4,355 Rent paid to a subsidiary - - 251 251 Rent paid to third parties 617 612 - - Rent received from a subsidiary - - (513) (452) Heat, light and power 19,879 17,165 836 738 Property tax 12,544 11,096 773 645 Development cost included in cost of sales 131,004 80,813 - - Inventory write-down 345 114 - - Advertising and promotion 15,476 11,929 110 93 Management fees 6,022 4,311 - - Other expenses 76,337 67,303 4,881 3,460 Currency exchange loss/(gain) - net 61 (104) - - Total cost of sales, marketing and distribution, administrative and other operating expenses 446,532 367,804 12,020 9,791
7. employee compensation The Group The Company 2006 2005 2006 2005 $’000 $’000 $’000 $’000
Wages and salaries 101,824 91,388 9,383 7,939 Employer’s contribution to defined contribution plans including Central Provident Fund 7,434 6,772 618 534 Retirement benefits 292 285 - - Share options granted to directors and employees 626 631 405 420 110,176 99,076 10,406 8,893 Less: Recharged to subsidiaries - - (5,388) (4,538) 110,176 99,076 5,018 4,355 UOL GROUP LIMITED 71 Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
8. other gains - exceptional items The Group The Company 2006 2005 2006 2005 $’000 $’000 $’000 $’000
Fair value reserve transferred to income statement on disposal of/return of capital from an available-for-sale financial asset 1,006 60 - - Impairment charge on investment in subsidiaries (Note 20) - - - (30) Write-back of impairment charge on investment in subsidiaries (Note 20) - - 67,170 16,450 Negative goodwill on acquisition of an associated company 14,388 - - - Gain on liquidation of subsidiaries - 392 - - Gain on disposal of an associated company [See note below] 146,094 - 146,605 - Loss on liquidation of subsidiaries/ an associated company (40) (13) - - Gain on sale of a subsidiary [Note 12(e)] 86,717 - - - Gain on sale of available-for-sale financial assets - unlisted equity shares - 55 - - 248,165 494 213,775 16,420
On 11 March 2006, the Company invested in a joint venture to redevelop certain properties in Singapore. The joint venture did not proceed subsequently and on 27 October 2006, the Company received consideration from the joint venture partner, determined on a willing buyer, willing seller basis, for the buyout of all of the Company’s share in the joint venture.
9. finance expense The Group The Company 2006 2005 2006 2005 $’000 $’000 $’000 $’000
Interest expense - bank loans 37,065 15,742 9,786 4 - bank overdrafts 71 78 - - - subsidiaries - - 7,350 4,622 - loans from minority shareholders of subsidiaries 762 190 - - - others - 14 - - 37,898 16,024 17,136 4,626 Less: Amount capitalised to development properties [Note 14(a)] (12,337) (2,434) - - 25,561 13,590 17,136 4,626 Bank facility fees 281 237 - - Amortisation of bond discount - 12,867 - 12,867 25,842 26,694 17,136 17,493 72 UOL GROUP LIMITED Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
10. income taxes (a) Income tax expense The Group The Company 2006 2005 2006 2005 $’000 $’000 $’000 $’000
Tax expense attributable to profit is made up of: Current income tax - Singapore 20,870 22,226 16,700 14,602 - foreign 3,191 2,657 - - Deferred income tax (Note 29) 8,774 6,373 10 - 32,835 31,256 16,710 14,602 Deferred income tax asset previously not recognised (Note 29) - (1,774) - - 32,835 29,482 16,710 14,602 (Over)/under provision in preceding financial years - Singapore current income tax [Note (b) below] 1,431 348 - - - deferred income tax (Note 29) (493) 156 (258) - 33,773 29,986 16,452 14,602
The tax expense on profit for the financial year differs from the amount that would arise using the Singapore standard rate of income tax due to the following: The Group The Company 2006 2005 2006 2005 $’000 $’000 $’000 $’000
Profit before tax 406,799 149,835 291,995 92,694
Tax calculated at a tax rate of 20% (2005: 20%) 81,360 29,967 58,399 18,539 Effects of: - Singapore statutory stepped income exemption (219) (186) (11) (12) - Effect of different tax rates in other countries 1,821 2,164 - - - Income not subject to tax (51,200) (4,928) (42,845) (6,629) - Deferred tax on unremitted foreign income 253 972 - - - Expenses not deductible for tax purposes 5,649 5,387 1,167 2,704 - Utilisation of previously unrecognised tax losses (3,438) (5,986) - - - Deferred tax assets not recognised in the current financial year 1,154 1,684 - - - Share of tax of associated companies (2,545) 408 - - Tax charge 32,835 29,482 16,710 14,602 UOL GROUP LIMITED 73 Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
10. income taxes (continued) (b) Movements in current income tax liabilities The Group The Company 2006 2005 2006 2005 $’000 $’000 $’000 $’000
At the beginning of the financial year 99,330 92,798 79,530 77,543 Currency translation differences 34 (140) - - Income tax paid (17,662) (11,821) (952) - Tax expense on profit [Note (a) above] - current financial year 24,061 24,883 16,700 14,602 - under provision in preceding financial years 1,431 348 - - Tax deducted at source (6,221) (6,738) (16,164) (12,615) Acquisition of a subsidiary [Note 12(e)] 674 - - - At the end of the financial year 101,647 99,330 79,114 79,530
Comprise: Current income tax assets (156) (1,448) - - Current income tax liabilities 101,803 100,778 79,114 79,530 101,647 99,330 79,114 79,530
11. Earnings per share (a) Basic earnings per share Basic earnings per share is calculated by dividing the net profit attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding during the financial year.
The Group 2006 2005
Net profit attributable to equity holders of the Company ($’000) 339,444 100,070
Weighted average number of ordinary shares in issue for basic earnings per share (‘000) 794,006 793,120
Basic earnings per share (cents per share) 42.75 12.62
(b) Diluted earnings per share 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. As at 31 December 2006, the Company’s dilutive potential ordinary shares are its share options. 74 UOL GROUP LIMITED Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
11. eArnings per share (continued)
(b) Diluted earnings per share (continued) The weighted average number of shares in issue is adjusted as if all share options that are dilutive were exercised. The number of shares that could have been issued upon the exercise of all dilutive share options less the number of shares that could have been issued at fair value (determined as the Company’s average share price for the financial year) for the same total proceeds is added to the denominator as the number of shares issued for no consideration, with no adjustment to earnings (numerator).
The Group 2006 2005
Net profit attributable to equity holders of the Company ($’000) 339,444 100,070
Weighted average number of ordinary shares in issue for basic earnings per share (‘000) 794,006 793,120 Adjustments for share options 349 68 Weighted average number of ordinary shares for diluted earnings per share 794,355 793,188
Diluted earnings per share (cents per share) 42.73 12.62
The changes in accounting policies did not materially affect the basic and diluted earnings per share for the current and prior year.
12. cAsh and bank balances The Group The Company 2006 2005 2006 2005 $’000 $’000 $’000 $’000
Cash at bank and on hand 31,881 19,117 - 390 Fixed deposits with financial institutions 98,416 85,386 12 1,112 130,297 104,503 12 1,502
(a) Cash and bank balances were denominated in the following currencies:
The Group The Company 2006 2005 2006 2005 $’000 $’000 $’000 $’000
Singapore Dollar 57,982 37,527 12 1,502 United States Dollar 13,989 14,994 - - Australian Dollar 45,240 41,420 - - Malaysian Ringgit 3,823 3,618 - - Renminbi 8,214 5,303 - - Others 1,049 1,641 - - 130,297 104,503 12 1,502 UOL GROUP LIMITED 75 Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
12. cAsh and bank balances (continued) (b) The fixed deposits with financial institutions for the Group and Company mature on varying dates within 12 months (2005: 12 months) from the end of the financial year and have the following weighted average effective interest rates as at the balance sheet date:
The Group The Company 2006 2005 2006 2005 % % % %
Singapore Dollar 3.2 2.9 1.0 3.0 United States Dollar 4.4 3.7 - - Australian Dollar 6.1 5.5 - - Malaysian Ringgit 2.6 2.6 - -
(c) Fixed deposits of the Group amounting to $2,837,000 (2005: $3,069,000) have been pledged as security for banking facilities of the Group (Note 33).
(d) For the purposes of the consolidated cash flow statement, the consolidated cash and cash equivalents comprised the following:
The Group 2006 2005 $’000 $’000
Cash and bank balances [Note 12(a)] 130,297 104,503 Less: Fixed deposits pledged as security (2,837) (3,069) Bank overdrafts (secured) (Note 25) - (757) Bank overdrafts (unsecured) (Note 25) (794) (42) Cash and cash equivalents per consolidated cash flow statement 126,666 100,635
(e) Acquisition and disposal of subsidiaries
The aggregate effects of the acquisition of Hotel Negara Limited (“HNL”) [see Note 20(d)] and disposal of Hotel Grand Plaza (Singapore) Pte Ltd (“HGP”) [see Note 20(e)] on the cash flows of the Group were as follows: The Group Acquisition Disposal Carrying Carrying amounts in amounts in At fair values HNL’s books HGP’s books $’000 $’000 $’000
Identifiable assets and liabilities Cash and cash equivalents 1,238 1,238 (2,138) Trade and other receivables 1,443 1,443 (1,389) Inventories 113 113 (191) Investment property (Note 21) - - (3,394) Property, plant and equipment (Note 22) 140,900 64,050 (90,567) Available-for-sale financial assets (Note 16) 7,452 7,452 - Other current assets - - (118) Total assets 151,146 74,296 (97,797)
76 UOL GROUP LIMITED Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
12. cAsh and bank balances (continued) (e) Acquisition and disposal of subsidiaries (continued) The Group Acquisition Disposal Carrying Carrying amounts in amounts in At fair values HNL’s books HGP’s books $’000 $’000 $’000
Trade and other payables (1,614) (1,614) 2,895 Shareholder’s loans - - 38,751 Borrowings (12,800) (12,800) - Current income tax liabilities [Note 10(b)] (674) (674) - Deferred income tax liabilities (Note 29) (1,408) (1,408) 2,040 Total liabilities (16,496) (16,496) 43,686
Identifiable net assets acquired/(disposed of) 134,650 57,800 (54,111)
Cash consideration paid 134,650 Less: Cash and cash equivalents in subsidiary acquired (1,238)
Net cash outflow on acquisition 133,412
The aggregate cash inflows arising from the disposal of HGP were as follows: $’000 Identifiable net assets disposed (as above) 54,111 Transfer from shareholders’ equity – asset revaluation reserve [Note 31(c)] (479) Gain on disposal (Note 8) 86,717 Cash proceeds from disposal 140,349 Repayment of shareholder’s loans 38,751 Less: Cash and cash equivalents in subsidiary disposed (2,138) Net cash inflow on disposal 176,962 UOL GROUP LIMITED 77 Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
13. trade and other receivables
The Group The Company 2006 2005 2006 2005 $’000 $’000 $’000 $’000
Current Trade receivables: - non-related parties 19,853 20,114 221 110 - associated companies 5 - - - Less: Allowance for impairment of receivables – non-related parties (693) (227) (6) (6) Trade receivables – net 19,165 19,887 215 104
Other receivables: - subsidiaries (non-trade) - - 3,164 1,677 - associated companies (non-trade) 3,278 340 2,890 335 - loan to an associated company (unsecured) 7,765 7,765 - - - sundry debtors 1,437 1,356 23 68 12,480 9,461 6,077 2,080
31,645 29,348 6,292 2,184 Non-current Loans to - subsidiaries (unsecured) - - 225,724 249,554 - associated companies (unsecured) 87,574 83,084 79,391 74,233 87,574 83,084 305,115 323,787
Total trade and other receivables 119,219 112,432 311,407 325,971
(a) Impairment loss on trade receivables for the Group recognised as an expense and included in ‘Administrative expenses’ amounted to $535,000 (2005: $140,000).
(b) Current and non-current trade and other receivables were denominated in the following currencies at the balance sheet date:
The Group The Company 2006 2005 2006 2005 $’000 $’000 $’000 $’000
Singapore Dollar 101,486 93,832 311,407 325,850 United States Dollar 10,651 10,920 - 121 Australian Dollar 3,360 4,146 - - Malaysian Ringgit 2,339 2,777 - - Others 1,383 757 - - 119,219 112,432 311,407 325,971 78 UOL GROUP LIMITED Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
13. trade and other receivables (continued) (c) Interest rate risk (i) Repricing analysis
The non-trade amounts due from subsidiaries and associated companies are interest free.
The loans to subsidiaries and associated companies are on fixed or floating rate basis and the following table shows the loans categorised by the earlier of repricing or expected maturity dates:
The Group The Company Floating Fixed Fixed Floating Fixed rates rates rates rates rates Less than Less than 1 to 5 Interest Less than 1 to 5 Interest 1 year 1 year years free 1 year years free $’000 $’000 $’000 $’000 $’000 $’000 $’000
2006 Loans to subsidiaries - - - - 171,602 50,905 3,217 Loans to associated companies 58,661 7,765 20,730 8,183 58,661 20,730 -
2005 Loans to subsidiaries - - - - 212,635 36,798 121 Loans to associated companies 55,033 7,765 19,200 8,851 55,033 19,200 -
(ii) Effective interest rates
The weighted average effective interest rates for the loans to subsidiaries and associated companies at the balance sheet date were as follows:
The Group The Company 2006 2005 2006 2005 % % % %
Loans to subsidiaries - floating rate - - 3.9 3.4 - fixed rate - - 2.5 2.5 Loans to associates - floating rate 3.6 2.4 3.6 2.4 - fixed rate 3.5 3.6 3.0 3.0
(d) Maturity of loans to subsidiaries and associated companies
The non-trade amounts due from subsidiaries and associated companies are repayable on demand. The loan to an associated company of $7,765,000 (2005: $7,765,000) is repayable in December 2007 or upon demand by the Company at any time. The non-current loans to subsidiaries and associated companies have no fixed terms of repayment but are not expected to be repaid within twelve months from the balance sheet date. UOL GROUP LIMITED 79 Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
13. trade and other receivables (continued) (e) The loans to subsidiaries and associated companies subordinated to the secured bank loans of the respective subsidiaries and associated companies are as follows:
The Group The Company 2006 2005 2006 2005 $’000 $’000 $’000 $’000
Loans subordinated to secured bank loans: Loans to subsidiaries - - 98,742 206,543 Loans to associated companies 69,840 74,233 69,840 74,233 69,840 74,233 168,582 280,776
14. Development properties
The Group 2006 2005 $’000 $’000
Costs of land 527,169 250,563 Development costs 74,408 31,300 Property taxes, interests and overheads 27,236 9,261 628,813 291,124 Development profits 66,018 27,846 Progress billings (117,188) (70,439) 577,643 248,531
(a) Borrowing costs of $12,337,000 (2005: $2,434,000) arising on financing specifically entered into for the development of properties were capitalised during the financial year and are included in development properties. A capitalisation rate of 3.91% (2005: 3.16%) per annum was used, representing the borrowing costs of the loans used to finance the projects.
(b) Bank borrowings and other banking facilities are secured on certain development properties of the Group [Note 25(a)]. 80 UOL GROUP LIMITED Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
14. Development properties (continued) (c) Details of the Group’s development properties are as follows:
Expected Site area/ Effective Tenure Stage of completion gross floor interest in Property of land completion date area (Sq. m) property
Twin Regency A residential development comprising 234 units of condominium apartments Freehold 96.2% 1st Quarter 2007 9,675/29,696 70%
Newton Suites A residential development comprising 118 units of condominium apartments Freehold 74.3% 2nd Quarter 2007 3,842/10,755 100%
Regency Suites A development comprising 104 units of mixed office and residential condominium apartments Freehold 15.6% 4th Quarter 2008 3,790/11,371 80%
Persiaran Hampshire A proposed residential development comprising 223 units of condominium apartments at Kuala Lumpur Freehold - 1st Quarter 2010 4,573/32,578 55%
Pavilion 11 A proposed residential development comprising 180 units of condominium apartments Freehold - 2nd Quarter 2009 7,585/21,237 100%
The Regency @ Tiong Bahru A residential development comprising 158 units of condominium apartments Freehold - 4th Quarter 2009 6,129/18,201 60%
Duchess Walk A proposed residential development comprising 120 units of condominium apartments Freehold - 2nd Quarter 2009 14,144/19,802 70%
Southbank A development comprising 273 units of mixed office and residential condominium 99 year apartments leasehold - 1st Quarter 2010 3,852/24,161 70% UOL GROUP LIMITED 81 Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
15. inventories The Group 2006 2005 $’000 $’000
Trading stock 1,650 2,112 Food and beverages 2,033 2,097 Spares for maintenance 1,279 923 4,962 5,132
The cost of inventories recognised as expense and included in ‘cost of sales’ amounted to $32,293,000 (2005: $32,224,000).
During the year, the Group made an inventory write-down of $345,000 (2005: $114,000) which has been included in “Other operating expenses” in the income statement.
16. Available-for-sale financial assets The Group The Company 2006 2005 2006 2005 $’000 $’000 $’000 $’000
At the beginning of the financial year 811,607 709,512 484,591 432,096 Acquisition of a subsidiary [Note 12(e)] 7,452 - - - Additions 47,037 15,453 47,037 15,453 Disposals (6,908) (661) - - Transfer to ‘associated companies’ arising from acquisition of additional percentage holdings (48,812) - (48,812) - Reversal of fair value reserve arising from available-for-sale financial asset becoming an associated company [Note 31(b)] (30,987) - (30,987) - Return of capital (56) (281) - - Fair value gains recognised in equity [Note 31(b)] 331,718 87,584 142,042 37,042 At the end of the financial year 1,111,051 811,607 593,871 484,591 Less: Non-current portion (544,129) (410,639) (26,949) (83,623) Current portion 566,922 400,968 566,922 400,968
At the balance sheet date, available-for-sale financial assets included the following:
Listed securities: - Equity shares 1,077,999 720,901 566,922 400,968 Unlisted securities: - Equity shares 33,033 90,687 26,949 83,623 - Preference shares 19 19 - - 1,111,051 811,607 593,871 484,591
The available-for-sale financial assets are denominated in Singapore Dollar. 82 UOL GROUP LIMITED Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
17. other current assets
The Group The Company 2006 2005 2006 2005 $’000 $’000 $’000 $’000
Deposits 2,850 14,590 1,525 100 Prepayments 4,444 4,382 231 198 7,294 18,972 1,756 298
18. investment property held for sale
The Group 2006 2005 $’000 $’000
Investment property 137,770 - Prepayments 78 - 137,848 - Liabilities directly associated with investment property held for sale: Rental deposits 2,212 - 2,212 -
19. Associated companies
The Group The Company 2006 2005 2006 2005 $’000 $’000 $’000 $’000
Equity investments at cost 112,086 1,000
At the beginning of the financial year 32,307 34,009 Additions 125,348 535 Reclassification from available-for-sale financial asset arising from acquisition of additional percentage holdings (Note 16) 48,812 - Liquidation of an associated company (440) - Share of results 14,138 (1,201) Share of movements in asset revaluation reserve [Note 31(c)] 4,139 - Dividends received, net of tax (2,176) (1,090) Currency translation differences (310) 54 At the end of the financial year 221,818 32,307 UOL GROUP LIMITED 83 Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
19. Associated companies (continued) (a) The summarised financial information of associated companies were as follows:
The Group 2006 2005 $’000 $’000
- Assets 1,690,247 695,674 - Liabilities 741,963 402,267 - Revenues 246,719 61,359 - Net profit/(loss) 53,312 (6,053)
(b) The share of associated company’s contingent liabilities incurred jointly with other investors amounted to $9,975,000 (2005: $10,789,000).
(c) Contingent liabilities of the associated company in which the Group is severally liable (Note 33) amounted to $17,387,000 (2005: $18,805,000).
(d) The associated companies are: Country of business/ Accounting Name of companies Principal activities incorporation Equity holding year end 2006 2005 % %
Tampines Condominium In the process Singapore - 40 by 31 December Pte Ltd** of liquidation UOL
Aquamarina Hotel Hotelier Singapore 25 by 25 by 31 December Private Limited** UEI UEI
Ardenis Pte Ltd Investment Singapore 35 by 35 by 31 December (“Ardenis”)** holding UOD UOD
Pilkon Development Investment The British 39.35 39.35 31 December Company Limited* holding Virgin Islands by HPL by HPL
PPHR (Thailand) Marketing agent Thailand 48.97 48.97 31 December Company Limited by PHM by PHM
Brendale Pte Ltd** Property Singapore 30 by 30 by 31 December development UOL UOL
Vista Development Property Singapore 30 by 30 by 31 December Pte Ltd** development UOL UOL
Park Developments Property Singapore 50 by - 31 December Pte. Ltd.** development UOL
Marina Centre Holdings Hotelier and Singapore 23 by - 31 December Pte Ltd (“MCH”)** property UOL [Note (f) below] investment
* Not required to be audited under the laws of the country of incorporation. ** Audited by PricewaterhouseCoopers, Singapore 84 UOL GROUP LIMITED Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
19. Associated companies (continued) (e) Ardenis has a 97% interest in Shanghai Xin Yue Real Estate Development Co., Ltd, a company whose country of incorporation and place of business is The People’s Republic of China and whose principal activity is that of property development.
(f) In the previous financial year, the Company holds a 12.7% interest in MCH and accounted for this investment as an available-for-sale financial asset. In May 2006, the Company made an additional acquisition of 10% interest in MCH. The acquisition resulted in the Company holding a total interest in MCH of 22.67% and consequently MCH became an associated company.
Upon MCH becoming an associated company, the fair value gains amounting to $30,987,000, previously recognised when the investment was an available-for-sale financial asset, was reversed [see Note 16 and 31(b)] and the investment is now carried at cost less accumulated impairment losses in the Company’s balance sheet in accordance with the accounting policy set out in Note 2.9.
20. subsidiaries The Company 2006 2005 Cost Market value Cost Market value $’000 $’000 $’000 $’000
Listed investments at cost 103,383 481,827 101,594 327,874 Unlisted investments at cost 956,471 820,521 1,059,854 922,115
Less accumulated impairment charge: At the beginning of the financial year (77,910) (94,330) Impairment charge for the financial year [Note 8] - (30) Write-back of impairment charge for the financial year [Note (a) below] 67,170 16,450 At the end of the financial year (10,740) (77,910) 1,049,114 844,205
(a) Write-back of impairment charge
A write-back of impairment charge of $67,170,000 (2005: $16,450,000) was recognised for certain of the Company’s unlisted investments in subsidiaries, being the difference between the carrying amount of the investment and its recoverable amount. The recoverable amount was determined for individual subsidiaries and represents the net tangible assets of the subsidiaries adjusted where applicable for valuation of assets at the end of the financial year. UOL GROUP LIMITED 85 Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
20. subsidiaries (continued) (b) The subsidiaries are: Country of business/ Name of companies Principal activities incorporation Cost of investment Equity Holding 2006 2005 2006 2005 $’000 $’000 % %
Held by the Company
Hotel Plaza Limited Hotelier, property Singapore 103,383 101,594 77.71 77.33 (“HPL”) owner and investment holding
Hotel Negara Limited Hotelier Singapore 134,650 - 100 - (“HNL”) [Note (d) below]
UOL Property Property Singapore 76,006 76,006 100 100 Investments Pte Ltd investment
UOL Capital Property Singapore 52,000 52,000 100 100 Investments Pte. Ltd. investment (previously known as “UOL Tiong Bahru Plaza Pte Ltd”)
UOL Overseas Property Singapore 50,000 50,000 100 100 Development Pte. Ltd. development and (“UOD”) investment holding
UOL Development Property Singapore 20,000 20,000 100 100 Pte Ltd development
UOL Equity Investments Investment Singapore 280,000 280,000 100 100 Pte Ltd (“UEI”) holding
UOL Overseas Investment Singapore 30,500 30,500 100 100 Investments Pte Ltd holding
UOL Management Property Singapore 2,041 2,041 100 100 Services Pte Ltd management services & investment
Parkroyal Hospitality Management of Singapore ~ ~ 100 100 Pte. Ltd. service apartments
United Venture Distributor of Singapore 2,651 2,651 100 100 Furnishings Pte Ltd furniture and related accessories
86 UOL GROUP LIMITED Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
20. subsidiaries (continued) (b) The subsidiaries are: (continued) Country of business/ Name of companies Principal activities incorporation Cost of investment Equity Holding 2006 2005 2006 2005 $’000 $’000 % %
Held by the Company
Mod.Living Pte Ltd Distributor of Singapore 1,000 1,000 100 100 furniture and related accessories
UOL Development Property Singapore 41,436 41,436 100 100 (Novena) Pte Ltd development
Novena Square Property Singapore 162,000 162,000 60 60 Investments Ltd investment
Novena Square Property Singapore 42,000 42,000 60 60 Development Ltd investment
Secure Venture Investment Hong Kong 24,972 24,972 100 100 Investments Limited holding (“SVIL”)*
Kings & Queens Property Singapore 35,000 35,000 70 70 Development Pte. Ltd. development
Regency One Property Singapore 800 800 80 80 Development Pte. Ltd. development
UOL Project Project Singapore 115 115 100 100 Management Services management Pte. Ltd. services
United Regency Property Singapore 600 ~ 60 60 Pte. Ltd. development
Duchess Walk Pte. Ltd. Property Singapore 700 - 70 - development
UOL Claymore Property Singapore ~ - 100 - Investments Pte. Ltd. investment 1,059,854 922,115 UOL GROUP LIMITED 87 Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
20. subsidiaries (continued) (b) The subsidiaries are: (continued) Country of business/ Name of companies Principal activities incorporation Equity Holding 2006 2005 % %
Held by subsidiaries
Promatik Emas Sdn. Bhd.* Property development Malaysia 55 by UOD 55 by UOD
Star Valuations Sdn Bhd* Rental of service Malaysia 100 by UOD 100 by UOD apartments
Chengdu United In the process The People’s Development Co., Ltd of liquidation Republic of China 80 by UOD -
Hua Ye Xiamen Hotel Hotelier The People’s 100 by SVIL 100 by SVIL Limited (previously Republic known as Dahua Xiamen of China Development Limited)*
Hotel Grand Plaza Hotelier Singapore - 100 by HPL (Singapore) Pte Ltd [Note (e) below]
New Park Hotel Hotelier Singapore 100 by HPL 100 by HPL (1989) Pte Ltd
Parkroyal Hospitality Hotel manager Singapore 100 by HPL 100 by HPL Management Pte Ltd and operator (“PHM”) (previously known as Plaza Pacific Hotels & Resorts International Pte Ltd)
United Lifestyle Holdings Investment holding Singapore 100 by HPL 100 by HPL Pte Ltd (“ULH”)
HPL Overseas Investments Investment holding Singapore 100 by HPL 100 by HPL Pte Ltd (“HOI”)
Premium Properties Investment holding Malaysia 100 by HPL 100 by HPL Sdn Bhd (“PPSB”)*
President Hotel Hotelier Malaysia 66.67 by PPSB 66.67 by PPSB Sdn Berhad (“PHSB”)* and 33.33 and 33.33 by HPL by HPL
Success Venture Investment holding The British 60 by HPL 60 by HPL Investments (Australia) Virgin Islands Ltd (“SVIA”) 88 UOL GROUP LIMITED Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
20. subsidiaries (continued) (b) The subsidiaries are: (continued)
Country of business/ Name of companies Principal activities incorporation Equity Holding 2006 2005 % %
Held by subsidiaries Success Venture Investment holding The British 100 by HPL 100 by HPL Investments (WA) Virgin Islands Limited (“SVIWA”)
Success City Pty Limited* Dormant Australia 95 by HPL 95 by HPL
Grand Elite Sdn. Bhd.* Dormant Malaysia 100 by PHSB 100 by PHSB
Grand Elite (Penang) Dormant Malaysia 100 by PHSB 100 by PHSB Sdn. Bhd.*
St Gregory Spa Pte Ltd Manage and operate Singapore 100 by ULH 100 by ULH health and beauty retreats and facilities
Dou Hua Restaurants Operator of Singapore 100 by ULH 100 by ULH Pte Ltd restaurants and bars
Suten Investment Investment holding Singapore 100 by HOI 100 by HOI & Development Pte Ltd (“SID”)
SGN Investment Pte Ltd In process of liquidation Singapore 100 by HOI 100 by HOI
PID Investments Investment holding Singapore 100 by HOI 100 by HOI Pte Ltd (“PIDI”)
Yangon Investment Investment holding Singapore 100 by HOI 100 by HOI Pte Ltd (“YIPL”)
Yangon Hotel Limited Hotelier Myanmar 95 by YIPL 95 by YIPL (“YHL”)**
Westlake International Hotelier Vietnam 75 by PIDI 75 by PIDI Company*
Suzhou Wugong Hotelier The People’s 100 by SID 90 by SID Hotel Co., Ltd* Republic of China and 10 by SGNI
Success Venture Trustee company Australia 100 by SVIA 100 by SVIA Pty. Limited*
Garden Plaza Hotelier Vietnam 100 by HPL 100 by HPL Company Limited* UOL GROUP LIMITED 89 Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
20. subsidiaries (continued) (c) The following unit trusts are held by:
Country of business/ Name of unit trusts Principal activities consititution Units held 2006 2005 % %
SVIA Success Venture Hotelier Australia 100 100 (Darling Harbour) Unit Trust*
Success Venture Hotelier Australia 100 100 (Parramatta) Unit Trust*
SVIWA Success Venture Hotelier Australia 100 100 (WA) Unit Trust*
~ Less than $1,000 * Companies audited by PricewaterhouseCoopers firms outside Singapore. ** Company audited by Myanmar Vigour Company Limited. YHL is not a significant subsidiary as defined under Rule 718 of the Listing Manual of the Singapore Exchange Securities Trading Limited.
(d) Acquisition of a subsidiary
On 24 June 2006, the Company acquired 54.5% of the issued share capital of HNL from United Overseas Bank Limited (“UOB”) and its related companies. A director and controlling shareholder of UOB is also a director of the Company. The remaining 45.5% were acquired through a Mandatory General Offer. The total cash consideration paid was $134,650,000.
HNL contributed revenue of $9,816,000 and net profit of $5,637,000 to the Group for the period from 1 July 2006 to 31 December 2006. The subsidiary’s assets and liabilities at 31 December 2005 were $74,446,000 and $19,016,000 respectively. If the acquisition had occurred on 1 January 2006, Group revenue would have been increased by $7,278,000 and net profit by $3,124,000 for the financial year ended 31 December 2006.
Fair value of identifiable net assets at the date of acquisition amounted to $134,650,000, resulting in no goodwill recognised on acquisition. Details of identifiable net assets acquired are disclosed in Note 12(e).
(e) Disposal of a subsidiary
On 3 October 2006, a subsidiary entered into an agreement to dispose of the subsidiary’s 100% interest in Hotel Grand Plaza (Singapore) Pte Ltd for a cash consideration of $140,349,000 net of transaction costs. The sale was completed on 28 December 2006, and the carrying value of the identifiable net assets disposed of amounted to $53,632,000, resulting in a gain on disposal of $86,717,000. Please refer to Note 12(e) for the effect of disposal of the subsidiary on the Group’s cash flows. 90 UOL GROUP LIMITED Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
21. investment properties The Group The Company 2006 2005 2006 2005 $’000 $’000 $’000 $’000
At the beginning of the financial year 1,545,193 1,500,945 224,236 209,522 Currency translation differences (143) 267 - - Additions during the financial year 43,463 6,202 7,776 4,074 Disposal of a subsidiary [Note 12(e)] (3,394) - - - Investment property held for sale [Note (a) below] (137,770) - - - Transfer to property, plant and equipment (Note 22) (18,043) - - - Write-back of over-accruals - (87) - - Revaluation surplus recognised in asset revaluation reserve [Note 31(c)] 228,779 37,866 46,679 10,640 At the end of the financial year 1,658,085 1,545,193 278,691 224,236
(a) The Group entered into a sale and purchase agreement on 9 October 2006 to sell one of its investment properties, known as Central Plaza, for a total consideration of $175,000,000. Accordingly, the carrying amount of this property has been transferred to “Investment property held for sale” (Note 18). The sale was completed on 9 January 2007.
(b) Investment properties are valued annually on 31 December by firms of professional valuers, on an open market existing use basis. It is the intention of the Directors to hold the investment properties for the long term.
(c) The investment properties are leased to third parties under operating leases [Note 34(d)].
(d) Bank borrowings are secured on certain investment properties of the Group amounting to $675,300,000 (2005: $594,935,000) [Note 25(a)]. UOL GROUP LIMITED 91 Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
21. investment properties (continued)
(e) The details of the Group’s investment properties at 31 December 2006 were:
Tenure of land
Odeon Towers - a 23-storey commercial building and a 2-storey 999-year podium block with 3 basement levels at leasehold North Bridge Road, Singapore from 1827 UOL Building - under construction commencing April 2005 to Freehold convert into a new 16-storey office-cum- serviced apartment Faber House - retained interests in a 12-storey commercial Freehold building and a 49-lot carpark at Orchard Road, Singapore United Square - a commercial building comprising a 4-storey retail Freehold podium with a basement, a 30-storey office tower and 7 carpark decks at Thomson Road, Singapore Central Plaza - a 20-storey office block at Tiong Bahru Road, 99-year lease [see Note 21(a)] Singapore from 1991
Novena Square - retained interests in a commercial building 99-year lease comprising two blocks of 18 and 25-storey office from 1997 towers and a 3-storey retail podium with elevated car parks at Thomson Road, Singapore Eunos Warehouse Complex - 2 units in a 4-storey flatted warehouse at 60-year lease Kaki Bukit Road 2, Singapore from 1982 The Plaza - retained interests in a 32-storey tower block 99-year lease comprising restaurants, function rooms, shops, from 1968 offices and service apartments and an adjacent 4-storey commercial building and a 641-lot car park at Beach Road, Singapore Shopping Arcade - a shopping arcade at Kitchener Road, Singapore Freehold at Parkroyal on Kitchener Road One Residency - under construction to build a 290-unit service Freehold apartment with car parks at Geran No. 26595, Lot 692 Seksyen 57, Kuala Lumpur, Malaysia
92 UOL GROUP LIMITED Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
22. Property, plant and equipment Plant, equipment, Land and buildings furniture Motor Renovation Freehold Leasehold and fittings vehicles in progress Total $’000 $’000 $’000 $’000 $’000 $’000
The Group Cost or valuation At 1 January 2006 Cost 290,890 254,362 362,608 2,538 1,238 911,636 Valuation - 41,575 - - - 41,575 290,890 295,937 362,608 2,538 1,238 953,211 Currency translation differences (1,639) (9,190) (9,267) (102) (7) (20,205) Acquisition of a subsidiary 132,443 - 28,225 - - 160,668 Additions 397 770 15,078 150 10,855 27,250 Disposals (309) (2,162) (15,052) (380) - (17,903) Reclassification (2,580) (2,715) 10,304 - (5,009) - Transfer from investment property (Note 21) 11,341 6,617 85 - - 18,043 Disposal of a subsidiary - (92,400) (34,731) - - (127,131) At 31 December 2006 430,543 196,857 357,250 2,206 7,077 993,933
Cost 419,223 154,269 357,250 2,206 7,077 940,025 Valuation 11,320 42,588 - - - 53,908 430,543 196,857 357,250 2,206 7,077 993,933
Accumulated depreciation At 1 January 2006 46,115 67,008 221,603 2,095 - 336,821 Currency translation differences (253) (2,227) (5,492) (72) - (8,044) Acquisition of a subsidiary 4,195 - 15,573 - - 19,768 Charge for the financial year 4,120 6,128 26,216 227 - 36,691 Disposals (17) (1,033) (11,840) (365) - (13,255) Reclassification 39 - (39) - - - Disposal of a subsidiary - (13,793) (22,771) - - (36,564) At 31 December 2006 54,199 56,083 223,250 1,885 - 335,417
Net book value at 31 December 2006 376,344 140,774 134,000 321 7,077 658,516
UOL GROUP LIMITED 93 Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
22. Property, plant and equipment (continued)
Plant, equipment, Land and buildings furniture Motor Renovation Freehold Leasehold and fittings vehicles in progress Total $’000 $’000 $’000 $’000 $’000 $’000
The Group (continued) Cost or valuation At 1 January 2005 Cost 294,221 236,172 334,271 2,132 12,094 878,890 Valuation - 41,575 - - - 41,575 294,221 277,747 334,271 2,132 12,094 920,465 Currency translation differences (2,830) 4,677 976 35 43 2,901 Additions 324 1,067 17,428 438 27,728 46,985 Disposals - (5,593) (11,480) (67) - (17,140) Reclassification (825) 18,039 21,413 - (38,627) - At 31 December 2005 290,890 295,937 362,608 2,538 1,238 953,211
Cost 290,890 254,362 362,608 2,538 1,238 911,636 Valuation - 41,575 - - - 41,575 290,890 295,937 362,608 2,538 1,238 953,211
Accumulated depreciation At 1 January 2005 42,227 60,532 205,254 1,912 - 309,925 Currency translation differences (230) 1,078 (132) 29 - 745 Charge for the financial year 3,856 6,001 25,209 214 - 35,280 Disposals - (603) (8,466) (60) - (9,129) Reclassification 262 - (262) - - - At 31 December 2005 46,115 67,008 221,603 2,095 - 336,821
net book value at 31 December 2005 244,775 228,929 141,005 443 1,238 616,390 94 UOL GROUP LIMITED Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
22. Property, plant and equipment (continued) Plant, equipment, Motor furniture and fittings vehicles Total $’000 $’000 $’000
the Company Cost At 1 January 2006 3,150 213 3,363 Additions 184 - 184 Disposals (157) - (157) At 31 December 2006 3,177 213 3,390
Accumulated depreciation At 1 January 2006 2,047 89 2,136 Charge for the financial year 449 43 492 Disposals (141) - (141) At 31 December 2006 2,355 132 2,487
net book value at 31 December 2006 822 81 903
Cost At 1 January 2005 3,078 213 3,291 Additions 384 - 384 Disposals (312) - (312) At 31 December 2005 3,150 213 3,363
Accumulated depreciation At 1 January 2005 1,874 46 1,920 Charge for the financial year 442 43 485 Disposals (269) - (269) At 31 December 2005 2,047 89 2,136
net book value at 31 December 2005 1,103 124 1,227
(a) The valuation of a hotel property of Hotel Plaza Limited (“HPL”) was carried out by a firm of professional valuers on 31 December 1985 on an open market existing use basis, with subsequent additions at cost. The valuation done in 1985 was incorporated in the financial statements. However, a decision was then made subsequently by the Board of Directors of HPL that future valuations of hotel properties would not be incorporated in the financial statements but would be disclosed for information. (b) At 31 December 2006, the open market value of the hotel properties of the Group (including plant, equipment, furniture and fittings) was $1,040,096,000 (2005: $911,544,000) and the net book value was $649,731,000 (2005: $608,182,000). The valuations of these hotel properties were carried out by firms of professional valuers on an open market existing use basis. The surplus on valuation of these hotel properties amounting to $390,635,000 (2005: $303,362,000) has not been incorporated in the financial statements. (c) In accordance with paragraph 77(e) of FRS 16 (revised 2006), the Company is required to disclose the carrying amount of the leasehold land and buildings in the financial statements had the assets been carried at cost less depreciation at the balance sheet date. The valuation of the leasehold land and buildings was carried out in 1985, and hence it is not possible to obtain the relevant information for such disclosure to be made in the financial statements. UOL GROUP LIMITED 95 Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
22. Property, plant and equipment (continued) (d) Bank borrowings and other banking facilities are secured on certain hotel properties of the Group [Note 25(a)] amounting to $341,453,000 (2005: $364,526,000).
(e) The details of the Group’s hotel properties at 31 December 2006 were:
Tenure of land
Parkroyal on Kitchener Road - a 531-room hotel at Kitchener Road, Singapore Freehold
Plaza Parkroyal - a 341-room hotel at Beach Road, Singapore 99-year lease from 1968
Negara on Claymore - a 198-room hotel at Claymore Road, Singapore Freehold
Crowne Plaza - a 345-room hotel at Darling Harbour, Freehold Darling Harbour Sydney, Australia
Crowne Plaza Parramatta - a 196-room hotel at Parramatta, Australia Freehold
Sheraton Perth Hotel - a 390-room hotel and a 4-level former office Freehold complex and carpark at Adelaide Terrace, Perth, Australia
Parkroyal Kuala Lumpur - a 348-room hotel at Jalan Sultan Ismail, Freehold and President House Kuala Lumpur, Malaysia
- a 320-lot carpark at Jalan Sultan Ismail, Leasehold Kuala Lumpur, Malaysia expiring in 2080
Parkroyal Penang - a 324-room resort hotel at Jalan Batu Ferringhi, Freehold Penang, Malaysia
Novotel Garden Plaza Saigon - a 191-room hotel and 4-storey annex block 49-year lease at Nguyen Van Troi Street, Ho Chi Minh City, from 1994 Vietnam
Hotel Sofitel Plaza Hanoi - a hotel with 317 rooms and 36 serviced 48-year lease apartments at Thanh Nien Road, Hanoi, Vietnam from 1993
Sheraton Suzhou - a 397-room hotel at Xinshi Road, Suzhou, 50-year lease Hotel & Towers Jiangsu, The People’s Republic of China from 1994
Sofitel Plaza Xiamen - a 394-room hotel at Hubin North Road, 70-year lease Xiamen, The People’s Republic of China from 1991
Parkroyal Yangon - a 329-room hotel at the corner of Alan 30-year lease Pya Phaya Road and Yaw Min Gyi Road, from 1997 Yangon, Union of Myanmar 96 UOL GROUP LIMITED Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
23. intangibles The Group 2006 2005 $’000 $’000
Trademark [Note (a) below] 504 604 Goodwill arising on consolidation [Note (b) below] 14,159 13,912 14,663 14,516
(a) Trademark The Group 2006 2005 $’000 $’000
At the beginning of the financial year 604 704 Amortisation for the financial year (100) (100) At the end of the financial year 504 604
Cost 946 946 Accumulated amortisation (442) (342) Net book value 504 604
(b) Goodwill arising on consolidation The Group 2006 2005 $’000 $’000
Cost At the beginning of the financial year 13,912 13,912 Acquisition of additional interest in a subsidiary 247 - At the end of the financial year 14,159 13,912
Impairment tests for goodwill
Goodwill is allocated to the Group’s cash generating units (“CGUs”) identified according to countries of operation and business segment. A segment-level summary of the goodwill allocation is analysed as follows: Hotel operations 2006 2005 $’000 $’000
Singapore 247 - The People’s Republic of China 13,081 13,081 Malaysia 831 831 14,159 13,912 UOL GROUP LIMITED 97 Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
23. intangibles (continued) (b) Goodwill arising on consolidation (continued) The recoverable amount of a CGU was determined based on value-in-use calculations. The calculations of the value-in-use were prepared by independent firms of professional valuers using the future expected cash flows of the CGUs.
Key assumptions used for value-in-use calculations:
The People’s Republic of China Malaysia Singapore
Growth rate 2.8% 5.1% 6.0% Discount rate 11.0% 8.8% 8.3%
24. trade and other payables
The Group The Company 2006 2005 2006 2005 $’000 $’000 $’000 $’000
Trade payables: - non-related parties 23,390 21,824 1,155 1,500 - minority shareholders - 1,804 - - 23,390 23,628 1,155 1,500
Other payables: - rental deposits 9,786 9,936 952 709 - accrued interest payable 10,388 4,639 1,072 4 - retention monies due to contractors 8,248 6,405 1,130 406 - accrued operating expenses 31,228 25,628 5,131 3,087 - sundry creditors 17,310 16,805 835 899 - subsidiaries (non-trade) - - 51 14 - associated companies (non-trade) - 12 - - - minority shareholders (non-trade) 1,369 250 - - 78,329 63,675 9,171 5,119
101,719 87,303 10,326 6,619
(a) The non-trade amounts due to subsidiaries, associated companies and minority shareholders are unsecured, interest free and repayable on demand.
(b) At the balance sheet date, the Company has given guarantees in respect of banking facilities granted to certain subsidiaries (Note 33). The Directors are of the view that there is no significant value to the guarantees issued. 98 UOL GROUP LIMITED Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
24. trade and other payables (continued) (c) Trade and other payables were denominated in the following currencies:
The Group The Company 2006 2005 2006 2005 $’000 $’000 $’000 $’000
Singapore Dollar 66,548 51,819 10,326 6,619 United States Dollar 12,729 12,306 - - Australian Dollar 9,440 7,669 - - Malaysian Ringgit 4,920 3,538 - - Renminbi 6,968 10,509 - - Others 1,114 1,462 - - 101,719 87,303 10,326 6,619
25. borrowings
The Group The Company 2006 2005 2006 2005 $’000 $’000 $’000 $’000
Current Bank overdrafts (secured) - 757 - - Bank overdrafts (unsecured) 794 42 619 - Bank loans (secured) 9,365 54,441 - - Bank loans (unsecured) 107,483 13,998 98,515 4,000 117,642 69,238 99,134 4,000
Non-current Bank loans (secured) 608,053 447,239 - - Bank loans (unsecured) 56,647 71,265 - - 664,700 518,504 - -
Total borrowings 782,342 587,742 99,134 4,000
(a) Securities granted
The bank overdrafts and loans are secured by mortgages on the subsidiaries’ hotel properties, investment properties and development properties; and/or assignment of all rights and benefits with respect to the properties. The net book values of hotel properties, investment properties and development properties which have been pledged as securities are as follows:
The Group 2006 2005 $’000 $’000
Hotel properties 341,453 364,526 Investment properties 675,300 594,935 Development properties 404,007 197,720 1,420,760 1,157,181 UOL GROUP LIMITED 99 Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
25. borrowings (continued) (b) Interest rate risk
(i) Repricing analysis
Interest on the bank loans of the Group is on a floating rate basis and the following table indicates the periods in which the bank loans of the Group will be repriced:
The Group
2006 Within 6 to 12 6 months months Total $’000 $’000 $’000
Bank loans (secured) 617,034 384 617,418 Bank loans (unsecured) 164,130 - 164,130 781,164 384 781,548
2005 Within 6 to 12 6 months months Total $’000 $’000 $’000
Bank loans (secured) 316,680 185,000 501,680 Bank loans (unsecured) 85,263 - 85,263 401,943 185,000 586,943
The Company
2006 Within 6 months Total $’000 $’000
Bank loans (unsecured) 98,515 98,515
2005 Within 6 months Total $’000 $’000
Bank loans (unsecured) 4,000 4,000 100 UOL GROUP LIMITED Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
25. borrowings (continued) (b) Interest rate risk (continued)
(ii) Effective interest rates
The weighted average effective interest rates of total borrowings at the balance sheet date were as follows:
The Group 2006 2005 SGD usD AUD mYR SGD USD AUD MYR % % % % % % % %
Bank overdrafts (secured) - - - - 5.0 - - 7.3 Bank overdrafts (unsecured) 5.0 - - - 5.0 - - - Bank loans (secured) 4.5 6.3 7.6 6.1 3.2 5.0 6.9 4.7 Bank loans (unsecured) 4.2 6.4 - 3.9 3.2 5.2 - -
The Company 2006 2005 sgD SGD % %
Bank loans (unsecured) 4.0 3.7
(c) Currency risk
The carrying amounts of total borrowings were denominated in the following currencies:
The Group The Company 2006 2005 2006 2005 $’000 $’000 $’000 $’000
Singapore Dollar 699,117 478,520 99,134 4,000 United States Dollar 42,291 65,282 - - Australian Dollar 16,812 22,089 - - Malaysian Ringgit 24,122 21,851 - - 782,342 587,742 99,134 4,000
(d) Maturity of borrowings
The current borrowings have a weighted average maturity of 2.2 months (2005: 8.2 months) from the end of the financial year. The non-current borrowings have the following maturity:
The Group 2006 2005 $’000 $’000
Between 1 and 2 years 72,744 22,836 Between 2 and 5 years 591,956 495,668 664,700 518,504 UOL GROUP LIMITED 101 Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
26. loans from subsidiaries The loans from subsidiaries are denominated in Singapore Dollar. The loans have no fixed terms of maturity and are not expected to be repaid within twelve months from the balance sheet date. Interest on the loans is based on a bank quoted one-month swap rate at the beginning of each month and the weighted average effective interest rate as at the balance sheet date is 3.6% (2005: 3.2%) per annum.
27. loans from minority shareholders of subsidiaries The loans have no fixed terms of maturity and are not expected to be repaid within twelve months from the balance sheet date.
Details of the loans from minority shareholders are as follows:
(i) Loan of $1,469,000 (2005: $1,190,000) denominated in Malaysian Ringgit. The loan is interest-free.
(ii) Loan of $18,039,000 (2005: $12,043,000) denominated in Singapore Dollar. Interest on the loan is on a fixed rate basis and the effective interest rate as at the balance sheet date is 2.5% (2005: 2.5%) per annum.
(iii) Loan of $20,385,000 (2005: $1,327,000) denominated in Singapore Dollar. Interest on the loan is based on a bank quoted three-month swap rate on the first business day of each quarter of the calendar year and the effective interest rate as at the balance sheet date is 3.59% (2005: 2.45%) per annum.
28. Provision for retirement benefits
The Group 2006 2005 $’000 $’000
Non-current 1,875 1,659
(a) A subsidiary of the Group in Malaysia operates an unfunded defined benefit scheme under the Collective Union Agreement for unionised employees. Benefits payable on retirement are calculated by reference to length of service and earnings over the employees’ year of employment. Provision for post-employment benefit obligations is made in the financial statements so as to provide for the accrued liability at the balance sheet date.
(b) The movements during the year recognised in the balance sheet were as follows:
The Group 2006 2005 $’000 $’000
At the beginning of the financial year 1,659 1,440 Benefits paid (57) (102) Charged to income statement 292 285 Exchange differences (19) 36 At the end of the financial year 1,875 1,659 102 UOL GROUP LIMITED Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
28. Provision for retirement benefits (continued) (c) The expense recognised in the income statement may be analysed as follows:
The Group 2006 2005 $’000 $’000
Current service cost 179 175 Interest on obligation 113 110 Expense recognised in the income statement 292 285
The charge to the income statement was included under administrative expenses in the income statement.
(d) The principal actuarial assumptions used in respect of the Group’s defined benefit plan were as follows:
The Group 2006 2005 % %
Discount interest rate 7.0 7.0 Future salary increase 5.5 5.5 Inflation rate 3.0 3.0 Normal retirement age (years) - Male 55 55 - Female 50 50
29. Deferred income taxes The Group
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off current income tax assets against current income tax liabilities and when the deferred income taxes relate to the same fiscal authority. The amounts, determined after appropriate offsetting, are shown on the balance sheets as follows: The Group The Company 2006 2005 2006 2005 $’000 $’000 $’000 $’000
Deferred income tax assets - to be recovered after one year (10,360) (9,154) - - (10,360) (9,154) - -
Deferred income tax liabilities - to be settled within one year 97,838 68,661 89,742 60,584 - to be settled after one year 61,117 50,418 4,813 5,046 158,955 119,079 94,555 65,630 UOL GROUP LIMITED 103 Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
29. Deferred income taxes (continued) The movements in the deferred income tax account are as follows: The Group The Company 2006 2005 2006 2005 $’000 $’000 $’000 $’000
At the beginning of the financial year 109,925 107,708 65,630 68,004 Currency translation differences (23) 130 - - Acquisition of a subsidiary [Note 12(e)] 1,408 - - - Disposal of a subsidiary [Note 12(e)] (2,040) - - - Tax charge/(credit) to: - income statement (Note 10) 8,774 4,599 10 - - equity [Note 31(b),(c)] 31,044 (2,668) 29,173 (2,374) (Over)/under provision in preceding financial year (Note 10) (493) 156 (258) - At the end of the financial year 148,595 109,925 94,555 65,630
Deferred income tax taken to equity (Note 31) during the financial year is as follows: The Group The Company 2006 2005 2006 2005 $’000 $’000 $’000 $’000
Fair value reserves [Note 31(b)] 29,173 4,108 29,173 4,108 Asset revaluation reserve [Note 31(c)] 1,871 (6,776) - (6,482) 31,044 (2,668) 29,173 (2,374)
Deferred income tax assets are recognised for tax losses carried forward to the extent that realisation of the related tax benefits through future taxable profits is probable. The Group has unrecognised tax losses of $1,414,000 (2005: $12,616,000) at the balance sheet date which can be carried forward and used to offset against future taxable income subject to those subsidiary companies meeting certain statutory requirements in their respective countries of incorporation. These tax losses have no expiry date. 104 UOL GROUP LIMITED Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
29. Deferred income taxes (continued) The movements in the deferred income tax assets and liabilities (prior to offsetting of balances within the same tax jurisdiction) during the financial year are as follows:
The Group
Deferred income tax liabilities Surplus on Unremitted revaluation foreign of certain income, Accelerated investment interests Deferred Other Fair value tax and hotel and development temporary gains depreciation properties dividends profit differences Total $’000 $’000 $’000 $’000 $’000 $’000 $’000
2006 At the beginning of the financial year 60,727 33,917 11,387 9,149 5,245 (1,346) 119,079 Currency translation differences - (44) (6) - - 14 (36) Acquisition of a subsidiary [Note 12(e)] - 1,408 - - - - 1,408 Disposal of a subsidiary [Note 12(e)] - (2,040) - - - - (2,040) Tax charge/(credit) to income statement - 1,877 (113) 317 7,615 (196) 9,500 Tax charge to equity 29,173 - 1,871 - - - 31,044 At the end of the financial year 89,900 35,118 13,139 9,466 12,860 (1,528) 158,955
Surplus on Unremitted revaluation foreign of certain income, Accelerated investment interests Deferred Other Fair value tax and hotel and development temporary gains depreciation properties dividends profit differences Total $’000 $’000 $’000 $’000 $’000 $’000 $’000
2005 At the beginning of the financial year 56,619 31,896 18,265 8,184 1,208 (1,270) 114,902 Currency translation differences - 81 11 - - (28) 64 Tax charge/(credit) to income statement - 1,940 (113) 965 4,037 (48) 6,781 Tax charge/(credit) to equity 4,108 - (6,776) - - - (2,668) At the end of the financial year 60,727 33,917 11,387 9,149 5,245 (1,346) 119,079 UOL GROUP LIMITED 105 Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
29. Deferred income taxes (continued) The Group (continued) Deferred income tax assets Excess of depreciation over capital allowances Tax losses Total $’000 $’000 $’000
2006 At the beginning of the financial year (996) (8,158) (9,154) Currency translation differences - 13 13 Tax credit to income statement - (1,219) (1,219) At the end of the financial year (996) (9,364) (10,360)
Excess of depreciation over capital allowances Tax losses Total $’000 $’000 $’000
2005 At the beginning of the financial year (996) (6,198) (7,194) Currency translation differences - 66 66 Tax credit to income statement - (2,026) (2,026) At the end of the financial year (996) (8,158) (9,154)
The Company Deferred income tax liabilities Accelerated Other Fair value tax temporary gains depreciation differences Total $’000 $’000 $’000 $’000
2006 At the beginning of the financial year 60,727 5,046 (143) 65,630 Tax charge to income statement - (234) (14) (248) Tax charge to equity 29,173 - - 29,173 At the end of the financial year 89,900 4,812 (157) 94,555
Surplus on revaluation of Accelerated certain Other Fair value tax investment temporary gains depreciation properties differences Total $’000 $’000 $’000 $’000 $’000
2005 At the beginning of the financial year 56,619 5,033 6,482 (130) 68,004 Tax charge to income statement - 13 - (13) - Tax charge/(credit) to equity 4,108 - (6,482) - (2,374) At the end of the financial year 60,727 5,046 - (143) 65,630 106 UOL GROUP LIMITED Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
30. share capital and share premium of UOL Group Limited
Number of shares Amount Total share Authorised Issued Authorised Issued capital and share share share share Share share capital capital capital capital premium premium ’000 ’000 $’000 $’000 $’000 $’000
2006 At the beginning of the financial year 1,000,000 793,232 1,000,000 793,232 275,032 1,068,264 Effect of Companies (Amendment) Act 2005 [see note (a) below] (1,000,000) - (1,000,000) 275,032 (275,032) - Proceeds from share issue: - to holders of share options - 1,672 - 3,723 - 3,723 At the end of the financial year - 794,904 - 1,071,987 - 1,071,987
2005 At the beginning of the financial year 1,000,000 793,055 1,000,000 793,055 274,856 1,067,911 Proceeds from share issue: - to holders of share options - 177 - 177 176 353 At the end of the financial year 1,000,000 793,232 1,000,000 793,232 275,032 1,068,264
(a) Under the Companies (Amendment) Act 2005 that came into effect on 30 January 2006, the concepts of par value and authorised share capital were abolished and the amount in the share premium account as at 30 January 2006 became part of the company’s share capital.
All issued shares are fully paid.
(b) During the financial year, the Company issued 1,672,000 (2005: 177,000) ordinary shares pursuant to the options under the UOL 2000 Share Option Scheme. The newly issued shares rank pari passu in all respects with the previously issued shares.
uol Group Executives’ Share Option Scheme
The UOL Group Executives’ Share Option Scheme (“the 2000 Scheme”) was approved by the shareholders of the Company at an Extraordinary General Meeting held on 23 May 2000.
Under the terms of the 2000 Scheme, the total number of shares granted shall not exceed 15% of the issued share capital of the Company and the executives may exercise the options by giving notice in writing to the Company in the prescribed form during the option period, accompanied by remittance of the amount of the Offering Price.
The Offering Price is equal to the average of the last dealt prices per share as determined by reference to the daily official list published by the Singapore Exchange Securities Trading Limited for a period of 3 consecutive trading days immediately prior to the relevant offering date.
On 18 May 2006, options were granted pursuant to the 2000 Scheme to the executives of the Company and its subsidiaries to subscribe for 1,432,000 ordinary shares in the Company (known as “the 2006 Options”) at the offer price of $3.21 per ordinary share. UOL GROUP LIMITED 107 Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
30. share capital and share premium of UOL Group Limited (continued) UOL Group Executives’ Share Option Scheme (continued) Statutory information regarding the 2006 Options is as follows:
(i) The vesting of granted options is conditional upon the completion of one year of service from the grant date. The option period begins on 18 May 2007 and expires on 17 May 2016 or on the date of termination of employment or in the case of the executive director, on the date he ceases to be the executive director of the Company, whichever is earlier, subject to the provisions of Rule 13 of the Rules of the 2000 Scheme.
(ii) The options may be exercised in full or in respect of 1,000 shares or a multiple thereof, on the payment of the exercise price.
(iii) The persons to whom the options have been granted have no right to participate by virtue of the options in any share issue of any other company in the Group.
(iv) The Group has no legal or constructive obligation to repurchase or settle the options in cash.
Movements in the number of ordinary shares outstanding under options at the end of the financial year and their exercise prices were as follows:
Options Options Options At the granted exercised lapsed At the beginning of during the during the during the end of Exercise/ The Group and the financial financial financial financial the financial Subscription Option the Company year year year year year price /$ period
Executives’ Share Options
2006 2002 Options 84,000 - 30,000 12,000 42,000 1.81 27.06.2003 to 26.06.2012 2003 Options 354,000 - 134,000 12,000 208,000 2.05 27.06.2004 to 26.06.2013 2004 Options 1,071,000 - 617,000 6,000 448,000 2.28 21.05.2005 to 20.05.2014 2005 Options 1,324,000 - 891,000 24,000 409,000 2.23 09.05.2006 to 08.05.2015 2006 Options - 1,432,000 - 90,000 1,342,000 3.21 18.05.2007 to 17.05.2016 2,833,000 1,432,000 1,672,000 144,000 2,449,000
2005 2001 Options 20,000 - 20,000 - - 1.58 31.05.2002 to 30.05.2011 2002 Options 146,000 - 44,000 18,000 84,000 1.81 27.06.2003 to 26.06.2012 2003 Options 440,000 - 68,000 18,000 354,000 2.05 27.06.2004 to 26.06.2013 2004 Options 1,256,000 - 45,000 140,000 1,071,000 2.28 21.05.2005 to 20.05.2014 2005 Options - 1,378,000 - 54,000 1,324,000 2.23 09.05.2006 to 08.05.2015 1,862,000 1,378,000 177,000 230,000 2,833,000
The fair value of options granted on 18 May 2006, determined using The Trinomial Tree Model was $724,185 (2005: $661,440). The significant inputs into the model were share price of $3.06 (2005: $2.25), at the grant date, exercise price of $3.21 (2006: $2.23), standard deviation of expected share price returns of 20.97% (2005: 26.68%), option life from 18 May 2007 to 17 May 2016 and annual risk-free interest rate of 3.21% (2005: 2.47%). The volatility measured at the standard deviation of expected share price returns is based on statistical analysis of daily share prices over the last three years. 108 UOL GROUP LIMITED Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
31. reserves
The Group The Company 2006 2005 2006 2005 $’000 $’000 $’000 $’000
Composition: Share option reserve [Note (a) below] 1,877 1,217 1,877 1,217 Fair value reserve [Note (b) below] 626,292 356,526 359,601 277,719 Asset revaluation reserve [Note 31(c)] 429,818 234,637 127,045 80,366 Capital reserves [Note 31(d)] 119,002 70,203 - - Currency translation reserve [Note 31(e)] (6,292) (16) - - Others - - 598 598 1,170,697 662,567 489,121 359,900
(a) Share option reserve The Group The Company 2006 2005 2006 2005 $’000 $’000 $’000 $’000
At the beginning of the financial year 1,217 352 1,217 352 Employee share option scheme: - Value of employee services 660 865 660 865 At the end of the financial year 1,877 1,217 1,877 1,217
(b) Fair value reserve The Group The Company 2006 2005 2006 2005 $’000 $’000 $’000 $’000
At the beginning of the financial year 356,526 273,457 277,719 244,785 Fair value gains on available-for-sale financial assets (Note 16) 331,718 87,584 142,042 37,042 Reversal of fair value reserve arising from available-for-sale financial asset becoming an associated company (Note 16) (30,987) - (30,987) - Deferred tax on fair value gains (Note 29) (29,173) (4,108) (29,173) (4,108) Fair value reserve transferred to income statement on disposal of/return of capital from an available-for-sale financial asset (1,006) (60) - - 270,552 83,416 81,882 32,934 Amount attributable to minority interests (786) (347) - - 269,766 83,069 81,882 32,934 At the end of the financial year 626,292 356,526 359,601 277,719 UOL GROUP LIMITED 109 Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
31. reserves (continued) (c) Asset revaluation reserve
The Group The Company 2006 2005 2006 2005 $’000 $’000 $’000 $’000
At the beginning of the financial year 234,637 195,164 80,366 63,244 Net surplus arising from the revaluation of investment properties (Note 21) 228,779 37,866 46,679 10,640 Deferred tax on (surplus)/deficit on revaluation of investment properties (Note 29) (1,871) 6,776 - 6,482 Share of associated company’s movement in asset revaluation reserve (Note 19) 4,139 - - - Disposal of a subsidiary [Note 12(e)] (479) - - - 230,568 44,642 46,679 17,122 Amount attributable to minority interests (34,043) (4,432) - - 196,525 40,210 46,679 17,122 Currency translation differences (1,344) (737) - - At the end of the financial year 429,818 234,637 127,045 80,366
The asset revaluation reserve of the Group does not take into account the surplus of $390,635,000 (2005: $303,362,000) arising from the revaluation of the hotel properties of the Group [Note 22(b)].
(d) Capital reserves
(i) Composition of capital reserves is as follows:
The Group The Company 2006 2005 2006 2005 $’000 $’000 $’000 $’000
Transfer from asset revaluation reserves for bonus issue of shares by a subsidiary 55,846 55,846 - - Share premium in a subsidiary attributable to the Group 13,360 13,360 - - Goodwill on consolidation 997 997 - - Acquisition of an associated company 48,799 - - - 119,002 70,203 - - 110 UOL GROUP LIMITED Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
31. reserves (continued) (d) Capital reserves (continued)
(ii) The movement in goodwill on consolidation is as follows:
The Group The Company 2006 2005 2006 2005 $’000 $’000 $’000 $’000
At the beginning of the financial year 997 1,023 - - Liquidation of a subsidiary - (26) - - At the end of the financial year 997 997 - -
(e) Currency translation reserve
The Group The Company 2006 2005 2006 2005 $’000 $’000 $’000 $’000
At the beginning of the financial year (16) 4,018 - - Net currency translation differences of financial statements of foreign subsidiaries and borrowings designated as hedges against foreign subsidiaries, net of minority interests (8,317) (5,050) - - Amount attributable to minority interests 2,041 1,016 - - (6,276) (4,034) - - At the end of the financial year (6,292) (16) - -
Revaluation and capital reserves are non-distributable.
32. Dividends The Group and the Company 2006 2005 $’000 $’000
Final one-tier dividend paid in respect of the previous financial year of 7.5 cents (2005: 6.0 cents) per share 59,492 47,583
At the Annual General Meeting on 25 April 2007, a final one-tier dividend of 7.5 cents per share amounting to a total of $59,618,000 and a special one-tier dividend of 7.5 cents per share amounting to a total of $59,618,000 will be recommended. These financial statements do not reflect these dividends, which will be accounted for in the shareholders’ equity as an appropriation of retained profits in the financial year ending 31 December 2007. UOL GROUP LIMITED 111 Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
33. contingent liabilities The Company has guaranteed the banking facilities of subsidiaries amounting to $174,388,000 (2005: $173,984,000). The banking facilities of subsidiaries were denominated in Singapore Dollar except for the amounts of $35,434,000 (2005: $38,658,000) and $2,955,000 (2005: nil) which were denominated in United States Dollar and Renminbi respectively.
At balance sheet date, the Group has given guarantees of $27,362,000 (2005: $29,594,000) in respect of banking facilities granted to certain associated companies. The guarantees granted are for unsecured banking facilities except for $17,387,000 (2005: $22,739,000) which is secured on fixed deposits of the Group amounting to $2,837,000 (2005: $3,069,000). In 2005, this guarantee was further secured by a property of a subsidiary which had a net book value of $97,344,000.
The Directors are of the view that no material losses will arise from these contingent liabilities.
34. commitments (a) Financial commitments
At the balance sheet date, the Group and the Company have the following financial commitments:
The Group The Company 2006 2005 2006 2005 $’000 $’000 $’000 $’000
Undrawn loan commitments 103,932 9,590 162,401 65,272
Undrawn loan commitments represent the Group and the Company’s commitment to provide the necessary funds in the form of shareholders loans to enable certain subsidiaries and associated companies to develop properties for sale and to repay bank borrowings.
(b) Capital commitments
Capital expenditure contracted for at the balance sheet date but not recognised in the financial statements are as follows:
The Group The Company 2006 2005 2006 2005 $’000 $’000 $’000 $’000
Expenditure contracted for - development properties, investment properties and plant and equipment 157,808 217,696 19,590 25,404 112 UOL GROUP LIMITED Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
34. commitments (continued) (c) Operating lease commitments – where a group company is a lessee
The Group leases various premises under non-cancellable operating lease agreements. The leases have varying terms, escalation clauses and renewal rights.
The future aggregate minimum lease payable under non-cancellable operating leases contracted for at the balance sheet date but not recognised as liabilities, are analysed as follows:
The Group 2006 2005 $’000 $’000
Not later than 1 year 1,038 1,746 Later than 1 year but not later than 5 years 2,465 4,620 Later than 5 years 9,552 11,089 13,055 17,455
(d) Operating lease commitments – where a group company is a lessor
The future minimum lease receivable under non-cancellable operating leases contracted for at the balance sheet date but not recognised as receivables, are analysed as follows:
The Group The Company 2006 2005 2006 2005 $’000 $’000 $’000 $’000
Not later than 1 year 112,888 73,714 8,960 7,578 Later than 1 year but not later than 5 years 76,905 56,089 9,067 8,593 189,793 129,803 18,027 16,171
The future minimum lease payments receivable under non-cancellable operating leases exclude the portion of lease payments receivable which are computed based on a percentage of the revenue of some of the lessees. The lease payments received during the financial year and recognised in the Group and Company’s revenue from property investments were $562,000 (2005: $442,000) and $168,000 (2005: nil) respectively.
35. completion of construction method As stated in Note 2.2(a), the Group recognises profits from the sale of properties using the percentage of completion method. Had the completion of construction method been adopted, the financial effects of the Group as required under Recommended Accounting Practice 11, Pre-Completion Contracts For The Sale Of Development Property, are as follows:
2006 2005 Decrease Decrease $’000 $’000
Opening balance of retained earnings 27,846 6,029 Revenue 169,297 99,246 Profit for the financial year 38,172 21,817 Development properties at the beginning of the financial year 27,846 6,029 Development properties at the end of the financial year 66,018 27,846 UOL GROUP LIMITED 113 Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
36. financial risk management Financial risk factors
The Group’s main financial risks comprise foreign exchange risk, interest rate risk, market risk, credit risk and liquidity risk. The Board provides guidance for overall risk management which seeks to minimise potential adverse effects on the financial performance of the Group.
(i) Foreign exchange risk
The Group operates in the Asia Pacific region and is exposed to foreign exchange risk arising from various currency exposures primarily with respect to Australian Dollar, Malaysian Ringgit, Renminbi, Euro and United States Dollar. The Group will hedge its foreign currency risk where necessary so as to reduce its exposure.
The Group has a number of investments in foreign subsidiaries whose net assets are exposed to currency translation risk. Currency exposures to the net assets of the Group’s subsidiaries in Australia, Malaysia, Myanmar, The People’s Republic of China and Vietnam are managed primarily through borrowings, as far as is reasonably practical, in foreign currencies which broadly match those in which the net assets are denominated or in currencies that are freely convertible.
(ii) Interest rate risk
As the Group has no significant interest-bearing assets other than fixed deposits with financial institutions, its income and operating cashflows are substantially independent of changes in market interest rates. The Group borrows at both fixed and variable rates. The variable rate borrowings, which expose the Group to interest rate risk, are generally pegged to the lending bank’s swap cost of funds. The Group does not use any financial instruments to hedge its interest rate risks.
(iii) Market risk
The Group is exposed to equity securities market risk from its investments. These positions are not hedged.
(iv) Credit risk
The Group places a substantial part of its cash balances with a certain group of financial institutions. However, these financial institutions have high credit standings. Apart from this risk, the Group has no significant concentration of credit risk. The Group has policies in place to ensure that sales of products and services on credit are made to customers with an appropriate credit history.
(v) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, and the availability of funding through an adequate amount of committed credit facilities to meet fluctuations in operating cash flows. The Group maintains flexibility in funding by keeping committed credit lines available.
37. fAir values The financial assets and financial liabilities are carried in the balance sheet at amounts which approximate their fair values. 114 UOL GROUP LIMITED Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
38. related party transactions (a) In the previous financial year, the Company was regarded by United Overseas Bank Limited (“UOB”) as an associated company and the related party transactions with UOB were disclosed in the financial statements for the financial year ended 31 December 2005. On 6 January 2006, UOB reduced its interest in the Company and no longer regards the Company as its associated company. Accordingly, disclosure of transactions with the UOB group of companies was no longer required.
(b) In addition to the related party information disclosed elsewhere in the financial statements, there were the following significant transactions between the Group and related parties during the financial year on terms agreed between the parties concerned:
The Group The Company 2006 2005 2006 2005 $’000 $’000 $’000 $’000
Transactions with directors and their associates Proceeds from sale of development properties 330 268 - - Rental received 1,102 841 264 4 Advertising expenses paid - 348 - - Proceeds from sale of furniture 200 1,769 - - Management fee received 257 168 - - Accounting and corporate secretarial fee received 29 - 29 - Shareholder’s interest receivable 701 80 701 80 Tenancy works expense paid - 210 - 210
Transactions with minority shareholders of subsidiaries Proceeds from sale of development properties 327 322 - - Payment of development cost 23,093 13,361 - -
(c) Key management personnel compensation is analysed as follows:
The Group 2006 2005 $’000 $’000
Salaries and other short-term employee benefits 2,633 2,166 Directors’ fees 822 547 Post-employment benefits – contribution to CPF 24 28 Share options granted 145 129 3,624 2,870
Total compensation to directors of the Company included in above amounted to $1,999,000 (2005: $1,461,000). UOL GROUP LIMITED 115 Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
39. group segmental information (a) Primary reporting format – business segments Trading and retail operations and Property Property Hotel management development investments operations services Investments Eliminations Total $’000 $’000 $’000 $’000 $’000 $’000 $’000
Financial year ended 31 December 2006 Revenue - External sales 169,297 92,000 300,062 10,823 32,939 - 605,121 - Inter-segment sales - 1,078 - 4,162 59,276 (64,516) - 169,297 93,078 300,062 14,985 92,215 (64,516) 605,121
Segment results 32,566 54,040 42,009 2,764 32,919 - 164,298 Other miscellaneous gains 363 3,230 1,142 193 187 - 5,115 Exceptional items (40) 160,482 86,717 - 1,006 - 248,165 32,889 217,752 129,868 2,957 34,112 - 417,578 Unallocated costs (5,709) Operating profits 411,869 Finance income 6,634 418,503 Finance expense (25,842) Share of results of associated companies 3,537 7,617 2,984 - - - 14,138 Profit before income tax 406,799 Income tax expense (33,773) Net profit 373,026
Segment assets 582,164 1,804,458 720,243 3,580 1,111,057 - 4,221,502 Associated companies 8,894 183,740 29,184 - - - 221,818 Loans to and non-trade amounts due from associated companies 90,433 - 8,189 - - - 98,622 Unallocated assets 109,970 Consolidated total assets 4,651,912
Segment liabilities 17,012 39,825 54,577 2,261 8 - 113,683 Unallocated liabilities 1,088,678 Consolidated total liabilities 1,202,361
Other segment items Capital expenditure - property, plant and equipment 2 1,287 25,909 52 - - 27,250 - investment property - 43,463 - - - - 43,463 Depreciation 11 1,937 34,685 58 - - 36,691 Amortisation - - 100 - - - 100 Write-down of inventory - - - 345 - - 345 116 UOL GROUP LIMITED Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
39. group segmental information (continued) (a) Primary reporting format – business segments (continued) Trading and retail operations and Property Property Hotel management development investments operations services Investments Eliminations Total $’000 $’000 $’000 $’000 $’000 $’000 $’000
Financial year ended 31 December 2005 Revenue - External sales 104,411 95,138 259,576 11,431 34,926 - 505,482 - Inter-segment sales - 1,224 - 2,125 40,182 (43,531) - 104,411 96,362 259,576 13,556 75,108 (43,531) 505,482
Segment results 21,048 62,126 23,400 1,008 34,888 - 142,470 Other miscellaneous gains 587 3,342 5,485 112 16,358 - 25,884 Exceptional items - - 307 72 115 - 494 21,635 65,468 29,192 1,192 51,361 - 168,848 Unallocated costs (4,792) Operating profits 164,056 Finance income 13,674 177,730 Finance expense (26,694) Share of results of associated companies 17 - (1,218) - - - (1,201) Profit before income tax 149,835 Income tax expense (29,986) Net profit 119,849
Segment assets 263,147 1,556,103 662,126 5,554 811,639 - 3,298,569 Associated companies 5,796 - 26,511 - - - 32,307 Loans to and non-trade amounts due from associated companies 82,337 - 8,852 - - - 91,189 Unallocated assets 98,120 Consolidated total assets 3,520,185
Segment liabilities 10,539 29,614 52,730 2,485 27 - 95,395 Unallocated liabilities 828,354 Consolidated total liabilities 923,749
Other segment items Capital expenditure - property, plant and equipment 7 742 46,194 42 - - 46,985 - investment property - 6,202 - - - - 6,202 Depreciation 10 2,282 32,897 91 - - 35,280 Amortisation - - 100 - - - 100 Write-down of inventory - - - 114 - - 114 UOL GROUP LIMITED 117 Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
39. group segmental information (continued) (a) Primary reporting format – business segments (continued)
At 31 December 2006, the Group is organised into five main business segments:
(i) Hotel operations operation of hotels in Singapore, Australia, Vietnam, Malaysia, Myanmar and The People’s Republic of China (“PRC”).
(ii) Property investments rental income received from commercial and residential properties.
(iii) Property development sales of residential properties.
(iv) Trading and retail sales of furniture, lightings and related accessories and fees received operations and from managing of properties. management services
(v) Investments dividend income from equity investments and profit from sale of quoted investments.
The division of the Group’s results and assets into business segments and geographical segments has been ascertained by reference to direct identification of assets and revenue/cost centres.
Inter-segment transactions are recorded at their transacted price which is generally at fair value.
Unallocated costs represent corporate expenses.
Segment assets consist primarily of property, plant and equipment, investment properties, development properties, available-for-sale financial assets, intangibles, inventories, receivables and operating cash, and exclude investments in associated companies, loans to and non-trade amounts due from associated companies, fixed deposits and current and deferred income tax assets.
Segment liabilities comprise operating liabilities and exclude tax and corporate borrowings.
Capital expenditure comprises additions to property, plant and equipment and investment properties.
(b) Secondary reporting format – geographical segments
The Group’s five business segments operate in six main geographical areas. In Singapore, where the Company is located, the areas of operation of the Group are principally hotel operations, property development, property investment and investment holdings. The Group also engages in the provision of management services and trading and retail operations in Singapore.
The main activities in Australia, Vietnam, Malaysia, PRC and Myanmar consist of hotel operations, operation of service apartments and investment holdings. The Group also engages in property development in Malaysia.
Revenue, segment results, total assets and capital expenditure are shown by the geographical area where the assets are located. 118 UOL GROUP LIMITED Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
39. group segmental information (continued) (b) Secondary reporting format – geographical segments (continued)
Total Capital Revenue Operating profits consolidated assets expenditure 2006 2005 2006 2005 2006 2005 2006 2005 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Singapore 399,868 315,443 377,369 140,687 4,089,961 2,959,522 40,877 15,252 Australia 82,047 88,746 11,215 14,654 177,295 173,999 6,507 4,656 Vietnam 31,436 26,844 8,513 6,296 80,176 86,599 2,861 3,038 Malaysia 38,366 33,075 5,592 4,214 134,820 126,525 17,860 1,680 PRC 47,792 36,640 9,223 (315) 157,620 159,936 2,398 28,261 Myanmar 5,612 4,734 (1,043) (1,480) 12,040 13,604 210 300 Others - - 1,000 - - - - - 605,121 505,482 411,869 164,056 4,651,912 3,520,185 70,713 53,187
40. new accounting standards and FRS interpretations Certain new standards, amendments and interpretations to existing standards have been published and they are mandatory for accounting periods beginning on or after 1 January 2007 or later periods. The Group has not early adopted these standards. The Group’s assessment of the impact of adopting those standards, amendments and interpretations that are relevant to the Group is set out below:
(a) FRS 40 - Investment Property
The Group has adopted FRS 40 on 1 January 2007, which is the effective date of the Standard. In 2006, the Group had accounted for its investment properties under FRS 25 Accounting for Investments as set out in Note 2.8 in these financial statements. Under FRS 40, changes in fair values of investment properties are required to be included in the income statement for the period in which the changes arise.
The Group has accounted for the effects of adoption of FRS 40 prospectively from 1 January 2007 in accordance with the transitional provisions of FRS 40.
(b) FRS 12 - Income Taxes
Prior to 2007, deferred tax liability on the surplus arising from the revaluation of the Group’s investment properties were not recognised except in cases where the gain on disposal of such investment properties will be subject to tax. Upon adoption of FRS 40, the Group has re-evaluated the requirement to account for the deferred tax liability on the surplus arising from the revaluation of these investment properties and will account for the deferred tax liability.
The effect of the above change will be accounted for prospectively from 1 January 2007 in the financial statements for year ending 31 December 2007 as the effects to the financial statements prior to 2007 are immaterial. UOL GROUP LIMITED 119 Annual Report 2006
NOTES TO THE FINANCIAL STATEMENTS (continued) For the financial year ended 31 December 2006
40. new accounting standards and FRS interpretations (continued) The estimated effects of adoption of FRS 40 and the change in the accounting for deferred tax liability on surplus arising from revaluation of investment properties on the balance sheet as at 1 January 2007 are as follows:
The Group The Company Increase/ (decrease) Increase/ (decrease) $’000 $’000
Balance sheet at 1 January 2007 Retained earnings 394,967 121,304 Asset revaluation reserve (420,491) (127,045) Deferred income tax liability 28,078 5,741 Minority interest (2,554) -
(c) FRS 107, Financial Instruments: Disclosures, and a complementary Amendment to FRS 1 – Presentation of Financial Statements – Capital Disclosures
FRS 107 introduces new disclosures to improve the information about financial instruments. It requires the disclosure of qualitative and quantitative information about exposure to risks arising from financial instruments, including minimum disclosures about credit risk, liquidity risk and market risk (including sensitivity analysis to market risk). It replaces the disclosure requirements in FRS 32 Financial Instruments: Disclosure and Presentation.
The amendment to FRS 1 introduces disclosures about the level of an entity’s capital and how it manages capital. The Group has assessed the impact of FRS 107 and the amendment to FRS 1 and concluded that the additional disclosures will be mainly the sensitivity analysis to market risk and the capital disclosures required by the amendment of FRS 1 which will be disclosed in the financial statements for the financial year ending 31 December 2007.
41. Authorisation of financial statements These financial statements were authorised for issue in accordance with a resolution of the Board of Directors of UOL Group Limited on 16 February 2007.
Auditors’ Report - Page 44. 120 UOL GROUP LIMITED Annual Report 2006
CORPORATE GOVERNANCE REPORT For the year ended 31 December 2006
The Company is committed in its continuing efforts to achieve high standards of corporate governance and business conduct so as to enhance long term shareholder value and safeguard the interests of its stakeholders. It has adopted a framework of corporate governance policies and practices in line with the principles and best practices set out in the Code of Corporate Governance 2005 (“Code”).
Principle 1: The Board’s Conduct of its Affairs The principal responsibilities of the Board are: 1. reviewing and approving the corporate policies, strategies, budgets and financial plans of the Company; 2. monitoring financial performance including approval of the annual and interim financial reports; 3. overseeing and reviewing the processes for evaluating the adequacy of internal controls, risk management, financial reporting and compliance; 4. approving major funding proposals, investments, acquisitions and divestment proposals; 5. planning board and senior management succession and the remuneration policies; and 6. assuming responsibility for corporate governance.
To facilitate effective management, certain functions of the Board have been delegated to various Board Committees, which review and make recommendations to the Board on specific areas. There are currently four standing board committees appointed by the Board. The membership and attendance of the Directors for the four standing board committees are set out on page 126.
The Board has conferred upon the Executive Committee (“EXCO”) and Chief Executive Officer (“CEO”) certain discretionary limits and powers for capital expenditure, budgeting, treasury and investment activities and human resource management. The levels of authorisation required for specified transactions are specified in a Charter adopted by the Board during the year.
The EXCO and CEO are assisted by the management team (“Management”) in the daily operations and administration of the Group’s business activities and the effective implementation of the Group’s strategies. The CEO in turn issues a chart of authority and limits for capital expenditure, budgets, investment and other activities for Management’s compliance.
In addition to the CEO, the key personnel leading the management team are the Deputy President (DP), the Chief Operating Officer (COO) and the Chief Financial Officer (CFO). The DP, COO and CFO have no familial relationship with each other or with the Chairman.
The EXCO currently comprises four members, namely: Wee Cho Yaw, Chairman Gwee Lian Kheng Alan Choe Fook Cheong Wee Ee Chao (appointed on 15 February 2007)
The EXCO is chaired by the Chairman of the Board and has been given certain authority and functions such as the formulation and review of policies, overall planning and review of strategy as well as dealing with business of an urgent, important or extraordinary nature whilst the CEO is responsible for the day-to-day operations and administration of the Group.
The Board conducts regular scheduled meetings on a quarterly basis. Ad-hoc meetings are convened when circumstances require. The Articles allow a board meeting to be conducted by way of telephonic and video- conferencing. The attendance of Directors at meetings of the Board and Board Committees, as well as the frequency of such meetings, is disclosed on page 126. UOL GROUP LIMITED 121 Annual Report 2006
CORPORATE GOVERNANCE REPORT (continued) For the year ended 31 December 2006
New Directors are provided with information on the corporate background, the key personnel, the core businesses, the group structure and financial statements of the Group. Guidance is also given to all Directors on regulatory requirements concerning disclosure of interests and restrictions on dealings in securities and training is made available to Directors on updates/developments in the regulatory framework and environment affecting the Company.
Principle 2: Board Composition and Balance Currently, the Board comprises nine Directors, five of whom are independent.
With the majority of the Board comprising independent directors and such independent directors having the requisite experience, expertise and weight, the Board is able to exercise objective judgment independently, and no individual or small group of individuals dominate the Board’s decision-making.
The Company’s Articles of Association (“Articles”) allow for the maximum of twelve Directors. The Board considers the current board size is appropriate, taking into account the nature and scope of the Group’s operations.
The current Board comprises persons who possess diverse corporate experiences and as a group, the relevant qualifications and experience and core competencies necessary to manage the Company.
Principle 3: Chairman and Chief Executive Officer CEO(“ ”) The Company has a separate Chairman and CEO. The Chairman and CEO have no familial relationship with each other. The CEO has the executive responsibility for the day-to-day operations of the Group. On the other hand, the Chairman provides leadership to the Board. He sets the meeting agenda in consultation with the CEO and ensures that Directors are provided with accurate, timely and clear information.
Principle 4: Board Membership The Nominating Committee (“NC”), currently comprises three members, two of whom are independent non- executive Directors. The NC members are: Alan Choe Fook Cheong, Chairman Lim Kee Ming Wee Cho Yaw
The NC is also responsible for re-nomination of Directors at regular intervals and at least every three years. In recommending to the Board any re-nomination and re-election of existing Directors, the NC takes into consideration the Directors’ contribution and performance at Board meetings, including attendance, preparedness, participation and candour.
The independence of the Board is also reviewed annually by the NC. The NC adopts the Code’s definition of what constitutes an independent director in its review. As a result of the NC’s review of the independence of each Director for this financial year, the NC is of the view that, save for Wee Cho Yaw, Gwee Lian Kheng, Wee Ee Chao and Wee Ee Lim, all Directors are independent Directors. Each NC member has abstained from deliberations in respect of his own assessment.
Alan Choe Fook Cheong is a non-executive director of The LearningLab Education Centre Pte Ltd, which is a tenant of United Square (owned by UOL Property Investments Pte Ltd, a wholly-owned subsidiary of the Company) from whom rental proceeds exceeding S$200,000/- in the year 2006 were received. The NC, with Alan Choe abstaining, regards Alan Choe as an independent Director because he is able to maintain his objectivity and independence at all times in the discharge of his duties as Director of the Company. 122 UOL GROUP LIMITED Annual Report 2006
CORPORATE GOVERNANCE REPORT (continued) For the year ended 31 December 2006
Directors of or over 70 years of age are required to be re-appointed every year at the Annual General Meeting (“AGM”) under Section 153(6) of the Companies Act before they can continue to act as a Director. The NC, with each member abstaining in respect of his own re-appointment, has recommended to the Board that Wee Cho Yaw, Alan Choe Fook Cheong and Lim Kee Ming who are over 70 years of age, be nominated for re-appointment at the forthcoming AGM.
Article 94 of the Articles also require one-third of the Directors, or the number nearest to one-third, to retire by rotation at every AGM. These Directors may offer themselves for re-election if eligible. The NC has recommended that Gwee Lian Kheng, who retires by rotation pursuant to this Article, be nominated for re-election as well.
The NC recommends all appointments and re-appointments of Directors to the Board. New Directors are appointed by way of a board resolution after the NC recommends their appointment for approval of the Board. New Directors thus appointed by way of board resolution must submit themselves for re-election at the next AGM pursuant to Article 99 of the Articles. During the year, the NC has recommended the appointment of two new Directors, namely Wee Ee Chao and Wee Ee Lim. The NC has recommended that the new Directors, who retire by rotation pursuant to this Article, be nominated for re-election as well.
The NC makes recommendations to the Board on all board appointments. The search and nomination process for new directors (if any) will be conducted through contacts and recommendations that go through the normal selection process, to ensure the search for the right candidates is as objective and comprehensive as possible.
Details of the Directors’ academic qualifications and other appointments are set out on pages 11 to 13.
Principle 5: Board Performance The NC has assessed the contributions of each Director to the effectiveness of the Board and evaluated the performance of the Board as a whole. In evaluating the performance of the Board as a whole, the NC has adopted certain quantitative indicators which include return on equity, return on assets and the Company’s share price performance.
Guideline 6: Access to Information Currently, Directors receive regular financial and operational reports on the Group’s businesses and briefings during its quarterly board meetings. In addition, management reports comparing actual performance with budget, highlighting key performance indicators, as well as accounts and reports on the financial performance of the Group, are also provided. During the quarterly board meetings, key management staff who are able to explain and provide insights to the matters to be discussed at the board meetings are invited to make the appropriate presentations and answer any queries from Directors. Directors who require additional information may approach senior management directly and independently.
Under the direction of the Chairman, the Company Secretary is responsible for ensuring good information flows within the Board and its committees and between senior management and non-executive directors, as well as facilitating orientation and assisting with professional development as required.
Directors have separate and independent access to the advice and services of the Company Secretary and may, either individually or as a group, in the furtherance of their duties and where necessary, obtain independent professional advice at the Company’s expense.
The Company Secretary and/or the Deputy Company Secretary attends all Board meetings and ensures that all Board procedures are followed. The Company Secretary, together with other management staff of the Company, ensures that the Company complies with the requirements of the Companies Act and the Listing Manual of the Singapore Exchange Securities Trading Limited (“SGX-ST”). UOL GROUP LIMITED 123 Annual Report 2006
CORPORATE GOVERNANCE REPORT (continued) For the year ended 31 December 2006
Guideline 7: Procedures for Developing Remuneration Policies The Remuneration Committee (“RC”) currently comprises three non-executive Directors of which two are independent. The RC members are: Lim Kee Ming, Chairman (appointed on 1 February 2007) Wee Cho Yaw Alan Choe Fook Cheong
The RC is currently chaired by an independent Director. The RC is responsible for ensuring a formal procedure for developing policy on executive remuneration and for fixing the remuneration packages for Directors and senior management. The RC recommends for the Board’s endorsement a framework of remuneration which covers all aspects of remuneration, including without limitation, directors’ fees, salaries, allowances, bonuses, options and benefits-in-kind. It also administers the UOL 2000 Share Option Scheme.
Guideline 8: Level and Mix of Remuneration In determining remuneration packages, the RC takes into consideration industry practices and norms in compensation.
In relation to Directors, the performance-linked elements of the remuneration package for executive Directors are designed to align their interests with those of shareholders. For non-executive Directors, their remuneration is appropriate to their level of contribution, taking into account factors such as effort and time spent as well as responsibilities of the Directors.
Mr Gwee Lian Kheng, the only executive Director of the Company, has an employment contract with the Company which may be terminated by either party giving 3 months’ notice. His remuneration package includes a variable bonus element (which is substantially linked to the performance of the Company) and share options of the Company.
The RC makes recommendations to the Board on directors’ fees and allowances. RC members abstain from deliberations in respect of their own remuneration. Details of the total fees and other remuneration of the Directors are set out in the Remuneration Report on page 128. Details of the share options granted to Gwee Lian Kheng, the only executive Director of the Company, during the year are also disclosed on page 41.
Guideline 9: Disclosure on Remuneration In relation to employees of the Group, the remuneration policy of the Company seeks to align the interests of such employees with those of the Company as well as to ensure that remuneration is commercially attractive to attract, retain and motivate employees. The typical remuneration package comprises both fixed and variable components, with a base salary making up the fixed component and a variable component in the form of a performance bonus and/or share options. The report on the remuneration of the top 5 key executives (who are not directors) of the Company is disclosed on page 128.
Details of the UOL 2000 Share Option Scheme are disclosed on page 40.
Guideline 10: Accountability The Board is responsible for providing a balanced and understandable assessment of the Company’s performance, position and prospects, including interim and other price sensitive public reports and reports to regulators, if required. Management provides to members of the Board for their endorsement, annual budgets and targets, and management accounts which present a balanced and understandable assessment of the Company’s performance, position and prospects. 124 UOL GROUP LIMITED Annual Report 2006
CORPORATE GOVERNANCE REPORT (continued) For the year ended 31 December 2006
Guideline 11: Audit Committee (“AC”) The AC comprises three members, with at least two members having many years of financial management expertise and experience, and all of whom are independent and non-executive Directors. The AC members are: Lim Kee Ming, Chairman Alan Choe Fook Cheong Wong Yuen Weng Ernest
The AC carries out the functions set out in the Code and the Companies Act. The terms of reference include reviewing the financial statements, the internal and external audit plans and audit reports, the external auditors’ evaluation of the system of internal accounting controls, the scope and results of the internal audit procedures, the cost effectiveness, independence and objectivity of the external auditors and interested person transactions.
In performing the functions, the AC has met with the internal and external auditors, without the presence of Management, at least annually and reviewed the overall scope of the internal and external audits and the assistance given by Management to the auditors.
The AC has explicit authority to investigate any matter within its terms of reference. It has full access to, and the co-operation of Management, and full discretion to invite any Director or executive officer to attend its meetings. It has reasonable resources to enable it to discharge its functions properly.
The AC has reviewed and is satisfied with the independence and objectivity of the external auditors and recommends to the Board the nomination of the external auditors for re-appointment.
During the year, the AC has reviewed and recommended the adoption of the Code of Business Conduct (“CBC”) to the Board. The CBC contains, inter alia, a whistle-blowing policy to encourage and provide a channel to employees to report, in good faith and in confidence, concerns about possible improprieties in financial reporting or other matters. The objective of such arrangement is to ensure independent investigation of such matters and for appropriate follow-up action.
Guideline 12: Internal Controls The Board recognises the importance of sound internal controls and risk management practices as part of good corporate governance. The Board is responsible for ensuring that Management maintains a sound system of internal controls to safeguard shareholders’ investments and the assets of the Group. The AC, with the assistance of internal and external auditors, has reviewed, and the Board is satisfied with, the adequacy of such controls, including financial, operational and compliance controls established by Management.
As the Group continues to expand its business portfolio, it is exposed to a variety of risks. It has put in place guidelines and strategies to manage these risks and to safeguard its business. The key types of risks include operational risk, financial risk and investment risk.
Operational Risk The Group’s operational risk framework is designed to ensure that operational risk are continually identified, managed and mitigated. This framework is implemented at each operating unit and in the case of the Group’s hotels, is monitored at the Group level by the Group’s asset management team. In the case of the Group’s development projects, these are subject to operating risks that are common to the property development industry and to the particular countries in which the projects are situated. In the case of the Group’s investment and hotel properties, these are subject to operating risks that are common to the property and hotel industries and to the particular countries in which the investment and hotel properties are situated. It is recognised that risks can never be entirely eliminated and the Group must always weigh the cost and benefit in managing the risks. As a tool to transfer and/or mitigate certain portions of risks, the Group also maintains insurance covers at UOL GROUP LIMITED 125 Annual Report 2006
CORPORATE GOVERNANCE REPORT (continued) For the year ended 31 December 2006 levels determined to be appropriate taking into account the cost of cover and risk profiles of the businesses in which it operates. Complementing the Management’s role is the internal audit which provides an independent perspective on the controls that help to mitigate major operational risks.
Financial Risk The Group is exposed to a variety of financial risks, including interest rates, foreign currency, credit and liquidity risks. The management of financial risks is outlined under Note 36 of the Notes to the Financial Statements.
Investment Risk The Board of Directors and EXCO have overall responsibility for determining the level and type of business risk the Group undertakes. The Group has a dedicated Investment Department that evaluates all new investment opportunities on the bases set out by the Board of Directors and EXCO. All major investment proposals are submitted to the EXCO and the Board for approval. Ongoing performance monitoring and asset management of new and existing investments are performed by the Group.
Guideline 13: Internal Audit The Internal Audit Department of the Group is independent of the activities it audits.
The Internal Audit Manager has a primary direct reporting line to the AC, with administrative reporting to the CEO.
The Internal Audit Department aims to meet or exceed the Standards for the Professional Practice of Internal Auditing set by the Institute of Internal Auditors.
The Internal Audit function is adequately resourced and has appropriate standing within the Group. The Internal Audit Manager, who joined the Group in October 1997, holds a Bachelor of Accountancy (Honours) Degree from the Nanyang Technological University. He is also a non-practising member of the Institute of Certified Public Accountants of Singapore and a Member of the Institute of Internal Auditors (Singapore).
The AC has reviewed and is satisfied with the adequacy of the Internal Audit function.
Guideline 14: Communication with Shareholders Guideline 15: Greater Shareholder Participation The Group engages in regular, effective and fair communication with its shareholders through the quarterly release of the Group’s results, the timely release of material information through the SGXNET of SGX-ST and the publication of the Annual Report. Shareholders and investors can also visit the Company’s website at www.uol.com.sg.
The Company also encourages greater shareholder participation at its annual general meetings and allows shareholders the opportunity to communicate their views on various matters affecting the Company. The Chairpersons of the EXCO, NC, RC and AC are present and available to address questions at general meetings. The external auditors are also present to address any shareholders’ queries on the conduct of audit and the preparation of the Auditors’ Report.
DEALINGS IN SECURITIES In line with Listing Rule 1207(18) on Dealings in Securities, the Company issues annually, with such updates as may be necessary from time to time, a circular to its Directors, officers and employees prohibiting dealings in listed securities of the Group from two weeks to one month, as the case may be, before the announcement of the Group’s quarterly and full-year financial results, and at any time they are in possession of unpublished material price sensitive information. 126 UOL GROUP LIMITED Annual Report 2006
CORPORATE GOVERNANCE REPORT (continued) For the year ended 31 December 2006
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
Number of meetings attended in 2006 NAME OF DIRECTOR BOARD EXCO AC RC NC Wee Cho Yaw 4 1 1 2 Gwee Lian Kheng 4 1 Alan Choe Fook Cheong# 4 4 1 2 Lim Kee Ming 4 4 1 2 Wong Yuen Weng Ernest (resigned on 12 March 2007) 4 4 Wee Ee Chao (appointed on 9 May 2006) 3 James Koh Cher Siang 4 Low Weng Keong 3 Wee Ee Lim (appointed on 9 May 2006) 3 Wee Ee Cheong (resigned on 9 May 2006) 1 1 Number of meetings held in 2006 4 1 4 1 2
# appointed as a member of EXCO on 9 May 2006 in place of Mr Wee Ee Cheong
PARTICULARS OF DIRECTORS Board Directorship: appointment Board Date first Executive/ Name of Director/ Committees as appointed Non-executive Academic & Professional Chairman or Date last Independent/ Qualifications Age Member re-elected Non-independent
Wee Cho Yaw 77 EXCO – Chairman 23.04.1973 Non-executive Chinese high school RC – Member 19.04.2006 Non-independent NC – Member
Gwee Lian Kheng 66 EXCO – Member 20.05.1987 Executive Bachelor of Accountancy (Hons), 19.04.2006 Non-independent University of Singapore; Fellow of Chartered Institute of Management Accountants, Chartered Certified Accountants, and Institute of Chartered Secretaries and Administrators; Member of Institute of Certified Public Accountants of Singapore
Alan Choe Fook Cheong 75 EXCO – Member 28.03.1979 Non-executive Bachelor of Architecture, University AC – Member 19.04.2006 Independent of Melbourne; RC – Member Diploma in Town & Regional Planning, NC – Chairman University of Melbourne; Fellowship Diploma, Royal Melbourne Institute of Technology; Fellow of Singapore Institute of Architects, Singapore Institute of Planners, and Royal Australian Institute of Architects; Member of Royal Institute of British Architects, Royal Town Planning Institute, Royal Australian Planning Institute and American Planning Association UOL GROUP LIMITED 127 Annual Report 2006
CORPORATE GOVERNANCE REPORT (continued) For the year ended 31 December 2006
PARTICULARS OF DIRECTORS (continued) Board Directorship: appointment Board Date first Executive/ Name of Director/ Committees as appointed Non-executive Academic & Professional Chairman or Date last Independent/ Qualifications Age Member re-elected Non-independent
Lim Kee Ming 79 AC – Chairman 23.04.1973 Non-executive Master of Science (International Trade * RC – Chairman 19.04.2006 Independent & Finance) Columbia University, New York; NC – Member Bachelor of Science (Business Administration) New York University, USA
Wong Yuen Weng Ernest # 61 AC – Member 16.01.1986 Non-executive Bachelor of Science (Chemical Engineering, 22.04.2005 Independent Honours), University of Surrey, UK
Wee Ee Chao 52 ** EXCO - Member 09.05.2006 Non-executive Bachelor of Business Administration, Non-independent The American University, Washington DC, USA
James Koh Cher Siang 60 Nil 23.11.2005 Non-executive Bachelor of Philosophy, Political Science 19.04.2006 Independent and Economics (Hons) and Master of Arts from University of Oxford, UK; Master in Public Administration, Harvard University, USA
Low Weng Keong 54 Nil 23.11.2005 Non-executive Fellow of CPA Australia, Institute of Chartered 19.04.2006 Independent Accountants in England & Wales and Institute of Certified Public Accountants of Singapore; Associate Member of Chartered Institute of Taxation (UK)
Wee Ee Lim 45 Nil 09.05.2006 Non-executive Bachelor of Arts (Economics), Non-independent Clark University, USA
Notes: 1) Directors’ shareholdings in the Company and related corporations, please refer to pages 38 and 39 . 2) Directorships or Chairmanships in other listed companies and other major appointments, both present and over the preceding 3 years, please refer to pages 11 to 13 . 3) * Appointed on 1 February 2007. 4) # Resigned on 12 March 2007. 5) ** Appointed on 15 February 2007. 128 UOL GROUP LIMITED Annual Report 2006
CORPORATE GOVERNANCE REPORT (continued) For the year ended 31 December 2006
REMUNERATION OF DIRECTORS Remuneration of Directors The following table shows a breakdown (in percentage terms) of the remuneration of Directors and details of share options granted to Directors for the year ended 31 December 2006: Share Defined Share Directors’ Option Contribution Total Option Salary Bonuses fees Grants1 Plans Others Remuneration Grants2 Remuneration Bands % % % % % % % Number S$1,250,000 to S$1,500,000 Gwee Lian Kheng 31 55 9 4 - 1 100 100,000 S$250,000 to S$1,250,000 Nil ------Below S$250,000 Wee Cho Yaw - - 100 - - - 100 - Alan Choe Fook Cheong - - 100 - - - 100 - Lim Kee Ming - - 100 - - - 100 - Wong Yuen Weng Ernest - - 100 - - - 100 - Wee Ee Chao - - 100 - - - 100 - James Koh Cher Siang - - 100 - - - 100 - Low Weng Keong - - 100 - - - 100 - Wee Ee Lim - - 100 - - - 100 - Wee Ee Cheong 3 - - 100 - - - 100 -
1 Fair value of share options is estimated using the Trinomial Tree model at date of grant. 2 Refers to options granted on 18 May 2006 under the UOL 2000 Share Option Scheme to subscribe for ordinary shares in the capital of UOL Group Limited (“UOL”), the holding company. The options may be exercised at any time during the option period from 18 May 2007 to 17 May 2016 at the offer price of S$3.21 per ordinary share. 3 Wee Ee Cheong resigned from the Board on 9 May 2006. Gwee Lian Kheng, an executive director of the Company, has an employment contract with the Company which may be terminated by either party giving three months’ notice. His remuneration package includes a variable bonus element (which is substantially linked to the performance of the Company) and share options of the Company. Details of the UOL 2000 Share Option Scheme can be found under the “Report of the Directors” section of this Annual Report.
Remuneration of Key Employees The remuneration1 of the top five key employees of the Group (who are not directors) is analysed into the respective remuneration bands as follows: S$500,000 to S$750,000 Gn Hiang Meng Liam Wee Sin S$250,000 to S$500,000 Foo Thiam Fong Wellington Wee Wei Ling 2 Below S$250,000 Han Chan Juan (Joined on 1 August 2006)
1 Included in the remuneration is the value of share options granted during the year (if any) under the UOL 2000 Share Option Scheme. Fair value of share options is estimated using the Trinomial Tree model. 2 Wee Wei Ling is the daughter of Wee Cho Yaw and sister of Wee Ee Cheong, Wee Ee Chao and Wee Ee Lim. UOL GROUP LIMITED 129 Annual Report 2006
INTERESTED PERSON TRANSACTIONS For the financial year ended 31 December 2006
Aggregate value of all interested person transactions during the financial year under review (excluding transactions less than S$100,000 and transactions conducted under shareholders’ mandate pursuant to Rule 920 of the Listing Manual) Name of interested person S$’000
Directors and their associates:
– Rental and service income 4,085
– Consideration for the sale of 3 units to the immediate family members of a director in 2 residential developments in Singapore 2,360
– Project management fees from Vista Development Pte. Ltd., a joint venture with an interested person and a third party 735
– Investment in and provision of loan to Park Developments Pte Ltd., a joint venture with an interested person and a third party 100,000
MATERIAL CONTRACTS
Except as disclosed under the section on Interested Person Transactions above and in Note 38 (Related Party Transactions) of the Notes to the Financial Statements, there were no other material contracts of the Company or its subsidiaries involving the interests of the Chief Executive Officer (as defined in the SGX-ST Listing Manual), each director or controlling shareholder, either still subsisting at the end of the financial year or if not then subsisting, entered into since the end of the previous financial year. 130 UOL GROUP LIMITED Annual Report 2006
SHAREHOLDING STATISTICS As at 6 March 2007
Class of shares : Ordinary shares Voting rights : One vote per share
SIZE OF SHAREHOLDINGS Range No. of Shareholders % No. of Shares %
1 – 999 16,941 60.04 3,097,158 0.39 1,000 – 10,000 9,380 33.24 31,039,839 3.91 10,001 – 1,000,000 1,868 6.62 88,672,927 11.15 1,000,001 and above 28 0.10 672,181,230 84.55 total: 28,217 100.00 794,991,154 100.00
TWENTY LARGEST SHAREHOLDERS Name No. of Shares %(1) 1. United Overseas Bank Nominees (Pte) Limited 164,722,607 20.72 2. DBS Nominees Pte Ltd 123,238,048 15.50 3. Wee Investments Pte Ltd 80,345,090 10.11 4. Tye Hua Nominees (Pte) Ltd 74,345,209 9.35 5. Citibank Nominees Singapore Pte Ltd 49,151,154 6.18 6. HSBC (Singapore) Nominees Pte Ltd 38,234,048 4.81 7. DBSN Services Pte Ltd 36,103,525 4.54 8. Raffles Nominees Pte Ltd 34,203,132 4.30 9. Morgan Stanley Asia (Singapore) Securities Pte Ltd 23,440,794 2.95 10. Wah Hin & Co Pte Ltd 8,122,177 1.02 11. Overseas Union Enterprise Limited 4,833,772 0.61 12. DB Nominees (S) Pte Ltd 3,921,034 0.49 13. Kah Motor Co Sdn Bhd 3,398,345 0.43 14. Phillip Securities Pte Ltd 3,338,393 0.42 15. C Y Wee & Co Pte Ltd 3,164,565 0.40 16. Ho Han Leong Calvin 2,611,202 0.33 17. Oversea-Chinese Bank Nominees Pte Ltd 2,175,257 0.27 18. OCBC Nominees Singapore Pte Ltd 2,154,447 0.27 19. Ngee Ann Development Pte Ltd 2,000,000 0.25 20. The Asia Life Assurance Society Ltd-Par Fund 1,699,340 0.21 Total: 661,202,139 83.16
Based on information available to the Company as at 6 March 2007, approximately 61% of the issued ordinary shares of the Company is held by the public and therefore, Rule 723 of the SGX-ST Listing Manual is complied with. UOL GROUP LIMITED 131 Annual Report 2006
SHAREHOLDING STATISTICS (continued) As at 6 March 2007
Substantial Shareholders as shown in the Register of Substantial Shareholders No. of Shares fully paid Name Direct Interest Deemed Interest Total % (1) 1. Wee Cho Yaw 3,388,151 220,768,442 (2) 224,156,593 28.20 2. Wee Ee Cheong 300,534 179,143,687 (3) 179,444,221 22.57 3. C Y Wee & Co Pte Ltd 98,512,587 – 98,512,587 12.39 4. Wee Ee Chao 30,748 80,820,597 (4) 80,851,345 10.17 5. Wee Ee Lim 241,489 80,553,452 (5) 80,794,941 10.16 6. Wee Investments Pte Ltd 80,535,090 – 80,535,090 10.13 7. United Overseas Bank Limited (“UOB”) – 80,252,243 (6) 80,252,243 10.09 8. Haw Par Corporation Limited – 41,428,805 (7) 41,428,805 5.21
Notes : (1) As a percentage of the issued share capital of the Company, comprising 794,991,154 shares
(2) Mr Wee Cho Yaw’s deemed interest in the shares arise as follows: (a) 274,858 shares held by his spouse (b) 98,512,587 shares held by C Y Wee & Co Pte Ltd (c) 80,535,090 shares held by Wee Investments Pte Ltd (d) 41,428,805 shares which Haw Par Corporation Limited is deemed to be interested in (e) 17,102 shares held by Kheng Leong Co. (Pte) Ltd
(3) Mr Wee Ee Cheong’s deemed interest in the shares arise as follows: (a) 3,423 shares held by his spouse (b) 98,512,587 shares held by C Y Wee & Co Pte Ltd (c) 80,535,090 shares held by Wee Investments Pte Ltd (d) 75,485 shares held by E C Wee Pte Ltd (e) 17,102 shares held by Kheng Leong Co. (Pte) Ltd
(4) Mr Wee Ee Chao’s deemed interest in the shares arise as follows: (a) 2,773 shares held by his spouse (b) 80,535,090 shares held by Wee Investments Pte Ltd (c) 265,565 shares held by Protheus Investment Holdings Pte Ltd (d) 17,102 shares held by Kheng Leong Co. (Pte) Ltd (e) 67 shares held by KIP Investment Holdings Pte Ltd
(5) Mr Wee Ee Lim’s deemed interest in the shares arise as follows: (a) 1,260 shares held by his spouse (b) 80,535,090 shares held by Wee Investments Pte Ltd (c) 17,102 shares held by Kheng Leong Co. (Pte) Ltd
(6) UOB’s deemed interest in the shares arise as follows: (a) 74,332,898 shares held in the name of Tye Hua Nominees (Pte) Ltd for the benefit of UOB (b) 551,000 shares and 4,325,617 shares held in the name of United Overseas Bank Nominees (Pte) Limited for the benefit of UOB Life Assurance Limited and United International Securities Limited respectively (c) 548,828 shares and 493,900 shares held by UOB Asset Management Ltd (“UOBAM”) as part of unit trusts fund and clients portfolios respectively which are managed by UOBAM
(7) Haw Par Corporation Limited’s deemed interest in the shares arise as follows: (a) 26,561,931 shares held by Haw Par Investment Holdings Pte Ltd (b) 10,527,246 shares held by Haw Par Capital Pte Ltd (c) 1,747,053 shares held by Pickwick Securities Private Ltd (d) 643,656 shares held by Haw Par Equities Pte Ltd (e) 1,424,981 shares held by Straits Maritime Leasing Pte Ltd (f) 300,000 shares held by Haw Par Trading Pte Ltd (g) 223,938 shares held by M&G Maritime Services Pte Ltd 132 UOL GROUP LIMITED Annual Report 2006
SHARE PRICE AND TURNOVER For the period from 1 January 2002 to 31 December 2006
Prices (s$)
4.8 4.700 4.700
4.6
4.4
4.2 4.260 4.0 4.040
3.8 3.920
3.6 3.540 3.4 3.500
3.2 3.280 3.160 3.160 3.040 3.000
3.0 3.140 2.980 2.820 2.8 2.900 2.780 2.840
2.6 2.550 2.740 2.700 2.630 2.610 2.440 2.420 2.410 2.400 2.390 2.390 2.390 2.380 2.380 2.370
2.4 2.570 2.500 2.280 2.270 2.280 2.270 2.250 2.240 2.230 2.380 2.180 2.190 2.180 2.2 2.330 2.300 2.150 2.140 2.320 2.290 2.250 2.240 2.070 2.230 2.050 2.200 2.030 2.200 2.190 2.020 2.160 2.170 2.000 2.140 2.140 2.140 1.980 1.970 1.960 2.0 2.120 1.940 1.920 2.060 1.900 1.900 1.890 1.890 2.010 2.000 1.970 1.820 1.780 1.780 1.770 1.8 1.910 1.750 1.750 1.750 1.890 1.740 1.880 1.730 1.730 1.870 1.720 1.850 1.850 1.830 1.820 1.820 1.770 1.760 1.750 1.730 1.710 1.710 1.710 1.6 1.710 1.690 1.690 1.680 1.660 1.650 1.620 1.600 1.590 1.560 1.4 1.560 JF MA MJ J AS ON D J FM AAMJ J SO ND J FM AAMJ J SO ND J FM AAMJ J SO ND J FM AAMJ J SO ND 2002 2003 2004 2005 2006 high Prices (s$) loW
turnoVer (millions) 200 190 180 170 160 150 140 130 120 110 100 90 80 70 60 50 40 30 20 10 0 JF MA MJ J AS ON D J FM AAMJ J SO ND J FM AAMJ J SO ND J FM AAMJ J SO ND J FM AAMJ J SO ND 2002 2003 2004 2005 2006 turnover (millions) UOL GROUP LIMITED 133 Annual Report 2006
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the 44th Annual General Meeting of the Company will be held at Parkroyal on Beach Road, Plaza Ballroom, Level 4, 7500A Beach Road, Singapore 199591, on Wednesday, 25 April 2007, at 3.45 p.m. to transact the following business:
AS ORDINARY BUSINESS Resolution 1 To receive the Financial Statements and the Reports of the Directors and the Auditors for the year ended 31 December 2006. Resolution 2 To declare a first and final tax-exempt (one-tier) dividend of 7.5 cents per ordinary share and a special tax-exempt (one-tier) dividend of 7.5 cents per ordinary share for the year ended 31 December 2006. Resolution 3 To approve Directors’ fees of S$378,100 for 2006 (2005 : S$245,000). Resolution 4 To re-appoint Mr Wee Cho Yaw, who retires pursuant to Section 153(6) of the Companies Act, Cap. 50, as Director of the Company to hold such office until the next Annual General Meeting of the Company. Resolution 5 To re-appoint Mr Alan Choe Fook Cheong, who retires pursuant to Section 153(6) of the Companies Act, Cap. 50, as Director of the Company to hold such office until the next Annual General Meeting of the Company. Resolution 6 To re-appoint Mr Lim Kee Ming, who retires pursuant to Section 153(6) of the Companies Act, Cap. 50, as Director of the Company to hold such office until the next Annual General Meeting of the Company. Resolution 7 To re-elect Mr Gwee Lian Kheng, who retires by rotation pursuant to Article 94 of the Company’s Articles of Association, as Director of the Company. Resolution 8 To re-elect Mr Wee Ee Chao, who was appointed during the year and retires pursuant to Article 99 of the Company’s Articles of Association, as Director of the Company. Resolution 9 To re-elect Mr Wee Ee Lim, who was appointed during the year and retires pursuant to Article 99 of the Company’s Articles of Association, as Director of the Company. Resolution 10 To re-appoint Messrs PricewaterhouseCoopers as Auditors of the Company and authorise the Directors to fix their remuneration.
AS SPECIAL BUSINESS To consider and, if thought fit, to pass with or without amendments, the following resolutions as Ordinary Resolutions:
Resolution 11 “That approval be and is hereby given to the Directors of the Company to offer and grant options in accordance with the regulations of the UOL 2000 Share Option Scheme (the “2000 Scheme”) and to allot and issue such number of shares as may be issued pursuant to the exercise of share options under the 2000 Scheme, provided always that the aggregate number of shares to be issued pursuant to the 2000 Scheme shall not exceed fifteen per cent (15%) of the issued share capital of the Company from time to time.” Resolution 12 “That authority be and is hereby given to the Directors of the Company to: (a) (i) issue shares in the capital of the Company (“shares”) whether by way of rights, bonus or otherwise; and/or (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) 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 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 was in force, 134 UOL GROUP LIMITED Annual Report 2006
NOTICE OF ANNUAL GENERAL MEETING (continued)
provided that: (1) the aggregate number of shares to be issued pursuant to this Resolution (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 issued share capital of the Company (as calculated in accordance with paragraph (2) below), of which the aggregate number of shares to be issued other than on a pro rata basis to shareholders of the Company (including shares to be issued in pursuance of Instruments made or granted pursuant to this Resolution) does not exceed twenty per cent (20%) of the issued share capital of the Company (as calculated in accordance with paragraph (2) below); (2) (subject to such manner of calculation as may be prescribed by the Singapore Exchange Securities Trading Limited (“SGX-ST”)) for the purpose of determining the aggregate number of shares that may be issued under paragraph (1) above, the percentage of issued share capital shall be based on the issued share capital of the Company at the time this Resolution is passed, after adjusting for: (i) new shares arising from the conversion or exercise of any convertible securities or share options or vesting of share awards which are outstanding or subsisting at the time this Resolution is passed; and (ii) any subsequent consolidation or subdivision of shares; (3) in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of the Listing Manual of the SGX-ST 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 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.”
BY ORDER OF THE BOARD
Foo Thiam Fong Wellington Secretary
Singapore, 4 April 2007
Notes A member entitled to attend and vote at the Meeting is entitled to appoint not more than two proxies to attend and vote in his stead. A proxy need not be a member of the Company. The instrument appointing a proxy must be deposited at the Registered Office of the Company at 101 Thomson Road, #33-00 United Square, Singapore 307591 not less than 48 hours before the time for holding the Meeting. Notes to Resolutions 1. In relation to Resolution 4, Mr Wee Cho Yaw will, upon re-appointment, continue as the Chairman of the Board of Directors and the Executive Committee, and as a member of the Remuneration and Nominating Committees. He is considered a non-independent director. 2. In relation to Resolution 5, Mr Alan Choe Fook Cheong will, upon re-appointment, continue as the Chairman of the Nominating Committee and as a member of the Executive, Audit and Remuneration Committees. He is considered an independent director. 3. In relation to Resolution 6, Mr Lim Kee Ming will, upon re-appointment, continue as the Chairman of the Audit and Remuneration Committees, and as a member of the Nominating Committee. He is considered an independent director. 4. In relation to Resolution 7, Mr Gwee Lian Kheng will, upon re-election, continue as a member of the Executive Committee. He is considered an executive non-independent director. 5. In relation to Resolution 8, the personal particulars of Mr Wee Ee Chao can be found on the “Board of Directors” section in the Summary Financial Report/Annual Report. Mr Wee Ee Chao will, upon re-election, continue as a member of the Executive Committee. He is considered a non-independent director. 6. In relation to Resolution 9, the personal particulars of Mr Wee Ee Lim can be found on the “Board of Directors” section in the Summary Financial Report/Annual Report. He is considered a non-independent director. 7. Resolution 11 is to empower the Directors to offer and grant options and to issue shares in the share capital of the Company pursuant to the 2000 Scheme, which was approved at the Extraordinary General Meeting of the Company on 23 May 2000. A copy of the Rules governing the 2000 Scheme is available for inspection by shareholders during normal office hours at the Company’s Registered Office. 8. Resolution 12 is to empower the Directors from the date of that meeting until the next Annual General Meeting to issue, or agree to issue shares and/or grant instruments that might require shares to be issued, up to an amount not exceeding fifty per cent (50%) of the issued share capital of the Company (calculated as described) of which the total number of shares to be issued other than on a pro rata basis to shareholders of the Company does not exceed twenty per cent (20%) of the share capital of the Company (calculated as described). IMPORTANT: FOR CPF INVESTORS ONLY 1. For investors who have used their CPF monies to buy UOL shares, this Report is sent to them at the request of their CPF Approved Nominee and is sent SOLELY FOR INFORMATION ONLY. 2. This Proxy Form is not valid for use by CPF Investors and shall be Proxy Form ineffective for all intents and purposes if used or purported to be Annual General Meeting used by them. 3. CPF Investors who wish to attend the Meeting as OBSERVERS have UOL Group Limited to submit their requests through their respective Agent Banks so (incorporated in the Republic of Singapore) that their Agent Banks may register with the Company’s Registrar Company Registration No. 196300438C (Please see Note No. 10 on the reverse).
I/We, (Name) of (Address) being a member/members of UOL GROUP LIMITED (“the Company”), hereby appoint:
Name Address NRIC/Passport Number Proportion of Shareholdings No. of Shares % and/or (please delete as appropriate) Name Address NRIC/Passport Number Proportion of Shareholdings No. of Shares %
or failing him/her, the Chairman of the Meeting as my/our proxy/proxies to attend and vote for me/us on my/our behalf and, if necessary, to demand a poll, at the 44th Annual General Meeting of the Company to be held at Parkroyal on Beach Road, Plaza Ballroom, Level 4, 7500A Beach Road, Singapore 199591 on Wednesday, 25 April 2007 at 3.45 p.m. and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for or against the Resolutions to be proposed at the Meeting as indicated below. If no specific direction as to voting is given, the proxy/proxies will vote or abstain from voting at his/their discretion, as he/they will on any other matter arising at the Meeting. The authority herein includes the right to demand or to join in demanding a poll and to vote on a poll.
To be used on a To be used in the show of hands event of a poll Resolution No. of Votes No. of Votes Number Ordinary Resolutions For * Against * For ** Against ** 1. Financial Statements and Reports of the Directors and the Auditors 2. Final Dividend and Special Dividend 3. Directors’ Fees 4. Re-appointment (Mr Wee Cho Yaw) 5. Re-appointment (Mr Alan Choe Fook Cheong) 6. Re-appointment (Mr Lim Kee Ming) 7. Re-election (Mr Gwee Lian Kheng) 8. Re-election (Mr Wee Ee Chao) 9. Re-election (Mr Wee Ee Lim) 10. Auditors and their Remuneration 11. Authority to Issue Shares (Share Option) 12. Authority to Issue Shares (General) * Please indicate your vote “For” or “Against” with a tick (√ ) within the box provided. ** If you wish to exercise all your votes “For” or “Against”, please tick (√ ) within the box provided. Otherwise, please indicate the number of votes as appropriate.
Dated this day of 2007
Shares in: No. of Shares (a) Depository Register (b) Register of Members Total Signature(s) or Common Seal of Member(s)
IMPORTANT: PLEASE READ NOTES ON THE REVERSE Notes: 1. Save for members which are nominee companies, a member of the Company entitled to attend and vote at the Meeting is entitled to appoint not more than two proxies to attend and vote in his/her stead. A proxy need not be a member of the Company. 2. Where a member appoints two proxies, the appointments shall be invalid unless he/she specifies the proportion of his/her shareholdings (expressed as a percentage of the whole) to be represented by each proxy. 3. This instrument of proxy must be signed by the appointor or his/her duly authorised attorney or, if the appointor is a body corporate, signed by its duly authorised officer or attorney or executed under its common seal. 4. A body corporate which is a member may also appoint by resolution of its directors or other governing body, an authorised representative or representatives in accordance with its Articles of Association and Section 179 of the Companies Act, Chapter 50 of Singapore, to attend and vote on behalf of such body corporate. 5. Completion and return of this instrument appointing a proxy shall not preclude a member from attending and voting at the Meeting. Any appointment of a proxy or proxies shall be deemed to be revoked if a member attends the Meeting in person, and in such event, the Company reserves the right to refuse to admit any person or persons appointed under this instrument of proxy, to the Meeting. 6. This instrument appointing a proxy or proxies (together with the power of attorney (if any) under which it is signed or a certified copy thereof) must be deposited at the registered office of the Company at 101 Thomson Road, #33-00 United Square, Singapore 307591, not less than 48 hours before the time fixed for holding the Meeting. 7. Please insert the number of shares held by you and registered in your name in the Register of Members and in the Depository Register of The Central Depository (Pte) Limited. If no number is inserted, the instrument of proxy will be deemed to relate to all the shares held by you. 8. Any alteration made in this form must be initialed by the person who signs it. 9. The Company shall be entitled to reject this instrument of proxy 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 this instrument of proxy. In addition, in the case of a member whose Shares are entered against his/her name in the Depository Register, the Company shall be entitled to reject any instrument of proxy lodged if such member, being the appointor, is not shown to have Shares entered against his/her name in the Depository Register as at 48 hours before the time appointed for holding the Meeting, as certified by The Central Depository (Pte) Limited to the Company. 10. Agent Banks acting on the request of the CPF Investors who wish to attend the Meeting as Observers are requested to submit in writing, a list with details of the investors’ names, NRIC/passport numbers, addresses and number of shares held. The list, signed by an authorised signatory of the Agent Bank, should reach the Company’s Registrar, Lim Associates (Pte) Ltd at 3 Church Street, #08-01 Samsung Hub, Singapore 049483, at least 48 hours before the time fixed for holding the Meeting.
2ND FOLD HERE
PROXY FORM Please Affix Postage Stamp
The Company Secretary UOL GROUP LIMITED 101 Thomson Road #33-00 United Square Singapore 307591
3RD FOLD HERE
FOLD THIS FLAP FOR SEALING