Annual Report 2015

CONTENTS
01 Corporate Profile 08 Financial Review 14 Milestones

02 Chairman and CEO Statement 10 Board of Directors 15 Corporate Offices

04 Financial Highlights 12 Management Team 16 Corporate Information

06 Operations Review 13 Group Structure 17 Corporate Governance Report

Our Vision
is to be a strategic global partner for
successful global companies, providing a full
range of integrated manufacturing services.

Our Mission
is to deliver the best in-class manufacturing
solutions to step up our customers’
manufacturing processes to produce quality
products.
 UMS Holdings Limited I Annual Report 2015 01

CORPORATE
PROFILE

Incorporated in Singapore on January 17, 2001, UMS Holdings Limited is a

one-stop strategic integration partner providing equipment manufacturing and
engineering services to Original Equipment Manufacturers of semiconductors and
related products.

The products we offer include modular and integration system for original
semiconductor equipment manufacturing.

Headquartered in Singapore, the Group has production facilities in Singapore,

Malaysia as well as California and Texas, USA.
02 UMS Holdings Limited I Annual Report 2015

CHAIRMAN AND
CEO STATEMENT

The Group’s FY2015 revenue edged up marginally

to S$111.1 million compared to S$109.8
million in FY2014. However, despite the stable
revenue, the Group is pleased to report that it has
achieved a record-breaking net profit of S$34.3
million during the year, marking a 38% increase
from S$24.9 million recorded in the previous
year. This makes FY2015 the most profitable year
Soh Gim Teik Chairman in UMS’ history.

Dear Shareholders,

FY2015 has been a very rewarding year for UMS. While the general
business environment continued to be plagued by global uncertainties,
UMS’ business remained stable. The Group’s FY2015 revenue edged up
marginally to S$111.1 million compared to S$109.8 million in FY2014.
However, despite the stable revenue, the Group is pleased to report that
it has achieved a record-breaking net profit of S$34.3 million during
the year, marking a 38% increase from S$24.9 million recorded in the
previous year. This makes FY2015 the most profitable year in UMS’
history. This was attributable to favourable business conditions such as
the strengthening of US dollar, lower raw material costs, the continuous
practice of cost control and a better mix of products sold.

In view of the Group’s excellent financial performance, the Board of

Directors (the “Directors”) is pleased to recommend and propose a final
dividend of TWO (2.0) Singapore cents and a special dividend of ONE
Luong Andy CEO (1.0) Singapore cent. Subject to the approval of the shareholders, this
will bring the total dividends declared and proposed for FY2015 to SIX
(6.0) Singapore cents.

Business Performance
The global semiconductor equipment industry remained stable
in FY2015. UMS experienced a pickup in orders during 1Q2015
following a weaker 4Q2014. Subsequently, the Group experienced two
consecutive strong quarters in 2Q2015 and 3Q2015 that bolstered its
revenue for the entire year.

In terms of segmental revenue contribution, UMS’ component sales for

FY2015 was strong, outperforming that of integrated system sales. The
consumables segment of its component business provided the Group
 UMS Holdings Limited I Annual Report 2015 03

CHAIRMAN AND
CEO STATEMENT

with a recurring income, thereby giving some stability to its revenue Moving forward, The Group will continue to seek opportunities with
stream. good long term growth potential and where it can leverage on its
financial and operational strength.
As stated earlier, the Group’s net profit after tax performed
tremendously well, rising to a record breaking S$34.3 million in Outlook
FY2015. The Group’s gross material margin grew 6 percentage The lower business activities from the last quarter of FY2015 are
points to 60% compared to 54% a year ago. The appreciation of US expected to follow into FY2016. While business activities in the first
dollar boosted the Group’s revenue while the weakened Malaysian half of FY2016 are expected to be subdued, UMS remains positive
Ringgit reduced the Group’s operational costs. Furthermore, lower about the outlook for FY2016 and the profitability of the Group over
raw material costs due to the weakening global economy also the longer term.
contributed to the Group’s margin growth.
SEMI, a leading global semiconductor trade association, had
The Group has always held a tight rein over its costs, as the expected global semiconductor equipment sales to grow, albeit
management is committed to continuously improve the bottom line nominally at 1.4% in 20161.
and maximize value for its shareholders. Towards the end of the
year, the Group completed the planned transfer of a substantial Appreciation
amount of production activities to its Penang plant and vacated On behalf of the Board, we would like to express our heartfelt
most of its leased space in 25 Changi North Rise, Changi North appreciation to all our stakeholders, which include our shareholders,
Industrial Estate. This allowed the Group to achieve cost savings in customers, business associates and partners, for their continuous
terms of lower energy costs and rental expenses. support of UMS.

Strong Cash Flow Generation In addition, we would also want to single out our employees and
The Group’s strong cash generation ability has always been one of express our special appreciation for their commitment, dedication
its greatest strength and FY2015 was no exception. UMS generated and hard work. Without them, the UMS can never be what it is
operating cash flow of S$35.8 million and free cash flow of S$31.3 today.
million in FY2015 compared to S$35.6 million and S$28.9 million
in FY2014 respectively. As such, the Group ended the year with a Last but not least, we would like to thank our fellow Board members
record net cash and cash equivalent of S$38.9 million even as it for their invaluable advice and guidance over the years.
paid out S$25.7 million dividends in FY2015.
A Special Note of Thanks from the CEO
Strategic Diversification On behalf of the Board, I would like to take this opportunity to thank
Over the years, UMS has always explored opportunities to Mr Soh Gim Teik who will be stepping down after the forthcoming
diversify its business portfolio to reduce the dependency on its Annual General Meeting for his invaluable contributions and
semiconductor segment. In January 2016, the Group signed a guidance to the Board and wish him well for his future endeavours.
definitive agreement with All Star Fortress Sdn Bhd to invest in the
company which will allow it to make inroads into the Malaysian and Soh Gim Teik Luong Andy
regional aerospace manufacturing industry. Chairman Chief Executive Officer
UMS Holdings Limited UMS Holdings Limited
With the increasing trend of international aerospace players
outsourcing more work as well as the Malaysian Government’s
efforts to further develop the local aerospace manufacturing
industry, the Group expects this new venture to put it in a good
position to capture these strong growth potentials. 1
Refer to http://www.semi.org/en/node/60181
04 UMS Holdings Limited I Annual Report 2015

FINANCIAL
HIGHLIGHTS

Revenue Net Profit

S$ Million S$ Million

160 40

34.2
120.5

140

28.9
114.4

111.1
113.2

27.6
109.8

120 30

24.9
100

17.0
80 20

60

40 10

20

0 0
FY2011 FY2012 FY2013 FY2014 FY2015 FY2011 FY2012 FY2013 FY2014 FY2015
 UMS Holdings Limited I Annual Report 2015 05

FINANCIAL
HIGHLIGHTS

Segmental Contribution Cash Balances & Free Cash Flow

S$ Million
Semiconductor (Semicon) Others

38.9
1%
40

37.9

33.8
35

32.5
31.7

31.3
29.2
29.3

28.9
FY2014 30
Revenue

25.8
25
99%
20

1%
10

FY2015
Revenue 0 FY2011 FY2012 FY2013 FY2014 FY2015

99%
Cash Balances Free Cash Flow
06 UMS Holdings Limited I Annual Report 2015

OPERATIONS
REVIEW

As these initiatives continue,

the Group will be in a good
position to enjoy good levels
of profit margin. The Group will
continue to explore ways to
reduce its overall manufacturing
costs, further increase its
competiveness as well as
maximizing profits.
 UMS Holdings Limited I Annual Report 2015 07

OPERATIONS
REVIEW

Operations review Sufficient Capacity for Growth

The global semiconductor equipment industry remained relatively The Group’s current manufacturing utilization rate is still relatively
stable despite weakness in the global economy. Chip makers low and has ample capacity for its future organic growth. The Group
worldwide continued their investments and that underpin the believes that there is no immediate requirement for any major
business activities of players in the value chain. Similarly, UMS’ capital expenditure.
major customer enjoyed a relatively healthy stream of orders, which
resulted in UMS’ steady performance in FY2015. UMS has in the past been exploring opportunities to diversify its
business to reduce its dependency on the semiconductor segment.
In terms of seasonality, the Group’s 1Q2015 revenue picked up In January 2016, the Group signed a definitive agreement with All
from a slower 4Q2014 and grew stronger as the year progressed Star Fortress Sdn Bhd (“ASF”) to invest in the company which will
towards 2Q2015 and 3Q2015. Towards the last quarter of the allow it to make inroads into the Malaysian and regional aerospace
year, the Group experienced slower orders and this is expected to manufacturing industry. In line with the shareholder agreement, ASF
continue into the first half of FY2016 as the slowdown in global will relocate its manufacturing operations to UMS’ Penang facilities.
economy continues. UMS will lease out part of its manufacturing premises to ASF and
this helps the Group to increase the utilization of its Penang factory
Efficient Cost Structure space.
The Group had always been actively pursuing a sustainable and
effective strategy to reduce its costs without compromising on the UMS’ strong financial and operational capabilities will add value
standard of its products. Over the years, UMS had developed the to this collaboration. The aerospace industry is an area that UMS
numerous manufacturing activities such as secondary process can enter into with similar scope of services and capabilities. Both
and specialized welding to establish itself as a one-stop integrated require a high level of precision engineering and robust quality
manufacturing platform. This allows the Group to minimize assurance processes.
subcontracting cost and retain most of the operating margins, as
well as ensuring a good quality control over its products. Outlook
The relatively weaker 4Q2015 is likely to continue into the first
The Group started the transfer of a substantial portion of its half of FY2016 as the global economic uncertainties lingers on.
machining activities to its Penang operations several years ago Although the industry may remain resilient in FY2016, the global
and this endeavor is completed towards the end of the year. In semiconductor equipment industry is still dependent on the chip
November 2015, the Group did not renew its lease at 25 Changi makers investment programs.
North Rise, Changi North Industrial Estate and relocated its
administrative functions to 23 Changi North Crescent in order to The Group’s major customer had not indicated any major downward
better utilize its factory space. This allowed the Group to achieve revisions to its orders at the current moment and there have been
cost savings in terms of lower energy costs and rental expense. industry experts even commenting that the global semiconductor
equipment industry may grow in FY2016, albeit nominally.
As these initiatives continue, the Group will be in a good position to
enjoy good levels of profit margin. The Group will continue to explore As such, the Group remains cautiously optimistic that business
ways to reduce its overall manufacturing costs, further increase its activities will be satisfactory and FY2016 will be a profitable year.
competiveness as well as maximizing profits.
08 UMS Holdings Limited I Annual Report 2015

FINANCIAL
REVIEW

Despite the relatively flat revenue,

the Group posted an excellent
net profit of S$34.3 million in
FY2015, growing 38% from
S$24.9 million a year ago.
FY2015 was the Group’s most
profitable year till date. Gross
material margin grew significantly
from 54% in FY2014 to 60% in
FY2015.
 UMS Holdings Limited I Annual Report 2015 09

FINANCIAL
REVIEW

Financial review While the Group saw employee benefits expense increased 11%
Revenue to S$13.5 million in FY2015, depreciation expense and Other
Despite the global economy remaining challenging with lots expenses in the same period declined 4% and 3% to S$7.4 million
of lingering uncertainties, UMS’ revenue stood relatively flat at and S$11.8 million respectively. Other credits grew from S$0.3
S$111.1 million in FY2015 compared to S$109.8 million a year million in FY2014 to S$2.5 million in FY2015 mainly as a result of
ago. In 1Q2015, the Group revenue grew 24% sequentially to foreign exchange gains.
S$27.5 million compared to S$22.1 million in 4Q2014. This was a
result of foundries pushing back their 4Q2014 investments into the In January 2016, UMS signed a definitive agreement with All Star
first quarter of FY2015. During this time, UMS’ major customer had Fortress Sdn Bhd (“ASF”) to invest in the company to participate in
also indicated that FY2015 will be a “back-end” loaded year with the Malaysia and regional aerospace manufacturing industry. This will
most demand coming in the second half of the year. be a long term investment with significant growth potential as part of
the Group’s diversification strategy. The investment amount as well as
The robustness of orders accelerated earlier than expected and the subsequent performance of this investment will not have any material
Group’s 2Q2015 revenue grew sequentially 13% to S$31.0 million. impact to the Group’s financial performance in FY2016.
Following the increase in business activities during 2Q2015, the
momentum continued into 3Q2015 with UMS achieving S$30.7 Under the collaboration, UMS will subscribe 10% equity in ASF for
million for the quarter. a consideration of RM0.145 million as well as extending secured
interest bearing convertible loans totaling up to USD7.5 million for
Subsequently, as most of the orders from UMS’ major customer its future expansion plans. UMS will also be renting its Penang
were fulfilled ahead of time as well as the increasing weakness premises on a commercial basis to ASF.
in global economy, the Group’s business activities in 4Q2015
experienced a slowdown. This resulted in UMS’ 4Q2015 revenue Cashflow
declining 29% quarter on quarter to S$21.9 million. Keeping up with its good track record of robust cash generation
abilities, UMS had generated a positive operating cash flow of S$35.8
Geographically, the Singapore market remained as the Group’s million and free cash flow of S$31.3 million in FY2015, as compared
largest market, contributing S$54.6 million in FY2015 while the to S$35.6 million and S$28.9 million respectively in FY2014.
US and Others regions both grew 18% each to S$26.6 million
and S$28.3 million respectively. Revenue from the Malaysia region As at 31 December 2015, the Group remained debt-free with
decreased 44% to S$1.6 million in FY2015. Additionally, UMS no bank borrowings and had managed to accumulate net cash
experienced higher contribution from its component business and cash equivalent of S$38.9 million, yet another all-time high
compared to its integrated system sales. The Group’s component milestone for the Group.
business has always enjoyed higher margins and is driven mainly
by consumables parts. Dividend
In view of UMS’ outstanding financial performance and in
Profitability recognition of shareholders’ unwavering support of the Group,
Despite the relatively flat revenue, the Group posted an excellent the Board had proposed a final dividend of 2.0 Singapore cents
net profit of S$34.3 million in FY2015, growing 38% from S$24.9 per ordinary share and special dividend of 1.0 Singapore cent per
million a year ago. FY2015 was the Group’s most profitable year till ordinary share (tax-exempt one-tier) for FY2015. This brings the
date. Gross material margin grew significantly from 54% in FY2014 total dividend proposed and declared to 6.0 Singapore cents per
to 60% in FY2015. This was a result of appreciation of the US share which includes dividends of 1.0 Singapore cent per ordinary
dollar, lower raw material costs and better product mix. share already paid out in each preceding quarters from 1Q2015,
2Q2015 and 3Q2015.
10 UMS Holdings Limited I Annual Report 2015

BOARD OF
DIRECTORS

Soh Gim Teik Luong Andy Oh Kean Shen

Chairman Chief Executive Officer Independent Director

Mr Soh Gim Teik was appointed Non- Mr Luong Andy was appointed as Chief Mr Oh Kean Shen was appointed as an
Executive Chairman and Independent Executive Officer of the Company in independent Director of the company on
Director of the Company since 2008. January 2005. Mr Luong previously 20 September 2007.
served as Chief Operating Officer of the
Mr Soh graduated in 1978 with a Company since April 2004. A graduate of the South Australian
degree in Bachelor of Accountancy. He Institute of Technology with a Bachelor
had previously practised as a public As President and Founder of the UMS Degree in Mechanical Engineering, he is
accountant and also had many years of Group, he has more than 20 years of now the Managing Director of Limbungan
working experience with a listed entity as experience in manufacturing front-end Batu Maung Sdn Bhd and his yachts
a finance director/chief financial officer. semicon components. He acquired his sales company, Pen Marine Sdn Bhd. In
He is a member of the Institute of machining skills through his experience in the past, he was Vice President of the
Singapore Chartered Accountants (ISCA) working in his family’s machining business Kenanga Invesment Bank Berhad providing
and is currently a Board and Governing in Vietnam. He emigrated to the USA professional investment management
Council member of the Singapore Institute from Vietnam in 1979 and shortly after services to corporate clients. Mr Oh is
of Directors where he serves as the 2nd college, started a precision machining actively involved in the Association of
Vice Chairman. He has also previously business called Long’s Manufacturing, Inc. Marine Industry of Malaysia, Singapore
served as a committee member of the Boating Industry Association and the Asia
Professional Accountants in Business Pacific Superyacht Association in the
Committee of the International Federation quest to promote the surge of the luxury
of Accountants. yachting industry in Asia.

Mr Soh is currently an independent

director in other public companies and
also serves in various non-profit and
charitable organisations.
 UMS Holdings Limited I Annual Report 2015 11

BOARD OF
DIRECTORS

Chay Yiowmin Loh Meng Chong, Stanley

Independent Director Executive Director

Mr Chay Yiowmin was appointed as an Mr. Stanley Loh was appointed as an

independent Director of the company on Executive Director of the Company on 30
28 June 2013. June 2010.

Mr Chay has more than 17 years of Mr. Stanley Loh joined the Company
public accounting experience in Singapore on 5 September 2008 as the Group’s
and the United Kingdom. Mr Chay is Financial Controller. He brings with him
currently an advisory partner with BDO over 20 years of experience in finance,
LLP Singapore, heading the Corporate accounting, treasury and auditing. Before
Finance Practice. Prior to joining BDO joining the Company, he held several
LLP, Mr Chay gained his professional controllership positions in trading and
experience with a number of large manufacturing organizations.
multinational accounting and audit firms
where he was admitted as a partner in Mr Loh holds a Bachelor of Accountancy
January 2010. Mr Chay holds a Bachelor (Hons) from National University of
of Accountancy and a Master of Business Singapore and a Master of Business
from Nanyang Technological University, Administration from Southern Illinois
and a Master of Business Administration University (Carbondale). A member of
from the University of Birmingham. Mr the Institute of Singapore Chartered
Chay is also a practising Chartered Accountants (ISCA), he is responsible
Accountant (CA Singapore) of the Institute for the overall financial, accounting, tax,
of Singapore Chartered Accountants treasury, corporate finance, compliance
(ISCA), Associate Chartered Accountant matters as well as the operations of the
(ACA) of the Institute of Chartered Group.
Accountants in England and Wales
(ICAEW), Certified Finance and Treasury
Professional (CFTP) of the Finance and
Treasury Association (FTA), and a Fellow
Member of the American Academy of
Financial Management (AAFM).

Mr Chay currently sits on the Singapore

steering committee of the Professional
Risk Managers’ International Association
(PRMIA), and the Corporate Finance
committee of the ICSA.
12 UMS Holdings Limited I Annual Report 2015

MANAGEMENT
TEAM

Luong Andy Loh Meng Chong, Stanley Kay Tan Kian Hong
Chief Executive Officer Group Financial Controller / Global Account Director
Senior Vice President, Operations

Mr Luong Andy, the Founder of UMS Mr. Stanley Loh joined the Company on 5 Mr Kay Tan was appointed Global Account
Holdings, has been the Group’s Chief September 2008 as the Group’s Financial Director in 2007, located in Milpitas,
Executive Officer since January 2005. He Controller. He brings with him over 20 California. As Global Account Director,
currently holds 85,859,000 ordinary shares years of experience in finance, accounting, Mr Tan holds overall responsibility for
in the Group. treasury and auditing. Before joining the managing the relationship between UMS
Company, he held several controllership and our key customers in USA by facilitating
Mr Luong has more than 20 years of positions in trading and manufacturing appropriate customer contacts at all levels,
experience in manufacturing front-end organizations. across all business creation cycles. He is
semicon components. He acquired his also responsible for the Company’s USA
machining skills through his experience Mr Loh holds a Bachelor of Accountancy subsidiary.
working in his family’s machining business (Hons) from National University of Singapore
in Vietnam. He emigrated to the USA from and a Master of Business Administration Prior to joining UMS in April 2007 Mr Tan
Vietnam in 1979 and shortly after college, from Southern Illinois University held a number of positions with increasing
started a precision machining business (Carbondale). A member of the Institute of responsibilities. Mr Tan started as a Trainee
called Long’s Manufacturing, Inc. Singapore Chartered Accountants (ISCA), Supervisor in precision machining in 1989
he is responsible for the overall financial, and in 2003, re-located to California,
accounting, tax, treasury, corporate USA as a Key Account Manager. Mr Tan
finance, compliance matters as well as the brought with him more than 20 years of
operations of the Group. broad scope experience in the machining
and assembly for high-tech equipment
manufacturing industries and hands on
experience in Project Management, Account
Management, Sales and Marketing.
 UMS Holdings Limited I Annual Report 2015 13

GROUP
STRUCTURE

100% UMS Systems Pte Ltd

(Singapore)

100% UMS Aerospace Pte Ltd

(Singapore)

100% UMS Pte Ltd 100% UMS Solutions Pte Ltd

(Singapore) (Singapore)

Integrated Manufacturing
100% Technologies Pte Ltd
UMS Holdings Limited (Singapore)

UMS International Pte Ltd Ultimate Manufacturing

100% 100% Solutions (M) Sdn. Bhd.
(Singapore)
(Malaysia)

Ultimate Machining
100% Solutions (M) Sdn. Bhd.
(Malaysia)

Integrated Manufacturing
100% Technologies, Inc
(United States)
14 UMS Holdings Limited I Annual Report 2015

MILESTONES

1984 2016
Founding of Long’s Manufacturing in Silicon Valley, January / Entered into agreement to acquire
USA by Luong Andy 10% equity stake and extend convertible loan
to Malaysian Aerospace Metallic Component
Manufacturer

1996
Started UMS in Singapore 2015
December / Signed MOU with Malaysian
Aerospace Metallic Component Manufacturer to

2004 achieve alternative revenue contribution from the

aerospace industry
Merger with Norelco Centreline Holdings Limited

2012
2006 February / Completed acquisition of Integrated
Manufacturing Technologies Pte Ltd and Integrated
December / Ground Breaking of a new 80,000 Manufacturing Technologies Inc
square foot facility in Changi North Rise, Singapore

August / Announcement of a US$20 million

investment into new business segments including
aerospace and oil and gas 2011
December / Entered into agreement to acquire
Integrated Manufacturing Technologies Pte Ltd
and Integrated Manufacturing Technologies Inc
2007
August / Ground Breaking of Penang (Malaysia)
facility

March / Entered into an exclusive contract with a

2010
major oil & gas company December / Obtained 10-years pioneer tax-free
status in Malaysia
January / UMS obtained AS9100:2004
certification

2009
2008 February / Commence operation of Malaysia - Penang
February / Grand opening of new Changi North Rise Hub, a RM75 million investment
facility
 UMS Holdings Limited I Annual Report 2015 15

CORPORATE
OFFICES

USA
Integrated Manufacturing Integrated Manufacturing
Technologies, Inc Technologies, Inc
(California office) (Texas office)
1477 North Milpitas Boulevard 13930 Immanuel Road, Suite B
Milpitas, CA 95035 Pflugerville, TX 78660
Tel : (65) 6543 2272
Fax : (65) 6542 9979
Email : [email protected]
Website : http://www.umsgroup.com.sg

SINGAPORE
UMS Pte Ltd
UMS Aerospace Pte Ltd
MALAYSIA UMS Systems Pte Ltd
UMS Solutions Pte Ltd
Ultimate Machining Solutions (M) Sdn. Bhd. UMS International Pte Ltd
Ultimate Manufacturing Solutions (M) Sdn. Bhd. Integrated Manufacturing Technologies Pte Ltd
1058, Jalan Kebun Baru, Juru 23 Changi North Crescent
14100 Simpang Ampat Changi North Industrial Estate
Seberang Perai Tengah Singapore 499616
Pulau Penang Tel : (65) 6543 2272
Malaysia Fax : (65) 6542 9979
Tel : (604) 507 3000 Email : [email protected]
Fax : (604) 502 3000 Website : http://www.umsgroup.com.sg
Email : [email protected]
Website : http://www.umsgroup.com.sg
16 UMS Holdings Limited I Annual Report 2015

CORPORATE
INFORMATION

Board of Directors Registered Office

Soh Gim Teik 23 Changi North Crescent
Chairman Changi North Industrial Estate
Singapore 499616
Luong Andy Tel: (65) 6543 2272
Chief Executive Officer Fax: (65) 6542 9979
Website: www.umsgroup.com.sg
Oh Kean Shen
Independent Director Independent Auditors
Moore Stephens LLP
Chay Yiowmin Public Accountants and Chartered Accountants
Independent Director 10 Anson Road #29-15 International Plaza
Singapore 079903
Loh Meng Chong, Stanley Audit Partner-in-charge: Christopher Bruce Johnson
Executive Director / Group Financial Controller / (appointed with effect from financial year ended
31 December 2013)
Senior Vice President, Operations

Audit Committee Share Registrar

Boardroom Corporate and Advisory Services Pte. Ltd.
Chay Yiowmin
50 Raffles Place #32-01
Soh Gim Teik
Singapore Land Tower
Oh Kean Shen
Singapore 048623
Nominating Committee
Oh Kean Shen
Principal Bankers
Oversea-Chinese Banking Corporation Limited
Soh Gim Teik
Standard Chartered Bank
Luong Andy
Citibank, N.A.,
Chay Yiowmin
The Development Bank of Singapore Ltd
Remuneration Committee United Overseas Bank Limited
Chay Yiowmin
Soh Gim Teik
Company Secretary
Ms Shirley Lim Guat Hua (ACIS)
Oh Kean Shen
Complete Corporate Services Pte Ltd
10 Anson Road #32-15 International Plaza
Singapore 079903
 UMS Holdings Limited I Annual Report 2015 17

Corporate Governance Report

The Board and Management of UMS Holdings Limited (the “Company”) is committed to maintaining high standards of corporate
governance and practices that are essential to protect the interest of shareholders. Excellence in corporate governance will not only
enhance and safeguard the interest of all our shareholders; it will also foster the stability and sustainability of the Group’s performance
that is crucial in the building of long-term shareholders’ value.

This report describes the Group’s corporate governance policies and processes with reference to the Code of Corporate Governance
2012 (the ‘Code’). The Board is pleased to confirm that for the financial year ended 31 December 2015, the Company has generally
adhered to the principles and guidelines of the Code and any deviations will be specified in this report.

The Board’s Conduct of its Affairs – Principle 1

The Board comprises five Directors at the end of the year 2015, of which three, including the Non-Executive Chairman, are Independent
Directors. The Board provides entrepreneurial leadership, set strategic aims, and ensures that the necessary financial and human
resources are in place for the Company to meet its objectives. It also establishes a framework of prudent and effective controls which
enable risks to be assessed and managed. In addition, it reviews management performance, set the Group’s values and standards, and
ensure that obligations to shareholders and others are understood and met.

The key responsibilities of the Board include:

– Approving business direction and strategies;

– Monitoring management’s performance;
– Ensuring the adequacy, efficiency and effectiveness of internal controls, risk management procedures, financial reporting and
compliance;
– Approving annual budget, major funding, investment and divestment proposals;
– Approving the nominations of the Board of Directors and appointments to the various Board committees; and
– Assuming the responsibility for overall corporate governance of the Group.

The Group has in place, a set of internal guidelines setting forth matters that require the Board’s approval. Matters that specifically
require the Board’s approval are those involving:

– Release of all results and any other relevant announcements;

– Group’s annual budget;
– Appointment of directors and key personnel;
– Group’s corporate and strategic directions, key operational initiatives;
– Major funding and investment initiatives;
– Merger and acquisition transactions;
– Declaration of interim dividend and proposal of final dividends;
– Interested party transactions;
– Matters involving conflict of interests for substantial shareholders or directors; and
– All other matters of material importance.

To ensure smooth and effective running of the Group and to facilitate decision making, the Board has established various committees to
assist in the discharge of its responsibilities. These committees operate under clearly defined terms of reference, which are headed by
Independent Directors. The three committees are:

• Audit Committee (“AC”)

• Nominating Committee (“NC”)
• Remuneration Committee (“RC”)
18 UMS Holdings Limited I Annual Report 2015

Corporate Governance Report

The Board meets regularly at least four times a year, to coincide with the announcement of the Group’s quarterly results. Ad-hoc Board
meetings are also convened as and when deemed necessary by the Board to address any specific or significant matters that may
arise. At meetings of the Board, the Directors are free to discuss and openly challenge the views presented by management and other
Directors. The decision making process is an objective one. In lieu of physical meetings, written resolutions are also circulated for
approval by the members of the Board.

During the current financial year, the Board met four times. The Company’s Constitution provides for the meetings of the Board by means
of conference telephone or similar communications equipment. The number of Board meetings held and the attendance of each board
member at the meetings for the year ended 31 December 2015 are disclosed below:

Audit Committee Nominating Remuneration

Name of Director Board Meetings Meetings Committee Meetings Committee Meetings
No No No No
No Held Attended No Held Attended No Held Attended No Held Attended
Mr Soh Gim Teik ^* 4 4 6 6 1 1 3 3
(Retires on 28 April 2016)
Mr Luong Andy+ 4 4 N.A N.A 1 1 N.A N.A
Mr Oh Kean Shen #* 4 4 6 6 1 1 3 3
Mr Chay Yiowmin #* 4 4 6 6 1 1 3 3
Mr Stanley Loh Meng Chong+ 4 4 N.A N.A N.A N.A N.A N.A

^ Non-Executive Chairman
+ Executive Director
# Non-Executive Director
* Independent Director

The retirement of Mr Soh Gim Teik as Non-Executive Chairman and Independent Director and member of Audit, Nominating and
Remuneration Committees of the Company will be effective after the close of business at the forthcoming Annual General Meeting on 28
April 2016. The Board have taken steps to find a replacement and shall endeavour to fill the vacancy and announce the appointment of
an Independent Non-Executive Director of the Company in due course.

To enhance the effectiveness of the Board, all Board members are kept informed of all the relevant new laws and regulations. Whenever
a new Director is appointed on the Board, the Company ensures that he receives appropriate training, briefing and orientation to enable
him to discharge his duties effectively.

Board Composition and Balance – Principle 2

As at 31 December 2015, the Board comprises five directors. The Chief Executive Officer (‘CEO”) is one of two Executive Directors
whilst the remaining three Directors, including the Non-Executive Chairman, are Non-Executive Directors of the Company. Non-Executive
Directors of the Company assist the Chairman to fulfil his role by regularly assessing the effectiveness of the Board’s processes and
activities in meeting set objectives and corporate governance standards.

Three Directors out of the total Board of five Directors are independent; hence the Group believes the Board is effective and autonomous.
The independence of each Director is reviewed annually by the Nominating Committee based on the Code’s definition of independence.
The Board has also satisfied the Code whereby at least one-third of the Board should be independent.

The non-executive and independent Directors would bring a broader view with independent judgment on issues for the Board’s
deliberations.
 UMS Holdings Limited I Annual Report 2015 19

Corporate Governance Report

The Board has the requisite blend of expertise, skills and attributes to oversee the Company’s business. Collectively, they have the core
competencies in areas such as accounting or finance, business or management experience, industry knowledge, strategic planning
experience and customers-based experience or knowledge, technology, and international affairs which provide valuable insights to
the Group. The diverse mix of background and experience provides for effective direction for the Group in its mission to becoming a
multinational group with a strong competitive edge in its business objectives. The Board considers its size as adequate and optimum to
undertake the numerous tasks of setting strategy, establishing vision, mission and value, exercising accountability to shareholders, and
delegating authority to management after taking into account the scope and nature of the operations of the Company and of the Group.

Chairman and Chief Executive Officer – Principle 3

Guideline 3.1 – Relationship between Chairman and Chief Executive Officer

The Code states that the roles of the Chairman and the CEO should be separate to ensure an appropriate balance of power and authority,
increased accountability and greater capacity of the Board for independent decision making. The division of responsibilities between
the Chairman and the CEO should be clearly established, set out in writing and agreed by the Board. The Company has adhered to the
recommendation of the Code by appointing Mr Soh Gim Teik as a Non-Executive Chairman with effect from 15 February 2008. Mr Luong
Andy has been the CEO of the Company since 2005.

As the CEO, Mr Luong Andy is responsible for the day-to-day management of the business. Mr Luong Andy has executive responsibilities
in the business directions and operational efficiency of the Group and plays a pivotal role in steering the strategic direction and growth of
the business. He also oversees the execution of the Group’s corporate and business strategy set out by the Board and ensures that the
directors are kept updated and informed of the Group’s business.

As the Non-Executive Chairman, Mr Soh Gim Teik’s responsibilities, among others, include the following:

• Lead the Board to ensure its effectiveness to all aspects of its role and set its agenda;
• Ensure that the directors receive accurate, timely and clear information;
• Ensure effective communication with shareholders;
• Encourage constructive relations between the Board and Management;
• Facilitate the effective contribution of Non-Executive Directors to the Board;
• Encourage constructive relations between the Non-Executive Directors and Executive Directors; and
• Promote high standards of corporate governance.

Board Membership – Principle 4

Guideline 4.1 – Composition of Nominating Committee

The appointment of new directors to the Board is recommended by the Nominating Committee (“NC”). The NC comprises three
Non-Executive Directors and one Executive Director, namely Mr Oh Kean Shen, Mr Soh Gim Teik, Mr Chay Yiowmin and Mr Luong Andy.

Name Role in NC Role In Board

Mr Oh Kean Shen Chairman Independent and Non-Executive Director
Mr Soh Gim Teik Member Chairman, Independent and Non-Executive Director
Mr Luong Andy Member Chief Executive Officer and Executive Director
Mr Chay Yiowmin Member Independent and Non-Executive Director
20 UMS Holdings Limited I Annual Report 2015

Corporate Governance Report

The Chairman of the NC is not directly associated with any substantial shareholder of the Company. The NC works within the written
terms of reference, which describes the responsibilities of its members. The principal functions of the NC include the following:

• Make recommendations to the Board on all board appointments, retirements and re-nomination having regards to the director’s
contribution and performance;
• Review and determine the independence of each director and ensure that the Board comprises at least one-third independent
directors;
• Review and decide if a director is able to and has been adequately carrying out his/her duties as a director of the Company,
when he/she has multiple board representations. The NC is of the opinion that all the directors who serve on multiple boards
have allocated sufficient time and attention to the Company and have carried out their duties as directors of the Company; and
• Determine how the Board’s performance may be evaluated, and propose objective performance criteria to assess the
effectiveness of the Board as a whole.

Guideline 4.5 – Selection and appointment of new Director

In identifying for appointment of new Directors, the NC applies the following main principles:-

• The Board shall have a majority of Directors who are not substantial shareholders of the Company and are independent of the
substantial shareholders of the Company; and
• The NC must be satisfied that each candidate is fit and proper for the position or office and is the best or most qualified
candidate nominated for the position or office taking into account the candidate’s track record, age, experience, capabilities, and
other relevant factors.

Under the Constitution of the Company, the Directors are required to retire at least once every three years. The NC assesses
and recommends to the Board whether the retiring Directors are suitable for re-election. The NC considers that the multiple board
representations held presently by some of the Directors do not impede their performance in carrying out their duties to the Company and
in fact, enhances the performance of the Board as it broadens the range of the experience and knowledge of the Board.

Board Performance – Principle 5

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

The NC has established an appraisal process to assess the performance and effectiveness of the Board as a whole as well as to
assess the contribution of individual directors. It focuses on a set of performance criteria which includes the evaluation of the size and
composition of the Board, the Board’s access to information, the Board processes and accountability. Review of the Board’s performance,
as appropriate, is undertaken collectively by the NC annually and informally on a continual basis.

The NC is responsible for the following functions:-

• To review and determine the independence of each director;

• To make recommendations to the Board on all nominations for appointment and re-appointment of directors;
• To implement a process for assessing the effectiveness of the Board as a whole and the contribution by each director;
• To evaluate the independence of each director as well as the size and composition of the Board; and
• To propose the Board’s performance evaluation criteria.
 UMS Holdings Limited I Annual Report 2015 21

Corporate Governance Report

Access to Information – Principle 6

The Board members are given an update on the Group’s financials, business plans and developments prior to board meetings and on
an on-going basis. Management has an obligation to provide the Board with complete and adequate information in a timely manner.
Board members are given full access to the Company’s information and independent access to the Company’s Management, including
the Group Financial Controller and the Company Secretary. To ensure that the Board members have sufficient time to look through the
materials and information, all board papers are sent to the members a few days before the Board meeting.

The Directors have separate and independent access to the Company Secretary. The Company Secretary assists the Chairman in
ensuring that all board procedures are followed and that the Company’s Constitution and applicable rules and regulations, including
requirements of the Singapore Companies Act and the Singapore Exchange Securities Trading Limited (“SGX-ST”) are complied with. The
Company Secretary or her representatives also administer, attend and prepare the minutes of all Board and Board Committee meetings
and assist the Chairman in implementing and strengthening corporate governance practices and processes. The Company Secretary is
also the primary channel of communication between the Company and SGX-ST.

The Company Secretary or her representatives attends all Board and Board Committee meetings and the minutes of such meetings are
promptly circulated to all Board members.

The appointment and the removal of the Company Secretary is a matter for the Board as a whole.

Each Director, whether individually or as a group, has the right to seek independent professional advice as and when necessary, in
furtherance of their duties, at the Company’s expense and with the approval of the Chairman.

Procedures for Developing Remuneration Policies – Principle 7

There should be a formal and transparent procedure for developing policies on executive remuneration and for fixing the remuneration
packages of individual directors. No Director should be involved in deciding his own remuneration.

The Remuneration Committee (“RC”) comprises the following Directors -:

Name Role in RC Role In Board

Mr Chay Yiowmin Chairman Independent and Non-Executive Director
Mr Soh Gim Teik Member Chairman, Independent and Non-Executive Director
Mr Oh Kean Shen Member Independent and Non-Executive Director

The RC members comprise entirely of Non-Executive and independent Directors. The members of the RC have extensive experience in
the formulation and implementation of wage policies and compensation schemes. If necessary, the RC will seek expert advice on human
resource matters or on remuneration of all directors, either within or outside the Company.

The RC’s responsibilities include the following:

– Recommending to the Board a framework of remuneration, and the specific remuneration packages for each director and the
CEO (including but not limited to director’s fees, salaries, allowances, bonuses, variable incentives, options and benefits in kind)
for the Board and key executives. If necessary, the RC will seek expert advice inside and/or outside the company on remuneration
of all directors.
– Review the adequacy and form of compensation of executive directors in accordance with predetermined key performance
indicators (“KPIs”) as would form the basis of the Company’s formalised appraisal system to ensure that the compensation
realistically commensurate with the responsibilities and risks involved in being an effective executive director;
22 UMS Holdings Limited I Annual Report 2015

Corporate Governance Report

– The performance-related elements of remuneration are designed to align interest of executive directors with those of
shareholders and link rewards to corporate and individual performance based on predetermined KPIs. These KPIs are appropriate
and meaningful measures for the purpose of assessing executive directors’ performance;
– Recruiting executive directors of the Company and determining their employment terms and remuneration;
– Positioning the Company’s executive remuneration package relative to other companies or its competitors based on advice and
recommendations by experts inside and/or outside the company;
– Reviewing and recommending to the Board the terms of renewal for those executive directors whose current employment
contracts have expired, including reassessing KPIs;
– Ensuring adequate disclosure in the directors’ remuneration as required by regulatory bodies such as SGX-ST;
– Overseeing the payment of fees to non-executive directors; and
– Reviewing and recommending to the Board the terms of renewal for those interested persons’ service contracts which are due to
expire or have expired based on predetermined KPIs.

Level and Mix of Remuneration – Principle 8

The level of remuneration should be appropriate to attract, retain and motivate the directors needed to run the Company successfully but
companies should avoid paying more for this purpose. A significant proportion of executive directors’ remuneration should be structured
so as to link rewards to corporate and individual performance.

The RC adopts a formal procedure for fixing the remuneration packages of individual directors. In setting the remuneration package of
the individual directors, the Company takes into consideration the following factors:

– Pay and employment conditions within the industry and in comparable companies;
– The Company’s relative performance and the performance of the individual directors;
– The attractiveness of the remuneration package so as to retain the directors and motivate them to run the Company successfully;
– Significance of performance related elements of remuneration; and
– Effort, time spent and responsibilities of the individual directors.

The remuneration policies for the Executive and Non-Executive Directors have been endorsed by the RC and the Board.

Disclosure on Remuneration – Principle 9

Executive Directors:

Executive directors receive their remuneration in two key components, that is, fixed monthly salary and variable bonus and incentives.
The fixed monthly salary includes car allowance and central provident fund contribution. The variable bonus and incentives depends
largely on the performance of the Group. In exceptional circumstances of misstatement of financial results or of misconduct resulting in
financial loss to the Company, the Group will be able to reclaim incentive components of remuneration from the executive director.

Non-Executive Directors:

Non-Executive Directors are paid a director’s fee on a quarterly basis in arrears. In determining the quantum of director’s fees, factors
such as effort and time spent, and responsibilities of the directors are taken into account. Non-Executive Directors are paid a basic fee
and allowance for attending any additional meeting. An additional fee for serving as Chairman on any committee is also being paid
to Non-Executive Directors. The RC ensures that none of the Non-Executive Directors are over-compensated to the extent that their
independence may be compromised. The director’s fees are subject to shareholders’ approval at the Annual General Meeting.

The Company believes that, given the sensitive nature of remuneration, full disclosure of breakdown of remuneration of each executive
director (excluding CEO) and each key management personnel is not advantageous to the Company.
 UMS Holdings Limited I Annual Report 2015 23

Corporate Governance Report

Guideline 9.1 Remuneration Details of the Directors

The remuneration of Directors for the year ended 31 December 2015 is set out below:

Central
Variable Provident
Bonus and Fund Directors
Name of Director Salary Incentives Allowances Contribution Fees Total
S$ S$ S$ S$ S$ S$
Non- Executive Directors
Below S$250,000
Mr Soh Gim Teik – – – – 63,739 63,739
Mr Oh Kean Shen – – – – 55,000 55,000
Mr Chay Yiowmin – – – – 60,000 60,000

Executive Directors
S$ 2,000,000 to S$2,249,999
Mr. Luong Andy 509,768 1,505,539 207,600 12,200 – 2,235,107

Central
Variable Provident
Bonus and Fund Directors
Name of Director Salary Incentives Allowances Contribution Fees Total
% % % % % %
S$ 250,000 to S$ 499,999
Mr Stanley Loh Meng Chong 44% 49% 4% 3% – 100%

Guideline 9.2 – Remuneration of the top five executives of the Group

The breakdown remuneration of the top 5 key executives (who are not Directors of the Company) in percentage terms for the year ended
31 December 2015 is set out below:

Central
Provident Fund
Name of Key Executive Salary Allowances Bonus Contribution Total
% % % % %
S$250,000 to S$499,999
Mr Kay Tan Kian Hong 50% 7% 43% – 100%
Below S$250,000
Mr Gobinath A/L Gunaselan 66% 8% 16% 10% 100%
Ms Pang Su Chun 69% 4% 17% 10% 100%
Ms Ang Teng Fung 68% 6% 14% 12% 100%
Mr Gajendran Rajendra Babu 65% 7% 14% 14% 100%

The total remuneration paid to the above key management personnel for the financial year ended 31 December 2015 was S$0.8M.

Other than as disclosed, the Company does not have any employee who is an immediate family member of a Director or CEO and whose
remuneration exceeds S$50,000 during the financial year.
24 UMS Holdings Limited I Annual Report 2015

Corporate Governance Report

Accountability – Principle 10

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

As defined in the Code, the Board presents to shareholders a balanced and understandable assessment of the Group’s performance,
position and prospect. The Management provides all Board members with management reports and accounts which represent balanced,
understandable assessment of the Group’s performance, position and prospects on a quarterly basis.

It is the Board’s policy to provide the shareholders with all important and price sensitive information. These are done through the SGXNET
during the quarterly announcements as and when necessary.

Audit Committee – Principle 12

The Audit Committee (“AC”) comprises the following members:

Name Role in AC Role In Board

Mr Chay Yiowmin Chairman Independent and Non-Executive Director
Mr Soh Gim Teik Member Chairman, Independent and Non-Executive Director
Mr Oh Kean Shen Member Independent and Non-Executive Director

The roles and responsibilities of the AC are to:

– Recommend to the Board, the external auditors to be appointed and the remuneration and terms of engagement letter therein;
– Review with the internal and external auditors, the audit plan, including the nature and scope of the audit and its cost
effectiveness before the audit commences;
– Review with the internal auditors and external auditors, their evaluation of the adequacy of the system of internal accounting
controls and compliance functions;
– Review the Group’s audited annual report and other quarterly financial statements and related notes and formal announcements
thereto; accounting principles adopted and the external auditors’ report prior to recommending to the Board for approval;
– Review the nature, scope, extent and cost effectiveness of non-audit services provided by the external auditors and ensuring that
these do not affect the independence and objectivity of the external auditors;
– Review any significant financial reporting issues, judgment and estimates made by the Management, so as to ensure the integrity
of the financial statements of the Company;
– Discuss problems and concerns, if any, arising from the interim and final audits, and any matters which the auditors may wish to
discuss (in the absence of the Management where necessary);
– Review the effectiveness of the Company’s material internal controls, including financial, operational and compliance controls via
reviews carried out by the internal auditors; and
– Review interested party transactions on a regular basis.

In respect of the overall audit process, the AC has:-

– Provided an open avenue of communication between the external auditors, internal auditors, the Management and the Board;
and
– Kept under review the scope and results of the external audit, internal audit, and their effectiveness and reported to the Board on
any significant findings.

The AC is guided by its terms of reference which provides explicit authority to investigate any matters within its terms of reference, full
access to and co-operation by the Management and full discretion to invite any Director and executive officer to attend its meetings, and
reasonable resources to enable it to discharge its functions properly.
 UMS Holdings Limited I Annual Report 2015 25

Corporate Governance Report

The AC has also put in place an anti fraud policy, whereby staff and business associates of the Group may raise concerns about
possible improprieties in matters of financial reporting, fraudulent acts and other matters and ensure that arrangements are in place for
independent investigations of such matters and appropriate follow up actions.

The AC met with external auditors, and with internal auditors, without the presence of the Company’s Management, at least once a year.

The Company has appointed a suitable auditing firm to meet its audit obligations, having regard to the adequacy of the resources and
experience of the auditing firm and the audit engagement partner assigned to the audit. Moore Stephens LLP was appointed as the
Company’s external auditors on 7 November 2007. Mr Christopher Bruce Johnson was appointed with effect from financial year ended
31 December 2013 as the audit engagement partner in charge of the audit of the Company. The Company confirms that Rule 712 of the
SGX-ST’s Listing Manual is complied with.

The auditors of the Company’s subsidiaries are disclosed in the notes to the financial statements in this annual report. The Company
confirms that the Company and the Group has complied with Rule 715 of the SGX-ST’s Listing Manual.

For FY2015, the total amount of fees in respect of statutory audit services provided by the external auditors for the Group amounted to
approximately S$211,000. There was no non-audit service rendered by the Group’s external auditors, Moore Stephens LLP, to the Group
for the FY2015.

The Audit Committee is satisfied with the independence and objectivity of the external auditors during the financial year and has
recommended to the Board the re-appointment of Moore Stephens LLP as external auditors at the forthcoming Annual General Meeting
of the Company.

Risk Management and Internal Controls – Principle 11

Internal audit – Principle 13

The Group has established a system of internal controls to address the financial, operational and compliance risks of the Group. The
Board recognizes the importance of sound internal controls and risk management practices to good corporate governance. The Board
affirms its overall responsibility for the Group’s overall internal control framework, and for reviewing the adequacy and integrity of those
systems on an annual basis. The internal control and risk management functions are performed by the Group’s key executives and the
CEO and CFO have confirmed the adequacy and effectiveness of the internal controls and risk management systems and the financial
records have been properly maintained and the financial statements give a true and fair view of the Group’s business operations and
finances. It should be noted, in the opinion of the Board, that no cost effective internal control system will preclude all errors and
irregularities, as a system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can provide
only reasonable and not absolute assurance against material misstatement or loss.

The internal audit (“IA”) function of the Group is outsourced to KPMG Services Pte Ltd (“KPMG”). The IA reports to the Audit Committee.
KPMG is guided by the Standards for Professional Practice of Internal Auditing set by The Institute of Internal Auditors.

The Group’s internal auditors conduct review in accordance with the audit plans of the Group’s key internal controls, including
financial, operational and compliance controls. Any material non-compliance or failures in internal controls and recommendations for
improvement are reported to Management and to the AC. The audit conducted by internal auditors will assist the AC in the assessment
of and obtaining assurance on the adequacy, efficiency and effectiveness of the Group’s internal control environment.

During the financial year, Management had taken remedial actions recommended by the internal and external auditors in prior financial
year so as to enhance certain internal control procedures. New areas of improvement were also recommended and implemented during
the current financial year.
26 UMS Holdings Limited I Annual Report 2015

Corporate Governance Report

The Board also recognises the importance of establishing a risk management framework to facilitate the governance of risks and
monitoring the effectiveness of internal controls. Accordingly, to facilitate the compliance of the Listing Manual, the Board has established
a Risk Advisory Committee comprising key senior management executives during the financial year to advise the Board of the various
financial, operational and compliance risks affecting the Group. Weightage will be assigned to these risks and appropriate actions will
be taken to mitigate or avoid these risks.

The Company has commissioned KPMG to perform a risk assessment review and subsequently established a risk identification and
management framework. In the Company, risks are identified and addressed, with the Board and senior management personnel of
the Group and its subsidiaries taking ownership of these risks. Action plans to manage the risks are continually being monitored by
Management and the Board.

The internal auditors will review policies and procedures as well as key controls over the selected areas as approved by the Audit
Committee, and will highlight any issues to the Directors and the AC. Additionally, in performing their audit of the financial statements,
the external auditors perform tests over operating effectiveness of certain controls that the auditors intend to rely on that are relevant to
the Group’s preparation of its financial statements. The external auditors also report any significant deficiencies in such internal controls
to the Directors and the AC.

Based on the internal control framework established and maintained by Management, the reports from the internal and external auditors,
and assurance reviewed from Management, the Board opines, with the concurrence of the AC, that the system of internal controls
including financial, operational, compliance and information technology controls and risk management systems maintained by the
Group’s Management that was in place throughout the financial year up to the date of this report, is adequate to meet the needs of the
Group in its current business environment. The Board, together with the AC and Management, will continue to enhance and improve the
existing internal control framework to identify and mitigate these risks.

Shareholder Rights and Responsibilities – Principles 14, 15 and 16

The Board’s policy is that shareholders and the public should be equally and timely informed of all major developments that may impact
materially on the Company.

The Company strives for timeliness and transparency in its disclosure to the shareholders and the public.

The Company communicates pertinent and timely information to its shareholders through:-

– The Company’s annual reports which are prepared and issued to all shareholders containing all relevant information about
the Group, including future developments and other disclosures required by the Singapore Companies Act and the Singapore
Financial Reporting Standards;
– Announcement of quarterly, half-yearly and full-year’s results on the Singapore Exchange Securities Trading Limited’s SGXNET;
– Press releases on major developments of the Group;
– Responding to all enquiries from investors, analysts, fund managers and the media through its Corporate Communications and
Investor Relations department;
– Formal and informal media and analysts’ briefings for the Group’s interim and annual financial results, chaired by the CEO, as
appropriate; and
– The Group’s website at www.umsgroup.com.sg from which shareholders can access information about the Group including all
publicly disclosed financial information, corporate announcements, press releases, annual reports and profiles of the Group.

Information is first disclosed to all shareholders through SGXNET announcements before the Company meets with any group of analysts
or investors. This ensures that all shareholders and the public have fair access to information. Where inadvertent disclosures are made
to a selected group of people, or unfounded rumours are spread about the Company, the Company will make the same disclosures and
clarify all rumours publicly immediately.
 UMS Holdings Limited I Annual Report 2015 27

Corporate Governance Report

Shareholders are encouraged to attend and participate at the Company’s Annual General Meeting to ensure that they have a better
understanding of the Group’s plans and developments for the future. The Chairman of the Board, Audit, Remuneration and Nominating
Committees and Management are required to be present at these meetings to address any questions that the shareholders may have.
The Company’s external auditors are also invited to attend the Annual General Meeting and are available to assist the Directors in
addressing any relevant queries by the shareholders relating to the conduct of the audit and the preparation and content of their auditors’
report. The Board values shareholders’ feedback and input.

The Company’s Constitution provides for a shareholder of the Company to appoint one or two proxies to attend the Annual General
Meeting and to vote in place of the shareholders.

Dealing in Company’s Securities

An internal Code on Dealings in Securities is also in place to prescribe the internal regulations pertaining to the securities of the Company
and its listed subsidiaries. The code prohibits securities dealings by Directors and employees while in possession of unpublished price-
sensitive information of the Group. All Directors and employees are also prohibited from dealing in the securities of the Company during
the period beginning two weeks before the announcement of the Company’s financial statements for each of the first three quarters of
its financial year and one month before the announcement of the Company’s full year financial statements and ending on the date of
the announcement of the financial results. Directors and officers are also advised not to deal in the Company’s securities for short term
considerations and they are expected to observe insider-trading laws at all times. The Company issues regular internal memorandums to
the Directors and officers of the Group to remind them of the aforementioned prohibitions.

Interested Person Transactions and Material Contracts

The Company has an internal policy to deal with interested person transactions. All interested person transactions will be documented
and submitted to the AC on a quarterly basis for their review and approval to ensure that the transactions are carried out at arm’s length.

During the current financial year, there were interested person transactions involving Mr Luong Andy and Sure Achieve Enterprises Pte
Ltd, a company in which Mr Luong’s wife, Mrs. Sylvia SY Lee Luong is a consultant. There were also interested person transactions with
Kalf Engineering Pte Ltd in which both Mr Luong Andy and Mr Stanley Loh have an interest. All interested person transactions were
conducted on arm’s length basis and on normal commercial terms within the regulatory guidelines. The Company has established pro-
cedures to ensure that all transactions with interested persons are reported on a timely manner to the Audit Committee and the transac-
tions are carried out on normal commercial terms and will not be prejudicial to the interest of the Company and its minority sharehold-
ers. Details of the interested person transactions are found on the supplementary financial information disclosures page of this Annual
Report.

Except as disclosed in the interested person transactions note found on the supplementary financial information disclosures page of this
Annual Report, there was no material contract or loan entered into between the Company and any of its subsidiaries involving interests
of any of the CEO, Director or controlling shareholder, either still subsisting at the end of FY2015 or if not then subsisting, entered into
since the end of the previous financial year.
Financial Contents
29 Directors’ Statement
32 Independent Auditors’ Report
34 Consolidated Income Statement
35 Consolidated Statement of Comprehensive Income
36 Balance Sheets
37 Consolidated Statement of Changes in Equity
38 Consolidated Statement of Cash Flows
40 Notes to the Financial Statements
84 Supplementary Financial Information Disclosures
86 Statistics of Shareholdings
88 Further Information on Directors
89 Notice of Annual General Meeting
Proxy Form
 UMS Holdings Limited I Annual Report 2015 29

DIRECTORS’ STATEMENT
For the financial year ended 31 December 2015

The directors present their statement to the members together with the audited consolidated financial statements of UMS Holdings
Limited (the “Company”) and its subsidiaries (collectively the “Group”) for the financial year ended 31 December 2015, and the balance
sheet of the Company as at 31 December 2015.

In the opinion of the directors,

(a) the consolidated financial statements of the Group and the balance sheet of the Company as set out on pages 34 to 83 are
drawn up so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2015
and the financial performance, changes in equity and cash flows of the Group for the financial year ended on that date;

(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.

1 Directors

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

Mr Luong Andy Executive Director

Mr Stanley Loh Meng Chong Executive Director
Mr Soh Gim Teik Independent Director
Mr Oh Kean Shen Independent Director
Mr Chay Yiowmin Independent Director

2 Arrangements to Enable Directors to Acquire Shares or Debentures

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

3 Directors’ Interests in Shares or Debentures

The directors of the Company holding office at the beginning and the end of the financial year had no interests in the shares or
debentures of the Company and related corporations as recorded in the register of directors’ shareholdings kept by the Company
under section 164 of the Singapore Companies Act, Chapter 50 (the “Act”), except as follows:

Held in the name of the directors Deemed interest

Name of Directors and the Company as at 1.1.15 as at 31.12.15 as at 1.1.15 as at 31.12.15

UMS Holdings Limited No. of Ordinary shares

(the Company)

Mr Luong Andy – – 91,759,000 85,859,000

Mr Stanley Loh Meng Chong 250,000 250,000 – –

By virtue of Section 7 of the Act, Mr Luong Andy is deemed to have an interest in the shares held by the Company in all its wholly
owned subsidiary companies.

There was no change in any of the above-mentioned interests between the end of the financial year and 21 January 2016.
30 UMS Holdings Limited I Annual Report 2015

DIRECTORS’ STATEMENT
For the financial year ended 31 December 2015

4 Options to Take Up Unissued Shares

During the financial year, no option to take up unissued shares in the Company or any corporation in the Group was granted.

5 Options Exercised

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

6 Unissued Shares Under Option

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

7 Audit Committee

The Audit Committee (“AC”) comprises all independent directors. The members of the AC at the date of this report are as follows:

Mr Chay Yiowmin (Chairman)

Mr Soh Gim Teik
Mr Oh Kean Shen

The AC carried out its functions in accordance with section 201B (5) of the Singapore Companies Act, Chapter 50. Amongst
others, the AC performed the following functions:

• Reviewed the external audit plan of the independent external auditors;

• Reviewed with the independent external auditors their report on the financial statements and the assistance given by the
Company’s officers to them;
• Met with the external auditors, other committees, and management in separate executive sessions to discuss any matters
that these groups believe should be discussed privately with the AC;
• Reviewed with the internal auditors their evaluation of the Company’s internal accounting control, the scope and results
of the internal audit procedures;
• Reviewed the financial statements of the Group and the Company prior to their submission to the directors of the
Company for adoption;
• Reviewed legal and regulatory matters that may have a material impact on the financial statements, related compliance
policies and programmes and any reports received from regulators;
• Reviewed interested person transactions (as defined in Chapter 9 of the Listing Manual of SGX); and
• Recommended to the board of directors that the independent external auditors, Moore Stephens LLP, be nominated for
re-appointment, approved the compensation of the external auditors, and reviewed the scope and results of the audit.

Other functions performed by the AC are described in the report on corporate governance included in the Company’s annual
report.
 UMS Holdings Limited I Annual Report 2015 31

DIRECTORS’ STATEMENT
For the financial year ended 31 December 2015

8 Independent Auditors

The auditors, Moore Stephens LLP, Public Accountants and Chartered Accountants, have expressed their willingness to accept
re-appointment.

On behalf of the Board of Directors,

LUONG ANDY LOH MENG CHONG, STANLEY

Singapore
18 March 2016
32 UMS Holdings Limited I Annual Report 2015

Independent Auditors’
Report to the Members of UMS Holdings Limited
(Incorporated in Singapore)

Report on the Financial Statements

We have audited the accompanying consolidated financial statements of UMS Holdings Limited (the “Company”) and its subsidiaries
(collectively referred to as the “Group”) as set out on pages 34 to 83, which comprise the balance sheets of the Group and of the
Company as at 31 December 2015, and the consolidated income statement and consolidated statement of comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows of the Group for the year then ended, and a
summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation of the financial statements that give a true and fair view in accordance with the
provisions of the Singapore Companies Act, Chapter 50 (the “Act”) and Singapore Financial Reporting Standards, and for devising and
maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against
loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit
the preparation of true and fair financial statements and to maintain accountability of assets.

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 about whether the financial statements are free from material misstatement.

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

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements of the Group and the balance sheet of the Company are properly drawn up in
accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the financial
position of the Group and of the Company as at 31 December 2015, and the financial performance, changes in equity and cash flows of
the Group for the year ended on that date.
 UMS Holdings Limited I Annual Report 2015 33

Independent Auditors’
Report to the Members of UMS Holdings Limited
(Incorporated in Singapore)

Report on Other Legal and Regulatory Requirements

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

Moore Stephens LLP

Public Accountants and
Chartered Accountants

Singapore
18 March 2016
34 UMS Holdings Limited I Annual Report 2015

Consolidated Income Statement

For the financial year ended 31 December 2015

Group
Note 2015 2014
S$’000 S$’000

Revenue 5 111,090 109,819

Changes in inventories 4,034 (3,866)
Raw material purchases and subcontractor charges (48,216) (46,389)
Employee benefits expense 6 (13,517) (12,222)
Depreciation expense 17, 18 (7,425) (7,741)
Other expenses 7 (11,838) (12,260)
Other credits 8 2,509 307
Finance income 9 128 74
Finance expense 10 – (18)
Profit before income tax 36,765 27,704

Income tax 11 (2,466) (2,775)

Net profit for the year attributable to the

owners of the Company 34,299 24,929

Earnings per share

- Basic 12 7.99 cents 5.81 cents
- Diluted 12 7.99 cents 5.81 cents

The accompanying notes form an integral part of the financial statements

 UMS Holdings Limited I Annual Report 2015 35

Consolidated Statement of Comprehensive Income

For the financial year ended 31 December 2015

Group
2015 2014
S$’000 S$’000

Net profit for the year 34,299 24,929

Other comprehensive loss, net of income tax:

Items that may be classified subsequently to profit or loss:
Exchange differences on translation of foreign operations (4,883) (356)

Total comprehensive income for the year

attributable to the owners of the Company 29,416 24,573

The accompanying notes form an integral part of the financial statements

36 UMS Holdings Limited I Annual Report 2015

Balance Sheets
As at 31 December 2015

Group Company
Note 2015 2014 2015 2014
S$’000 S$’000 S$’000 S$’000

ASSETS
Current Assets
Cash and bank balances 13 38,933 33,792 223 357
Trade receivables and other current assets 14 12,420 12,850 4,226 3,740
Inventories 15 37,361 33,327 – –
Total Current Assets 88,714 79,969 4,449 4,097

Non-Current Assets
Investments in subsidiaries 16 – – 192,415 192,415
Property, plant and equipment 17 34,807 41,725 – –
Investment property 18 2,411 2,629 – –
Goodwill 19 81,683 81,683 – –
Total Non-Current Assets 118,901 126,037 192,415 192,415

Total Assets 207,615 206,006 196,864 196,512

LIABILITIES AND EQUITY

Current Liabilities
Trade and other payables 20 9,760 11,061 7,981 7,043
Income tax payable 1,975 2,357 21 –
Total Current Liabilities 11,735 13,418 8,002 7,043

Non-Current Liabilities
Deferred tax liabilities 11 972 1,337 – –
Long-term provision 21 443 453 – –
Total Non-Current Liabilities 1,415 1,790 – –

Total Liabilities 13,150 15,208 8,002 7,043

Capital and Reserves

Share capital 22 136,623 136,623 136,623 136,623
Reserves 23 (9,146) (4,263) – –
Retained earnings 66,988 58,438 52,239 52,846
Total Equity 194,465 190,798 188,862 189,469

Total Liabilities and Equity 207,615 206,006 196,864 196,512

The accompanying notes form an integral part of the financial statements

 UMS Holdings Limited I Annual Report 2015 37

Consolidated Statement of Changes in Equity

For the financial year ended 31 December 2015

Foreign
Exchange
Share Translation Retained
Note Capital Reserve Earnings Total
S$’000 S$’000 S$’000 S$’000

Group
Balance at 1 January 2015 136,623 (4,263) 58,438 190,798

Net profit for the year – – 34,299 34,299

Other comprehensive loss
for the year - Exchange differences on
translation of foreign operations – (4,883) – (4,883)
Total comprehensive income
for the year – (4,883) 34,299 29,416

Dividends 24 – – (25,749) (25,749)

Balance at 31 December 2015 136,623 (9,146) 66,988 194,465

Balance at 1 January 2014 136,623 (3,907) 58,415 191,131

Net profit for the year – – 24,929 24,929

Other comprehensive loss
for the year - Exchange differences on
translation of foreign operations – (356) – (356)
Total comprehensive income
for the year – (356) 24,929 24,573

Dividends 24 – – (24,906) (24,906)

Balance at 31 December 2014 136,623 (4,263) 58,438 190,798

The accompanying notes form an integral part of the financial statements

38 UMS Holdings Limited I Annual Report 2015

Consolidated Statement of Cash Flows

For the financial year ended 31 December 2015

Group
Note 2015 2014
S$’000 S$’000
Cash Flows from Operating Activities
Profit before income tax 36,765 27,704
Adjustments for:
Depreciation expense 17, 18 7,425 7,741
Property, plant and equipment written off 8 213 276
Unwinding discount on long-term provision 9 (10) (11)
Gain on disposal of property, plant and equipment 8 (20) (40)
(Write back)/allowance for doubtful debts (trade) 8 (36) 33
Allowance for doubtful debts (non-trade) 8 308 –
Bad debts written off (trade) 8 – 9
Inventories written off 8 438 –
Allowance for inventories obsolescence 8 642 26
Reversal of allowance for inventories obsolescence 8 (1,017) –
Interest income 9 (118) (63)
Interest expense 10 – 18
Unrealised foreign exchange gain (1,125) (126)
Operating cash flows before working capital changes 43,465 35,567
Changes in working capital:
Trade receivables and other current assets (380) 8,055
Inventories (4,120) 3,794
Trade and other payables (427) (7,845)
Cash generated from operations 38,538 39,571
Income tax paid (2,766) (3,962)
Net cash generated from operating activities 35,772 35,609

Cash Flows from Investing Activities

Proceeds from disposal of property, plant and equipment 20 40
Purchase of property, plant and equipment 17 (4,478) (6,689)
Interest received 118 63
Net cash used in investing activities (4,340) (6,586)

Cash Flows from Financing Activities

Proceeds from bank borrowings – 6,268
Repayment of bank borrowings – (6,268)
Dividends paid 24 (25,749) (24,906)
Withdrawal/(placement) in fixed deposit - restricted 247 (8)
Interest paid – (18)
Net cash used in financing activities (25,502) (24,932)

Net increase in cash and cash equivalents 5,930 4,091

Cash and cash equivalents at the beginning of the year 33,543 28,990
Net effect of exchange rate changes on the balances of
cash and cash equivalents held in foreign currencies (540) 462
Cash and cash equivalents at the end of the year (A) 38,933 33,543

The accompanying notes form an integral part of the financial statements

 UMS Holdings Limited I Annual Report 2015 39

Consolidated Statement of Cash Flows

For the financial year ended 31 December 2015

A. Cash and Cash Equivalents

For the purpose of presenting the consolidated statement of cash flows, the consolidated cash and cash equivalents comprise
the following:

Group
2015 2014
S$’000 S$’000

Cash and bank balances (Note 13) 38,933 33,792

Less: Fixed deposit - restricted in use (Note 13) – (249)
Cash and cash equivalents per consolidated
statement of cash flows 38,933 33,543

The accompanying notes form an integral part of the financial statements

40 UMS Holdings Limited I Annual Report 2015

Notes to the Financial Statements

31 December 2015

These notes form an integral part of and should be read in conjunction with the accompanying financial statements:

1 General

UMS Holdings Limited (the “Company”) is a public limited company incorporated and domiciled in Singapore, and is listed on the
Mainboard of the Singapore Exchange Securities Trading Limited (“SGX-ST”). The controlling shareholder of the Company is Mr
Luong Andy.

The principal activity of the Company is investment holding. The principal activities of the subsidiaries are disclosed in Note 16.

The registered office address and principal place of business of the Company is at 23 Changi North Crescent, Singapore 499616.

The financial statements for the financial year ended 31 December 2015 were approved and authorised for issue by the board of
directors in accordance with a resolution of the directors on the date of the Directors’ Statement.

2 Basis of Preparation

The financial statements have been prepared in accordance with the provisions of the Singapore Companies Act, Chapter 50 and
Singapore Financial Reporting Standards (“FRS”).

The financial statements, which are expressed in Singapore Dollar (“S$”), are rounded to the nearest thousand dollar (S$’000),
except as otherwise indicated. The financial statements have been prepared on an historical cost basis, except as disclosed in
the summary of accounting policies set out in Note 3.

Adoption of New/Revised FRS

On 1 January 2015, the Group and the Company adopted the following standards and interpretations mandatory for annual
financial periods beginning on or after 1 January 2015.

Effective for annual

financial periods
beginning on or after

Amendment to FRS 24 Related Party Disclosures 1 July 2014

Amendment to FRS 40 Investment Property 1 July 2014
Amendment to FRS 108 Operating Segments 1 July 2014
Amendment to FRS 113 Fair Value Measurement 1 July 2014
Amendment to FRS 103 Business Combinations 1 July 2014

Amendment to FRS 24 Related Party Disclosures

This amendment clarifies that an entity providing key management personnel services to the reporting entity or to the parent of
the reporting entity is a related party of the reporting entity. The amendments require the amounts incurred by an entity for such
services to be included in the related party disclosures. However, this amount need not be split into components required for
other key management personnel compensation.

As this is a disclosure standard, it did not have any impact on the financial performance of the Group or the financial positions of
the Group and the Company when implemented.
 UMS Holdings Limited I Annual Report 2015 41

Notes to the Financial Statements

31 December 2015

2 Basis of Preparation (cont’d)

Adoption of New/Revised FRS (cont’d)

Amendment to FRS 40 Investment Property

The amendment clarifies that FRS 40 and FRS 103 are not mutually exclusive. The guidance in FRS 40 assists preparers to
distinguish between investment property and owner-occupied property. Preparers also need to refer to the guidance in FRS 103
to determine whether the business acquisition of an investment property is a business combination. The standard is effective for
annual periods beginning on or after 1 July 2014.

The amendment will not have any impact on the financial performance of the Group or the financial positions of the Group and of
the Company on initial application.

Amendment to FRS 108 Operating Segments

The amendment requires the disclosure of judgements made by management in deciding whether to combine operating
segments for segment reporting purposes, including the economic indicators that have been assessed in determining whether
the aggregated operating segments have similar economic characteristics.

The reconciliation of the total reportable segments’ assets to the entity’s total assets is required to be disclosed only if segment
assets are regularly reported to the chief operating decision maker.

As this is a disclosure standard, it did not have any impact on the financial performance of the Group or the financial positions of
the Group and the Company when implemented.

Amendment to FRS 113 Fair Value Measurement

The amendment clarifies that the references to financial assets and financial liabilities in FRS 113 should be read as applying to
all contracts within the scope of, and accounted for, in accordance with, FRS 39, regardless of whether they meet the definitions
of financial assets or financial liabilities in FRS 32 Financial Instruments: Presentation.

Amendment to FRS 103 Business Combinations (Scope of exception for joint venture)

The amendment clarifies that the formation of all types of joint arrangements (and not just joint ventures) are outside the scope
of FRS 103. This scope exception applies only to the accounting in the financial statements of the joint arrangements itself.

Amendment to FRS 103 Business Combinations is effective prospectively for annual periods beginning on or after 1 July 2014.

The adoption of this standard did not have any material impact on the financial performance of the Group or financial positions of
the Group and the Company when implemented.
42 UMS Holdings Limited I Annual Report 2015

Notes to the Financial Statements

31 December 2015

2 Basis of Preparation (cont’d)

New/Revised FRS which are not yet effective

Effective for annual

financial periods
beginning on or after

Amendment to FRS 1 Disclosure Initiative 1 January 2016

Amendment to FRS 27 Equity Method in Separate Financial Statements 1 January 2016
Amendment to FRS 110, FRS 112 Investment Entities: Applying the Consolidation Exception 1 January 2016
and FRS 28
Amendment to FRS 7 Statement of Cash Flows 1 January 2017
Amendment to FRS 12 Income taxes – Recognition of deferred tax assets for 1 January 2017
unrealised losses
FRS 109 Financial Instruments 1 January 2018
FRS 115 Revenue from Contracts with Customers 1 January 2018

Amendment to FRS 1 Disclosure Initiative

The amendment to FRS 1 is designed to further encourage entities to apply professional judgement in determining what
information to disclose in their financial statements. The amendment also clarify that entities should use professional judgement
in determining where and in what order information is presented in the financial disclosures.

The amendment to FRS 1 is effective for annual periods beginning on or after 1 January 2016, with early adoption permitted.

As this is a disclosure standard, it will not have any impact on the financial performance of the Group or the financial positions of
the Group and the Company when implemented.

Amendment to FRS 27 Equity Method in Separate Financial Statements

The amendment to FRS 27 will allow entities to use the equity method to account for investments in subsidiaries, joint ventures
and associates in the entities’ separate financial statements. This is in addition to the accounting policy choice to account for
such investments at cost less impairment, or fair value (in accordance with FRS 39 or FRS 109), which currently exists and will
continue to be available.

The Group is in the process of assessing the potential impact that will result from the application of the amendment to FRS 27.

Amendment to FRS 110, Investment Entities: Applying the Consolidation Exception

FRS 112 and FRS 28

The amendments to FRS 110, FRS 112 and FRS 28 regarding consolidation exception are listed below:

• An intermediate parent that is a subsidiary of an investment entity is exempted from preparing consolidated financial
statements, even if its investment entity parent measures all of its subsidiaries at fair value.
• A parent company should not consolidate a subsidiary that provides services related to the investment activities of the
parent if that subsidiary is an investment entity.
• A non-investment entity investor that applies the equity method to an associate/joint venture investment entity may retain
the fair value measurement applied to the subsidiaries of the associate/joint venture investment entity.

An investment entity that measures all of its subsidiaries at fair value should disclose the information that is required by FRS 112
Disclosure of Interests in Other Entities.
 UMS Holdings Limited I Annual Report 2015 43

Notes to the Financial Statements

31 December 2015

2 Basis of Preparation (cont’d)

New/Revised FRS which are not yet effective (cont’d)

The Group is of the view that the amendment will not have any impact on the financial performance of the Group or the financial
positions of the Group and of the Company on initial application.

Amendment to FRS 7 Statement of Cash Flows

The amendments require new disclosure about changes in liabilities arising from financing activities in respect of:

• changes from financing cash flows;

• changes arising from obtaining or losing control of subsidiaries or other businesses;
• the effect of changes in foreign exchange rates;
• changes in fair values; and
• other changes.

The above disclosure also applies to changes in financial assets if cash flows from those financial assets are included in cash
flows from financing activities.

The amendments are effective for annual periods beginning on or after 1 January 2017, with early application is permitted.
Comparative information for earlier periods is not required.

The Group is of the view that the amendment will not have any impact on the financial performance of the Group or the financial
positions of the Group and of the Company on initial application.

Amendments to FRS 12 Income taxes – Recognition of deferred tax assets for unrealised losses

The amendments clarify the application of FRS 12 to unrealised losses on debt investments, and the assessment of future taxable
profits against which deferred tax assets can be recognised. Specifically:

• Deductible temporary differences will result from unrealised losses on debt investments measured at fair value in
financial statements, but measured at cost for tax purposes. This is regardless of how the entity intends to realise the
investment.
• Estimates of future taxable profits used to assess recoverability of deferred tax assets resulting from deductible temporary
differences:

– includes profits on the recovery of assets for more than their carrying amount if such recovery is probable;
– includes only income types against which those temporary differences qualify to be deducted under tax legislation;
and
– excludes tax deductions resulting from the reversal of those temporary differences.

Amendments to FRS 12 is effective for annual periods beginning on or after 1 January 2017, with early application permitted.

The Group is of the view that the amendment will not have any impact on the financial performance of the Group or the financial
positions of the Group and of the Company on initial application.
44 UMS Holdings Limited I Annual Report 2015

Notes to the Financial Statements

31 December 2015

2 Basis of Preparation (cont’d)

New/Revised FRS which are not yet effective (cont’d)

FRS 109 Financial Instruments

FRS 109 prescribes the accounting requirements for financial instruments and replaces the existing guidance in FRS 39 Financial
Instruments: Recognition and Measurement. FRS 109 prescribes a new classification and measurement framework for financial
instruments, requires financial assets to be impaired based on a new expected credit loss model, changes the hedge accounting
requirements, and carries forward the recognition and de-recognition requirements for financial instruments from FRS 39.

FRS 109 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted.

The Group is in the process of assessing the potential impact that will result from the application of FRS 109.

FRS 115 Revenue from Contracts with Customers

FRS 115 Revenue from Contracts with Customers sets out the requirements for recognising revenue that apply to all contracts
with customers (except for contracts that are within the scope of the standards on leases, insurance contracts and financial
instruments). FRS 115 replaces the previous revenue standards, FRS 18 Revenue and FRS 11 Construction Contracts, and
the related interpretations on revenue recognition, INT FRS 115 Agreements for the Construction of Real Estate, INT FRS 118
Transfers of Assets from Customers, and INT FRS 31 Revenue – Barter Transactions Involving Advertising Services.

FRS 115 establishes a five-step model that will apply to revenue arising from contracts with customers. Under FRS 115, revenue
is recognised at an amount that reflects the consideration which an entity expects to be entitled in exchange for transferring
goods or services to a customer. The principles in FRS 115 provide a more structured approach to measuring and recognising
revenue when the promised goods and services are transferred to the customer i.e. when performance obligations are satisfied.
Key issues for the Group include identifying performance obligations, accounting for contract modifications, applying the
constraint to variable consideration, evaluating significant financing components, measuring progress toward satisfaction of a
performance obligation, recognising contract cost assets and addressing disclosure requirements.

Either a full or modified retrospective application is required for annual periods beginning on or after 1 January 2018 with early
adoption permitted. The Group is currently assessing the impact of FRS 115 and plans to adopt the new standard on the required
effective date.

3 Summary of Significant Accounting Policies

(a) Basis of Consolidation

Subsidiaries

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity
when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to
affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control
is transferred to the Group. They are deconsolidated from the date that control ceases.

The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control listed above.
 UMS Holdings Limited I Annual Report 2015 45

Notes to the Financial Statements

31 December 2015

3 Summary of Significant Accounting Policies (cont’d)

(a) Basis of Consolidation (cont’d)

Subsidiaries (cont’d)

When the Company has less than a majority of the voting rights of an investee, it has power over the investee when the
voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The
Company considers all relevant facts and circumstances in assessing whether or not the Company’s voting rights in an
investee are sufficient to give power, including:

• the size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote
holders;
• potential voting rights held by the Company, other vote holders or other parties;
• rights arising from other contractual agreements; and
• any additional facts and circumstances that indicate that the Company has, or does not have, the current ability
to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous
shareholders’ meetings.

The Group applies the acquisition method to account for business combinations. The consideration transferred for the
acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the
acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or
liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group
recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the
non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets.

Acquisition-related costs are expensed as incurred.

If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held
equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such
re-measurement are recognised in profit or loss.

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in
accordance with FRS 39 Financial Instruments either in profit or loss or as a change to other comprehensive income.
Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for
within equity.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the
acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net
assets acquired is recorded as goodwill. If the total of consideration transferred, non-controlling interest recognised and
previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a
bargain purchase, the difference is recognised directly in profit or loss.

Inter-company transactions, balances and unrealised gains on transactions between the group companies are eliminated.
Unrealised losses are also eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform
with the Group’s accounting policies.
46 UMS Holdings Limited I Annual Report 2015

Notes to the Financial Statements

31 December 2015

3 Summary of Significant Accounting Policies (cont’d)

(a) Basis of Consolidation (cont’d)

Change in ownership interests in subsidiaries without change of control

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions
– that is, as transactions with the owners in their capacity as owners. The difference between fair value of any
consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in
equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

Disposal of subsidiaries

When the Group ceases to have control, any retained interest in the entity is re-measured to its fair value at the date
when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying
amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial
asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are
accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts
previously recognised in other comprehensive income are reclassified to profit or loss.

(b) Goodwill on Consolidation

Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of the business
combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities.
Following initial recognition, goodwill is measured at cost less accumulated impairment losses. Goodwill is reviewed for
impairment annually or more frequently if events or changes in circumstances indicate that the carrying amount may be
impaired.

For the purpose of impairment testing, goodwill acquired is allocated to each of the Group’s cash-generating units that
are expected to benefit from the synergies of the combination. The cash-generating unit (“CGU”) to which goodwill has
been allocated is tested for impairment annually and whenever there is an indication that the CGU may be impaired, by
comparing the carrying amount of the CGU, including the allocated goodwill, with the recoverable amount of the CGU.
Where the recoverable amount of the CGU is less than the carrying amount, an impairment loss is recognised in profit or
loss. Impairment losses recognised for goodwill are not reversed in subsequent years.

When goodwill forms part of a CGU and part of the operation within that CGU is disposed of, the goodwill associated
with the operation disposed of, is included in the carrying amount of the operation when determining the gain or loss on
disposal of the operation. In this circumstance, goodwill disposed of is measured based on the relative fair values of the
operations disposed of, and the portion of the CGU retained.

(c) Investments in Subsidiaries

In the Company’s separate financial statements, the investments in subsidiaries are stated at cost less any impairment
losses. An assessment of the investments in subsidiaries is performed when there is an indication that the investments
may have been impaired.

On disposal of the investments in subsidiaries, the difference between the net disposal proceeds and the carrying amount
of the investments is recognised in the profit or loss.
 UMS Holdings Limited I Annual Report 2015 47

Notes to the Financial Statements

31 December 2015

3 Summary of Significant Accounting Policies (cont’d)

(d) Property, Plant and Equipment

Measurement

Property, plant and equipment are stated at cost less accumulated depreciation and any impairment losses.

Capital work-in-progress is stated at cost less any accumulated impairment losses, if any, and cost incurred during the
period of construction. No depreciation is provided on capital work-in-progress and upon completion of the construction,
the costs will be transferred to property, plant and equipment.

Depreciation

Depreciation is calculated on a straight-line method to write off the cost of the property, plant and equipment over their
estimated useful lives. The estimated useful lives are as follows:

Freehold buildings – 50 years

Leasehold properties – 60 years
Plant and equipment – 3 to 10 years

Freehold land has an unlimited useful life and therefore is not depreciated.

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or,
where shorter, the term of the relevant leases.

The carrying amounts of property, plant and equipment are reviewed for impairment when events or changes in
circumstances indicate that the carrying amount may not be recoverable.

The estimated residual values, useful lives and depreciation method are reviewed annually, with the effect of any changes
in estimate accounted for on a prospective basis. This ensures that the method and period of depreciation are consistent
with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the item
of property, plant and equipment.

Subsequent expenditure

Subsequent expenditure relating to property, plant and equipment that has already been recognised, is added to the
carrying amount of the asset when it is probable that future economic benefits, in excess of the standard performance
of the asset before the expenditure was made, will flow to the Group and the cost of the item can be reliably measured.
Other subsequent expenditure is recognised as an expense during the year in which it is incurred.

Disposal

Property, plant and equipment are derecognised upon disposal or when no future economic benefits are expected from
its use or disposal. The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is
determined as the difference between the sales proceeds (if any) and the carrying amount of the asset, and is recognised
in profit or loss.
48 UMS Holdings Limited I Annual Report 2015

Notes to the Financial Statements

31 December 2015

3 Summary of Significant Accounting Policies (cont’d)

(e) Investment Property

Investment property comprises significant portions of leasehold property that is held for long-term rental yields and/or for
capital appreciation.

Investment property is measured initially at cost, including transaction costs, and subsequently carried at cost less
accumulated depreciation and any impairment loss. The carrying amount includes the cost of replacing part of an existing
investment property at the time that cost is incurred if the recognition criteria are met; and excludes the costs of day-to-
day servicing of an investment property.

Depreciation is calculated on a straight-line basis over a period of 30 years.

The residual values, useful lives and depreciation method of the investment property are reviewed, and adjusted as
appropriate, at each balance sheet date. The effects of any revision are included in profit or loss when the changes arise.

Investment property is derecognised when either they have been disposed of or when the investment property is
permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gain or loss on the
retirement or disposal of an investment property is recognised in profit or loss in the year of retirement or disposal.

When the cost model is applied, the fair value of the investment property is disclosed at each reporting date.

(f) Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and deposits with financial institutions that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of changes in value. For the purpose of presentation
in the consolidated statement of cash flows, cash and cash equivalents consist of cash and cash equivalents (as defined
above) less restricted deposit balances that are pledged to secure banking facilities.

(g) Inventories

Inventories are measured at the lower of cost and net realisable value. Cost is determined on the weighted average
method. The cost of finished goods and work-in-progress comprises raw materials, direct labour, other direct costs and
related production overheads (based on normal operating capacity) but excludes borrowing costs. Net realisable value
represents the estimated selling price in the ordinary course of business less all estimated costs of completion and costs
necessary to make the sale.

(h) Impairment of Non-financial Assets Excluding Goodwill

Non-financial assets excluding goodwill are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. If such indication exists, the recoverable amount
(i.e. the higher of the fair value less cost to sell and 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,
the recoverable amount is determined for the cash-generating unit (“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 profit or loss unless the
asset is carried at revalued amount. In this case, such impairment loss of a revalued asset is treated as a revaluation
decrease.
 UMS Holdings Limited I Annual Report 2015 49

Notes to the Financial Statements

31 December 2015

3 Summary of Significant Accounting Policies (cont’d)

(h) Impairment of Non-financial Assets Excluding Goodwill (cont’d)

An impairment loss for an asset 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 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 an impairment loss for an asset is recognised in profit or loss, unless the asset is carried at revalued
amount, in which case, such reversal is treated as a revaluation increase. However, to the extent that an impairment loss
on the same revalued asset was previously recognised in profit or loss, a reversal of that impairment is also recognised
in profit or loss.

(i) Offsetting Financial Instruments

Financial assets and financial liabilities are offset and net amount reported in the balance sheets, when and only when,
there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net
basis, or to realise the financial assets and settle the financial liabilities simultaneously.

(j) Financial Assets

Classification

The Group classifies its financial assets as loans and receivables. The classification depends on the nature of the asset
and the purpose for which the assets were acquired. Management determines the classification of its financial assets at
initial recognition.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. They are presented as current assets, except for those expected to be realised later than twelve months
after the balance sheet date, which are classified as non-current assets. Loans and receivables are presented as “trade
receivables and other current assets”, and “cash and bank balances” on the balance sheet.

Recognition and derecognition

Regular way 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 disposal of a financial asset, the difference between the net sale proceeds and the carrying amount is
recognised in profit or loss. Any amount in the fair value reserve relating to that asset is reclassified to profit or loss.

Initial measurement

Financial assets are initially recognised at fair value plus transaction costs.

Subsequent measurement

Financial assets are subsequently carried at amortised cost using the effective interest method.

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 and recognises an allowance for impairment when such evidence exists.

Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy, and default or significant
delay in payments are objective evidence that these financial assets are impaired.
50 UMS Holdings Limited I Annual Report 2015

Notes to the Financial Statements

31 December 2015

3 Summary of Significant Accounting Policies (cont’d)

(j) Financial Assets (cont’d)

Impairment (cont’d)

The carrying amount of these assets is reduced through the use of an impairment allowance account which is calculated
as the difference between the carrying amount and the present value of estimated future cash flows, discounted at the
original effective interest rate. When the asset becomes uncollectible, it is written off against the allowance account.
Subsequent recoveries of amounts previously written off are recognised against the same line item in profit or loss.

The allowance for impairment loss account is reduced through profit or loss in a subsequent period when the amount
of impairment loss decreases and the related decrease can be objectively measured. The carrying amount of the asset
previously impaired is increased to the extent that the new carrying amount does not exceed the amortised cost had no
impairment been recognised in prior periods.

(k) Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets
that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of
those assets, until such time as the assets are substantially ready for their intended use or sale.

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

(l) Financial Liabilities

Financial liabilities are initially measured at fair value, plus transaction costs and are subsequently measured at amortised
cost using the effective interest method.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating
interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future
cash payments (including all fees and points paid or received that form an integrated part of the effective interest
rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or, where
appropriate, a shorter period to the net carrying amount on initial recognition.

Borrowings (if any) are presented as current liabilities unless the Group has an unconditional right to defer settlement for
at least 12 months after the reporting period.

The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or
they expired. The difference between the carrying amount of the financial liabilities derecognised and the consideration
paid and payable is recognised in profit or loss.

(m) Provisions

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

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation
at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a
provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present
value of those cash flows.
 UMS Holdings Limited I Annual Report 2015 51

Notes to the Financial Statements

31 December 2015

3 Summary of Significant Accounting Policies (cont’d)

(n) Employee Benefits

Employee benefits are recognised as an expense, unless the cost qualifies to be capitalised as an asset.

Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into
separate entities such as the Central Provident Fund/Employees Provident Fund on a mandatory, contractual or voluntary
basis. The Group has no further payment obligations once the contributions have been paid.

Employee entitlements to annual leave are recognised as a liability when they accrue to the employees. The estimated
liability for leave is recognised for services rendered by employees up to the balance sheet date.

(o) Share Capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares are
deducted against the share capital account.

(p) Dividends to Company’s Shareholders

Dividends to the Company’s shareholders are recognised when the dividends are approved for payment.

(q) Revenue Recognition

Revenue for the Group comprises the fair value of the consideration received or receivable for the sale of goods and
rendering of services in the ordinary course of business, net of goods and services tax, rebates and discounts and after
eliminating intercompany sales within the Group.

The Group recognises revenue when the amount of revenue and related cost can be reliably measured, it is probable that
the collectability of the related receivables is reasonably assured and when the specific criteria for each of the Group’s
activities are met as follows:

(i) Sale of goods

Revenue on the sale of goods is recognised when the significant risks and rewards of ownership of the goods
have been transferred to the customer. Revenue is not recognised to the extent there are significant uncertainties
regarding recovery of the consideration due, associated costs or the possible return of goods.

(ii) Rental income

Rental income from operating leases (net of any incentives given to the lessees) is recognised on a straight line
basis over the lease term as set out in specific rental agreements.

(iii) Interest income

Interest income is recognised on a time proportion basis using the effective interest method.
52 UMS Holdings Limited I Annual Report 2015

Notes to the Financial Statements

31 December 2015

3 Summary of Significant Accounting Policies (cont’d)

(r) Operating Leases

As lessor

Leases of investment property where the Group retains substantially all risks and rewards incidental to ownership
are classified as operating leases. Rental income from operating leases (net of any incentives given to the lessees) is
recognised in profit or loss on a straight-line basis over the lease term.

Contingent rents are recognised as income in profit or loss when incurred.

As lessee

Leases of factory premises where substantially all risks and rewards incidental to ownership are retained by the lessors
are classified as operating leases. Payments made under operating leases (net of any incentives received from the
lessors) are recognised in profit or loss on a straight-line basis over the period of the lease.

Contingent rents are recognised as an expense in profit or loss when incurred.

(s) Income Tax

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

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the
profit or loss because of items of income or expense that are taxable or deductible in other years and items that are
never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or
substantively enacted by the end of the reporting period.

Deferred tax

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally
recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available
against which those deductible temporary differences can be utilised.

Such deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill or from the
initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither
the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries,
except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future.

Deferred tax assets arising from deductible temporary differences associated with such investments and interests are
only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the
benefits of the temporary differences and they are expected to reverse in the foreseeable future.
 UMS Holdings Limited I Annual Report 2015 53

Notes to the Financial Statements

31 December 2015

3 Summary of Significant Accounting Policies (cont’d)

(s) Income Tax (cont’d)

Deferred tax (cont’d)

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

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

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner
in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its tax assets
and liabilities.

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

The Group recognises a previously unrecognised deferred tax asset to the extent that it has become probable that future
taxable profit will allow the deferred tax asset to be recovered.

Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at the
date, would be recognised subsequently if new information about facts and circumstances changed. The adjustment
would either be treated as a reduction to goodwill (as long as it does not exceed goodwill) if it is incurred during the
measurement period or in profit or loss.

Current and deferred tax for the year

Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items that
are recognised outside profit or loss (whether in other comprehensive income or directly in equity), in which case the tax
is also recognised outside profit or loss, or where they arise from the initial accounting for a business combination. In the
case of a business combination, the tax effect is taken into account in the accounting for the business combination.

(t) Foreign Currencies

Functional and presentation currency

The individual financial statements of each Group entity are presented in the currency of the primary economic
environment in which the entity operates (its functional currency). For the purpose of the consolidated financial
statements, the results and financial position of each Group entity are expressed in Singapore Dollar (“S$”), which is the
functional currency of the Company and the presentation currency for the consolidated financial statements.

Transactions and balances

In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional
currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions.

At the balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing at
that date.
54 UMS Holdings Limited I Annual Report 2015

Notes to the Financial Statements

31 December 2015

3 Summary of Significant Accounting Policies (cont’d)

(t) Foreign Currencies (cont’d)

Transactions and balances (cont’d)

Currency translation differences 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 sheet date are recognised in
profit or loss, unless they arise from borrowings in foreign currencies and other currency instruments designated and
qualifying as net investment hedges and net investment in foreign operations.

Those currency translation differences are recognised in the foreign currency translation reserve in the consolidated
financial statements and transferred to profit or loss as part of the gain or loss on disposal of the foreign operation.

Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates
prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical
cost in a foreign currency are not retranslated.

Translation of Group entities’ financial statements

The results and financial position of each group entity that has a functional currency different from the presentation
currency is translated into the presentation currency as follows:

– Assets and liabilities are translated at the closing exchange rate at the balance sheet date;

– Income and expenses are translated at average exchange rates (unless this 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 transactions); and

– All resulting exchange differences are recognised in other comprehensive income and accumulated in the foreign
currency translation reserve.

On the disposal of a foreign operation (i.e. a disposal of the Group’s entire interest in a foreign operation, or a disposal
involving loss of control over a subsidiary that includes a foreign operation), all of the accumulated exchange differences
in respect of that operation attributable to the Group are reclassified to profit or loss.

In the case of a partial disposal (i.e. no loss of control) of a subsidiary that includes a foreign operation, the proportionate
share of accumulated exchange differences are re-attributed to non-controlling interests and are not recognised in profit
or loss.

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities
of the foreign operation and translated at the closing rate at the balance sheet date. Exchange differences arising are
recognised in other comprehensive income.
 UMS Holdings Limited I Annual Report 2015 55

Notes to the Financial Statements

31 December 2015

3 Summary of Significant Accounting Policies (cont’d)

(u) Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the executive personnel
whose members are responsible for allocating resources and assessing performance of the operating segments.

(v) Related Parties

A related party is defined as follows:

A related party is a person or entity that is related to the entity that is preparing its financial statements (referred to as
the “reporting entity”).

a. A person or a close member of that person’s family is related to a reporting entity if that person:

i. has control or joint control over the reporting entity;

ii. has significant influence over the reporting entity; or

iii. is a member of the key management personnel of the reporting entity or of a parent of the reporting entity.

b. An entity is related to a reporting entity if any of the following conditions applies:

i. the entity and the reporting entity are members of the same group (which means that each parent,
subsidiary and fellow subsidiary is related to the others);

ii. one entity is an associate or joint venture of the other entity (or an associate or joint venture of a member
of a group of which the other entity is a member);

iii. both entities are joint ventures of the same third party;

iv. one entity is a joint venture of a third entity and the other entity is an associate of the third entity;

v. the entity is a post-employment benefit plan for the benefit of employees of either the reporting entity
or an entity related to the reporting entity. If the reporting entity is itself such a plan, the sponsoring
employers are also related to the reporting entity;

vi. the entity is controlled or jointly controlled by a person identified in (a); or

vii. a person identified in (a) (i) has significant influence over the entity or is a member of the key management
personnel of the entity (or of a parent of the entity).
56 UMS Holdings Limited I Annual Report 2015

Notes to the Financial Statements

31 December 2015

4 Critical Accounting Estimates and Judgements

In the application of the Group’s accounting policies, which are described in Note 3, management are required to make
judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent
from other sources. The estimates and associated assumptions are based on historical experience and other factors that are
considered to be relevant. Actual results may differ from these estimates.

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

(a) Key Sources of Estimation Uncertainty

The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the
balance sheet date that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year.

Useful lives of property, plant and equipment and investment property

The Group determines the estimated useful lives and related depreciation charges for its property, plant and equipment,
and investment property. This estimate is based on the historical experience of the actual useful lives of property, plant
and equipment, and investment property of a similar nature and function. It could change significantly as a result of
technical innovations and competitor actions. Management will increase the depreciation charge where the useful lives
are less than previously estimated, or it will write-off or write-down technically obsolete assets that have been abandoned
or sold.

There is no change in the estimated useful lives of property, plant and equipment and investment property during the
financial year. The carrying amounts of property, plant and equipment (excluding capital work-in-progress) and investment
property of the Group as at 31 December 2015 amounted to S$34,807,000 (2014: S$37,388,000) and S$2,411,000
(2014: S$2,629,000) respectively. A 5% difference in the expected useful lives of these assets from management’s
estimates would result in an approximate 0.8% (2014: 1.2%) change in the Group’s net profit for the year. Further details
are given in Notes 17 and 18.

Impairment of goodwill

The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value
in use of the cash-generating unit to which goodwill has been allocated. Estimating the value in use requires the Group
to make an estimate of the expected future cash flows from the cash-generating unit and also to choose a suitable
discount rate in order to calculate the present value of those cash flows. The carrying amount of the Group’s goodwill as
at 31 December 2015 was S$81,683,000 (2014: S$81,683,000). Further details are given in Note 19.

Provision for dismantling and restoration

The Group has recognised a provision for dismantling and removing the items and restoring the existing factory to its
original condition. In determining the amount of the provision, assumption and estimates are made in relation to the
discount rate, expected cost to dismantle and remove all plant from the factory site and expected timing of those costs.

The carrying amount of the provision as at 31 December 2015 was S$443,000 (2014: S$453,000) (Note 21). If the
estimated pre-tax discount rate used in the calculation had been 1% higher than the management estimates, the carrying
amount of the provision would have been S$4,000 (2014: S$5,000) higher.
 UMS Holdings Limited I Annual Report 2015 57

Notes to the Financial Statements

31 December 2015

4 Critical Accounting Estimates and Judgements (cont’d)

(b) Critical Judgements in applying Accounting Policies

In the process of applying the Group’s accounting policies, the application of judgements that are expected to have a
significant effect on the amounts recognised in the financial statements are discussed below.

Impairment of trade and other receivables

The Group assesses at each balance sheet date whether there is any objective evidence that a financial asset is impaired.
Allowances are applied where events or changes in circumstances indicate that the balances may not be collectible. To
determine whether there is objective evidence of impairment, the Group considers factors such as the probability of
insolvency, current economic trends and default or significant delay in payments. Where the expectation is different from
the original estimate, such difference will impact the total carrying amounts of trade and other receivables of the Group
and the Company as at 31 December 2015 amounting to S$12,051,000 (2014: S$12,020,000) and S$4,212,000 (2014:
S$3,725,000) (Note 14) respectively.

During the financial year ended 31 December 2015, the Group recognized a reversal of allowance for impairment on trade
receivables amounting to S$36,000 (2014: allowance for impairment of S$33,000) (Note 8). Certain trade receivables
which were assessed to be non-recoverable by the management were written off during the financial year (See Note 8
and Note 14 for further details).

The Group’s allowance for impairment of trade and other receivables as at 31 December 2015 amounted to S$308,000
(2014: S$152,000) (Note 14).

Allowance for inventories obsolescence

Reviews are made periodically by management on inventories for excess inventories, obsolescence and decline in net
realisable value below cost. Allowances are recorded against the inventories for any such declines based on historical
obsolescence and slow-moving experiences.

During the financial year ended 31 December 2015, the Group recognised a net reversal for allowance for inventory
obsolescence of S$375,000 (2014: a net allowance for inventory obsolescence of S$26,000) (Note 8). In addition,
inventory amounting to S$438,000 (2014: Nil) were written off during the financial year ended 31 December 2015.

5 Revenue

Group
2015 2014
S$’000 S$’000

Sale of goods 109,575 108,341

Rental income 1,515 1,478
111,090 109,819
58 UMS Holdings Limited I Annual Report 2015

Notes to the Financial Statements

31 December 2015

6 Employee Benefits Expense

Group
2015 2014
S$’000 S$’000

Salaries and wages (9,737) (9,268)

Expenses on executive bonus plan to
key management personnel (2,350) (1,627)
Contributions to defined contribution plans (1,430) (1,327)
(13,517) (12,222)

7 Other Expenses

Group
2015 2014
S$’000 S$’000

The major components include the following:

Utilities (2,955) (3,837)
Rental expense of premises - operating leases (1,414) (1,403)
Upkeep of machinery (2,622) (2,544)
Freight charges (532) (614)
Other rental expenses (142) (151)
Legal and professional fees (1,245) (1,225)
Auditor’s remuneration
- Company’s auditors (202) (202)
- Other auditors (9) (9)
Upkeep of properties (736) (210)
Insurance (534) (502)
Property tax (291) (286)
Others (1,156) (1,277)
(11,838) (12,260)

There were no non-audit fees paid/payable to the Company’s auditors during the financial years ended 31 December 2015 and
2014.
 UMS Holdings Limited I Annual Report 2015 59

Notes to the Financial Statements

31 December 2015

8 Other Credits/(Charges)

Group
2015 2014
S$’000 S$’000

Property, plant and equipment written off (213) (276)

Allowance for doubtful debts (non-trade) (308) –
Bad debts written off - trade – (9)
Write back/(allowance) for doubtful debts (trade) 36 (33)
Allowance for inventories obsolescence (642) (26)
Reversal of allowance for inventories obsolescence 1,017 –
Foreign exchange gains - net 2,893 533
Inventories written off (438) –
Gain on disposal of property, plant and equipment 20 40
Others 144 78
2,509 307

9 Finance Income

Group
2015 2014
S$’000 S$’000

Interest income from cash and cash equivalents 118 63

Finance income
- Unwinding discount on long-term provision (Note 21) 10 11
128 74

10 Finance Expense

Group
2015 2014
S$’000 S$’000

Interest expense - bank borrowings – (18)

60 UMS Holdings Limited I Annual Report 2015

Notes to the Financial Statements

31 December 2015

11 Income Tax

Group
2015 2014
S$’000 S$’000
Current income tax:
- current year 3,214 3,043
- (over)/under provision in respect of prior years (383) 39
Deferred taxation
- current year (365) (307)
2,466 2,775

A reconciliation of the applicable tax rate to the Group’s effective tax rate applicable to profit before income tax for the financial
year is as follows:

Group
2015 2014
S$’000 S$’000

Profit before income tax 36,765 27,704

Tax at the applicable tax rate of 17% (2014: 17%) 6,250 4,710
Tax effect of non-deductible items* 1,379 637
Income not subject to taxation* (1,356) (230)
(Over)/under provision of income tax in respect of prior years (383) 39
Tax exemption (5,209) (3,487)
Singapore statutory stepped exemption (206) (224)
Effect of different tax rates operating in other jurisdictions 1,991 1,334
Effect of deferred tax benefit previously not recognised – (4)
2,466 2,775

*  ainly relates to expenses of/income derived by those entities of the Group, whose principal activities are those of investment holding
M
that do not qualify for deduction/are not taxable as they are capital in nature, in accordance with the relevant tax regulation.

The applicable tax rate used for the reconciliations above is the corporate tax rate of 17% (2014: 17%) payable by corporate
entities in Singapore on taxable profits under tax law in that jurisdiction.

The tax exemption relates to a subsidiary in Malaysia which has been granted pioneer status by the Inland Revenue Board of
Malaysia for a period of five years with an option to apply for another five-year extension. During this period, all trading income
of the subsidiary is exempt for income tax purposes.

The Malaysian statutory tax rate will be reduced to 24% from the current year’s tax rate of 25%, which is effective from the year
of assessment 2016, which is the financial year ending 31 December 2016.
 UMS Holdings Limited I Annual Report 2015 61

Notes to the Financial Statements

31 December 2015

11 Income Tax (cont’d)

The deferred tax assets and liabilities as at the balance sheet date are as follows:

(Credited)/
Debited
At the beginning to income At the end
of the year statement of the year
S$’000 S$’000 S$’000

Group
2015
Deferred tax liabilities:
Excess of net book value of
property, plant and equipment 1,344 (360) 984
Total deferred tax liabilities 1,344 (360) 984

Deferred tax assets:

Provisions (7) (5) (12)
Total deferred tax assets (7) (5) (12)

Net deferred tax liabilities 1,337 (365) 972

2014
Deferred tax liabilities:
Excess of net book value of
property, plant and equipment 1,653 (309) 1,344
Total deferred tax liabilities 1,653 (309) 1,344

Deferred tax assets:

Provisions (9) 2 (7)
Total deferred tax assets (9) 2 (7)

Net deferred tax liabilities 1,644 (307) 1,337

As at 31 December 2015, a subsidiary has unutilised tax losses of approximately S$47,000 (2014: S$47,000) available for offset
against future taxable income, subject to agreement with the tax authorities on the relevant tax regulations. The tax losses have
no expiry date. The deferred tax assets arising from these unutilised tax losses totalling approximately S$8,000 (2014: S$8,000)
have not been recognised in accordance with the accounting policy in Note 3(s).

As at 31 December 2015, no deferred tax liability (2014: Nil) has been recognised for taxes that would be payable on the
undistributed earnings of the Group’s overseas subsidiaries as:

– No withholding tax is imposed on dividends from Malaysia subsidiaries due to the double tax agreement between
Malaysia and Singapore.

– The USA subsidiary has minimal undistributed earnings, thus the Group does not foresee any distribution of earnings.
62 UMS Holdings Limited I Annual Report 2015

Notes to the Financial Statements

31 December 2015

12 Earnings Per Share

The earnings per share is calculated by dividing the Group’s net profit for the year attributable to the owners of the Company by
the weighted average number of ordinary shares outstanding in issue during the financial year:

Group
2015 2014

Net profit for the year (S$’000) 34,299 24,929

Number of ordinary shares:

Weighted average number of ordinary shares for the
purpose of computation of basic and diluted earnings
per share 429,143,947 429,143,947

Basic earnings per share (Singapore cents) 7.99 5.81

Diluted earnings per share (Singapore cents) 7.99 5.81

Diluted earnings per share is the same as basic earnings per share as there were no dilutive potential ordinary shares
outstanding as at 31 December 2015 and 2014.

13 Cash and Bank Balances

Group Company
2015 2014 2015 2014
S$’000 S$’000 S$’000 S$’000

Cash on hand and at banks, and short-term

bank deposit (i) 36,097 33,543 223 357
Fixed deposit – restricted in use (ii) – 249 – –
Fixed deposit (i) 2,836 – – –
38,933 33,792 223 357

(i) The rate of interest for the interest earning bank accounts and the fixed deposit is between Nil and 3.6% (2014: Nil and
3.35%) per annum.

(ii) The fixed deposit was pledged as security for the banking facility granted to a subsidiary and earned interest at a rate of
3.20% per annum in the prior financial year.
 UMS Holdings Limited I Annual Report 2015 63

Notes to the Financial Statements

31 December 2015

14 Trade Receivables and Other Current Assets

Group Company
2015 2014 2015 2014
S$’000 S$’000 S$’000 S$’000

Trade receivables:
Third parties 10,326 10,646 – –
Less: Allowance for impairment losses – (152) – –
10,326 10,494 – –

Other receivables and deposits:

Subsidiaries – – 4,205 3,410
Third parties 1,123 914 7 7
Related party 298 6 – –
Deposits 612 606 308 308
Less: Allowance for impairment losses (308) – (308) –
1,725 1,526 4,212 3,725

Prepayments 369 830 14 15

Trade receivables and other current assets 12,420 12,850 4,226 3,740

Movements in the allowance for impairment

of trade and other receivables are as follows:
Balance at the beginning of the year 152 126 – –
(Write back)/allowance during the year (36) 33 308 –
Effect of foreign exchange (30) (7) – –
Bad debts written off (86) – – –
Balance at the end of the year – 152 308 –

The average credit period generally granted for trade receivables is between 30 to 90 days (2014: 30 to 90 days).

Trade receivables which were impaired as at 31 December 2014 relate to debtors that were in significant financial difficulties
and have defaulted in payments. These trade receivables were not secured by any collateral.

The Group’s trade receivables due from third parties include outstanding receivables which amounted to approximately S$6.7
million (2014: S$7.3 million) from a key customer which accounted for approximately 86% (2014: 84%) of the Group’s total
revenue for the current financial year. Management have considered these facts and have assessed that the Group’s exposure to
this key customer would not have an impact on the Group’s financial performance and its ability to continue as a going concern
in the foreseeable future.

The non-trade receivables from subsidiaries and a related party, which are generally due on 30 to 60 days’ terms, are unsecured,
interest-free and repayable in cash.
64 UMS Holdings Limited I Annual Report 2015

Notes to the Financial Statements

31 December 2015

15 Inventories

Group
2015 2014
S$’000 S$’000

Lower of cost and net realisable values:

Finished goods and goods for resale 6,278 4,987
Work-in-progress 20,208 18,990
Raw materials 10,875 9,350
37,361 33,327

Cost of inventories sold recognised as cost of sales

in the consolidated income statement 44,182 50,255

16 Investments in Subsidiaries

Company
2015 2014
S$’000 S$’000

Unquoted equity shares, at cost 216,213 216,213

Less: Allowance for impairment loss (23,798) (23,798)
192,415 192,415

Movements in the allowance for impairment loss of investments in subsidiaries:

Balance at the beginning and the end of the year 23,798 23,798

The subsidiaries held by the Company and its subsidiaries as at the balance sheet date are listed below:

Effective percentage
of equity Company’s
Name of subsidiaries, held by Group cost of investment
place of business and 2015 2014 2015 2014
incorporation Principal activities % % S$’000 S$’000

Held by the Company

UMS Systems Pte Ltd Assembly and integration of 100 100 9,561 9,561
(Singapore) equipment and automated
assembly lines

UMS International Pte Ltd Investment holding 100 100 800 800
(Singapore)

UMS Pte Ltd Investment holding and precision 100 100 127,081 127,081
(Singapore) machining of medical and wafer
fabrication equipment parts
manufacturers and providing
electroplating and anodising
services
 UMS Holdings Limited I Annual Report 2015 65

Notes to the Financial Statements

31 December 2015

16 Investments in Subsidiaries (cont’d)

Effective percentage
of equity Company’s
Name of subsidiaries, held by Group cost of investment
place of business and 2015 2014 2015 2014
incorporation Principal activities % % S$’000 S$’000

Held by the Company (cont’d)

UMS Aerospace Pte Ltd Precision machining of machine 100 100 20,000 20,000
(Singapore) parts for oilfield precision
component manufacturers and
other industries

Integrated Manufacturing Stainless steel gaslines and 100 100 19,803 19,803
Technologies Pte Ltd weldment manufacturing and
(Singapore) assembly

Integrated Manufacturing Stainless steel gaslines and 100 100 8,196 8,196
Technologies Inc weldment manufacturing and
(United States) 1 assembly

Ultimate Machining Manufacture of precision 100 100 30,772 30,772

Solutions (M) Sdn. Bhd. machining components, assembly
(Malaysia) 2 and integration of equipment and
automated assembly lines
216,213 216,213

Held through UMS International Pte Ltd

Ultimate Manufacturing Manufacture of precision 100 100

Solutions (M) Sdn. Bhd. machining components, assembly
(Malaysia) 2 and integration of equipment and
automated assembly lines

Held through UMS Pte Ltd

UMS Solutions Pte Ltd Holder of investment property 100 100

(Singapore)

All the above subsidiaries are audited by Moore Stephens LLP, Singapore except the followings:

1
Statutory audit is not required in the country of incorporation but audited by Moore Stephens LLP for consolidation purposes.

2 
Audited by Moore Stephens Associates & Co, Malaysia, a member firm of Moore Stephens International Limited, of which Moore
Stephens LLP, Singapore is also a member.
66 UMS Holdings Limited I Annual Report 2015

Notes to the Financial Statements

31 December 2015

17 Property, Plant and Equipment

Capital
Freehold Freehold Work-in- Leasehold Plant and
land buildings progress property equipment Total
S$’000 S$’000 S$’000 S$’000 S$’000 S$’000

Group
2015
Cost
At the beginning of the year 3,262 13,622 4,337 7,082 127,266 155,569
Effect of foreign currency exchange
differences (417) (2,278) – – (3,795) (6,490)
Additions – 118 – – 4,360 4,478
Reclassification – 4,337 (4,337) – – –
Disposals/Write-off – – – – (2,261) (2,261)
At the end of the year 2,845 15,799 – 7,082 125,570 151,296

Accumulated depreciation
At the beginning of the year – 1,418 – 1,673 110,753 113,844
Effect of foreign currency exchange
differences – (173) – – (2,341) (2,514)
Depreciation for the year – 253 – 126 6,828 7,207
Disposals/Write-off – – – – (2,048) (2,048)
At the end of the year – 1,498 – 1,799 113,192 116,489

Net book value

At the end of the year 2,845 14,301 – 5,283 12,378 34,807

2014
Cost
At the beginning of the year 3,322 14,166 4,309 7,082 121,588 150,467
Effect of foreign currency exchange
differences (60) (244) (80) – (523) (907)
Additions – – 108 – 6,581 6,689
Disposals/Write-off – (300) – – (380) (680)
At the end of the year 3,262 13,622 4,337 7,082 127,266 155,569

Accumulated depreciation
At the beginning of the year – 1,187 – 1,547 104,314 107,048
Effect of foreign currency exchange
differences – (23) – – (299) (322)
Depreciation for the year – 280 – 126 7,116 7,522
Disposals/Write-off – (26) – – (378) (404)
At the end of the year – 1,418 – 1,673 110,753 113,844

Net book value

At the end of the year 3,262 12,204 4,337 5,409 16,513 41,725
 UMS Holdings Limited I Annual Report 2015 67

Notes to the Financial Statements

31 December 2015

18 Investment Property

Group
2015 2014
S$’000 S$’000

Cost
At the beginning and the end of the year 4,877 4,877

Accumulated depreciation
At the beginning of the year 2,248 2,029
Depreciation for the year 218 219
At the end of the year 2,466 2,248

Net book value

At the end of the year 2,411 2,629

Investment property relates to the leasehold property held by a subsidiary under an operating lease to earn rental income. Rental
income and direct operating expenses related to the investment property amounted to S$1,506,449 (2014: S$1,458,938) and
S$532,197 (2014: S$521,461) respectively, for the year ended 31 December 2015.

The estimated fair value of the leasehold property amounted to S$12,000,000 (2014: S$12,000,000), classified under Level 2 of
the fair value hierarchy (as defined in Note 29(b)(i)), as determined on the basis of management’s review of similar properties in
the market as at 31 December 2015. The key input applied in the estimation of the investment property is unit price per square
foot. There has been no change to the valuation technique during the year.

Details of the Group’s investment property and information about the fair value hierarchy as at 31 December 2015 and 2014 are
as follows:

Level 1 Level 2 Level 3 Total

S$’000 S$’000 S$’000 S$’000

2015
Leasehold property – 12,000 – 12,000

2014
Leasehold property – 12,000 – 12,000

19 Goodwill

Group
2015 2014
S$’000 S$’000

At the beginning and the end of the year 81,683 81,683

68 UMS Holdings Limited I Annual Report 2015

Notes to the Financial Statements

31 December 2015

19 Goodwill (cont’d)

The goodwill was assessed for impairment as at the balance sheet date. The recoverable amount of a CGU is determined based
on value in use calculations. The key assumptions for the value in use calculations are as follows:

2015 2014

1. Estimated discount rates using pre-tax rates that

reflect current market assessments of the risks
specific to the CGUs 7.14% 7.71%
2. Growth rates used to calculate the terminal value
based on industry growth forecasts – –
3. Cash flow forecasts derived from the most recent
financial budgets approved by management 5 years 5 years
4. Gross margin 54% 55%

These assumptions were used for the analysis of the CGU. Management recognises the speed of technological change and the
possibility of new entrants that can have a significant impact on the growth rate assumptions. The effect of new entrants is not
expected to have a significant adverse impact on the forecasts included in the budget. The budgeted gross margin is based on
past performance and expectations of market development.

Based on management’s assessment of the recoverable amount of the CGU, no impairment on goodwill was required as at 31
December 2015 (2014: Nil).

Sensitivity analysis

Management considered the possibility of an increase or decrease in the estimated growth rate and increase in the discount
rate used. A 5% increase in the estimated discount rate used would not result in a recoverable amount lower than the carrying
amount of goodwill in this CGU.

20 Trade and Other Payables

Group Company
2015 2014 2015 2014
S$’000 S$’000 S$’000 S$’000

Trade payables:
Third parties 3,888 5,421 – –

Other payables:
Subsidiaries – – 5,250 4,867
Third parties 620 587 264 238
Accrued operating expenses 4,735 4,408 2,467 1,938
Deposits received 517 645 – –
5,872 5,640 7,981 7,043

Trade and other payables 9,760 11,061 7,981 7,043

The average credit period generally taken to settle trade payables is approximately 60 days (2014: 60 days).

The amounts payable to subsidiaries are non-trade, unsecured, interest-free and repayable on demand.
 UMS Holdings Limited I Annual Report 2015 69

Notes to the Financial Statements

31 December 2015

21 Long-Term Provision

Group
2015 2014
S$’000 S$’000

Provision for dismantling and removing the item and restoring the site relating to
leasehold and investment properties 443 453

Balance at the beginning of the year 453 464

Less: Unwinding discount of estimated liability (10) (11)
Balance at the end of the year 443 453

The Group makes full provision for the future cost of dismantling and removing the items and restoring the site relating to
leasehold and investment properties on a discounted basis. The long-term provision represents the present value of the
restoration costs relating to the two factory premises held by the Group.

As per the lease agreement, the Group is required to bear the cost of dismantling and removing the items and restoring the
factory premises to its original state at the end of the lease period in year 2027 for 23 Changi North Crescent and 2033 for 25
Changi North Crescent.

22 Share Capital

2015 2014
No. of No. of
ordinary shares S$’000 ordinary shares S$’000

Group and Company

Issued and fully paid:
At the beginning of the year 429,143,947 136,623 343,754,327 136,623
Issuance of bonus shares – – 85,389,620 –
At the end of the year 429,143,947 136,623 429,143,947 136,623

During the financial year ended 31 December 2014, the Company issued bonus shares (the “Bonus Issue”) on the basis of 1
bonus shares for every 4 existing ordinary share in the share capital of the Company held by the shareholders. The Bonus Issue
was fully credited as fully paid at no cost to the entitled shareholders without capitalisation of the Company’s reserves.

Ordinary shares of the Company do not have any par value. The holders of ordinary shares are entitled to receive dividends as
and when declared by the Company. All ordinary shares carry one vote per share without restrictions and rank equally with
regards to the Company’s residual assets.
70 UMS Holdings Limited I Annual Report 2015

Notes to the Financial Statements

31 December 2015

23 Reserves

Group
2015 2014
S$’000 S$’000

Foreign exchange translation reserve 9,146 4,263

Movement in reserves for the Group is set out in the consolidated statement of changes in equity.

The foreign exchange translation reserve is used to record foreign exchange differences arising from the translation of the
financial statements of foreign subsidiaries whose functional currencies are different from that of the Group’s presentation
currency.

24 Dividends

Group
2015 2014
S$’000 S$’000

Declared and paid during the financial year

Dividends on ordinary shares:
- Special exempt (one-tier) dividend for 2014: 1 cent
(for 2013: 1.5 cents) per share 4,291 5,156
- Final exempt (one-tier) dividend for 2014: 2 cents
(for 2013: 2 cents) per share 8,583 6,875
- Interim exempt (one-tier) dividend for 2015: 3 cents
(for 2014: 3 cents) per share 12,875 12,875
25,749 24,906

Proposed but not recognised as a liability as at 31 December

Dividends on ordinary shares, subject to shareholders’
approval at the Company’s Annual General Meeting:
- Special exempt (one-tier) dividend for 2015: 1 cent
(for 2014: 1 cents) per share 4,291 4,291
- Final exempt (one-tier) dividend for 2015: 2 cents
(for 2014: 2 cents) per share 8,583 8,583
12,874 12,874

Tax consequences of proposed dividends

The above-mentioned proposed dividends to the shareholders by the Company have no income tax consequences (2014: Nil).

25 Related Party Transactions

A related party is an entity or person that directly or indirectly through one or more intermediaries controls, is controlled by, or
is under common or joint control with, the entity in governing the financial and operating policies, or that has an interest in the
entity that gives it significant influence over the entity in financial and operating decisions. It also includes members of the key
management personnel or close members of the family of any individual referred to herein and others who have the ability to
control, jointly control or significantly influence by or for which significant voting power in such entity resides with, directly or
indirectly, any such individual.
 UMS Holdings Limited I Annual Report 2015 71

Notes to the Financial Statements

31 December 2015

25 Related Party Transactions (cont’d)

There are transactions and arrangements between the Group and related parties and the effects of these on the basis determined
between the parties are reflected in these financial statements. In addition to the transactions and balances disclosed elsewhere
in the financial statements, related party transactions include the following:

Group
2015 2014
S$’000 S$’000

Transactions with related parties

Professional fees 800 800
Rental income (9) (19)
Progress payment for plant and equipment 298 –

Related parties comprise mainly companies which are controlled by the Group’s key management personnel and their close
family members.

Key Management Compensation

Key management personnel are directors and those persons having authority and responsibility for planning, directing and
controlling the activities of the company, directly or indirectly. The below amounts for key management compensation are for all
directors and five other key management personnel. Included in the above amounts are the following items:

Group
2015 2014
S$’000 S$’000

Salaries, bonuses and related benefits 3,464 3,702

Defined contribution plans 80 75
Fees to directors 179 202
3,723 3,979

Comprised amounts paid/payable to:

Directors of the Company* 2,904 3,208
Other key management personnel* 819 771
3,723 3,979

* The amounts disclosed represent actual compensation received by key management personnel during the financial year.

26 Capital Commitments

Capital expenditure contracted for at the balance sheet date but not recognised in the financial statements is as follows:

Group
2015 2014
S$’000 S$’000

Authorised and contracted but not provided for 268 265

72 UMS Holdings Limited I Annual Report 2015

Notes to the Financial Statements

31 December 2015

27 Operating Lease Commitments

Where the Group is a lessor

The Group leases out its investment property under non-cancellable operating leases. The lease contains escalation clauses
where lease rental is negotiated for a certain period of time with an increment not exceeding a certain percentage.

At the balance sheet date, the future minimum lease receivables under non-cancellable operating lease on investment property
with terms of more than one year of the Group are as follows:

Group
2015 2014
S$’000 S$’000

Within 1 year 884 1,463

Within 2 to 5 years – 884
884 2,347

The remaining tenure period of the aforesaid operating lease is within 1 year (2014: 2 to 5 years).

Where the Group is a lessee

The Group has various operating lease agreements for factory premises. The rental payable is subject to an escalation clause
with a maximum increment of the annual rent not to exceed a certain percentage of the annual rent of the immediately preceding
year.

At the balance sheet date, the future minimum lease payments under non-cancellable operating leases with terms of more than
one year of the Group are as follows:

Group
2015 2014
S$’000 S$’000

Within 1 year 467 1,507

Within 2 to 5 years 1,459 1,276
After 5 years 2,789 2,933
4,715 5,716

The Company does not have any operating lease commitments as at 31 December 2015 and 2014.
 UMS Holdings Limited I Annual Report 2015 73

Notes to the Financial Statements

31 December 2015

28 Financial Information by Segments

The Group’s businesses are organised into two main business segments, namely semiconductor and others. The semiconductor
segment provides precision machining components and equipment modules for semiconductor equipment manufacturers. The
others segment is the supplier of base components to oil and gas original equipment manufacturers (“OEM”).

The accounting policies of the reportable segments are the same as the Group’s accounting policies described in Note 3.

Intersegment sales and results include transfers between business segments. Such transfers are accounted for at competitive
prices charged to external parties for similar goods. Those transfers are eliminated on consolidation. The revenue from external
parties is measured in a manner consistent with that in the statement of comprehensive income.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on
a reasonable basis. Segment assets consist principally of receivables and inventories. Segment liabilities include trade payables
and accrued liabilities.

Segment information about these businesses is presented below:

Business Segments

Total for continuing

Semiconductor Others operations
2015 2014 2015 2014 2015 2014
S$’000 S$’000 S$’000 S$’000 S$’000 S$’000

Group
Total segment sales 157,657 150,550 964 719 158,621 151,269
Inter-segment sales (47,531) (41,450) – – (47,531) (41,450)
Sales to external parties 110,126 109,100 964 719 111,090 109,819

Segment results 36,319 27,505 446 199 36,765 27,704

Material non-cash items include:

Depreciation expense 7,207 7,522 218 219 7,425 7,741
Property, plant and equipment written
off 213 276 – – 213 276
Allowance for doubtful debt (non-
trade) – – 308 – 308 –
Inventories written off 242 – 196 – 438 –
(Reversal)/Allowance of inventories
obsolescence - net (179) 26 (196) – (375) 26

Total assets 350,890 343,148 101 1,823 350,991 344,971

Total assets include:

Additions to property, plant
and equipment 4,478 6,689 – – 4,478 6,689

Total liabilities 33,782 33,098 – – 33,782 33,098

74 UMS Holdings Limited I Annual Report 2015

Notes to the Financial Statements

31 December 2015

28 Financial Information by Segments (cont’d)

Business Segments (cont’d)

A reconciliation of total assets for reportable segments to total assets is as follows:

Group
2015 2014
S$’000 S$’000

Total assets for reportable segments 350,991 344,971

Adjustment and elimination of inter-segment assets (143,376) (138,965)
Total assets 207,615 206,006

A reconciliation of total liabilities for reportable segments to total liabilities is as follows:

Group
2015 2014
S$’000 S$’000

Total liabilities for reportable segments 33,782 33,098

Adjustment and elimination of inter-segment liabilities (20,632) (17,890)
Total liabilities 13,150 15,208

Geographical Segments

The Group operates in three principal geographical areas - Singapore (country of domicile), Malaysia and the United States of
America (“USA”). Other key geographical areas include People’s Republic of China, Poland, Taiwan and South Korea.

In presenting information on the basis of geographical segments, segment revenue is based on the countries of domicile of the
customers. Segment assets are based on the geographical location of the assets.

Revenue and non-current assets information based on the geographical location of customers and assets respectively are as
follows:

Singapore USA Malaysia Others Total

2015 2014 2015 2014 2015 2014 2015 2014 2015 2014
S$’000 S$’000 S$’000 S$’000 S$’000 S$’000 S$’000 S$’000 S$’000 S$’000

Group
Total sales to
external parties 54,603 60,433 26,585 22,619 1,597 2,849 28,305 23,918 111,090 109,819

Other geographical information:

Non-current assets:
Property, plant
and equipment 7,908 9,339 111 199 26,788 32,187 – – 34,807 41,725
Investment property 2,411 2,629 – – – – – – 2,411 2,629
Goodwill 80,759 80,759 – – 924 924 – – 81,683 81,683
91,078 92,727 111 199 27,712 33,111 – – 118,901 126,037

Information about major customers

Included in revenues arising from semiconductor segments of S$110.1 million (2014: S$109.1 million) are revenues of
approximately S$95.7 million (2014: S$92.6 million) which arose from sales to the Group’s largest customer.
 UMS Holdings Limited I Annual Report 2015 75

Notes to the Financial Statements

31 December 2015

29 Financial Instruments

(a) Financial Risk Management Policies and Objectives

The Group and the Company are exposed to financial risks arising from its operation and the use of financial instruments.
The main risks include capital risk, credit risk, interest rate risk, liquidity risk and foreign currency risk. Management
reviews and monitors policies for managing each of these risks.

The following sections provide details regarding the Group’s and Company’s exposure to the above-mentioned financial
risks and the objectives, policies and processes for the management of these risks.

(i) Capital risk

When managing capital, the objectives of the Group and Company are: (a) to safeguard the Group’s and
Company’s ability to continue as a going concern so that it can continue to provide returns for shareholders and
benefits for other stakeholders, and (b) to provide an adequate return to shareholders by pricing products and
services commensurate with the level of risk. The Group’s and Company’s overall strategy remains unchanged
from 2014.

The Group and Company set the amount of capital in proportion to risk. The Group and Company manage
the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk
characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group and
Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new
shares, or sell assets to reduce debt.

The Group and Company monitor capital on the basis of the debt-to-adjusted capital ratio. This ratio is calculated
as net debt divided by adjusted capital. Net debt is calculated as total liabilities (exclude income tax payable,
deferred tax liabilities and long-term provision) less cash and bank balances. Adjusted capital comprises all
components of equity (i.e. share capital, reserves and retained earnings).

Group Company
2015 2014 2015 2014
S$’000 S$’000 S$’000 S$’000

Net (cash)/debt (29,173) (22,731) 7,758 6,686

Total equity 194,465 190,798 188,862 189,469

Debt-to-adjusted capital ratio N.M. N.M. 0.041 0.035

N.M.: Not meaningful

The Group and Company do not have to comply with any externally imposed capital requirements for the financial
years ended 31 December 2015 and 2014.
76 UMS Holdings Limited I Annual Report 2015

Notes to the Financial Statements

31 December 2015

29 Financial Instruments (cont’d)

(a) Financial Risk Management Policies and Objectives (cont’d)

(ii) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss
to the Group and Company. For trade receivables, the Group and Company adopts the policy of dealing only with
customers with an appropriate credit history, and obtaining sufficient security where appropriate to mitigate credit
risk. For other financial assets, the Group and Company adopt the policy of dealing only with high credit quality
counterparties.

Credit exposure to an individual counterparty is restricted by credit limits that are approved by the management
based on an ongoing credit evaluation. The counterparty’s payment profile and credit exposure are continuously
monitored at the entity level and at the Group’s and Company’s level by management.

Financial assets that are potentially subject to concentrations of credit risk and failures by counterparties to
discharge their obligations consist principally of cash and bank balances and trade and other receivables. Bank
deposits that are neither past due nor impaired are placed with reputable financial institutions with high credit-
ratings assigned by international credit-rating agencies. Trade receivables that are neither past due nor impaired
at the balance sheet date are substantially creditworthy companies with a good collection record with the Group
and the Company. An ongoing credit evaluation is performed of the debtor’s financial condition and a loss from
impairment is recognised in profit or loss. The carrying amount of financial assets recorded in the financial
statements, grossed up for any allowance for impairment, represents the Group’s and the Company’s maximum
exposure to credit risk.

The table below is an analysis of trade and other receivables as at the balance sheet date:

Group Company
2015 2014 2015 2014
S$’000 S$’000 S$’000 S$’000

Not past due and not impaired 9,588 10,369 4,212 3,417
Past due but not impaired1
- Less than 30 days 535 292 – –
- More than 30 days 1,928 1,359 – 308
2,463 1,651 – 308
12,051 12,020 4,212 3,725

Impaired receivables -
individually assessed 308 152 308 –
Less: Allowance for impairment losses1 (308) (152) (308) –
– – – –

Trade and other receivables, net 12,051 12,020 4,212 3,725

1 The movements in the allowance for impairment during the year are set out in Note 14.
 UMS Holdings Limited I Annual Report 2015 77

Notes to the Financial Statements

31 December 2015

29 Financial Instruments (cont’d)

(a) Financial Risk Management Policies and Objectives (cont’d)

(iii) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s financial instruments will
fluctuate because of changes in market interest rate. The Group’s exposure to interest rates arises primarily from
interest-earning financial assets and interest-bearing financial liabilities.

The Group is not exposed to any interest-bearing financial liabilities as at year end.

The tables below set out the Group’s and Company’s exposure to interest rate risk. Included in the tables are the
financial assets and financial liabilities at carrying amounts, categorised by the earlier of contractual repricing or
maturity dates.

Interest
bearing at
variable Non-Interest
interest rates bearing Total
S$’000 S$’000 S$’000

Group
2015
Financial assets
Trade receivables and other current assets
(excluding prepayments) – 12,051 12,051
Cash and bank balances 32,549 6,384 38,933
32,549 18,435 50,984

Financial liabilities
Trade and other payables – 9,760 9,760

2014
Financial assets
Trade receivables and other current assets
(excluding prepayments) – 12,020 12,020
Cash and bank balances 25,883 7,909 33,792
25,883 19,929 45,812

Financial liabilities
Trade and other payables – 11,061 11,061
78 UMS Holdings Limited I Annual Report 2015

Notes to the Financial Statements

31 December 2015

29 Financial Instruments (cont’d)

(a) Financial Risk Management Policies and Objectives (cont’d)

(iii) Interest rate risk (cont’d)

Interest
bearing at
variable Non-Interest
interest rates bearing Total
S$’000 S$’000 S$’000

Company
2015
Financial assets
Trade receivables and other current assets
(excluding prepayments) – 4,212 4,212
Cash and bank balances 210 13 223
210 4,225 4,435

Financial liabilities
Trade and other payables – 7,981 7,981

2014
Financial assets
Trade receivables and other current assets
(excluding prepayments) – 3,725 3,725
Cash and bank balances 314 43 357
314 3,768 4,082

Financial liabilities
Trade and other payables – 7,043 7,043

A 3% (2014: 3%) increase/(decrease) in the interest rates as at the balance sheet date, with all variables including
tax rate being held constant, would result in a corresponding increase/(decrease) in profit after tax as follows:

Group Company
2015 2014 2015 2014
S$’000 S$’000 S$’000 S$’000

Profit after tax 3 2 *- *-

* The amount is less than S$1,000.

 UMS Holdings Limited I Annual Report 2015 79

Notes to the Financial Statements

31 December 2015

29 Financial Instruments (cont’d)

(a) Financial Risk Management Policies and Objectives (cont’d)

(iv) Liquidity risk

Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations
due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from
mismatches of the maturities of financial assets and financial liabilities. The Group’s and the Company’s objective
is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities.

The table below analyses the maturity profile of the Group’s and Company’s financial liabilities based on
contractual undiscounted cash flows.

Carrying Contractual Within Within 2

amount cash flows 1 year to 5 years
S$’000 S$’000 S$’000 S$’000

Group
2015
Trade and other payables 9,760 9,760 9,760 –

2014
Trade and other payables 11,061 11,061 11,061 –

Company
2015
Trade and other payables 7,981 7,981 7,981 –

2014
Trade and other payables 7,043 7,043 7,043 –

(v) Foreign currency risk

The Group is exposed to foreign currency risk on sales and purchases that are denominated in a currency other
than the respective functional currencies of the entities of the Group. The currency giving rise to this risk is
primarily the United States Dollar (“USD”).

To manage the aforesaid foreign currency risk, the Group maintains a natural hedge, whenever possible, by
depositing foreign currency proceeds from sales into foreign currency bank accounts which are primarily used for
payments of purchases in the same currency denomination.
80 UMS Holdings Limited I Annual Report 2015

Notes to the Financial Statements

31 December 2015

29 Financial Instruments (cont’d)

(a) Financial Risk Management Policies and Objectives (cont’d)

(v) Foreign currency risk (cont’d)

The Group’s and Company’s exposures to foreign currency risk are as follows:

United
Singapore Japanese Malaysian States
Dollar Yen Euro Ringgit Dollar Total
S$’000 S$’000 S$’000 S$’000 S$’000 S$’000

Group
2015
Financial assets
Cash and bank balances 4,701 30 – 3,353 30,849 38,933
Trade receivables and other current
assets (excluding prepayments) 2,231 – – 792 9,028 12,051
6,932 30 – 4,145 39,877 50,984

Financial liabilities
Trade and other payables (5,950) (50) – (1,169) (2,591) (9,760)

Net financial assets/(liabilities) 982 (20) – 2,976 37,286 41,224

Less: Net financial assets

denominated in the respective
entities’ functional currencies (1,003) – – (2,976) (2,447) (6,426)
Currency exposure (21) (20) – – 34,839 34,798

2014
Financial assets
Cash and bank balances 14,698 6 – 1,304 17,784 33,792
Trade receivables and other current
assets (excluding prepayments) 2,076 – – 296 9,648 12,020
16,774 6 – 1,600 27,432 45,812

Financial liabilities
Trade and other payables (5,987) – (9) (977) (4,088) (11,061)

Net financial assets/(liabilities) 10,787 6 (9) 623 23,344 34,751

Less: Net financial assets

denominated in the respective
entities’ functional currencies (10,787) – – (623) (2,940) (14,350)
Currency exposure – 6 (9) – 20,404 20,401
 UMS Holdings Limited I Annual Report 2015 81

Notes to the Financial Statements

31 December 2015

29 Financial Instruments (cont’d)

(a) Financial Risk Management Policies and Objectives (cont’d)

(v) Foreign currency risk (cont’d)

United States
Singapore Dollar Dollar Total
S$’000 S$’000 S$’000

Company
2015
Financial assets
Cash and bank balances 190 33 223
Trade receivables and other current assets (excluding
prepayments) 4,212 – 4,212

Financial liabilities
Trade and other payables (7,981) – (7,981)

Net financial (liabilities)/assets (3,579) 33 (3,546)

Less: Net financial liabilities

denominated in the Company’s
functional currency 3,579 – 3,579

Currency exposure – 33 33

2014
Financial assets
Cash and bank balances 311 46 357
Trade receivables and other current assets (excluding
prepayments) 3,057 668 3,725

Financial liabilities
Trade and other payables (7,043) – (7,043)

Net financial (liabilities)/assets (3,675) 714 (2,961)

Less: Net financial liabilities

denominated in the Company’s
functional currency 3,675 – 3,675

Currency exposure – 714 714

82 UMS Holdings Limited I Annual Report 2015

Notes to the Financial Statements

31 December 2015

29 Financial Instruments (cont’d)

(a) Financial Risk Management Policies and Objectives (cont’d)

(v) Foreign Currency Risk (cont’d)

If the following currency strengthen by 10% (2014: 10%) against S$ as at the balance sheet date, with all other
variables including tax rate being held constant, the effect arising from the net financial assets/(liabilities) position
will be as follows:

Group Company
Increase/(Decrease) Increase/(Decrease)
profit after tax profit after tax
S$’000 S$’000

2015
United States dollar 2,892 3

2014
United States dollar 1,694 59

A 10% weakening of the above currency against the S$ as at the balance sheet date would have had the equal
but opposite effect on the amounts shown above, on the basis that all other variables remain constant.

(b) Financial Instruments

(i) Fair value of financial instruments

Fair value is defined as the amount at which the financial instruments could be exchanged in a current transaction
between knowledgeable willing parties in an arm’s length transaction, other than in a forced or liquidation sale.
Fair values are obtained from discounted cash flow models and option pricing models as appropriate.

The Group presents financial assets measured at fair value and classified by level of the following fair value
measurement hierarchy:

(i) Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities;

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

(iii) Level 3: inputs for the asset or liability that are not based on observable market data (unobservable
inputs).

(ii) Fair Value of the Group’s financial assets and financial liabilities that are not measured at fair value on a recurring
basis

The carrying amounts of financial assets and financial liabilities with a maturity of less than one year (including
cash and bank balances, trade and other receivables, and trade and other payables) approximate their fair values
due to the relatively short-term maturity of these financial instruments.
 UMS Holdings Limited I Annual Report 2015 83

Notes to the Financial Statements

31 December 2015

30 Subsequent Event

On 27 January 2016, the Group entered into a definitive shareholders’ agreement (the “Agreement”) to subscribe for a 10%
equity interest in All Stars Fortress Sdn. Bhd. (the “Target Company”) via issuance of new ordinary shares (the “Acquisition”) for a
purchase consideration of approximately S$0.03 million (RM0.10 million).

In addition, the other key terms of the Agreement are as follows:

(a) The Group will also extend to the Target Company secured convertible loans up to a total of S$10.65 million (US$7.5
million), which includes S$9.51 million (US$6.7 million) for the Target Company to strengthen its capability and expand its
manufacturing capacity to meet the long term needs of aerospace customers;

(b) The Group will be granted the option to convert the balance loan amount into additional ordinary shares of the Target
Company; and

(c) The Group will rent its Penang premises on a commercial basis to the Target Company.

The accounting for this Acquisition is incomplete at the time these financial statements have been authorised for issue.
84 UMS Holdings Limited I Annual Report 2015

Supplementary Financial
Information Disclosures Required by SGX-ST Listing Manual

1. Interested Person Transactions

The transactions entered into with interested person during the financial year which fall under Rule 907 of the Listing Manual of
the SGX-ST are:-

Aggregate value of all interested
person transactions during the
financial year under review
(excluding transactions less Aggregate value of all interested
than $100,000 and transactions person transactions conducted
conducted under shareholders’ under shareholders’ mandate
mandate pursuant to Rule 920 of pursuant to Rule 920 (excluding
Name of interested person the SGX Listing Manual) transactions less than $100,000)
2015 2014 2015 2014
S$’000 S$’000 S$'000 S$'000
Sure Achieve Enterprises Pte Ltd 1
Consultancy Services charges 800 800 – –

Kalf Engineering Pte Ltd 2

Factory rental 9 19 – –
Progress payment for water system
upgrade 298 –

Notes:

(1) Transaction above is with Sure Achieve Enterprises Pte Ltd in which Mrs. Sylvia SY Lee Luong is a consultant and is the wife of the
CEO, Mr. Andy Luong. Sure Achieve Enterprises Pte Ltd provides sales consultancy services to the Group.

The aggregate value of IPT entered into between the Group and Sure Achieve Enterprises Pte Ltd for the year ended 31 December 2015
amounted to S$800,000 which represented approximately 0.6% of the Group’s latest audited net tangible assets as at 31 December
2015.

(2) Kalf Engineering Pte Ltd is a company in which both executive directors Mr Luong Andy and Mr Stanley Loh Meng Chong have an
interest.
 UMS Holdings Limited I Annual Report 2015 85

Supplementary Financial
Information Disclosures Required by SGX-ST Listing Manual

2. Properties

As required by Rule 1207 (10) of the SGX-ST Listing Manual, the description of properties held by the group are as follows:

Net Book Value

2015 2014
Location Description Tenure S$’000 S$’000

23 Changi North Crescent Office cum factory 30 + 30 years lease 5,283 5,409
Changi North building commencing 16 August
Industrial Estate 1997 and ending
Singapore 499616 16 August 2057

25 Changi North Crescent Leased 30 years lease commencing 2,411 2,629

Changi North Industrial Estate 1 February 2003 and ending
Singapore 499617 31 January 2033

1058, Jalan Kebun Baru, Office cum factory Freehold 17,146 15,466
Juru and Lot 20020, building
Pecahan Lot 702 Mukim 13
14100 Simpang Ampat
Seberang Perai Tengah
Pulau Pinang, Malaysia
86 UMS Holdings Limited I Annual Report 2015

Statistics of Shareholdings
As at 23 March 2016

Number of shares : 429,143,947

Class of Equity Shares : Ordinary Shares
Number of Issued Shares : 429,143,947
Voting Rights : On show of hands: 1 vote for each member
On a poll: 1 vote for each ordinary share

Distribution of Shareholdings

No. of
Size of Shareholdings Shareholders % No. of Shares %

1 – 99 27 0.49 1,090 0.00

100 – 1,000 99 1.82 63,823 0.02
1,001 – 10,000 1,831 33.62 12,626,946 2.94
10,001 – 1,000,000 3,463 63.59 188,348,739 43.89
1,000,001 and above 26 0.48 228,103,349 53.15
Total 5,446 100.00 429,143,947 100.00

Based on the information provided to the Company as at 23 March 2016, approximately 79.93% of the issued ordinary shares of the
Company is held by the public, and therefore, Rule 723 of the Listing Manual is complied with.

Twenty Largest Shareholders

No. Name No. of Shares %

1 UOB KAY HIAN PRIVATE LIMITED 88,398,250 20.60

2 DBS NOMINEES (PRIVATE) LIMITED 23,839,550 5.56
3 MORGAN STANLEY ASIA (SINGAPORE) SECURITIES PTE LTD 23,832,979 5.55
4 CITIBANK NOMINEES SINGAPORE PTE LTD 20,245,093 4.72
5 UNITED OVERSEAS BANK NOMINEES (PRIVATE) LIMITED 16,255,150 3.79
6 RAFFLES NOMINEES (PTE) LIMITED 9,079,975 2.12
7 PHILLIP SECURITIES PTE LTD 6,355,250 1.48
8 OCBC NOMINEES SINGAPORE PRIVATE LIMITED 4,089,650 0.95
9 DBSN SERVICES PTE. LTD. 3,675,450 0.86
10 MAYBANK KIM ENG SECURITIES PTE. LTD. 2,940,800 0.69
11 TAN BOON KHAK HOLDINGS PTE LTD 2,446,000 0.57
12 HSBC (SINGAPORE) NOMINEES PTE LTD 2,337,000 0.54
13 CITIBANK CONSUMER NOMINEES PTE LTD 2,290,500 0.53
14 DB NOMINEES (SINGAPORE) PTE LTD 2,213,815 0.52
15 CHAN YEOK PHENG 2,156,250 0.50
16 TAN ENG YAM @TAN ENG ANN 2,055,250 0.48
17 TEOH OOI KING ONG 2,045,000 0.48
18 TAN POH GHEE 1,940,250 0.45
19 OCBC SECURITIES PRIVATE LIMITED 1,908,100 0.44
20 YIM WING CHEONG 1,630,000 0.38
TOTAL 219,734,312 51.21
 UMS Holdings Limited I Annual Report 2015 87

Statistics of Shareholdings
As at 23 March 2016

Substantial Shareholders As at 23 March 2016

Number of shares Number of shares

registered in the in which substantial
Name of substantial name of substantial shareholder is deemed Percentage
shareholder shareholder to have an interest Total (%)
Luong Andy – 85,859,000 85,859,000 20.01

Notes:

(1) Based on the total issued and paid-up ordinary share capital of the Company comprising 429,143,947 Shares.

(2) Luong Andy is deemed interested in 85,859,000 shares registered in the name of UOB Kay Hian Private Limited.
88 UMS Holdings Limited I Annual Report 2015

Further Information on Directors

Date of Initial Date of Last Present and Past Directorship

Appointment in UMS Re-election in UMS in other Other Major
Name of Director Holdings Limited Holdings Limited Listed Companies Appointments
Soh Gim Teik 15 February 2008 30 April 2015 BBR Holdings (S) Ltd –

QAF Limited –

KS Energy Limited (appointed –

on 1 May 2015)

Craft Print International Limited –

(resigned on 28 Jan 2015)

Oh Kean Shen 20 September 2007 30 April 2015 – Managing Director of:-

a) Limbongan Batu
Maung Sdn Bhd
b) Pen-Marine Sdn Bhd

Luong Andy 1 April 2004 – – –

Loh Meng Chong, 30 June 2010 29 April 2014 – –

Stanley

Chay Yiowmin 28 June 2013 29 April 2014 8I Holdings Limited Partner of BDO LLP

Advance SCT Limited

(resigned on 31 May 2015)
 UMS Holdings Limited I Annual Report 2015 89

Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN that the Annual General Meeting of UMS Holdings Limited (“the Company”) will be held at The Boardroom,
Basement 1, The Fullerton Hotel, 1 Fullerton Square, Singapore 049178 on Thursday, 28 April 2016 at 10.00 a.m. to transact the
following businesses:

ORDINARY BUSINESS:

1. To receive and consider the Directors’ Statement and Audited Financial Statements for the financial year ended 31 December
2015 and the Auditors’ Report thereon. Resolution 1

2. To approve the payment of a final tax-exempt (one-tier) dividend of 2.0 cents per ordinary share in respect of the financial year
ended 31 December 2015. Resolution 2

3. To approve the payment of a special tax-exempt (one-tier) dividend of 1.0 cent per ordinary share in respect of the financial year
ended 31 December 2015. Resolution 3

4. To re-elect Mr Chay Yiowmin, who is retiring by rotation in accordance with Regulation 104 of the Company’s Constitution, as
Director of the Company.

[Mr Chay Yiowmin will, upon re-election as a Director of the Company, remain as Chairman of the Audit Committee and
Remuneration Committee, and a member of the Nominating Committee and will be considered independent for the purpose of
Rule 704(7) of the Listing Manual of the Singapore Exchange Securities Trading Limited.] Resolution 4

5. To approve the payment of Directors’ fees of S$197,932 for the financial year ending 31 December 2016, to be paid quarterly in
arrears. (FY2015: S$180,000) Resolution 5

6. To re-appoint Messrs Moore Stephens LLP as Independent Auditors and to authorise the Directors to fix their remuneration.
Resolution 6

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

SPECIAL BUSINESS:

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

8. Authority to allot and issue shares up to fifty per centum (50%) of the issued shares in the capital of the Company

“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
90 UMS Holdings Limited I Annual Report 2015

Notice of Annual General Meeting

(b) (notwithstanding that the authority conferred by this Resolution may have ceased to be in force) issue shares in
pursuance of any Instrument made or granted by the Directors while this Resolution was in force,

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 50 per cent of the total number of issued
shares (excluding treasury shares) in the 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
20 per cent of the total number of issued shares (excluding treasury shares) in the 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 sub-paragraph (1)
above, the percentage of issued shares shall be based on the total number of issued shares (excluding treasury shares)
in the 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 bonus issue, 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 from the time being in force (unless such compliance has been waived by the SGX-ST), all
applicable legal requirements under the Companies Act and otherwise, and the Constitution 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.”
[Explanatory Note (i)] Resolution 7

9. Renewal of Share Buyback Mandate

That for the purposes of Sections 76C and 76E of the Companies Act, Chapter 50, the Directors of the Company be and are
hereby authorised to make purchases or otherwise acquire ordinary shares in the capital of the Company from time to time
(whether by way of market purchases or off-market purchases on equal access scheme) of up to ten per centum (10%) of the
total number of issued shares (excluding treasury shares) in the capital of the Company (as ascertained as at the date of Annual
General Meeting of the Company) at the price of up to but not exceeding the Maximum Price as defined in the Appendix to this
Notice of Annual General Meeting dated 6 April 2016 (the “Letter”), in accordance with the terms of the Share Buyback Mandate
set out in the Letter, and the Share Buyback Mandate shall, unless varied or revoked by the Company in a general meeting,
continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual
General Meeting of the Company is required by law to be held, or the date on which Share Buybacks are carried out to the full
extent mandated, whichever is earliest.
[Explanatory Note (ii)] Resolution 8
 UMS Holdings Limited I Annual Report 2015 91

Notice of Annual General Meeting

Explanatory Notes:

(i) Resolution 7 is to authorise the Directors to issue shares in the capital of the Company and to make or grant instruments (such as warrants or
debentures) convertible into shares, and to issue shares in pursuance of such instruments, up to a number not exceeding in total 50% of the
total number of issued shares (excluding treasury shares) in the capital of the Company, with a sub-limit of 20% for issues other than on a pro
rata basis to shareholders. For the purpose of determining the aggregate number of shares that may be issued, the percentage of issued shares
shall be based on the total number of issued shares (excluding treasury shares) in the capital of the Company at the time that Resolution 7 is
passed, after adjusting for (a) 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 that Resolution 7 is passed, and (b) any subsequent consolidation or subdivision
of shares.

(ii) Resolution 8 above, if passed, will authorise the Directors of the Company from the date of this AGM until the next AGM of the Company or
the date by which the next AGM of the Company is required by law to be held, or the date on which the authority contained in the Share
Buyback Mandate is varied or revoked by the Company in a general meeting or the date on which Share Buybacks are carried out to the full
extent mandated, whichever is the earliest, to purchase or otherwise acquire ordinary shares in the capital of the Company by way of market
purchases or off-market purchases on equal access scheme of up to ten per centum (10%) of the total number of issued shares (excluding
treasury shares) in the capital of the Company at the price of up to but not exceeding the Maximum Price as defined in the Appendix to the
Letter. The rationale for, the authority and limitation on, the sources of funds to be used for the purchase or acquisition including the amount of
financing and the financial effects of the purchase or acquisition of ordinary shares by the Company pursuant to the Share Buyback Mandate
on the audited consolidated financial statements of the Company for the financial year ended 31 December 2015 are set out in greater detail in
the Appendix to the Letter.
92 UMS Holdings Limited I Annual Report 2015

Notice of Annual General Meeting

NOTICE OF BOOK CLOSURE DATE FOR THE PROPOSED FINAL DIVIDEND AND SPECIAL DIVIDEND

NOTICE IS HEREBY GIVEN THAT the Share Transfer Books and Register of Members of the Company will be closed on 10 May 2016, for
the purpose of determining members’ entitlements to the Final Dividend of 2.0 cents per ordinary share and Special Dividend of 1.0 cent
per ordinary share (tax-exempt one-tier) for the financial year ended 31 December 2015.

Duly completed registrable transfers received by the Company’s Share Registrar, Boardroom Corporate & Advisory Services Pte. Ltd.,
50 Raffles Place, #32-01 Singapore Land Tower, Singapore 048623 up to the close of business at 5.00 p.m. on 9 May 2016 will be
registered before entitlement to the Proposed Final Dividend and Special Dividend are determined. Members whose Securities Accounts
with The Central Depository (Pte) Limited are credited with shares in the Company as at 5.00 p.m. on 9 May 2016 will be entitled to the
Proposed Final Dividend and Special Dividend.

The Proposed Final and Special Dividend, if approved at the forthcoming Annual General Meeting of the Company, will be paid on 30 May
2016.

BY ORDER OF THE BOARD

Shirley Lim Guat Hua

Company Secretary
Singapore
6 April 2016

Notes:

1. A member of the Company entitled to attend and vote at the Annual General Meeting may appoint not more than two proxies to attend and vote
instead of him.

2. Where a member appoints two proxies, he shall specify the proportion of his shareholdings to be represented by each proxy in the instrument
appointing the proxies.

3. Pursuant to Section 181 of the Companies Act, Chapter 50 of Singapore, any member who is a relevant intermediary is entitled to appoint one
or more proxies to attend and vote at the Annual General Meeting. Relevant intermediary is either:

(a) a banking corporation licensed under the Banking Act (Chapter 19) or a wholly-owned subsidiary of such a banking corporation, whose
business includes the provision of nominee services and who holds shares in that capacity.

(b) A person holding a capital markets services licence to provide custodial services for securities under the Securities and Futures Act
(Chapter 289) and who holds shares in that capacity; or

(c) The Central Provident Fund Board established by the Central Provident Fund Act (Chapter 36), in respect of shares purchased under
the subsidiary legislation made under that Act providing for making of investments from the contributions and interest standing to the
credit of members of the Central Provident Fund, if the Board holds those shares in the capacity of an intermediary pursuant to or in
accordance with that subsidiary legislation.

4. A proxy need not be a member of the Company.

5. The instrument appointing a proxy or proxies, duly executed, must be deposited at the registered office of the Company at 23 Changi North
Crescent, Singapore 499616 not less than 48 hours before the time set for the Annual General Meeting.
 UMS Holdings Limited I Annual Report 2015 93

Notice of Annual General Meeting

PERSONAL DATA PRIVACY:

By submitting a proxy form appointing a proxy(ies) and/or representative(s) to attend, speak and vote at the Annual General Meeting and/or any
adjournment thereof, a member of the Company (i) consents to the collection, use and disclosure of the member’s personal data by the Company
(or its agents) for the purpose of the processing and administration by the Company (or its agents) of proxies and representatives appointed for the
Annual General Meeting (including any adjournment thereof) and the preparation and compilation of the attendance lists, minutes and other documents
relating to the Annual General Meeting (including any adjournment thereof), and in order for the Company (or its agents) to comply with any applicable
laws, listing rules, regulations and/or guidelines (collectively, the “Purposes”), (ii) warrants that where the member discloses the personal data of the
member’s proxy(ies) and/or representative(s) to the Company (or its agents), the member has obtained the prior consent of such proxy(ies) and/or
representative(s) for the collection, use and disclosure by the Company (or its agents) of the personal data of such proxy(ies) and/or representative(s) for
the Purposes, and (iii) agrees that the member will indemnify the Company in respect of any penalties, liabilities, claims, demands, losses and damages
as a result of the member’s breach of warranty.
This page has been intentionally left blank.
 IMPORTANT UMS Holdings Limited
1. Relevant intermediaries as defined in Section 181 of the Companies Act, (Incorporated in the Republic of Singapore)
Chapter 50 may appoint more than 2 proxies to attend, speak and vote at the (Registration No: 200100340R)
Annual General Meeting.
2. For CPF/SRS investors who have used their CPF monies to buy shares in UMS
Holdings Limited, this proxy form is not valid for use and shall be ineffective PROXY FORM
for all intents and purposes if used or purported to be used by them. CPF/
SRS investors should contact their CPF Approved Nominees if they have any
ANNUAL GENERAL MEETING
queries regarding their appointment as proxies.
3. By submitting an instrument appointing a proxy(ies) and/or representative(s),
a member accepts and agrees to the personal data privacy terms set out in
the Notes to this Proxy Form.

I / We NRIC/ Passport/ Co. Reg. No.

of (Address)
being a member/members of UMS Holdings Limited (the “Company”), hereby appoint
NRIC/Passport Proportion of
Name Address
Number Shareholdings (%)

and/or (delete as appropriate)

NRIC/Passport Proportion of
Name Address
Number Shareholdings (%)

or failing him/her, the Chairman of the Meeting as my/our proxy/proxies to attend and to vote for me/us on my/our behalf at the Annual
General Meeting of the Company to be held at The Boardroom, Basement 1, The Fullerton Hotel, 1 Fullerton Square, Singapore 049178
on Thursday, 28 April 2016 at 10.00 a.m. and at any adjournment thereof.

(Please indicate with a “” in the spaces provided whether you wish your votes(s) to be cast for or against the resolutions as set out in
the Notice of Annual General Meeting. In the absence of specific directions, the proxy/proxies will vote or abstain as he/they may think
fit, as he/they will on any other matter arising at the Annual General Meeting.)

No. Resolutions For Against

Ordinary Business
1 To receive and consider the Directors’ Statement and the Report of the Auditors and the
Audited Financial Statements for the financial year ended 31 December 2015
2 To approve a final tax-exempt (one-tier) dividend
3 To approve a special tax-exempt (one-tier) dividend
4 To re-elect Mr Chay Yiowmin as Director
5 To approve directors’ fees for the year ending 31 December 2016
6 To re-appoint Auditors and authorise the directors to fix their remuneration
Special Business
7 To authorise the directors to allot and issue shares
8 Renewal of Share Purchase Mandate

Dated this day of 2016

Total number of Shares held

IMPORTANT: PLEASE READ NOTES OVERLEAF

Signature(s)/ Common Seal of Member

&
Notes:

1. Please insert the total number of shares held by you. If you have shares entered against your name in the Depository Register (as defined
in Section 81SF of the Securities and Futures Act, Chapter 289 of Singapore), you should insert that number of shares. If you have shares
registered in your name in the Register of Members of the Company, you should insert that number of shares. If you have shares entered
against your name in the Depository Register and shares registered in your name in the Register of Members, you should insert the aggregate
number of shares. If no number is inserted, this form of proxy will be deemed to relate to all the shares held by you.

2. (a) A member who is not a relevant intermediary is entitled to appoint not more than two proxies to attend, speak and vote at the Annual
General Meeting. Where such member’s form of proxy appoints more than one proxy, the proportion of the shareholdings concerned to
be represented by each proxy shall be specified in the form of proxy.

(b) A member who is a relevant intermediary is entitled to appoint more than two proxies to attend, speak and vote at the Annual General
Meeting, but each proxy must be appointed to exercise the rights attached to a different share or shares held by such member. Where
such member’s form of proxy appoints more than two proxies, the number and class of shares in relation to which each proxy has
been appointed shall be specified in the form of proxy.

“Relevant intermediary means:

(i) a banking corporation licensed under the Banking Act (Chapter 19) or a wholly-owned subsidiary of such a banking
corporation, whose business includes the provision of nominee services and who holds shares in that capacity.

(ii) A person holding a capital markets services licence to provide custodial services for securities under the Securities and
Futures Act (Chapter 289) and who holds shares in that capacity; or

(iii) The Central Provident Fund Board established by the Central Provident Fund Act (Chapter 36), in respect of shares purchased
under the subsidiary legislation made under that Act providing for making of investments from the contributions and interest
standing to the credit of members of the Central Provident Fund, if the Board holds those shares in the capacity of an
intermediary pursuant to or in accordance with that subsidiary legislation.

3. A proxy need not be a member of the Company.

4. Where a member appoints more than one proxy, the member must specify the proportion of shareholdings to be represented by each proxy. If
no proportion of shareholdings is specified, the proxy whose name appears first shall be deemed to carry 100% of the shareholdings of his/her
appointor and the proxy whose name appears after shall be deemed to be appointed in the alternate.

5. The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 23 Changi North Crescent, Singapore
499616 not less than 48 hours before the time appointed for holding the Annual General Meeting.

6. Completion and return of the instrument appointing a proxy or proxies by a member shall not preclude him from attending and voting at the
Annual General Meeting if he so wishes. Any appointment of a proxy or proxies by a member shall be deemed to be revoked if a member
attends the Annual General Meeting in person, and in such event, the Company reserves the right to admit any person or persons appointed
under the instrument of proxy to the Annual General Meeting.

7. The instrument appointing a proxy or proxies must be signed by the appointor or his attorney duly authorized in writing. Where the instrument
appointing a proxy or proxies is executed by a corporation, it must be executed either under its common seal or under the hand of any officer
or attorney duly authorized. A corporation which is a member may authorize by resolution of its directors or other governing body such person
as it thinks fit to act as its representative at the Annual General Meeting.

8. Where an instrument appointing a proxy or proxies is signed on behalf of the appointor by an attorney, the letter or power of attorney or a duly
certified copy thereof must (failing previous registration with the Company) be lodged with the instrument of proxy, failing which the instrument
may be treated as invalid.

9. The Company shall be entitled to reject an instrument of proxy or proxies if it is incomplete, improperly completed, illegible or where the true
intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies.
In addition, in the case of a member whose shares are entered in the Depository Register, the Company may reject any instrument appointing a
proxy or proxies if the member, being the appointor, is not shown to have shares entered against his name in the Depository Register as at 72
hours before the time appointed for holding the Annual General Meeting, as certified by The Central Depository (Pte) Limited to the Company.

PERSONAL DATA PRIVACY:

By submitting an instrument appointing proxy(ies) and/or representative(s), the member accepts and agrees to the personal data privacy terms set out
in the Notice of Annual General Meeting dated 6 April 2016.
 UMS Holdings Limited
Company Registration No : 200100340R

23, Changi North Crescent,

Changi North Industrial Estate
Singapore 499616

Tel: 6543 2272

Fax: 6542 9979

www.umsgroup.com.sg