SINGAPORE BUSINESS AWARDS 2011 BUSINESSMAN OF THE YEAR CHIA KIM PIOW, 62 CHAIRMAN & MANAGING DIRECTOR ROTARY ENGINEERING LIMITED

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1 SINGAPORE BUSINESS AWARDS 2011 BUSINESSMAN OF THE YEAR CHIA KIM PIOW, 62 CHAIRMAN & MANAGING DIRECTOR ROTARY ENGINEERING LIMITED BACKGROUND Chia Kim Piow is the Founder and Chairman of the Rotary Group of Companies. With nearly 40 years of experience in plant and facility design and construction, he has been instrumental in developing the Group from a sub-contractor in electrical engineering that did small jobs for Singapore s oil refining and petrochemical sector to a multinational turnkey engineering design and construction group. Under his stewardship, the group has gained the recognition as one of the region's leading players in the oil and gas, petroleum, petrochemical and pharmaceutical industries. Rotary Engineering Ltd has been listed on the mainboard of Singapore Exchange since Rotary has consistently won awards at the SIAS Investors' Choice Awards since 2006, most notably being the Most Transparent Company in the Construction Category in In 2008, Rotary won the Enterprise of the Year award at the Singapore Business Awards. 1 1

2 In recognition of his leadership qualities, Mr Chia was awarded the Chief Executive Officer of the Year 2008 for companies with S$300 million to less than S$1 billion in market capitalisation in the 2009 Singapore Corporate Awards. At the industry level, Mr Chia has been an active member of the Process Industry Contractors Association Singapore (PICAS), now known as the Association of Process Industry (ASPRI). In 1998, Mr Chia was voted the President of PICAS. In his 2-year presidency, Mr Chia led the Steering Committee to obtain approval from government agencies to implement the Process Construction and Maintenance (PCM) foreign workers quota for the industry; Thus resolving the long outstanding manpower issue in skills competency and skills recognition. Between 1998 and 2000, a total of more than 2500 workers were trained and certified under his leadership. Currently, Mr Chia remains active as the honorary member offering technical advice to the Association of Process Industry (ASPRI). At the community and grassroot level, Mr Chia served as the Chairman of School Advisory Committee for Jurong West Primary School since 16 June He was appointed as a Patron of the Pioneer Citizens Consultative Committee since 3 April 2003 and is also the Patron of the Taman Jurong Citizens Consultative Committee since 1 October Mr Chia has been serving as council member of Singapore-Liaoning Economic and Trade Council since June Mr Chia was also conferred the title of Honorary Professor by Dalian Jiatong University on 3 June On 1 January 2008, Mr Chia was appointed to serve as Chairman of ITE College West Advisory Committee and is still very much involved in the educational field. Effective April 2010, Mr Chia is a Board member of SPRING Singapore (Standards, Productivity & Innovation Board), a statutory board under the Ministry of Trade and Industry. Mr Chia was conferred the Public Service Medal in 2010 by the President of Singapore in recognition of his community services. The Public Service Medal, also known as PBM (Pingat Bakti Masyarakat), is a National Day Award which may be given to any person who has rendered commendable public service in Singapore for his achievement in the field of arts and letters, sports, the sciences, business, the professions and the labour movement. COMPANY PROFILE Mainboard-listed Rotary Engineering started in 1972 with a capital of just S$15,000, chipped in by five partners who were not satisfied working for others and wanted to be their own boss. Today, Rotary is one of the region s leading oil and gas infrastructure services companies with extensive international experience offering fully integrated engineering design, procurement, construction and maintenance ( EPCM ) services to the oil and gas, petroleum, 2 2

3 petrochemical and pharmaceutical industries. Record net profit hit S$63.7 million, along with highest ever revenue of S$704.2 million for FY2010, 70 times of that in Back in 1984, Rotary was on the brink of going bust, hit by a double whammy of poor business and high overheads. Rotary had by then grown into an amalgamation of disparate businesses going separate ways. While the businesses shared a common roof, they were not pulling in enough revenue to support the overlapping overheads which had become a heavy burden. Mr Chia overhauled Rotary. He took advantage of the lull in the industry to hire more engineers that a Japanese rival shed - and sharpened his company's focus on engineering. Eating humble pie when it had to fend off creditors during that critical year, Rotary almost went over the edge. This horrible experience taught Mr Chia to be more prudent in later years. As a result, he is inclined to shun unfamiliar terrain in business. The company went public in 1993 and is spreading its wings in global markets, having established a presence in Malaysia, Thailand, Indonesia, India, Australia, China, Saudi Arabia and most recently, the United Arab Emirates. It was a multinational company client in Singapore that got Rotary launched in an overseas market. Impressed with the job Rotary had done, the MNC client would offer the company more projects elsewhere where it also operated. Its first break overseas was in Thailand. The client awarded Rotary a $40 million contract and Rotary s successful execution of the contract established its overseas credentials. Its first big break came in 2000 when it secured a S$100 million deal from Oiltanking Singapore. The next big break came in 2006 when it won the S$535 million project to build Asia s largest oil terminal for Universal Terminal on Jurong Island. Rotary has maintained a presence in the Middle East since In 2007 invested S$22 million to set up a fabrication and maintenance facility in Jubail Industrial City. It landed its first contract the same year, an US$11.5 million deal from SHARQ Eastern Petrochemical Company. The following year, it landed a US$62 million contract with Saudi Kayan Petrochemical Company to construct 24 tanks for its Saudi Kayan Petrochemical Company in Al-Jubail, Kingdom of Saudi Arabia. With a total workforce of over 7,000 employees, Rotary launched its Global Work Force Scheme in The programme helps to develop a ready and skilled workforce in order to fuel its growth on a global scale. The first initiative trains and employs workers of diverse disciplines who are equipped with specific skills for Rotary s projects in various parts of the world. 3 3

4 RECENT ACHIEVEMENTS Significant Investments In 2008, Rotary increased its stake in its joint venture company in Saudi Arabia, Petrol Steel Co. Ltd to 51%, in a bid to increase its capitalisation from SAR5 million to SAR20 million. The joint venture is to support Rotary s ventures in the region, such as the construction work at SATORP. Rotary Engineering Limited recently incorporated a wholly-owned subsidiary company, Rotary Engineering Fujairah FZE in United Arab Emirates, at an investment of 1,000 shares at AED150,000. Rotary Engineering Fujairah FZE operates mainly in United Arab Emirates and is in the business of EPC for storage tanks of oil and gas, petroleum and petrochemical plants. Securing Major Contracts And Forging Progress In New Markets Through Thai Rotary Engineering, Rotary Engineering Limited, in December 2006, secured Engineering, Procurement & Construction ( EPC ) contracts worth US$90 million from Map Ta Phut Olefins Co. Ltd. This is a joint venture between Siam Cement Group and DOW Chemicals, for the construction of a process plant off-site facility in Map Ta Phut, Rayong Province, Thailand. In the same year, Rotary started participating in environmentally-friendly projects involving biofuels. It landed its first such project, a S$24 million contract to undertake the EPC of a biodiesel process plant and its related facilities, to produce biofuel and other downstream derivatives for Nexsol (Singapore) Pte. Ltd, a subsidiary company of Peter Cremer (Singapore) GmbH. In 2007, Rotary secured an important strategic win through its joint venture company, Petrol Steel Co. Ltd. This involved providing EPC services for the ethylene plant that forms part of the SHARQ Third Expansion Project at Jubail Industrial City in the Kingdom of Saudi Arabia. In the same year, Oiltanking Singapore, with whom Rotary has forged a relationship for almost two decades, awarded them with contracts totalling S$136.5 million S$45.5 million from Oiltanking Odfjell Terminal Singapore Private Limited ( OOTS ) for the engineering design and construction of Mono Ethylene Glycol and Propylene Oxide storage tanks and related facilities adjacent to the existing OOTS chemical storage terminal on Jurong Island, S$74 million EPC contract for PT Oiltanking Merak in Indonesia S$17 million EPC deal for Oiltanking Singapore. Shell Eastern Petroleum Ltd also continued to support them with an award of two contracts - $52 million for MEG plant and $24 million for their ECC project. Since 2006, Rotary have been awarded five contracts in relation to the Shell Houdini project. 4 4

5 Rotary successfully delivered its S$535 million Universal Terminal project in Jurong Island in It had completed the project one of the world's largest independent oil terminals with a capacity of 2.3 million cubic meters housed in 73 storage tanks and 12 marine jetties, ahead of schedule. This showcased their world-class capabilities and has propelled them to compete on a higher level, with bigger projects, both locally and internationally saw Rotary embarking on a biofuel project with Neste. This $37.9 million Engineering, Procurement & Construction contract is in relation to Neste Oil's new generation biofuel plant in Tuas and involves the erection of 11 storage tanks. The contract was awarded by Technip Italy SpA. Also, in 2008, through its joint venture with Petrol Steel Pte Ltd, it got hold of its first significant project in Saudi Arabia, a US$62 million contract to build 24 tanks for the Saudi Kayan Petrochemical Complex in Jubail Industrial City. In July 2009, Rotary inked an Engineering, Procurement and Construction (EPC) deal totaling S$48 million with Thailand s PTT Tank Terminal Company Limited for the PTT Tank Terminal Project. Rotary also signed two contracts in 2009 totaling $36 million from Neste Oil Singapore Pte Ltd for electrical and instrumentation works at Neste s $1.2 billion NExBTL Renewable Diesel Plant in Tuas, among others. In 2009, the Group was also awarded a US$745 mil contract in Saudi Arabia to build a refinery tank farm. Work outside the Kingdom worth US$384 million will be managed entirely by Rotary in Singapore and work amounting to US$361 million within the Kingdom will be handled by Petrol Steel which is 51% owned by Rotary. The contract was awarded to Rotary Engineering and its joint venture company, Petrol Steel Co Ltd by Saudi Aramco Total Refining and Petrochemical Company, for its Jubail refinery. When completed, the 400,000 barrels per day export refinery will be one of the most advanced in the world. In October 2010, Rotary announced it had been awarded a contract worth US$250 million by Singapore-based oil trader Concord Energy Pte Ltd to build a petroleum storage facility with capacity of 1.1 million m 3, which will be operated as Fujairah Oil Terminal, in the UAE. It had also secured two new contracts worth a total of S$20 million from Shell Eastern Petroleum for revamp works at one of the process units on Pulau Bukom and for maintenance works at Shell Chemical s plants on Jurong Island. Building Strong Internal Support Infrastructure The Global Workforce (GWF) scheme, launched in 2007, increases Rotary's competitive edge as they grow their own engineers and craftsmen who are attuned to the Rotary brand of service delivery. Rotary s four Overseas Training 5 5

6 and Test Centres in China and India had trained more than 1,000 personnel. As they prepare to take on more and bigger projects, this scheme will take on greater importance. Rotary s plans in Saudi Arabia to support Saudization plans are currently ongoing and they are looking to cooperate with local service providers to provide training to their workforce. The Rotary Globalisation Plan was formally launched in It is an internal restructuring programme that reflects Rotary s intent to position itself strategically. With its six key Business Units operational, all Business Units operating environments are being standardised, automated and integrated with SAP, Enterprise Resource Planning (ERP) systems, as well as the SmartPlant suite of engineering systems.. FINANCIAL PERFORMANCE FY2007 Fuelled by a strong economy and a vibrant oil-and-gas sector, net profit for 2007 reached a record high of $52.8 million, up 50 per cent from 2006 s $35.2 million. Full year earnings per share rose to 9.3 cents from 2006 s 8.7 cents. The company is proposing a final dividend of 2.3 cents per share. Including the interim dividend of 2.3 cents per share that it paid out on Sept 3, 2007, this works out to a dividend yield of 4.6 per cent based on Feb 25 s closing share price of $1.00. However, full-year turnover hit a new high of $510.2 million, an increase of 17 per cent over the $437.4 million it chalked up the previous year. The increase in turnover is largely accounted by contributions from several ongoing projects on Jurong Island. As at end December, the Group has a total order book of $516.4 million. The Group continues to prospect for contract overseas, and in early 2007, was awarded a $74 million contract by PT Oiltanking Indonesia JV terminal project in Merak, Indonesia. It recently formed a joint venture with Beijing Everthriving Energy Technology Co Ltd to undertake the transportation and sale of LNG in China. This gives Rotary its exposure to the energy sector in China. As part of its globalisation plan, it opened a training centre in China and launched its Global Work Force Scheme in June last year. This initiative would target at doubling its workforce to 6,000 strong in three years. FY2008 Rotary Engineering posted net earnings of $50.9 million on revenue of $520.1 million for the year ended December

7 Profit was down slightly from $52.8 million in FY 2007, but revenue was up from $510.2 million that year. Rotary declared a final dividend of 2.3 cents a share, translating into a yield of 11 per cent. Rotary, which specialises in building energy storage and distribution terminals on Jurong Island and elsewhere, had an order book of $446 million and cash of $157.4 million coming into the current year. The stock s net tangible asset backing per share was 36 cents, significantly above the counter s current price of 20.5 cents. Mr Chia said gross margin at 23.7 per cent versus 24.4 per cent in 2007 is stable. Rotary has more than $400 million of active projects on Jurong Island, including Shell s Houdini project, the Parallel Train project, ExxonMobil s second petrochemical project and Neste Oil s next generation bio-fuel manufacturing plant the world s biggest. FY2009 For FY2009, Rotary posted a revenue of S$551.9 million, a 6% increase over the S$520.1 million it achieved in the previous financial year. The Group recorded a net profit after tax and minority interest of S$54.2 million, a 7 per cent rise over the previous year s $50.9 million. Singapore was the Group s biggest revenue contributor in FY2009 with S$347.9 million or 63% of revenue, with overseas business contributing the remaining 37% or S$204 million. Saudi Arabia contributed S$111.5 million or 20%, while Thailand s share came to $67.8 million or 12%. The company has an order book of $1.3 billion, 80 per cent of which is offshore and with contributions stretching forward to This includes the massive US$745 million deal to build a tank farm in Jubail, Saudi Arabia, for Saudi Aramco Total Refining and Petrochemical Company (Satorp). The company declared a final dividend of 3.8 cents which works out to a payout ratio of 40 per cent for FY2009. FY has indeed been an exhilarating and exciting year for Rotary. In FY2010, Rotary achieved record profit after tax attributable to parent of S$63.7 million, up 7 7

8 18% from S$54.2 million a year ago. A new high of S$704.2 million in revenue was also registered, an increase of 28% from S$551.9 million previously. Earnings per share for the year was 11.2 cents against 9.6 cents a year ago. The Board of Directors has recommended a final dividend of 3.8 cents per share; an interim dividend of 1.0 cent per share has been paid in September 2010, bringing total dividends for FY2010 to 4.8 cents per share. Rotary continued to maintain a strong financial position as the year drew to a close, with total assets of S$739.5 million, net tangible assets of S$297.6 million, net working capital of S$210.6 million and cash and cash equivalents of S$134.7 million. As of end-2010, order book stood at a healthy S$0.9 billion with projects targeted to be completed and delivered progressively, up to end Of this, more than 92% of the contracts originated from overseas. With Rotary s two projects in Saudi Arabia and the United Arab Emirates, they continue to build on their reputation and track record in a region that they believe continues to hold long term promise. Rotary continues to capitalise on their presence to secure more projects in the coming years mainly in the Gulf Cooperation Council (GCC) countries. In Asia, Rotary continues to strengthen their grip on the Asian market, breaking into new areas and where possible, aligning their interests as partners with clients so that they can scale the value chain gradually. Rotary s interest and foray into new areas and new markets is helping them to power ahead on the growth path. They are exploring opportunities for global strategic partnerships as they look to extend their geographic reach further. SHARE INFO On 31 st December 2010 it shares closed at $1.02 a piece, giving it a market capitalisation of $579 million. Its share price dropped to as low as 20 cents and its 52 week high was $1.30. It ranked 148 th largest company on the local bourse. FINANCIAL SUMMARY S$ Million Turnover $437.3 $510.2 $520.1 $551.9 $

9 Pre-tax Profit $47.8 $71.5 $69.8 $65.3 $81.9 Net Profit $35.5 $56.0 $54.3 $54.2 $63.7 EPS (cents) NAV (cents) Awards 2006 Most Transparent Company : Construction Category (Runner-up) SIAS Investors' Choice Awards 2007 Most Transparent Company : Construction Category SIAS Investors' Choice Awards 2008 Enterprise of the Year 2007 Singapore Business Awards 2008 Most Transparent Company : Construction Category (Runner-up) SIAS Investors' Choice Awards 2009 Most Transparent Company : Construction Category (Runner-up) SIAS Investors' Choice Awards CEO of the Year 2008 Singapore Corporate Awards Most Transparent Company : Construction Category (Runner-up) SIAS Investors' Choice Awards December