final output
final output
final output
Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
We are dependent on foreign labour for manpower as we currently have approximately 430<br />
foreign labourers at our work sites<br />
The construction industry in Singapore is highly labour intensive. As local manpower is scarce, we<br />
rely substantially on foreign workers. The supply and recruitment of foreign labour is subject to<br />
policies imposed by the Ministry of Manpower. In the event of any changes in such policies, our<br />
ability to recruit foreign labour may be affected. Currently, the Ministry of Manpower imposes levies<br />
of $30 per month on skilled foreign workers and $470 per month on unskilled foreign workers. Any<br />
increase in the aforesaid levies will increase our cost of sales and thus reduce our profitability.<br />
The construction industry in Singapore is also discussed on pages 46 and 55 of this Prospectus.<br />
We may lose our business licence, we may also lose our BCA gradings or we may be<br />
downgraded<br />
We are registered with BCA as an L6 grade contractor under the category “Plumbing & Sanitary<br />
Works” and an L5 grade contractor under the category “Electrical Engineering”. The L6 and L5<br />
grades allow us to tender for projects of unlimited value and up to $10 million respectively. In addition,<br />
we possess at least an L1 BCA grade under several other categories.<br />
We have to meet the various requirements of BCA in order to maintain our BCA gradings. The<br />
requirements include (i) a minimum issued and paid-up capital; (ii) qualified personnel with the<br />
necessary professional or technical qualifications and experience; (iii) the necessary performance<br />
track records; (iv) contracts’ profile; and (v) the necessary licences and certificates from the various<br />
authorities such as the Public Utilities Board, Telecommunications Authority of Singapore and ENV.<br />
The gradings awarded by BCA are usually valid for a period of up to three years, and are subject to<br />
review at anytime within that period. This BCA grading only limits the contract value that a company<br />
may directly tender from governmental bodies.<br />
There is no assurance that we can maintain the necessary licences and certificates from the various<br />
authorities. In addition, the respective authorities may revoke our licences, certificates and BCA<br />
gradings. There is no assurance that we will not lose our licences or BCA gradings. To date, we have<br />
been awarded two M&E contracts each exceeding $10 million, and these two projects were completed<br />
in 1996. As at the date of this Prospectus, we do not have any contracts exceeding $10 million.<br />
However, in the event that our L6 status cannot be maintained, we will not be able to directly tender<br />
for any public sector plumbing & sanitary projects with contract value exceeding $10 million. This will<br />
have an adverse impact on our performance.<br />
We may be liable to pay liquidated damages due to delays in the completion of projects<br />
In the event of any delays in the completion of a project, we may be liable to pay liquidated damages<br />
to main contractors or developers. The quantum of liquidated damages payable is normally specified<br />
in the contracts. However, if the delay is due to factors beyond our control, such as unanticipated<br />
site conditions, we may not be liable for liquidated damages and may be granted an extension of<br />
completion time. To date, we have not had to pay any liquidated damages. However, there is no<br />
assurance that there will be no delays in the completion of our current or future projects which may<br />
result in claims for liquidated damages that will adversely affect the profit margins of the project.<br />
Our revenue recognition may be delayed due to delays in the completion of projects<br />
Our revenue is recognised based on the percentage completion basis, which is in line with the<br />
Singapore Accounting Standards and industry practice. We recognise revenue upon incurring 50% of<br />
the estimated cost to completion for the project (“Completion”). If the costs incurred on a project do<br />
not exceed the 50% of Completion when we <strong>final</strong>ize our annual accounts, the project revenues and<br />
costs would be deferred as work-in-progress in the balance sheet. No profit or loss is recognised in<br />
our results of operations for projects which do not exceed 50% of the estimated cost to completion<br />
for the project.<br />
18