Dear Shareholders,

We are pleased to present you the annual report of United Engineers Limited and its group of companies (“the Group”) for the financial year ended 31 December 2010 (“FY2010”).

Strong profit growth
The year saw revenue increased 28% to $901.4 million mainly due to progressive revenue recognition from residential projects, The Rochester  and Park Central @ AMK. Arising from the increased revenue, gross profit rose 77% to $286.6 million. Gross profit percentage also increased to 31.8% compared with 23.0% in 2009.

Other income increased 381% to $51.1 million mainly due to higher revaluation gains from the Group’s investment properties.

The Group’s attributable profit increased significantly to $186.2 million in 2010 compared with $52.2 million in 2009.

The Directors are pleased to propose a first and final tax exempt (one-tier) dividend of 5 cents per ordinary stock and a special tax exempt (one-tier) dividend of 5 cents per ordinary stock for FY2010.

Successful listing of UEEC
Upon receiving shareholders’ approval to list the Group’s mechanical and electrical (“M&E”) engineering and construction subsidiary, UE E&C Ltd. (“UEEC”), at the extraordinary general meeting in December 2010, an initial public offering of 70 million shares in the capital of UEEC at $0.48 each was launched in February 2011 on the Mainboard of Singapore Exchange Securities Trading Limited.

The listing of UEEC seeks to unlock shareholder value by allowing the Group’s M&E engineering and construction businesses to be valued more distinctly from the rest of the Group’s businesses.

The listing will also allow the Group to streamline its operations and focus on property-related and environmental engineering businesses in Singapore and overseas.

The Group’s new headquarters
In December 2010, the Group moved its corporate office, previously in UE Square, and the bulk of its operations in various locations to UE BizHub CENTRAL at 12 Ang Mo Kio Street 64. This consolidation of the Group’s major operations seeks to enhance intra-Group working efficiency and employee relations.

UE BizHub CENTRAL, acquired by the Group in April 2010, has a total gross floor area of about 378,426 sft. Leveraging on the Group’s build-to-suit capabilities, we plan to further expand UE BizHub CENTRAL up to 622,766 sft in future.

Consolidation of the Group’s property portfolio
During the year, the Group sold UE Print Media Hub at Tai Seng Avenue for $51 million. UE Print Media Hub is a five-storey industrial building developed, constructed and managed by the Group.

The sale is in line with the Group’s ongoing strategy to retain a core property portfolio and continue to pursue build-to-suit projects. The Group’s commercial properties include UE Square, UE BizHub CENTRAL and upcoming developments like UE BizHub EAST  in Changi Business Park and the mixed development comprising a hotel and shopping mall at One-North.

New development projects
The Group broke new grounds with two new development projects – one being its first in the prime shopping belt of Orchard Road, and the other its first executive condominium (“EC”).

In July 2010, the Group announced plans to develop a 20-storey building comprising a 512-room hotel, 230,000 sft retail space and a multi-storey carpark at 277 Orchard Road (the former Specialists’ Centre/Hotel Phoenix site). The Group will also project manage a connected project across the road at 218 Orchard Road (the former Orchard Emerald site) which will be an 11-storey building comprising 50,000 sft office space and 55,000 sft retail space.

In January 2011, the Group launched Austville Residences, an Australian resort-inspired, 540-unit EC project with full condominium facilities located at Sengkang East Avenue/Buangkok Drive.

Model of excellence for construction execution
During the year, the Group’s mixed development at One-North made good progress. Being one of the Group’s key development projects, much efforts and investments have been made in areas of project management and workplace safety and health to ensure timeliness in construction and quality assurance standards are maintained at all times. Under the well-managed execution, the project attained close to 2.5 million, accident-free man-hours at year end.

Branding success
The Group recognises the importance of branding promotion in today’s business, and constantly promotes its well-established brand through various initiatives.

The year saw the Group being honoured a Business Superbrand award by Business Superbrands, the world-leading brand promotional platform that curates winning brands based on company reputation, market share, achievement, recognition and corporate and social responsibility.

In addition, two of the Group’s marketing brochures won an award at the 40th Creativity International Awards.

Upping the ante in workplace safety and health
During the year, the Group made further achievements in workplace safety and health.

United Engineers Limited and United Engineers Developments Pte Ltd each won a Workplace Safety and Health (“WSH”) Performance Award (Silver) from the WSH Council for its good performance in workplace safety and health through the implementation of sound OHSAS 18001 management systems.

Greatearth Construction Pte Ltd, UE Service Corp and Park Avenue Suites each won a Safety and Health Award Recognition for Projects (“SHARP”) award from the WSH Council for good workplace safety and health performance and management systems at specific worksites and projects.

Due to the outstanding demonstration of workplace safety and health performance and leadership, the Group received a bizSAFE Mentor status from the WSH Council. Currently, there are only 12 organisations in Singapore being accorded the bizSAFE Mentor status.

A revitalised board
Our director Mr Lai Teck Poh did not offer himself for re-election, and will therefore retire from the Board on 29 April 2011. Mr Lai joined the Board in 1992, and is one of the longest-serving members of the Board. We would like to thank him for his contributions over the years, and wish him all the best in his future endeavours.

On 1 January 2011, the Board appointed Mr David Wong Cheong Fook as an Independent Director. Mr Wong was a Partner with Ernst & Young and the Group Managing Director of Wearnes Technology. He was also a pilot and senior officer with the Republic of Singapore Air Force. We are confident that his past working experience and extensive knowledge from serving on other boards will allow him to contribute to the Group.

Thank you
We would like to thank all customers, unions, business partners and shareholders for their continued support. Last but not least, we would also like to thank the Board members for their contributions to the Group, as well as the management and staff for their dedication and efforts during the year.