Union Steel : ANNUAL REPORT 2024

ANNUAL REPORT 2024

FINANCIAL STATEMENTS & SUSTAINABILITY REPORT JULY 2023 - JUNE 2024

Contents

CORPORATE INFORMATION

Corporate Profile	2
Operating Locations	3
Business Overview	4
Corporate Structure	6
Chairman's Statement	8
Board of Directors	10
Key Management	12
Financial Highlights	14
SUSTAINABILITY REPORT
About this Report	17
Board Statement	18
Sustainability Committee	19
Stakeholder Engagement	20
Materiality Assessment	21
TCFD Reporting	30
GRI Content Index	32
TCFD Content Index	35
FINANCIAL STATEMENTS
Statement of Corporate Governance	37
Directors' Statement	57
Independent Auditor's Report	60
Consolidated Statement of Financial Position	66
Statement of Financial Position	67
Consolidated Statement of Comprehensive Income	68
Consolidated Statement of Changes in Equity	69
Consolidated Statement of Cash Flows	70
Notes to the Financial Statements	72
FOR THE SHAREHOLDERS
Shareholding Statistics	128
Notice of Annual General Meeting	130
Annual General Meeting Proxy Form	135

UNION STEEL HOLDINGS LIMITED

Corporate Profile

Union Steel Holdings Limited ("Union Steel" or the "Group") is a multi-business investment holding company, with three primary business drivers - metals, scaffolding and engineering. The Group started operations in 1984 as YLS Steel Pte Ltd, which was involved in the trading of ferrous scrap metal and since 1991, has been distributing construction steel through Union Steel Pte Ltd.

Leveraging over 30 years of experience and a global network of suppliers and clients, the Group has since expanded into several complementary business areas which tap on its expertise in steel products and deep knowledge of the construction sector.

The Group first ventured outside the metal and recycling industries when it added scaffolding to its product range in 2012. Today, Union Steel's products and services have expanded to include engineering and deck equipment, primarily servicing the offshore and marine industries.

With its diverse but complementary business holdings, Union Steel is well-positioned for the next chapter in its history and continues to innovate and adapt to the changing times. Given its expertise in steel trading and recycling, the Group's operations are guided by socially responsible practices, to ensure the safeguarding of precious natural resources whilst striving to achieve sustainable financial returns.

Union Steel Holdings Limited was listed on the SGX-ST Mainboard on 15 August 2005.

Over the years, the Group has received several awards including:

2003 Enterprise 50 Award

2004 Enterprise 50 Award

Fastest Growing 50 Certification

Singapore 500 Small Medium Enterprises

2009 Singapore 1000 - Sales Turnover Growth

Excellence Award

2010 Singapore International 100 Company

HEADQUARTERS

33 Pioneer Road North Singapore 628474

Tel	: [phone]
Fax	: [phone]
Web	: www.unionsteel.com.sg

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Operating Locations

YLS STEEL PTE LTD

UNION STEEL PTE LTD

YEW LEE SENG METAL PTE LTD

HOCK ANN METAL SCAFFOLDING PTE LTD

GEE SHENG MACHINERY & ENGINEERING PTE LTD

TRANSVICTORY WINCH SYSTEM PTE LTD

PROMOTER HYDRAULICS PTE LTD

MARSHAL SYSTEMS PRIVATE LIMITED

APPLIED ENGINEERING PTE LTD

FASTWELD ENGINEERING CONSTRUCTION PTE LTD

ANNUAL REPORT 2024

Corporate Profile

33 Pioneer Road North Singapore 628474

Tel	: [phone]
Fax	: [phone]
14 Gul Road Singapore 629344
Tel	: [phone]
Fax	: [phone]
Web	: www.ylssteel.com.sg
33 Pioneer Road North Singapore 628474
Tel	: [phone]
Fax	: [phone]
12 Gul Road Singapore 629343
Tel	: +65	6265 9833
Fax	: +65	6861 4674
Web	: www.unionsteel.com.sg
28 Kranji Loop, #01-04 Kranji Green Singapore 739571
Tel	: +65	6382 0576
Fax	: +65	6382 1197
Web	: www.ylssteel.com.sg

10 Bukit Batok Crescent #04-01

The Spire Singapore 658079

Tel	: [phone]
Fax	: [phone]
Web	: www.hock-ann.com.sg
2 Kranji Link Singapore 728648
Tel	: [phone]
Fax	: [phone]
Web	: www.geesheng.com.sg
9 Pioneer Walk Singapore 627752
Tel	: [phone]
Fax	: [phone]
Web	: www.transvictorywinch.com
9 Pioneer Walk Singapore 627752
Tel	: [phone]
Fax	: [phone]
Web	: wwwv.promoter.com.sg
9 Pioneer Walk Singapore 627752
Tel	: [phone]
Fax	: [phone]
Web	: www.marshal-systems.com
46 Tuas Road Singapore 638499
Tel	: [phone]
Fax	: [phone]
Web	: www.appliedengineering.com.sg

2 Kranji Link Singapore 728648

Tel	: [phone]
Fax	: [phone]
Web	: www.fastweld.com.sg
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UNION STEEL HOLDINGS LIMITED

Business Overview

METALS	Union Steel has firmly established itself in the metal industry over the last 30 years. Today, we provide steel
	rental, distribution, and storage services as well as metal recycling.
	METAL RECYCLING
	The Group operates a one-stop metal recycling centre through YLS Steel Pte Ltd, with multiple facilities
	across Singapore. We collect and process metal scrap before exporting to smelters. Our refined and
	comprehensive processes have been set in place to achieve the cleanest grade of metal scrap before
	exporting to smelters. With more than 30 years of experience, we have grown to become one of the most
	established metal recycling companies in Singapore.
	STEEL DISTRIBUTION AND STORAGE
	The Group supplies steel products to the construction and engineering industries through Union Steel Pte
	Ltd. We offer a wide range of steel products such as reinforcement steel bars, H-beams,I-beams, pipes,
	steel plates and sheet piles. Our vast supply network allows us to fulfil any specification requirements at
	competitive rates. We also provide complementary services such as steel storage and handling services.
	STEEL LEASING
	The Group offers steel leasing solutions to the construction industry through YLS Steel Pte Ltd. We have an
	extensive inventory of steel sheet piles, mild steel plates, steel test piles and steel beams with customisable
	lengths available for short and long-term requirements.
	Our leasing solutions are cost and space efficient and can be applied at all phases of a construction project.
	We help our customers achieve greater cost savings with flexible leasing or buy-back options.

SCAFFOLDING	The Group expanded its services to the construction industry in 2012 with scaffolding products and services.
	The Group offers scaffolding services and related consultancy through Hock Ann Metal Scaffolding Pte Ltd.
	We specialise in scaffolding services and related consultancy, sales and rental of scaffolding materials and
	the supply of skilled workers for erection and dismantling of scaffolds.
	We have established ourselves as the provider of choice in the local scaffolding industry, our expertise is
	built on our experience, industry knowledge and safety awareness in scaffolding.

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ANNUAL REPORT 2024

Business Overview

ENGINEERING	Initiated in 2015, the Group's diversification into adjacent markets gained momentum with strategic
	acquisitions in 2022. Our engineering services now encompass a broad spectrum, targeting the marine, oil
	and gas sectors.
	OIL & GAS
	Acquired by the Group in 2015, Gee Sheng Machinery & Engineering Pte Ltd adds engineering to the
	Group's range of services. We service predominantly the oil and gas industry, specialising in the fabrication
	of custom equipment certified to operate in the Zone 2 hazardous areas including pressure pump units,
	process mixing units and hydraulic power units. Our products are tested and commissioned at our in-house
	test facility with test pressures up to 15,000 PSI to ensure quality.
	Applied Engineering Pte Ltd joined the Group in May 2022, strengthening our service offerings to the
	upstream firms of the oil and gas industry. Founded in 1934, we are well established for our design and
	fabrication of process equipment such as pressure vessels and heat exchangers for energy related
	industries.
	Incorporated in 1993 and joined the Group in July 2022, Marshal Systems Private Limited is a leading
	systems integrator preferred by internationally renowned companies in the oil and gas industry. Our
	solutions cover telecommunications, safety, fire protection and control, and instrumentation systems for oil
	and gas assets such as land-based installation facilities, vessels, rigs as well as onshore facilities making
	them a safer place for people to work in.
	In November 2022, we broadened our scope with the acquisition of Fastweld Engineering Construction
	Pte Ltd. Founded in 1999, the engineering firm provides an extensive range of services to oil refineries
	and petrochemical plants including design, fabrication, maintenance and construction of storage tanks,
	pipelines and equipment.
	MARINE
	Transvictory Winch System Pte Ltd, a leading manufacturer and supplier for custom deck equipment to
	the marine, offshore, oil and gas industries, joined Union Steel in 2016. As one of the largest stockists in
	Southeast Asia, we provide immediate solutions to all winching and lifting applications. With over three
	decades of experience in the industry, we are the preferred partner to reputable multinational companies
	requiring winch systems. Our stringent verifications and testing processes ensure "zero failure" in our
	products, making us the go-to company for quality winching solutions.
	The recent acquisition of Promoter Hydraulics Pte Ltd in August 2022, one of the largest suppliers of
	hydraulic winches and power packs in Southeast Asia, further strengthened our position in the market.

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UNION STEEL HOLDINGS LIMITED

Corporate Structure

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ANNUAL REPORT 2024

Corporate Structure

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UNION STEEL HOLDINGS LIMITED

Chairman's Statement

Dear Shareholders,

On behalf of the board of directors (the "Board"), I am pleased to present the Annual Report of Union Steel Holdings Limited (the "Company") and its subsidiaries (the "Group") for the financial year ended 30 June 2024 ("FY2024").

The year 2024 has been one of navigating significant geopolitical challenges, including the ongoing US-China trade dispute, the Russia-Ukraine conflict, and unrest in the Middle East. These factors have heightened uncertainties in the global economic recovery and outlook. Despite these headwinds, we successfully navigated a year marked by both challenges and opportunities.

Our Metals segment faced pressures from continued declines in steel and scrap metal prices, coupled with intense competition, which impacted sales and volumes. Conversely, our Scaffolding segment saw a stabilisation in revenue following a surge, as construction backlogs from the COVID-19 pandemic were resolved. Despite these hurdles, both segments have managed to sustain stable profits, which is a testament to the dedication and resilience of our team.

In recent years, the oil & gas, offshore, and marine sectors have presented substantial opportunities on both regional and global fronts. In response, we have strategically expanded our operations by acquiring entities that enhance our Engineering segment's capabilities across the sector's value chain. This strategic expansion underscores our commitment to broadening our service offerings and extending our market reach, which contributed to the segment's improved performance in FY2024.

As we move forward, the Group remains committed to addressing challenges while seizing opportunities. We will continue to prioritise excellence and innovation, while diligently managing costs to optimise the performance of our various business segments. This focused approach has resulted in a 14% increase in net profit to S$12.7 million in FY2024, up from S$11.1 million in the financial year ended 30 June 2023 ("FY2023").

During FY2024, the Company successfully executed a 1:3 share split, converting every one ordinary share into three ordinary shares. This move aims to enhance the stock's attractiveness and accessibility by increasing the number of shares and lowering the price per share, thereby facilitating greater trading liquidity and broadening our shareholder base. I am pleased to report that the share price has responded positively post-split, reflecting the market's confidence in the Group's strategy and growth prospects.

Furthermore, the Group remains committed to sustainability and responsible business practices, recognising the importance of reducing our environmental footprint. Our ongoing efforts include optimising resource use and investing in energy-efficient technologies to foster long-term sustainable growth while contributing positively to the environment.

FINANCIAL AND BUSINESS REVIEW

The Group's revenue rose by 7% to S$114.9 million in FY2024, from S$107.3 million in FY2023. The increase in revenue was mainly attributable to strong performance of the Engineering segment. However, this was partially offset by a decline in sales within the Metals and Scaffolding segments.

Since FY2022, the ongoing recovery in the offshore, marine, oil and gas industries, along with the Group's diversification into these related businesses, has led to the strong growth in the Engineering segment for FY2024. Revenue for the Engineering segment grew by 33% from S$46.8 million in FY2023 to S$62.4 million in FY2024.

Despite a 6% increase in sales from the Metals segment to S$23.7 million in the second half of FY2024, annual sales for the Metals segment decreased by 11% to S$44.7 million in FY2024 as compared to FY2023. This decline was primarily due to intense competition and the ongoing softening of prices for both new steel and scrap metal.

The Scaffolding segment recorded a reduction in revenue of 26% to S$7.8 million in FY2024 from S$10.5 million in FY2023, as operations normalised with the resolution of construction backlogs caused by Covid-19 pandemic.

Singapore continues to remain the main contributor to the Group's revenue in terms of geography, accounting for 81% or S$93.0 million of group sales in FY2024 as compared to 78% or S$83.6 million in FY2023. Overseas sales declined to $21.9 million in FY2024 from S$23.7 million in FY2023, and this was mainly due to lower overseas sales generated by the Engineering segment.

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ANNUAL REPORT 2024

Chairman's Statement

The Group's gross profit grew by 14% to S$31.3 million in FY2024 from S$27.4 million in FY2023, mainly due to the higher revenue and improved performance of the Engineering segment. In FY2024, the Group experienced an improvement in gross profit margin to 27.2% as compared to the 25.5% gross profit margin achieved in FY2023, and this was mainly due to the improved performance of the Engineering segment.

As at 30 June 2024, the Group had a net asset value per share of S$0.75 (30 June 2023: S$0.66) on 118,134,300 shares, net

current assets of S$33.3 million (30 June 2023: S$29.3 million), total assets of S$159.0 million (30 June 2023: S$157.2 million),

and shareholders' equity of S$88.4 million (30 June 2023: S$77.6 million). Net gearing of the Group has increased to 11.3% from

5.4% a year ago, due mainly to the overall reduction in cash and cash equivalents to S$17.0 million (30 June 2023: S$22.7 million).

OUTLOOK

To mitigate the impact of continued price declines and intense competition in the new steel and scrap metal markets, we have strategically shifted our focus to the steel leasing business, where we have experienced steady growth in recent years. This decision has reinforced our position as a versatile service provider and we remain cautiously optimistic about the future performance of this segment.

The Scaffolding segment, which supports Singapore's construction sector, continues to deliver stable profits for the Group and is expected to sustain its current performance moving forward.

The Group continues to expand regionally in the oil & gas, offshore and marine engineering industry, while continually optimising costs, enhancing operational efficiency, and fostering synergistic relations amongst the diverse business units. The Engineering segment's revenue and profit have gradually increased in the last few years, accordingly, the Group maintains a positive outlook about the prospects of this segment.

DIVIDEND

In recognition of the continued support of shareholders, the Board is pleased to reward shareholders with a recommended dividend per share of 1.3 Singapore cents for their continued trust and belief in the Group.

ACKNOWLEDGEMENT

I would like to extend our heartfelt gratitude to our Board of Directors for their continued guidance and support, and our management and staff for their hard work and dedication in helping us to achieve a decent set of results for FY2024 even in a challenging business operating environment. We also would like to accord our sincere appreciation to our customers, business associates, suppliers and other stakeholders for their unwavering support over the years as we continue to lead, innovate, and drive positive change in the spirit of excellence that is Union Steel Holdings Limited.

Lastly, I would like to extend our deepest appreciation to Mr. Siau Kai Bing and Ms. Tan Min-Li, who after serving the board for nineteen years and nine years respectively, will be retiring as Independent Directors following the upcoming Annual General Meeting on 28 October 2024. Thank you for your invaluable contributions and dedicated service over the years. Your guidance, wisdom, and commitment have been instrumental in shaping the Group's success, and I wish you all the best in your future endeavours.

MR ANG YU SENG (洪友成)

EXECUTIVE CHAIRMAN & CHIEF EXECUTIVE OFFICER

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