PEC : Sustainability Report

SUSTAINABILITY REPORT

Section 1: FY 2022 Highlights

About PEC Limited

[GRI 102-1,102-2,102-4,102-5 and 102-6]

Established in 1982, PEC Ltd. (PEC) has grown into a recognised plant and terminal engineering specialist with fabrication facilities spread across the world

• helmed by a strong management team with decades of experience in their individual fields.

PEC serves four main sectors - oil & gas, petrochemicals, oil & chemical terminals and pharmaceuticals and is making good progress into the clean energy sector through our wholly-owned subsidiary, PEC Process Systems Pte Ltd, which designs and fabricates modular process and gas compression solutions.

Our reputation for being a reliable and trusted provider of engineering solutions has won over a growing number of customers in the industries we serve, including prominent MNCs that have been with us since 1982. Over the years, these relationships have allowed us to establish a firm foothold in Asia and the Middle East, where we continue to expand our presence.

One of PEC's core businesses is project works, under which we provide engineering, procurement & construction (EPC), EPC project management

and project management consultancy services. Providing plant maintenance services, including plant turnarounds and upgrading, makes up our other core business, where we offer customers all the advantages of a 'one-stop' service.

PEC's specialty services cover engineering, mechanical, piping, structural, tankage, electrical & instrumentation, heat treatment, testing & isolation, painting & blasting, scaffolding, insulation & refractories, fireproofing and hydrojetting.

We have a global network serving diverse needs of our customers with project works and maintenance services being carried out in Singapore, China, India, Malaysia, Thailand, Vietnam, Oman and the Middle East. The Group comprise PEC Ltd and its local and overseas subsidiaries as illustrated at the Organisation Chart below.

With our established processes and methodologies, PEC aims to be the engineering specialist of choice for customers. To better meet client needs, we are constantly enhancing and expanding our capabilities through acquisitions and technological upgrading.

PEC LTD.

Singapore

International

SUSTAINABILITY REPORT

Section 1: FY 2022 Highlights

About this Report

[GRI 102-3,102-10,102-45,102-46,102-50 to 102-56]

FY2021 Targets, FY2022 Progress, Future Targets

The following table lists PEC's key targets, near term targets and progress to date.

Key Performance Highlights and Targets

We are proud to present our fifth annual sustainability report, which outlines PEC's approach in the Environmental, Social and Governance (ESG) factors into its management, policies, and operations. At PEC, we are committed to promoting accountability and transparency of sustainability reporting as we reflect on our progress in the sustainability journey while working on our future targets. Through this report, we hope to provide assurance and create stronger relationships with stakeholders as we demonstrate our commitment to sustainability. This report replaces the PEC Sustainability Report 2021 issued on 11 October 2021 as its latest annual sustainability publication.

Scope of the Report

This report covers our sustainability performance in the financial year 2022, from 1 July 2021 to 30 June

India, Malaysia, Myanmar, Thailand, the Middle East Vietnam and Oman. Some of the chapters include data which is limited only to our operations in Singapore and/or UAE. There was no significant change

to the Company's size, structure, ownership or supply chain during the reporting period.

Reporting Framework

This report is prepared in accordance with the sustainability reporting requirements of the Singapore Exchange Securities Trading Limited ("SGX-ST") Listing Rule 711A. It has also been developed while referencing the primary components stated in SGX- ST Listing Rule 711B on the "comply or explain" basis.

The sustainability report has also been prepared in accordance with the Global Reporting Initiatives ("GRI") in the GRI Standards (Core

2016 are used. The Enhanced SGX Practice Note 7.6 Sustainability Reporting Guide that took effect from 1 Jan 2022 and the newly updated GRI Universal Standards 2021 will be adopted for the Financial Year 2023 from 1 July 2022 to 30 June 2023 (SR FY 2023).

Our GRI content index can be found on pages 32-36 of the report.

Assurance

Our sustainability report has been independently assured by CSRWorks International Pte Ltd, in accordance with the AA1000 Assurance standards. The assurance statement can be read on page 29-31.

Confirmation and Approval

This sustainability report has been endorsed by the Board of Directors on page 5.

2022. We are pleased to report our strategies, initiatives, and performance in relation to our material ESG topics. In addition, this report also highlights areas that require further efforts to be addressed in the future. The information provided in this report covers operations wholly owned and managed with the headquarter based in Singapore. These operations are PEC Group's network of engineering facilities and offices located in Singapore, China,

option). The GRI framework was chosen for this reporting as it is one of the most widely used and recognised standards for reporting globally. The disclosures made in this report are in line with GRI's Reporting Principles - accuracy, balance, clarity, comparability, reliability, and timeliness.

For this report, SGX Practice Note

7.6 Sustainability Reporting Guide effective from 07 Feb 2020 to

31 Dec 2021 and GRI Standards

Contact Us

PEC welcomes feedbacks from its stakeholders for further improvement in its sustainability performance and reporting. If you have any feedback and questions about this report, please contact us at:

Address: 14 International Business Park, Singapore 609922

Email: ir@peceng.com

Tel: +65 6268 9788

Fax: +65 6268 9488

82.00% participation achieved for our Employee Satisfaction Survey for FY2022.

$592.87 spent on average per employee on learning and development

$1.96 mil spent on training and development

22.88 hours of training received per employee on average

89.16% of our workers

have one or more certified skill compared to 95.6% last year

Continue to maintain at

least 80% participation for employee satisfaction in our biennial Employee Satisfaction Survey

SUSTAINABILITY REPORT

Section 1: FY 2022 Highlights

SUSTAINABILITY REPORT

Section 2: Sustainable Governance and Management

Message from

Board of Directors of PEC

[GRI 102-14]

"At PEC, our focus is on building long-term resilience and creating sustainable value for all

stakeholders. We recognise we are facing an energy transition, and we believe we are well-positioned to continue to serve the energy and chemical

industries in a manner consistent with our commitment to a sustainable path for our business."

In the face of rising inflation, geopolitical tensions, global energy security concerns, and efforts around the world to mitigate the effects of climate change, we are committed to a sustainable and efficient operation, maximising the value we create for our stakeholders, while minimising our impact on the environment.

During the past year, we continued to focus on ensuring that we operate ethically and with the highest standard of corporate governance. We are committed to building a workforce that fosters diversity, and which shares the same values and purpose - a workforce where employees feel respected, valued, and safe.

The Board recognises that stakeholders are increasingly interested in how the Company performs in relation to its long- term value. As part of our ongoing sustainability efforts, we continue to reduce our impact on the environment, bring value to our

customers and conduct business with integrity and high ethical standards. We will explore the adoption of green energy solutions such as the installation of solar panels in our premise and explore the use of electric vehicles. We aim to participate in green projects with our customers on sustainable energy.

Sustainability plays a significant role in the Company's overall strategic plan to stay relevant and competitive in the business. Guided by our corporate culture, we monitor our key sustainability performance indicators, and aim to improve

the long-term sustainability of our business, while reducing our impact on the environment.

The Board recognises that sustainability concerns and shareholder expectations will continue to evolve. The Board will continue to work with the management to oversee and monitor the key ESG topics as the sustainability landscape continues to evolve. At PEC, our focus is on building long-term resilience and creating sustainable value for all stakeholders. We recognise we are facing an energy transition, and we believe we are well-positioned to continue to serve the energy and chemical industries in a manner consistent with our commitment to a sustainable path for our business.

Sincerely

Board of Directors

PEC Ltd.

CEO's Message

[GRI 102-14]

Towards Sustainable Business

At PEC, we strive to be a leading service provider and preferred business partner for engineering, procurement, construction, and maintenance services in the process industries. Therefore, we are committed to conduct our business in a responsible and sustainable manner, with a high emphasis

on the Health, Safety, Security & Environment (HSSE) performance. While we continue to be cautious on COVID-19, a bigger crisis that can cause catastrophic destruction - climate change continues to loom. As global pressure to decarbonise and address climate change becomes a pressing issue, we believe sustainability practices can create value for all our stakeholders. Our commitment to sustainability begins with our Board of Directors and senior management and is reinforced at every level of our organisation.

New Business Opportunities in Green Energy Sector

As majority of our customers are from the energy and chemical sectors, how we support our customers' business activities while mitigating the long-term impact on our environment is key to our sustainable future. We are making progress in this area by exploring new business opportunities on clean-energy related projects such as hydrogen storage. With our experience and, skilled workforce we are well positioned to transition

to take on projects focusing on low- carbon economy. The steps we are taking to reduce emissions reflect our commitment to addressing the effects of climate change. We strongly believe that a complete transition away from fossil-based energy is not currently possible and the energy transition is a long-term and complex endeavour. Oil and gas is not just a legacy business, as energy majors' plans for greener energy are funded by cash from

oil and gas business as they transit toward a low-carbon future; developing and implementing greener and sustainable solutions.

Digitalisation and Investment in Technology

Additionally, we continue to invest in digitalisation to aid in improving our productivity. Streamlining and automating our operations such as central fabrication and digitisation in the area of maintenance work will be our key priorities as it helps us gain a competitive advantage. By relying on digitalisation, we reduce wastage, errors and reworks which enhances the sustainability of our operations. We are looking into further transport route optimisation and into transitioning part of our large fleet of vehicles into electric vehicles.

Building Human Capital

Employees are the backbone of our organisation, and it is our responsibility to ensure all employees are respected and treated non-discriminatory. In our workplace, we promote diversity in representation through our Board Diversity Policy. We also create opportunities for our both local and overseas employees through training and education with along with our Learning and Development

Department (LND). We believe in equipping key resources and employees with the necessary skills. Apart from our local employees, we also employ migrant workers in our business operations. We are committed to upholding human rights and to integrate human rights due diligence more firmly into our business. We treat others with respect and dignity, encourage diversity and provide safe working conditions and promote equal opportunity for all.

Looking Ahead

Although the future remains uncertain and the road to recovery from COVID-19 might be uncertain, there is undeniable evidence that ESG factors will become even more critical. We will focus on pursuing new business opportunities in

the green economy, digitalising our operations, and building our employee capital. We will continue to keep up with our sustainability efforts and advance our sustainability agenda, in the hope of building a better, greener, world for future generations. On behalf of the entire leadership team, I wish to thank all our employees, customers, and stakeholders for their continued support to ensure the success of our Company.

Sustainability Governance

[GRI 102-18]

At PEC, our sustainability governance is helmed by the Board of Directors. The Board has the fundamental responsibility to oversee and be accountable for sustainability related matters. The board members review and monitor the material ESG factors and is the main decision-making body for all sustainability strategic policies and planning.

The Sustainability Management Council chaired by our Group Chief Executive Officer (CEO) supports and reports to the Board. The Council consists of management staff and function

1CARING

We care for our colleagues, care for the Company assets, care for the community and care for society

4COMPETENCIES

We strongly believe our service is competencies driven and we will take every opportunity to upgrade our competencies

Corporate

Sustainability Policy

We are committed to placing sustainability at the heart of our business strategy to manage the potential social and environmental risks. Our CS policy outlines

our approach to CS in the key areas - governance, social and environment.

leaders and is supported by a sustainability disclosure project team. Our Business Excellence (BE) Committee is a cross-functional team of subject matter experts from senior management from various departments, reports to the Group CEO. The BE identifies sustainability issues, drives the sustainability strategies, set targets and measures sustainability performance, with the guidance and advice by the Board. Sustainability strategies and targets are endorsed by the Group CEO and are reviewed yearly to ensure effective execution.

At PEC, our employees also play a vital role in operationalising our sustainability goals. Over the years, we have instilled the concept of

2CONTINUOUS LEARNING

We strive to continuously improve our services by keeping abreast with the latest technology

and know-how

5COMMITMENT

We are second to none in terms

of delivery of HSSE, Quality

and Schedule

In terms of our governance, we are committed to being a responsible business and cultivate an ethical principle and enhance value for stakeholders. We also provide a safe and healthy working environment and are committed to environmental protection and stewardship. As employees are the backbone of our Company, we ensure that employees

sustainable development at our Company. This has gradually led to widespread adoption of sustainability by our employees and to make sustainability a part of their daily work.

Corporate Core Values

[GRI 102-16]

Our corporate values - the 6 Cs is instilled in PEC. It helps our employees understand what PEC stands for and serves as the guidelines for every decision. The C is underpinned by six core values that presents the Company's commitments aimed at "strengthening PEC's long-term value while contributing to the well- being of stakeholders.

3CUSTOMER FOCUS We offer services to the best of our ability and build consensus

to maintain an everlasting

relationship

6COST EFFECTIVENESS

We are resourceful, confident, and willing to benchmark our productivity, sales and profit

are treated fairly in a workplace where diversity is embraced. In addition, PEC has put in place good corporate citizenship and support charity and community initiatives which are relevant to its business, employees, customers, and stakeholders. With our CS policy, we will be able to create long-term value for our business and our stakeholders.