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Sharpening Focus

Singapore Computer Systems Limited Annual Report 2005


SCS is people- and process-oriented. We believe in giving our customers our best people supported by proven processes to make IT work for their organisations. We make use of living technologies – technologies that are proven and can stand the test of time – to deliver quality solutions at the right time and price.


CONTENTS Vision, Mission and Values 02 Corporate Profile 05 Chairman’s Statement 06 Board of Directors 10 Key Management 14 Corporate Information 17 Financial Highlights 18 Operations Review 23



Highlights of the Year 35

Singapore Computer Systems Limited Annual Report 2005

Financial Report 37 Directors’ and Employees’ Remuneration 105 Interested Person Transactions 107 Corporate Governance 108 Shareholding Statistics 118 SCS Offices 119 Notice of 26th AGM 121 Proxy Form


Vision To be the Trusted Provider of Trusted Services

Singapore Computer Systems Limited Annual Report 2005



Mission Empowering organisations with competent professionals using proven processes and living technologies in a timely and cost-effective manner


Values I n t e g r i t y L e a d e r s h i p V a l u e - C r e a t i o n E x c e l l e n c e I n n o v a t i o n T e a m w o r k

Singapore Computer Systems Limited Annual Report 2005

O p e n n e s s




Singapore Computer Systems Limited Annual Report 2005



TRUSTED SERVICES AT WORK Our Trusted Services are reliable, secure and recurring in nature. They are critical IT services that our customers outsource to us, thus enabling us to build long-lasting relationships with them. As the trusted provider of trusted services, our unique 25-year history gives us a deep understanding of our markets, our customers and the communities in which we operate. Our Trusted Services position us strongly for future growth.


Corporate Profile

Singapore Computer Systems (“SCS�) is a leading information and communications technology service provider in Asia. As the provider of Trusted Services to its customers, SCS empowers organisations with competent IT professionals, using proven processes and living technologies in a timely and cost-effective manner.

 Singapore Computer Systems Limited Annual Report 2005

Our services are designed to maximise organisational performance and are compliant with regulatory and security guidelines. They range from traditional IT infrastructure, business solutions, systems integration and managed services to state-of-the-art ApplicationAware Infrastructure, Infrastructure-Aware Applications, converged communications, business rules management systems, business process outsourcing, and business continuity management services. These are flexible solutions that can adapt as the needs of our customers grow or change. Trusted Services have been successfully deployed in multiple sectors including government; banking, insurance and financial services; manufacturing, logistics and distribution; healthcare; property; and telecommunications. Incorporated in 1980 and listed on the Main Board of The Singapore Exchange in 1991, SCS has operations in Asia spanning Singapore, Brunei, China, Hong Kong, Indonesia, Malaysia, the Philippines and Thailand.

IDA is celebrating 25 years of InfoComm. SCS has been in business for the past 26 years. We are part and parcel of Singapore’s InfoComm transformation!


Chairman’s Statement

Dear Shareholders The financial year ended 31 December 2005 (“FY2005”) must rank as one of the most challenging periods in the 25-year history of Singapore Computer Systems (“SCS”). We had entered the year with great optimism after a return to profitability in FY2004 and, as such, the Board was then of the opinion that SCS would be able to maintain the profit momentum in the year under review.

Singapore Computer Systems Limited Annual Report 2005



Earlier in the year, the Board directed that a critical assessment of all projects be undertaken along with a strategic review of our investments. The review had us realise that we had to make significant allowances for project overruns and investment impairments. In a sharp turn of events, we issued a profit warning and announced a loss of S$34.8 million for the first half of the year.

New Management and Renewed Board In May, both the President and Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) resigned. The Board thus embarked on a rigorous and intensive search to bring in a new

management team to help stabilise the Group. Mr. Tan Tong Hai was appointed the new President and CEO in August. Tong Hai, who has also joined the Board, brings with him a strong record of corporate leadership in the IT and Telecommunications sectors. Mr. Vincent Phua, a Finance veteran in both the IT and Media sectors, was appointed the new CFO in September. As part of our Board renewal process, we brought in Mr. Philip Eng, former Group Managing Director of Jardine Cycle & Carriage, and Professor Tan Cheng Han, Dean of the Faculty of Law at the National University of Singapore, in May. The Board was further strengthened by the appointment of Mr. Venky Krishnakumar, Senior Advisor to McKinsey & Co., in August.

The new management team’s priority was to focus its efforts on stabilising the Group’s operations and laying a framework for sustained profitability.


Sharpened Focus The new management team’s priority was to focus its efforts on stabilising the Group’s operations and laying a framework for sustained profitability. The Board and the Exco have been actively involved in providing guidance to the management team and remain committed to restoring shareholders’ confidence and returning the Group to profitability. Significant progress has been made in the following areas:

• Customer Focus



• Project Bidding and Management

Singapore Computer Systems Limited Annual Report 2005

• Business Excellence • Products and Services • Partners • Regional Presence • Talent and Resource Management


Chairman’s Statement

Customer Focus

Products and Services

A renewed focus on customers by establishing client relationship teams enables SCS to forge closer ties with them. In doing so, the client relationship teams will grow existing businesses, secure new ones and build them into long-term loyal customers.

SCS will continue to focus on offering “Trusted Services”, a suite of services and solutions based on SCS’ existing strengths in providing infrastructure, business solutions and managed services. These will be integrated with business process outsourcing (“BPO”), business continuity management (“BCM”), and other recurringrevenue services. The “Trusted Services” initiative was launched in August 2005 and has since received favourable response from the market.

Project Bidding and Management

Singapore Computer Systems Limited Annual Report 2005



To improve the quality and profitability of the projects that SCS bids for and takes on, the existing bidding and project review processes were sharpened. A comprehensive risk assessment process has since been established to ensure proper project sizing and costing with acceptable margins during the project bidding stage. A project review process to regularly assess the health of ongoing projects was also instituted to ensure early identification of projects that are behind schedule and minimise the risk of project cost overruns.

Business Excellence To ensure higher service quality, SCS has aligned its internal processes with world-class standards like the Capability Maturity Model (“CMM”) and ISO 9000. SCS was recently re-certified for ISO 9001 for the fourth time over a 12-year period. The new target is to work towards achieving the Capability Maturity Model Integration (“CMMi”) Level 5 and Information Security Management System certifications, in order to further demonstrate to customers the value of our solution offerings.

Partners Instead of having multiple partners for every product and market, SCS will target top-tier partners. The new strategy is to build SCS into the top contributor to these partners so that better support and terms can be obtained. Dedicated partner relationship managers have been appointed to build quality relationships and track our business performance with these partners. These efforts have paid off, as reflected in the number of partner awards SCS received in 2005.

Regional Presence SCS currently has direct operations spanning eight countries in Asia – Singapore, Indonesia, Thailand, Brunei, the Philippines, Malaysia, Hong Kong and China. However, having many points of direct presence requires a lot of management attention and may not bring about stronger regional growth. SCS will adopt a more focused approach with emphasis on high-growth markets within ASEAN and China. For the remaining markets, SCS will adopt a partnership approach and right-size operations accordingly to ensure better regional contribution.


Talent and Resource Management SCS will continue to develop its human capital and strengthen their core competencies. A resource management function has been established to track the competencies and utilisation of staff so that they may be deployed more effectively.

Improved Results

I have every confidence that the new team under the leadership of Tong Hai, will bring about a transformation of SCS and return it to sustained profitability.

Outlook Barring any unforeseen circumstances, the Group expects to be profitable for FY2006.

bring about a transformation of SCS and return it to sustained profitability. 

Appreciation I would like to record our thanks to four long-serving Board members who retired this year – Mrs. Theresa Foo-Yo Mie Yoen, Ms. Low Sin Leng, Datuk Robert Chua Teck Chew and Mr. Spencer Lee Tien Chye. We would like to thank our management and staff for their hard work and dedication during these difficult times. To our business partners, customers and shareholders who have stood by us loyally during this period, we express our heartfelt appreciation.

Dividend In the light of the loss in FY2005, the Board has proposed that no dividends be paid this year. We would appreciate the understanding of shareholders in this.

Peter Seah Chairman

Singapore Computer Systems Limited Annual Report 2005

These changes have resulted in improved performance for the third and fourth quarter of FY2005. Our losses were reduced to S$9.1 million in the third quarter, and in the fourth quarter, we made a profit of S$0.3 million. For the full year, the Group recorded a net loss of S$43.6 million on a turnover of S$348.1 million. The new team has also secured new customer contracts, bringing the order book to S$267.5 million, to be fulfilled in FY2006 and beyond.

I have every confidence that the new team under the leadership of Tong Hai, will


Board of Directors

Singapore Computer Systems Limited Annual Report 2005

10

Left to right: Mr. Peter Seah Lim Huat, Mr. Boon Swan Foo, Mr. Venkatachalam Krishnakumar and Mr. Donald Albert Ramble.


Mr. Peter Seah Lim Huat Chairman Chairman, Executive Resource & Compensation Committee

Mr. Peter Seah was appointed Chairman of the Board on 1 January 2005. Presently, he is a member of the Temasek Advisory Panel. In addition, Mr. Seah is Chairman of SembCorp Industries and ST Engineering and Deputy Chairman of Singapore Technologies Telemedia and Global Crossing. He is President Commissioner of Indonesian Satellite Corporation and Bank Internasional Indonesia, and sits on the Boards of CapitaLand, Chartered Semiconductor Manufacturing, EDB Investments, Government of Singapore Investment Corporation, StarHub, STATS ChipPAC, PSA International and Siam Commercial Bank. Mr. Seah is also a member of the Defence Science and Technology Agency, Institute of Defence and Strategic Studies, Vice-President of Singapore Chinese Chamber of Commerce & Industry and Treasurer of Singapore Business Federation.

Mr. Seah graduated from the University of Singapore in 1968 with an honours degree in Business Administration.

Mr. Boon Swan Foo Deputy Chairman

Prior to joining A*STAR, Mr. Boon was CEO and Deputy Chairman of ST Engineering, and concurrently the Chief Financial Officer of Singapore Technologies.

Mr. Venkatachalam Krishnakumar Director Member, Executive Committee

Mr. Krishnakumar was appointed to the Board on 13 August 2005. Mr. Krishnakumar is currently Senior Advisor to McKinsey & Company. Mr. Krishnakumar also serves as Board Chairman on Citibank (Malaysia) Sdn Bhd and is a Board member in Citibank Korea Ltd, Citibank (Savings) Manila, ST Engineering and Singapore Land Authority. He holds Bachelor of Engineering and Master of Business Administration degrees from the Indian Institute of Management, India. Previously, Mr. Krishnakumar was Chief Operating Officer and Chief Financial Officer of the Asia Pacific Consumer Bank for Citigroup from where he retired in February 2005 after 31 years with the company.

Chairman, Executive Committee and Nomination Committee

Mr. Donald Albert Ramble

Mr. Boon was appointed Deputy Chairman of the Board and Chairman of the Executive Committee on 1 January 2005. He is currently Managing Director of the Agency for Science, Technology and Research (“A*STAR”), and Executive Chairman of Exploit Technologies, A*STAR’s commercialisation arm. He also serves as Deputy Chairman of the Science and Engineering Research Council (“SERC”) Management Board and is a member of the Biomedical Research Council (“BMRC”) Management Board. SERC and BMRC are divisions under A*STAR.

Member, Executive Committee

Mr. Boon serves on the Boards of the Infocomm Development Authority of Singapore, the

Director Mr. Ramble was appointed to the Board on 15 July 2003. He is currently President, Asia Pacific, of Spectris PLC, a group of technology companies that design and manufacture specialist instrumentation and controls. Prior to joining Spectris, Mr. Ramble was the Managing Director (Pacific Rim and Latin America) of Mentor Graphics, a corporation in the area of electronic design automation. Mr. Ramble also has extensive experience working in various management capacities in Unisys and Sperry in countries that include ASEAN, India, USA, Turkey, USSR and Western Europe.

11 Singapore Computer Systems Limited Annual Report 2005

Previously, Mr. Seah was President & Chief Executive Officer (“CEO”) of Singapore Technologies Pte Ltd. Before that, he was a banker for 33 years, retiring as Vice-Chairman and CEO of Overseas Union Bank in 2001.

Singapore-MIT Alliance Governing Board, and NTUC Income Insurance Cooperative. He is Chairman of the Management Development Institute of Singapore Senate, as well as an Executive Committee member of the Economic Development Board and a Fellow at the Singapore Institute of Directors and the Institute of Certified Public Accountants of Singapore.


Board of Directors

Singapore Computer Systems Limited Annual Report 2005

12

Left to right: Mr. Philip Eng Heng Nee, Professor Tan Cheng Han, Mr. William Liu Wei Hai and Mr. Tan Tong Hai.


Mr. Philip Eng Heng Nee Director Chairman, Audit Committee

Mr. Eng was appointed to the Board on 16 May 2005. Mr. Eng is currently Chairman of Accord Customer Care Solutions Limited and City Gas Pte Ltd and Deputy Chairman of MCL Land Limited. He is also Director of Asia General Holdings Limited, MTQ Corporation Ltd and Chinese Development Assistance Council, Commissioner of PT Bank Danamon Indonesia, Ambassador Designate to Greece, and Singapore’s High Commissioner to the Federal Republic of Nigeria. He spent 23 years with the Jardine Cycle & Carriage Group before retiring in February 2005 as Group Managing Director.

Professor Tan Cheng Han

September 2001. He is currently the President of Green Dot Capital Pte Ltd, an investment holding company in IT solutions and services as well as electronic payment, mobile and internet businesses for the new economy. In addition, he is Chairman of the Singapore IT Disputes Resolution Advisory Council and W3 Infocomm Group, Deputy Chairman of Monte Jade Singapore Chapter, member of Board of Advisors to the Singapore Infocomm Technology Federation (“SiTF”), Council Member of the Singapore/British Business Council and a member of the board of SISTIC and the National Library Board. Before joining Green Dot Capital in September 2001, Mr. Liu was the President & Chief Executive Officer of ABACUS International Pte Ltd. During his service in ABACUS from 1993 to 2001, Mr. Liu was responsible for the company’s profitable growth and spearheaded the company’s expansion initiative across the Asia-Pacific region covering 20 countries.

Director Member, Audit Committee

Professor Tan was appointed Senior Counsel at the Opening of the Legal Year in 2004 and was named one of three Young Global Leaders from Singapore by the World Economic Forum in January 2005.

Mr. William Liu Wei Hai Director Member, Audit Committee Mr. Liu was appointed a member of the Board and member of the Audit Committee in

Mr. Tan Tong Hai Director President & CEO Mr. Tan was appointed President & CEO on 11 August 2005, and Executive Director on 12 August 2005. Mr. Tan is an active business leader and serves as a Council Member of Singapore Infocomm Technology Federation (“SiTF”), and a member of the Singapore Chinese Chamber of Commerce & Industry (“SCCCI”) IT advisory panel. He was previously the President of the Association of Telecommunications Industry of Singapore (“ATiS”) and also served on the Chinese editorial advisory committee at the Singapore Press Holdings (“SPH”). Prior to joining SCS, Mr. Tan was the President & CEO of NASDAQ-listed Pacific Internet (“PacNet”), where he turned the company around from a loss position within a year of joining and, subsequently delivered profitability for 14 consecutive quarters. Before PacNet, Mr. Tan was CEO of StarHub Internet, and prior to that, he spent 11 years with IBM, where he held many management positions, including General Manger of International Application Solutions Pte Ltd, a wholly owned subsidiary of IBM, focusing on business applications for SMEs.

13 Singapore Computer Systems Limited Annual Report 2005

Professor Tan, who is Dean of the Faculty of Law at the National University of Singapore, joined the Board on 16 May 2005. His other appointments include being a Vice-President of the Singapore Academy of Law, a Senate member of the National University of Singapore, a Governor of the Asian Law Institute and the IP Academy of Singapore, a member of the Securities Industry Council, a member of the Competition Commission of Singapore, a member of the Appeal Advisory Panel to the Minister of Finance, a member of the Military Court of Appeal, and a member of the Board of Legal Education. He also serves on the Boards of Chuan Hup Holdings Limited, ST Marine Limited, Anwell Technologies Limited, Exploit Technologies Pte Ltd, and NTUC Income.


Key Management

Mr. Tan Tong Hai President & Chief Executive Officer

Singapore Computer Systems Limited Annual Report 2005

14

Mr. Tan Tong Hai was appointed President and Chief Executive Officer (“CEO”) of Singapore Computer Systems Limited (“SCS”) on 11 August 2005. In this role, Mr. Tan is responsible for spearheading the Company’s new business strategy and sharpening its focus to become the Trusted Provider of Trusted Services. Mr. Tan leads a team of more than 2,000 ICT technical, sales and support professionals in Singapore and in the region to steer SCS towards the path of sustained profitability. Before joining SCS, Mr. Tan was President and CEO of NASDAQ-listed Pacific Internet (“PacNet”), a regional internet provider operating in seven countries. During his four-and-a-half year tenure in PacNet, Mr. Tan turned the company around from a loss position within a year of joining. Subsequently, he delivered profitability for 14 consecutive quarters, built PacNet’s overseas operations and spearheaded the Company’s thrust into the profitable arena of corporate business. Before joining, Mr. Tan was CEO of StarHub Internet where he was popularly known as the “free surf man” after introducing the “surf-the-internet-for-free” concept which helped StarHub become the leader in the consumer internet segment. A graduate (with honours) in electrical engineering from the National University of Singapore, Mr. Tan is a distinguished corporate leader. He began his career at IBM and worked there for 11 years. During his stint there, he developed an intimate knowledge of the systems integration business and held many management positions, including that of General Manager of International Application Solutions Pte Ltd,

Mr. Tan Tong Hai (left) and Mr. Vincent Phua Chin Chor.

a wholly owned subsidiary of IBM, focusing on business applications for SMEs. Mr. Tan contributes actively to non-profit organisations. He is currently serving as a Council Member of the Singapore Infocomm Technology Federation (“SiTF”), and a member of the Singapore Chinese Chamber of Commerce & Industry (“SCCCI”) IT advisory panel. He was previously President of the Association of Telecommunications Industry of Singapore (“ATiS”) and also a member of the Chinese editorial advisory committee of Singapore Press Holdings (“SPH”).


Mr. Vincent Phua Chin Chor

Mr. Chua Ah Leng

Chief Financial Officer

Chief Operating Officer

Mr. Phua was appointed Chief Financial Officer of SCS on 12 September 2005. In this capacity, Mr. Phua is responsible for the overall financial management of the SCS group of companies with a view to increasing shareholder returns. In particular, he looks into improving operational efficiencies of SCS’ existing businesses, costing systems and project management processes, as well as streamlining processes for more effective resource utilisation.

Mr. Chua was appointed Executive Vice-President, Solutions, on 21 April 2003 to manage SCS’ business solutions delivery to customers. He was promoted to the position of Chief Operating Officer on 10 May 2005.

Mr. Phua has more than 25 years’ experience heading the regional and group finance function in the fields of information technology services and media. Most recently, Mr. Phua served as Senior Vice-President – Group Financial Controller of MediaCorp Pte Ltd (“MediaCorp”), Singapore’s largest and most established broadcaster, where he was instrumental in strengthening the finance team and streamlining internal processes. He was also involved in the rationalisation exercise between MediaCorp and SPH MediaWorks.

Prior to EDS, Mr. Phua spent 10 years in two German IT MNCs, namely Siemens-Nixdorf Information Systems (Singapore) Pte Ltd and Nixdorf Computer (Singapore) Pte Ltd. Mr. Phua graduated from the then University of Singapore with a Bachelor’s degree in Accountancy in 1979. He is a Fellow at the Institute of Certified Public Accountants of Singapore and a member of the Chartered Institute of Management Accountants (United Kingdom).

Apart from focusing on the management of SCS’ large-scale projects, Mr. Chua is also responsible for overseeing the profitability and growth of SCS’ China operations. 15

Mr. Alvin Kok Executive Vice-President, International Mr. Kok joined SCS on 3 May 2004 from Baan Asia Pacific where he held the position of VicePresident and Managing Director, Asia Pacific. Mr. Kok has more than 24 years’ experience in software development and implementation, consulting, sales and marketing and the management of business operations. Mr. Kok has also held leadership positions in Onyx Software, Asia Commerce Inc. and JD Edwards, playing an instrumental role in expanding markets within the Asia-Pacific. As Executive Vice-President, International, Mr. Kok is responsible for charting the profitability and growth of SCS’ overseas operations, with special focus on Indonesia. He also heads the Supply Chain Business Unit, which is responsible for expanding SCS’ business in the manufacturing, logistics & distribution sectors.

Singapore Computer Systems Limited Annual Report 2005

Between 1993 and 2001, Mr. Phua was the Director of Finance (Asia) in EDS International (Singapore) Pte Ltd. (“EDS”), a global leader in the information technology service industry. At EDS, he started the finance team which subsequently grew to an 85-man unit, implemented effective project management and costing systems in EDS Singapore during its early investment phase and also set up subsidiaries and also forged joint ventures in the ASEAN region.

Mr. Chua has over 26 years of experience in the IT industry mainly in a management capacity. Before joining SCS, Mr. Chua was Chief Executive Officer of PrivyLink, an IT security product and services company; Chief Executive Officer of Frontline Solutions and Chief Operating Officer of Frontline Technology Corporation. Between 1996 and 2000, Mr. Chua was Chief Technology Officer and Assistant Chief Executive Officer of National Computer Systems (“NCS”) where he charted the strategic directions for NCS to deliver its products and services and managed its regional strategy and expansion plans.


Key Management

Singapore Computer Systems Limited Annual Report 2005

16

Left to right: Mr. Chua Ah Leng, Mr. Alvin Kok and Mr. Vincent Lim Shuh Moh.

Mr. Vincent Lim Shuh Moh Executive Vice-President, Sales & Marketing Mr. Lim joined SCS on 1 March 2001 from Infonet Systems & Services Pte Ltd (“Infonet”), where he held the position of Managing Director. He was promoted to the position of Executive VicePresident, Sales & Marketing on 1 April 2006. Mr. Lim has more than 25 years’ experience in the IT industry. Prior to Infonet, Mr. Lim spent 11 years with SCS where he rose through the ranks to be the General Manager, Enterprise Computing Business Unit before leaving for Infonet. After he rejoined SCS, he was the

General Manager, Sales & Marketing (Enterprise Systems Unit), before it was spun-off as Enterprise Systems Pte Ltd (“ESPL”), a subsidiary of SCS. Mr. Lim was the Chief Operating Officer, and then Chief Executive Officer of ESPL. He was later promoted to Senior Vice-President, Integrated Infrastructure Solutions, and then Senior Vice-President, Sales & Marketing. As Executive Vice-President, Sales & Marketing, Mr. Lim is responsible for the client and partner relationship functions. In this role, he focuses on strengthening ties and building long-term relationships with customers and business partners. Mr. Lim is also responsible for the marketing function to raise the image and brand of SCS.


Corporate Information

Board of Directors

Company Secretaries

Mr. Peter Seah Lim Huat (Chairman)

Ms. Lena Chow

Mr. Boon Swan Foo (Deputy Chairman)

Ms. Tay Bee Choo

Mr. Philip Eng Heng Nee (appointed with effect from 16 May 2005)

Mr. William Liu Wei Hai Professor Tan Cheng Han (appointed with effect from 16 May 2005)

Mr. Donald Albert Ramble Mr. Venkatachalam Krishnakumar

Registered Office 7 Bedok South Road Singapore 469272 Telephone (65) 6827 8888 Facsimile (65) 6827 8899 Website

www.scs.com.sg

(appointed with effect from 13 August 2005)

(appointed with effect from 12 August 2005)

Datuk Robert Chua Teck Chew (resigned with effect from 31 October 2005)

Mrs. Theresa Foo-Yo Mie Yoen

Share Registrar

17

M&C Services Pte Ltd

Singapore Computer Systems Limited Annual Report 2005

Mr. Tan Tong Hai

138 Robinson Road #17-00 The Corporate Office Singapore 068906

(resigned with effect from 31 October 2005)

Mr. Spencer Lee Tien Chye (resigned with effect from 31 October 2005)

Ms. Low Sin Leng

Auditors KPMG

(resigned with effect from 9 May 2005)

Certified Public Accountants 16 Raffles Quay #22-00 Hong Leong Building Singapore 048581

Audit Committee

Partner-in-charge

Mr. Philip Eng Heng Nee (Chairman)

Ms. Esther Bay Choon Huay

(resigned with effect from 31 October 2005)

Mr. Pek Yew Chai

(appointed with effect from 31 October 2005)

Mr. William Liu Wei Hai Professor Tan Cheng Han (appointed with effect from 31 October 2005)

Datuk Robert Chua Teck Chew (Chairman) (resigned with effect from 31 October 2005)

Mrs. Theresa Foo-Yo Mie Yoen (resigned with effect from 31 October 2005)

(Appointed in financial year commencing 1 January 2002)


Financial Highlights

Group Revenue ($Million)

Group Profit/(Loss) Attributable to Shareholders ($Million) 348.12

2005

2005

427.98

2004 2003

2004

418.93

2001

Singapore Computer Systems Limited Annual Report 2005

18

Shareholders’ Funds ($Million)

11.80

2001

17.58

Earnings/(Loss) Per Share After Tax (cents) 95.65

2005

2004

143.33

2003

(33.02)

2002

540.71

2005

27.69*

2003

466.98

2002

(43.58)

155.85

2001

2004

17.96*

2003

119.39

2002

(28.27)

148.18

(21.42)

2002

7.66

2001

11.41

Return on Average Shareholders’ Funds (%)

Return on Average Assets (%)

2005

2005

(36.47)

2004 2003 2002 2001

* Restated

21.08* (24.00)

2004 2003

7.76 12.48

(16.57)

2002 2001

11.04* (13.04) 3.96 5.13


EVA For 5 Years 2001

2002

2003

2004*

2005

$’000

$’000

$’000

$’000

$’000

20,588

13,729

(36,914)

32,914

(40,895)

Share of Associate Profits

2,018

2,110

1,646

Interest expense

2,022

1,113

967

672

659

Others

5,530

4,265

20,031

(17,371)

(1,238)

Adjusted Profit/(Loss) Before Interest & Tax

30,158

21,217

(14,270)

16,950

(40,174)

Cash Operating Taxes (Note 1)

(6,626)

(4,418)

(3,225)

(6,157)

(3,699)

Net Operating Profit/(Loss) After Tax (NOPAT)

23,532

16,799

(17,495)

10,793

(43,873)

219,256

205,854

205,814

191,149

170,243

9.25

9.10

8.03

8.60

9.35

(20,270)

(18,733)

(16,530)

(16,439)

(15,918)

Group EVA attributable to ordinary shareholders

3,262

(1,934)

(34,025)

(5,646)

(59,791)

Unusual items (UI) (Note 4)

(1,651)

(397)

(1,286)

(12,643)

(2,227)

19

1,611

(2,331)

(35,311)

(18,289)

(62,018)

Singapore Computer Systems Limited Annual Report 2005

Net Operating Profit/(Loss) Before Tax Adjust for:

Average Capital Employed (Note 2) Weighted - Average Cost of Capital (%) (Note 3) Capital Charge

Group EVA attributable to shareholders (exclude UI)

735**

1,300**

* Restated ** Share of Associate Profits is computed net of tax

Note 1:

The reported current tax is adjusted for the statutory tax impact of interest expense.

Note 2:

Monthly average share capital plus interest bearing liabilities, timing provision, goodwill amortised, and present value of operating leases. Major Capital Components: Long-Term debt Short-Term debt

Note 3:

22 8,774

Equity

161,447

170,243

The Weighted Average Cost of Capital is calculated in accordance to Singapore Computer Systems Limited (“SCS”) Group EVA Policy as follows: (i) Cost of Equity using Capital Asset Pricing Model with market risk premium at 6.0%; (ii) Risk-free rate of 2.62% (2004:3.78%) based on yield-to-maturity of Singapore Government 10-year Bonds; (iii) Ungeared beta at 1.17 (2004:0.94) based on SCS risk categorisation; and (iv) Cost of Debt rate at 3.03% (2004:3.70%) using 5-year Singapore Dollar Swap Offered Rate plus 75 basis point.

Note 4:

Unusual Items (UI) refer to divestment of investment properties, subsidiary and associates, long-term investments and disposal of major fixed assets.


Financial Highlights 5-YeaR VALUE ADDED STATEMENT

2001

2002

2003

2004

2005

$’000

$’000

$’000

$’000

$’000

Revenue

540,712

466,982

418,928

427,984

348,117

Bought in Materials

(389,218 )

(327,355 )

(313,510 )

(313,562)*

(280,505)

Value Added From Operations

151,494

139,627

105,418

114,422*

67,612

Other Non Operating Income/(Expenses)

784

(1,995 )

(3,114 )

Total Value Added

152,278

137,632

102,304

139,925*

67,600

To Employees

109,492

103,411

105,189

95,569

88,849

VALUE ADDED FROM:

25,503

(12)

To Providers of Capital

6,265

4,657

4,397

4,175

4,318

20

To Government

6,142

3,733

(206 )

5,730

3,164

Singapore Computer Systems Limited Annual Report 2005

Distribution of Value Added

Balance Retained in Business

27,631

23,986

(21,543 )

36,512*

(31,670)

Non Production Income/(Cost)

2,748

1,845

14,467

(2,061)

2,939

Total Distribution

152,278

137,632

102,304

139,925*

67,600

Value Added Per Employee

74.33

70.66

57.39

58.99

30.49

Value Added Per Employment Cost

1.38

1.35

1.00

1.20

0.76

Value Added Per Dollar Investment in Property, Plant and Equipment

1.32

1.22

0.86

1.00

0.52

Productivity Analysis

Value Added from Operations ($Million)

Value Added Per Employee ($Million)

Value Added Per Employment Cost ($Million)

2005

2005

2005

2004 2003 2002 2001

* Restated

67.61 114.42*

2004

105.42

2003 139.63 151.49

2002 2001

30.49 58.99

2004

57.39

2003 70.66 74.33

0.76 1.20 1.00

2002

1.35

2001

1.38


10 Years Financial Summary 1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

327.31

377.65

480.49

420.67

447.50

540.71

466.98

418.93

Share of Results of Associates

(0.97)

5.69

1.53

1.40

1.94

2.02

2.11

1.65

Profit/(Loss) before taxation

10.84

24.93

51.40

26.75

25.67

22.61

15.84

(35.27)

33.65* (39.60)

6.93

16.84

27.71

19.18

17.25

17.58

11.80

(33.02)

27.69* (43.58)

Property, Plant & Equipment

54.26

59.78

55.65

52.95

56.96

54.18

48.14

47.15

45.42

50.16

Investments

18.92

28.17

11.56

18.28

29.59

31.26

30.76

38.61

12.70

24.18

0.41

0.18

0.09

2.70

5.32

10.74

8.21

3.25

2.26

0.12

Other Assets

156.64

166.71

212.72

175.52

235.79

220.32

201.71

184.84

197.05 183.35

Total Assets

230.23

254.84

280.02

249.45

327.66

316.50

288.82

273.85

257.43 257.81

54.80

77.52

103.68

119.90

133.59

148.18

155.85

119.39

143.33

95.65

Minority Interest

2.55

9.93

3.55

4.66

6.15

4.92

3.91

2.77

10.83

11.88

Total Borrowings

71.95

62.73

53.58

13.05

34.17

43.94

11.65

44.73

2.77

13.53

Other Liabilities

100.93

104.66

119.21

111.84

153.75

119.46

117.41

106.96

100.50 136.75

Total Equity & Liabilities

230.23

254.84

280.02

249.45

327.66

316.50

288.82

273.85

257.43 257.81

Group Profit & Loss Account ($Million) Revenue

Profit/(Loss) attributable to Shareholders

427.98 348.12 0.73**

1.30**

Group Balance Sheet ($Million)

Intangible Assets

Shareholders’ Funds

17.96* (28.27)

Earnings/(Loss) After Tax (Cents)

6.93

11.22

18.29

12.53

11.23

11.41

7.66

(21.42)

Gross Dividend (Cents)

3.00

3.00

3.00

3.00

3.75

3.00

3.00

3.00

3.00

3.00

Average Share Price ($)

1.09

1.15

0.92

1.93

3.49

1.79

1.34

0.87

0.79

0.81

Gross Yield (%)

2.75

2.61

3.26

1.55

1.07

1.68

2.24

3.44

3.79

3.70

54.39

77.34

67.92

76.45

83.39

89.23

95.78

70.18

91.52

61.98

Net Tangible Assets (Cents)

Financial Ratios 13.06

25.45

30.59

17.15

13.61

12.48

7.76

(24.00)

21.08* (36.47)

Return on Average Assets (%)

3.56

7.52

10.94

7.69

5.80

5.13

3.96

(13.04)

11.04* (16.57)

Debt Equity Ratio

1.25

0.72

0.50

0.10

0.24

0.29

0.07

0.37

0.02

0.13

Working Capital Ratio

1.13

1.21

1.23

1.42

1.27

1.36

1.58

1.21

1.92

1.24

Return on Average Shareholders’ Funds (%)

* Restated ** Share of Associate Result is computed net of tax

Singapore Computer Systems Limited Annual Report 2005

Per Share Data

21


Singapore Computer Systems Limited Annual Report 2005

22

CONVERGENCE OF INFRASTRUCTURE AND BUSINESS SOLUTIONS Our unique strength lies in our ability to seamlessly integrate both Infrastructure and Business Solutions. Our Infrastructure solutions are designed to be application aware – we call this Application-Aware Infrastructure (“AAI”). Likewise, our Business Solutions are designed to optimise infrastructure resources – we call this Infrastructure-Aware Applications (“IAA”). Be it AAI or IAA, SCS offers true convergence of infrastructure and applications into Trusted Services.


Operations Review

Financial Performance The Group’s performance for the financial year ended 31 December 2005 (“FY2005”) should be viewed against the backdrop of several actions that the Group undertook during the year under review, including a critical assessment of existing projects, a strategic review of investments and a realignment of its regional footprint. The Group’s turnover declined 19% from S$428.0 million in FY2004 to S$348.1 million in FY2005, mainly due to the loss of revenue contribution from the divested Ceritas New Zealand Limited (“Ceritas New Zealand”) and SCS Computer Systems Sdn Bhd (“SCS Malaysia”) entities, which contributed S$76.0 million and S$15.6 million, respectively, to the Group’s revenue in FY2004.

A review of all projects undertaken as well as a strategic review of the Group’s investments in the first half of the year resulted in significant allowances for project cost overruns and investment impairments. This led to the Group reporting cumulative losses of S$43.9 million for the first three quarters of FY2005, with the largest loss reported in the second quarter of FY2005 (“2Q FY2005”). In 3Q FY2005, the Group’s operating performance improved as a result of stronger regional contributions and lower expenses. Although revenue was reduced as a result of fewer project completions and lower sales, the Group secured new orders and built additional backlog for subsequent quarters.

All in, the Group recorded a net loss of S$43.6 million for FY2005, mainly due to the need to make allowances amounting to S$40.6 million for project losses. The Group closed the year with a stronger order book, with S$267.5 million worth of projects to be fulfilled in FY2006 and beyond. This compares favourably with S$237.3 million of orders as reported at the end of FY2004.

Review by Business Segments The Group’s business is broadly categorised into two major segments – IT Infrastructure and IT Business Solutions. The IT Infrastructure segment provides enterprise systems and networks, converged communications, grid computing and managed infrastructure services, such as IT managed services, call centre services and business continuity management (“BCM”) services, while the IT Business Solutions segment provides solutions ranging from mission-critical turnkey systems integration projects to secure, compliant and dependable business process outsourcing (“BPO”) services, such as Forms Process Outsourcing and e-Procurement services. The Business Solutions segment also includes competencies such as SAP, business rules, healthcare and e-Government services and solutions.

23 Singapore Computer Systems Limited Annual Report 2005

The decrease in revenue was partially offset by the first full-year contribution of S$62.2 million from PT SCS Astragraphia Technologies (“SAT”), the Group’s 51%-owned joint venture in Indonesia. Regional revenue contribution for FY2005 stands at S$88.4 million, comprising 25% of the Group’s revenue.

The stabilisation of operations continued into the final quarter. The Group increased its revenue, reduced its operating expenses and changed its revenue mix, generating an improved gross profit margin. This led to the Group breaking even and recording a profit of S$0.3 million, in spite of allowances made for project cost overruns.


Operations Review

Microsoft, IBM, EMC, Juniper Networks, BEA Systems, Nokia and Sun Microsystems. Together with our partners, we have also won several key projects in 2006 as detailed below. SCS was awarded a S$3.6 million infrastructure contract by Republic Polytechnic to design, build and commission a wired and wireless network infrastructure for its new campus at Woodlands. Cisco Systems is our main technology partner for this project.

Singapore Computer Systems Limited Annual Report 2005

24

IT Infrastructure The Group’s IT Infrastructure projects continued to generate the bulk of SCS’ revenue, contributing 72% of the Group’s revenue in FY2005 compared with 75% in FY2004. However, revenue for the segment fell, mainly due to the divestment of Ceritas New Zealand and SCS Malaysia in FY2004, which had the bulk of their business in IT Infrastructure. The segment continued to be profitable, generating total profit before tax of S$7.9 million. The IT Infrastructure business segment relies heavily on the strength of our partnerships. Being vendor-neutral, SCS works closely with its network of top-tier partners to offer and deliver best-ofbreed solutions to customers. Our strategy is to focus on building up SCS to be the top revenue contributor to these partners so that better support and terms can be obtained. Dedicated partner relationship managers have been appointed to build quality relationships and track our business performance with these partners. We are pleased that our role in these partnerships has been acknowledged by our partners. Awards won for the year 2005 were from industry leaders including Cisco Systems, Hewlett-Packard,

Our partnership with United Devices for PC Grid Computing has also borne fruit. SCS collaborated with the National University of Singapore (“NUS”) to set up Singapore’s first supercomputing grid at NUS, known as the Tera-Scale Campus Grid (“TCG@NUS”). The TCG@NUS project achieved notable success when it was used by a team of prominent life sciences research scientists from NUS and the Genome Institute of Singapore to reduce the computation-intensive DNA Sequence Alignment processing time from one month to just under two days. Singapore is believed to be among the world’s first to introduce super-computing capabilities or grid computing into its schools. This initiative has been dubbed SG@Schools – or the PC Grid Computing for Schools programme. SCS, a local leader in grid computing implementations, is driving this initiative to provide grid-enabling technology, help conceptualise projects, and mentor students using PC Grid applications. This initiative is expected to help produce a new generation equipped to leverage grid computing for economic and competitive advantages. SCS was also awarded a S$1.7 million threeyear contract to provide managed operations and data centre services for NTUC Income Insurance Cooperative Limited (“NTUC Income”), a leading insurer in Singapore. This highlights the Group’s capability in providing outsourced infrastructure and managed services.


IT Business Solutions The contribution of IT Business Solutions projects increased to 26% of the Group’s revenue in FY2005 from a contribution of 24% in FY2004. Although the percentage of revenue contributed increased, the IT Business Solutions segment constituted the bulk of the losses in FY2005. Total loss before tax was S$38.4 million, primarily due to project cost overruns. In order to minimise the risk of future project overruns, enhanced financial controls, risk assessment and project review processes were introduced to ensure that projects won would be completed within contracted terms. We have also decided to focus on bidding for projects where we have core competencies with proven track record in order to reduce implementation risks.

The NTUC Income Digital Warehouse project mentioned above was given a special award – the “Corporate Compliance Solutions Partner Award 2005” – from our partner, EMC, to recognise the contribution and dedication of SCS in selling a complete end-to-end solution that helps our customer meet compliance requirements. Our competency in electronic document management and hosting has also led us to sign a Memorandum of Understanding (“MOU”) with the National Archives of Singapore, SQL View and Sun Microsystems to develop Singapore’s first e-Registry Hub. The project is designed to address

Another project that demonstrates our competency in electronic document management is the iDeal Shop and Dealer Access System for StarHub Limited (“StarHub”). This project garnered an award at MIS Asia IT Excellence Awards 2005 in the “Best Business Enabler - Communications & Media” category. The iDeal Shop and Dealer Access System is a web-based state-of-theart Customer Management System for shops and dealer outlets. The electronic document management system helps manage contracts and supporting documentation for StarHub in compliance with Electronic Transaction Act (“ETA”) guidelines. Our competency in Microsoft applications has led us to be awarded an exclusive three-year, multimillion dollar contract by Blackwell Publishing Ltd (“Blackwell”), the world’s leading society publisher of academic, medical and professional journals, to provide maintenance and development services for its global applications. SCS will provide technology solutions developed on a Microsoft platform and will enhance and upgrade these for use with the latest Microsoft architectures and technologies. Our competency in SAP has also led to two partner awards being conferred on us for the year under review by SAP Asia Pte Ltd, which oversees SAP implementations throughout the Asia Pacific. SCS was awarded “Best Upgrade Project (Singapore)” for performing a technical upgrade from SAP R/3 version 4.6C to mySAP ERP2004 for Senoko Power Ltd. SCS was also awarded “Best Netweaver Implementation Project (Regional and Singapore)” for implementing the SAP Enterprise System for the Ministry of Defence, together with our partners Accenture Ltd and SAP Asia Pte Ltd.

25 Singapore Computer Systems Limited Annual Report 2005

For example, SCS was awarded a contract to provide an entire secure backbone for StraightThrough Electronic Processing (“STEP”) for NTUC Income. This is the next phase of SCS’ collaboration with NTUC Income, following the successful implementation of their Digital Warehouse. The Digital Warehouse project was made possible though SCS’ subsidiary, Trusted Hub Limited (“Trusted Hub”), which has the core competency of Evidence Act-compliant digital imaging. Trusted Hub converted more than 40 million copies of insurance policies into electronic documents that are admissible in court. With these electronic documents available, NTUC Income was able to confidently destroy its paper documents. This Digital Warehouse project is expected to help NTUC Income save up to S$10 million a year. Together with Trusted Hub, SCS has replicated its success with NTUC Income into providing Forms Process Outsourcing services for banks. Currently, SCS is servicing two of Singapore’s leading local banks and a prominent European financial institution with QFB status in Singapore.

the record lifecycle needs of both public and private sector organisations within a centralised, secure and controlled environment. Under the agreement, SCS will be responsible for hosting the e-Registry infrastructure and providing on-site support to ensure system continuity. The project is expected to bring about greater efficiency, corporate governance and control in addition to cost savings.


Singapore Computer Systems Limited Annual Report 2005

26

REGIONAL MARKET PENETRATION We increase penetration in our existing markets by deepening our relationships with local partners and creating leadership positions for ourselves. With Singapore as the headquarters, we aim to tap ASEAN as the market for our successful e-Government and SAP solutions, while also looking to China for healthcare business and software development.


Operations Review

Review by Geography The regional performance in FY2005 has to be viewed in light of the regional divestment and investment activities in FY2004. At the start of FY2004, SCS operated in nine countries spanning Singapore, Brunei, China, Hong Kong, India, Malaysia, New Zealand, the Philippines and Thailand. As part of our realignment exercise, non-core entities – SCS Malaysia, Kshema Technologies (India) and Ceritas New Zealand – were divested between 2Q and 3Q FY2004. In order to tap the growing Indonesian market, SCS entered into a joint venture with Indonesiabased PT Astra Graphia Tbk to invest in PT SCS Astragraphia Technologies (“SAT”) in the second half of FY2004.

e-Government and SAP to growth markets within ASEAN. Outside of ASEAN, SCS aims to develop China as the Group’s software development arm in addition to being a market for healthcare services. Within ASEAN, our focus countries are Indonesia, Thailand, Brunei and the Philippines. In both Indonesia and Thailand, our main customers are from the commercial sector. For Brunei and the Philippines, our customers are mainly from the government sector for which we aim to replicate successful e-Government projects implemented in Singapore. SAT, the Group’s 51%-owned joint venture in Indonesia, is the largest contributor of revenue and profit outside Singapore. SCS aims to

Following our strategic review, we will continue to streamline our regional presence. We will focus on growing revenue and generating profit from the region by building the depth of our competencies in each country over expanding our regional footprint. For operations in markets that are non-strategic or loss-making, we intend to divest, close or right-size them. This is in line with SCS’ aim to establish its leadership in sectors and markets in which the Group is doing well, such as in the implementation of SAP solutions for customers in Indonesia. By market, SCS will primarily focus on the ASEAN region, with Singapore serving as the headquarters to replicate its core competencies in

PT SCS Astragraphia Technologies (“SAT”), the Group’s 51%-owned joint venture in Indonesia.

increase this even further through synergies between the solution offerings from Singapore and Indonesia. Prior to the establishment of the joint venture, SAT was the in-house IT arm of PT Astragraphia Tbk. SAT provides both application and infrastructure solutions to the Indonesian market with a strong emphasis on the automotive, banking and telecommunications sectors. SAT currently serves the IT needs of major Indonesian telecommunications players and provides SAP human resource consulting and

Singapore Computer Systems Limited Annual Report 2005

Due to the reduction in contribution from the divested entities, revenue contribution outside Singapore as a percentage of total revenue was reduced from 31% in FY2004 to 25% in FY2005. This decrease in revenue was partially offset by the first full-year contribution from SAT in FY2005. Losses outside Singapore amounted to S$3.8 million in FY2005, primarily due to losses from our Greater China operations. This was again partially offset by the profit contribution of S$1.3 million from SAT in FY2005.

27


Operations Review

Ambergris Solutions Philippines, Inc (“Ambergris”), a leading call centre in the Philippines which SCS and TELUS International invested in.

Singapore Computer Systems Limited Annual Report 2005

28

implementation services to five of the six major banks in Indonesia. With its large pool of certified SAP professionals and its partnership with SCS’ SAP Competency Centre in Singapore, the Group intends to transform SAT into a SAP powerhouse in Indonesia. Thailand is another growth market within ASEAN that the Group has targeted. SCS has been building its sales and marketing network in the country, forging closer relationships with security and infrastructure partners, and is preparing to make inroads into the business continuity and disaster recovery sectors.

By market, SCS will primarily focus on the ASEAN region, with Singapore serving as the headquarters to replicate its core competencies in e-Government and SAP to growth markets within ASEAN.

SCS has made headway in replicating successful e-Government solutions implemented for the Singapore government in Brunei and the Philippines. In Brunei, SCS partnered ATB Technologies Sdn Bhd to secure a multi-million dollar contract to deliver Trusted Services to the Brunei Ministry of Defence. This project entails the implementation of a Human Resource Management Information System and Electronic Document Management System. In the Philippines, SCS, together with its Philippine-based partner, Ayala Systems Technology, Inc. (“ASTI”), is currently working on a project to develop an e-Procurement and e-tender system for the Philippine Government’s Department of Budget and Management. ASTI is the largest local systems integrator and IT services provider in the Philippines. SCS has enjoyed a joint venture partnership with ASTI for over 10 years, and intends to leverage this partnership to seek further opportunities to deliver e-Government solutions in the Philippines. In order to tap the growing call centre market in the Philippines, SCS has inked an agreement with TELUS International to set up a strategic joint venture company to invest in Ambergris


Solutions Philippines, Inc. (“Ambergris”), a leading call centre in the Philippines. Ambergris provides inbound sales and customer care solutions to USbased blue-chip clients in the utilities, IT, travel, hospitality and financial services industries.

SCS’ China headquarters is in Beijing. In 2003, SCS was awarded a S$2.2 million project to implement an integrated Hospital Information System (“iHIS”) for Beijing Tongren Hospital’s new wing in Yi Zhuang. This project is expected to be completed in 2006, and will serve as a

As part of SCS’ collaboration with Nanyang Polytechnic (“NYP”) and the Infocomm Development Authority of Singapore (“IDA”), twenty final-year IT students NYP were attached to SCS’ Singapore and China offices for three months per location. The students were involved in the enhancement of SCS’ iHIS for hospitals in China. SCS believes that the cultivation of a global mindset starts with an early exposure to global economies and experiences, and will continue to support such initiatives. In order to leverage the large pool of IT professionals in China, SCS established an SDC in Chengdu in 2002. In 2005, the SDC was relocated to Tianfu Hi-Tech Zone, one of Chengdu’s premier IT hubs. SCS’ SDC currently has about 100 developers building applications for customers in Singapore, in addition to spearheading the localisation of SCS’ proven iHIS healthcare solution for the China market. The SDC was bestowed two awards for the year under review, namely the “Chengdu Software Industry Association Outstanding Member Award” and the “Most Promising Enterprise Award” (“成都市软件 行业协会优秀会员” 及 “最具潜力发展企业”) by the Chengdu government.

Nanyang Polytechnic students in SCS’ China office (above). A team from SCS Chengdu Software Development Centre (left).

29 Singapore Computer Systems Limited Annual Report 2005

China is a growing market that cannot be ignored. IDC forecasts China’s IT market to reach US$35.08 billion in 2006, up 13.7% over 2005, with hospital consolidation, be it government-led or self-initiated, becoming increasingly apparent in 2006. [Source: IDC China Press Release on 31 Dec 2005: “IDC Predictions for China’s ICT Market in 2006”] The close relationship between the Singapore and China governments, as well as SCS’ early foray into the China market in 1999, facilitates its strategy to continue strengthening its software development centre (“SDC”) in Chengdu and developing China as a market for IT services, with key focus on the healthcare management segment. In recognition of our leadership position, SCS currently leads Singapore’s Healthcare Industry Cluster, in a national initiative that helps Singapore-based IT service providers penetrate the China market.

showcase of SCS’ competency in replicating integrated solutions for the healthcare industry from Singapore to China.


Singapore Computer Systems Limited Annual Report 2005

30

FOUNDATION FOR SUCCESS Our customers, partners and employees are the foundation upon which the Group’s success depends. We are committed to forging closer ties with our customers, establishing ourselves as the top contributor to our partners, and attracting and developing talented employees.


Operations Review

Laying a Foundation for Sustained Profitability The Group’s priorities are to stabilise its operations and lay a framework for sustained profitability. To achieve this, several key initiatives have been implemented, with an emphasis on strengthening strategic customer and business partner relationships, improving processes, right-sizing regional operations, building core competencies, and managing talent and human resources.

31

2

The public sector, or government sector, forms the core of SCS business, contributing about 60% of the Group’s revenue. SCS’ key accounts in Singapore include Ministry of Defence, Ministry of Home Affairs and Ministry of Education. We aim to deepen our relationships with these accounts and secure new government accounts in the current financial year.

A central project tracking system has been implemented by which all project managers would update the status of their projects, providing management with a consolidated view of the progress of various projects. An internal independent project review team has also been established to conduct periodic reviews of all on-going projects and highlight potentially “troubled” projects to the management at an early stage, thus helping to minimise the risk of project overruns and improving profitability.

To sustain profitability, SCS will need to deepen relationships with current customers and cultivate relationships with new customers. In this way, we can increase our “wallet-share” in existing accounts and grow revenue through new accounts. To better serve our customers, separate client relationship teams, established for the public and commercial sectors, will serve to strengthen our relationship with current customers and generate sales leads in their respective sector.

SCS’ strategy in the commercial sector, which accounted for the remaining 40% of its business, is to focus on growing accounts in the financial services, healthcare, telecommunications, energy, manufacturing, logistics and distribution sectors.

Project Bidding and Management

Project overruns accounted for the bulk of the Group’s loss in FY2005. To minimise the risk of project overruns, the project bidding process has been enhanced to include a review by an internal independent bid review team, which will assess the risks of taking on the project from technology, implementation, finance and legal perspectives.

Singapore Computer Systems Limited Annual Report 2005

1

Customer Focus


Operations Review

3

Business Excellence

Underlying our approach to business excellence is a strong drive to deliver quality solutions, which is demonstrated by the Group’s achievement of relevant certifications. This drive for quality started in 1993, when SCS was one of the early pioneers to drive ISO 9000 quality standards in the IT industry. SCS has been re-certified for ISO 9001 for the fourth consecutive cycle in 12 years (with each cycle valid for three years).

Singapore Computer Systems Limited Annual Report 2005

32

With a strong foundation in ISO 9000, SCS achieved Level 4 of the Carnegie Mellon University’s Capability Maturity Model - Software (“CMM-SW ® ”) in 2004 and is currently aiming to upgrade this to the Capability Maturity Model

SCS will leverage its market differentiator as a provider of Trusted Services, its strong relationships with customers and partners, and its core competencies to service the public and commercial sectors in Singapore and the region.

Integration (“CMMi”) Level 5 standard. SCS also targets to obtain the Information Security Management System (ISO/IEC 27001:2005) certification. These certifications demonstrate the credibility of our solutions and enhance the value of our solution offerings to our customers. Internally, these frameworks help ensure smoother inter-department coordination, leading to more efficient project implementations for our customers.

4

Products and Services

SCS’ Trusted Services offering comprises a recurring-revenue suite of services and solutions based on the Group’s existing core competencies. This is in line with SCS’ aim to win projects based on its competencies, rather than on price. Through our market differentiator as a Trusted Services provider, SCS aims to transform one-off projects into recurring-revenue projects, which will allow us to build long-term relationships with customers who subscribe to our IT services. This will also help to strengthen our business model, leading to sustained profitability. In the IT Infrastructure business segment, SCS has developed competencies in IT security, business continuity, convergence, standard operating environment (“SOE”) and grid computing. For IT Business Solutions, SCS has competencies in SAP, business rules, Forms Process Outsourcing, e-Procurement, healthcare and e-Government. These competencies form the basis upon which our Trusted Services solution offering is built.

5

Partners

Sustainable growth can only come about by having a strong network of partners. Hence, our plan is to focus on developing a network of top-tier partners and build SCS to be the top contributor to these partners so that better support and terms can be obtained. To build quality relationships and track our business performance with these partners, dedicated partner relationship managers have been appointed. In a typical project, SCS often provides customers with implementation and maintenance services while partners provide the products or licenses. Hence the support from these top-tier partners is very important to ensure that the higher-margin service components are contracted to SCS.


6

Regional Presence

SCS’ target markets are ASEAN and China. The business model in ASEAN will be changed to a partnership model from a direct operations model, as we believe that coupling SCS’ domain expertise and intellectual capital with the “on-the-ground” knowledge of local partners will forge the best model for success. China continues to be an attractive destination for the Group. SCS aims to leverage China’s ample resources and talent pool for off-shore software development in addition to tapping the overall growth potential of the market, especially in the provision of IT services and solutions for the healthcare industry. SCS is currently taking steps to carefully assess the markets in which the Group will continue to operate and believes that a stronger, profitable business can be built on a streamlined regional footprint.

7

Talent and Resource Management

The Group recognises that its people are its core asset and the foundation upon which the Group’s core competencies are built. Hence, we continue to seek, hire, groom and develop talented individuals. The Group is also committed to equipping employees with the necessary skills and resources, rewarding them with competitive incentives, and providing opportunities to maximise their potential. SCS has recently strengthened the human resources team to sharpen its focus on staff training and development. Training emphasis is placed on professional certifications, so as to build up the competencies within the company. Efficient utilisation of our human resources is also important to reap higher returns from projects undertaken and to sustain profitability. This is handled by the resource management office, which tracks the competencies of staff so as to deploy the right people to the right project more effectively. The resource management office not only handles the staff in Singapore, but also tracks the utilisation of staff in SCS’ software development centre in Chengdu, China, where work is outsourced to ensure maximum utilisation of the talented and capable staff there. Managing our resources efficiently will enable costs to be contained, leading to sustained profitability.

Conclusion The Group believes that a foundation for sustained profitability has been laid. SCS will leverage its market differentiator as a provider of Trusted Services, its strong relationships with customers and partners, and its core competencies to service the public and commercial sectors in Singapore and the region.

33 Singapore Computer Systems Limited Annual Report 2005

To sustain profitability, it is important for SCS to regularly and critically review the performance of its regional operations, lest the overall contribution from profitable entities is offset by loss-making entities. SCS currently has direct operations spanning eight countries in Asia – Singapore, Indonesia, Thailand, Brunei, the Philippines, Malaysia, Hong Kong and China. However, having many points of direct presence requires a lot of management attention and may not bring about stronger regional growth. SCS’ new regional strategy is to focus on building depth and leadership positions in each of the existing markets where we have presence. For non-performing entities, SCS will “right-size” them accordingly.


Singapore Computer Systems Limited Annual Report 2005

34

WINNING WITH CUSTOMERS And PARTNERS As a Trusted Services provider, we focus on matching the needs of our customers with the strengths of our partners. We aim to bring in the right solutions providers to meet the specific requirements of our customers. At the same time, we work with a few key solutions’ providers and aim to become their trusted implementation partner so that we can grow our business together. Our ultimate goal is to include our customers as part of the winning team and mutually gain from future sales of the solution, thus making them our partners too!


Highlights Of The Year KEY MILESTONES OF 2005 • Awarded contract to provide an entire secured backbone for Straight-Through Electronic Processing (“STEP”) for NTUC Income, following the rollout of NTUC Income’s Digital Warehouse, where SCS’ subsidiary, Trusted Hub Limited, converted more than 40 million insurance policies into electronic documents that are acceptable in court. • Awarded a S$3.6 million infrastructure contract by Republic Polytechnic to design, build and commission a wired and wireless network infrastructure for its new campus at Woodlands, based on Cisco technology.

• Awarded a S$1.7 million contract to provide managed operations and data centre services for NTUC Income over three years. • Won a multi-million dollar contract with Brunei partner, ATB Technologies, to implement a Human Resource Management Information System and Electronic Document Management System for the Brunei Ministry of Defence. • Awarded the Best Upgrade Project (Singapore) by SAP Asia Pte Ltd, where the SAP team performed a technical upgrade from R/3 version 4.6 to mySAP ERP2004 for Senoko Power Ltd.

• Collaborated in establishing the ServiceOriented Architecture (“SOA”) Centre at Nanyang Polytechnic, the first of its kind in the region, to encourage wider adoption of web services technology in Singapore. • Signed a MOU to form the Singapore Business Continuity Management Consortium to provide business continuity management services in China. • Signed a MOU with National Archives of Singapore, SQL View and Sun Microsystems to develop Singapore’s first e-Registry Hub – designed to address the record lifecycle needs of both the public and private sector organisations. • Entered into a strategic partnership with Telus International Inc. to invest in leading Philippines call centre, Ambergris Solutions Philippines Inc.

• Awarded the Best Netweaver Implementation Project (Regional and Singapore) by SAP Asia Pte Ltd, where the SAP team, together with Accenture Ltd and SAP Asia Pte Ltd, implemented the SAP Enterprise System for the Ministry of Defence. • The iDeal Shop and Dealer Access system built for StarHub Ltd garnered an award at Mr. Tan Tong Hai (right) receiving the award for SAP Best Netweaver Implementation Project (Regional and Singapore) 2005.

35 Singapore Computer Systems Limited Annual Report 2005

• Awarded an exclusive three-year, multi-million dollar contract to provide maintenance and development services for Blackwell Publishing Limited’s global applications.

MIS Asia IT Excellence Awards 2005 in the Best Business Enabler - Communications & Media category. This system is a Web-based state-of-the-art Customer Management System for shops and dealer outlets. The Electronic Document Management System manages contracts and supporting documentation in compliance with Electronic Transaction Act (“ETA”) guidelines.


Highlights Of The Year MAJOR ACHIEVEMENTS • SAP Best Upgrade Project (Singapore) 2005 • SAP Best Netweaver Implementation Project (Regional and Singapore) 2005 • Cisco Systems Gold Certified Partner 2005 • Cisco Systems Top 2 Major Contributors for Wireless Technologies 2005 • Microsoft Gold Certified Partner (June 2005 – June 2006)

• EMC – Velocity Partner Program – Corporate Compliance Solutions Partner Award 2005 • EMC – Authorised EMC Velocity Partner • Juniper Networks – Most Promising Partner, 2005 • Nokia – Top Reseller for Singapore, 2005

• Microsoft – In Recognition of Achieving a Microsoft Competency in Delivering Information Worker Solutions

• Sun Microsystems Outstanding Contribution Award FY05 (Premier Systems Integrator)

• Microsoft – In Recognition of Achieving a Microsoft Competency in Delivering Advanced Infrastructure Solutions

• SAP – Certified SAP Services Partner, Singapore, 2005

• HP Overall Top Revenue Contribution for 1st Half FY2005

• BEA Channel Partner of the Year (ASEAN) FY05

• Tandberg Data – Outstanding Performance Award, 2005

Singapore Computer Systems Limited Annual Report 2005

36

• IBM – Significant Competitive Win – IBM eServer xSeries 2005

• HP Software Sales Olympics Champion 2005 for Singapore • HP – Top “Financial Services” Revenue Contribution for 1st Half FY2005 • HP – Top “Commercial” Growth Partner for 1st Half FY2005 • IBM – Top Performing IBM Business Partner – Enterprise Sales – IBM Software 2005 • IBM – Top Performing IBM System Integrator – IBM eServer pSeries 2005

• Trend Micro Certified Premium Partner, 2005 • Canon – Distinctive Partner Award for LCOS Projectors 2005 • Chartered Semiconductor Manufacturer – Appreciation for Effort Towards the Successful Start-up of Chartered Fab 7, Jan 2005 • Chengdu Software Industry Association Outstanding Member Award (成都市软件行业协会优秀会员) • Chengdu Most Promising Enterprise Award (最具潜力发展企业)


FINANCIAL REPORT Directors’ Report 38 Statement by Directors 50 Report of the Auditors to the Members of Singapore Computer Systems Limited 51

Consolidated Profit and Loss Account 53 Statement of Changes in Equity 54 Consolidated Statement of Cash Flows 57 Notes to the Financial Statements 59

Singapore Computer Systems Limited Annual Report 2005

Balance Sheet 52

37


Directors’ Report Year Ended 31 December 2005

We are pleased to submit this annual report to the members of the Company together with the audited financial statements for the financial year ended 31 December 2005.

Directors The directors in office at the date of this report are as follows: Peter Seah Lim Huat

(Appointed on 1 January 2005)

Boon Swan Foo

(Appointed on 1 January 2005)

Philip Eng Heng Nee

(Appointed on 16 May 2005)

William Liu Wei Hai Tan Cheng Han

(Appointed on 16 May 2005)

Donald Albert Ramble Venkatachalam Krishnakumar

(Appointed on 13 August 2005)

Tan Tong Hai

(Appointed on 12 August 2005)

Directors’ Interests Singapore Computer Systems Limited Annual Report 2005

38

According to the register kept by the Company for the purposes of Section 164 of the Companies Act, Chapter 50 (the “Act”), particulars of interests of directors who held office at the end of the financial year (including those held by their spouses and infant children) in shares, debentures and share options in the Company and in related corporations are as follows:

Name of director and corporation in which interests are held

Exercise price per share

Exercise period

Holdings at beginning of the year / date of appointment

Holdings at end of the year

The Company Ordinary shares of $0.25 each fully paid William Liu Wei Hai

Donald Albert Ramble

3,000

3,000

15,000

Options to subscribe for ordinary shares of $0.25 each William Liu Wei Hai

$1.55 $1.55 $1.55 $1.55

8/3/2003 to 7/3/2007 8/3/2004 to 7/3/2007 8/3/2005 to 7/3/2007 8/3/2006 to 7/3/2007

2,000 2,000 2,000 2,000

2,000 2,000 2,000 2,000

$0.86 $0.86 $0.86 $0.86

22/2/2004 to 21/2/2008 22/2/2005 to 21/2/2008 22/2/2006 to 21/2/2008 22/2/2007 to 21/2/2008

2,000 2,000 2,000 2,000

2,000 2,000 2,000 2,000

$0.84 $0.84 $0.84 $0.84

30/4/2005 to 29/4/2009 30/4/2006 to 29/4/2009 30/4/2007 to 29/4/2009 30/4/2008 to 29/4/2009

2,000 2,000 2,000 2,000

2,000 2,000 2,000 2,000


Directors’ Report Year Ended 31 December 2005

Name of director and corporation in which interests are held

Exercise price per share

Exercise period

Holdings at beginning of the year / date of appointment

Holdings at end of the year

– – – –

2,000 2,000 2,000 2,000

8,000 –

8,000 8,000

12,000 30,000 32,000

12,000 30,000 32,000

18,800 8,000

18,800 8,000

23,443 46,887 40,000 45,000 85,000 –

23,443 46,887 40,000 45,000 85,000 85,000

7,500

7,500

40,000

40,000

The Company (cont’d) Options to subscribe for ordinary shares of $0.25 each William Liu Wei Hai

$0.84 $0.84 $0.84 $0.84

10/4/2006 to 9/4/2010 10/4/2007 to 9/4/2010 10/4/2008 to 9/4/2010 10/4/2009 to 9/4/2010

Donald Albert Ramble

$0.84 $0.84

30/4/2005 to 29/4/2009 10/4/2006 to 9/4/2010

Related Corporations The Ascott Group Limited Options to subscribe for ordinary shares of $0.20 each Peter Seah Lim Huat

5/5/2003 to 30/12/2006 10/5/2004 to 30/12/2006 31/12/2004 to 30/12/2006

Chartered Semiconductor Manufacturing Ltd Ordinary shares of $0.26 each fully paid Boon Swan Foo Donald Albert Ramble Options to subscribe for ordinary shares of $0.26 each Peter Seah Lim Huat

$3.46 $1.86 $0.72 $1.10 $1.70 $1.16

22/2/2003 to 22/2/2007 30/8/2003 to 30/8/2007 28/2/2004 to 28/2/2008 29/8/2004 to 29/8/2008 27/2/2005 to 27/2/2009 26/8/2006 to 26/8/2010

Global Crossing Limited Options to subscribe for Restricted Common Stock of US$0.01 each Peter Seah Lim Huat

US$0.01

8/3/2005 to 8/3/2009

Options to subscribe for ordinary shares of US$0.01 each Peter Seah Lim Huat

US$10.16

12/1/2005 to 11/1/2014

39 Singapore Computer Systems Limited Annual Report 2005

$0.353 $0.321 $0.418


Directors’ Report Year Ended 31 December 2005

Name of director and corporation in which interests are held

Exercise price per share

Holdings at beginning of the year / date of appointment

Exercise period

Holdings at end of the year

Related Corporations (cont’d) Green Dot Internet Services Pte Ltd Options to subscribe for ordinary shares of $1.00 each William Liu Wei Hai

Singapore Computer Systems Limited Annual Report 2005

40

$1.00 $1.00 $1.00 $1.00

12/3/2003 to 11/3/2013 12/3/2004 to 11/3/2013 12/3/2005 to 11/3/2013 12/3/2006 to 11/3/2013

1,330 1,330 1,330 1,330

1,330 1,330 1,330 1,330

$1.00 $1.00 $1.00 $1.00

1/4/2004 to 31/3/2014 1/4/2005 to 31/3/2014 1/4/2006 to 31/3/2014 1/4/2007 to 31/3/2014

1,308 1,308 1,308 1,309

1,308 1,308 1,308 1,309

$1.00 $1.00 $1.00 $1.00

1/4/2005 to 31/3/2015 1/4/2006 to 31/3/2015 1/4/2007 to 31/3/2015 1/4/2008 to 31/3/2015

– – – –

1,460 1,460 1,460 1,461

3,000

3,000

Neptune Orient Line Ltd Ordinary shares of $1.00 each fully paid William Liu Wei Hai

PT Bank Internasional Indonesia Tbk Ordinary shares of Rp 22.5 each fully paid Philip Eng Heng Nee

1,000,000

1,000,000

PT Indosat Tbk Ordinary shares of Rp100 each fully paid Peter Seah Lim Huat

150,000

150,000

Options to subscribe for ordinary shares of Rp100 each Peter Seah Lim Huat

Rp3,702.60

1/8/2005 to 31/7/2006

Raffles Holdings Limited Ordinary shares of $0.50 each fully paid Boon Swan Foo

10,000

40,000


Directors’ Report Year Ended 31 December 2005

Name of director and corporation in which interests are held

Exercise price per share

Holdings at beginning of the year / date of appointment

Exercise period

Holdings at end of the year

Related Corporations (cont’d) SembCorp Industries Ltd Ordinary shares of $0.25 each fully paid Peter Seah Lim Huat Boon Swan Foo William Liu Wei Hai

– 50,000 2,629

140,000 47,000* 2,471*

* Adjusted for capital reduction in 2005

Options to subscribe for ordinary shares of $0.25 each Peter Seah Lim Huat

20/4/2002 to 19/4/2006 8/5/2003 to 7/5/2007 18/10/2003 to 17/10/2007 3/6/2004 to 2/6/2008 19/11/2004 to 18/11/2008 18/5/2005 to 17/5/2009 23/11/2005 to 22/11/2009 1/7/2006 to 30/6/2010 22/11/2006 to 21/11/2010

140,000 70,000 70,000 70,000 70,000 70,000 70,000 – –

140,000 70,000 70,000 70,000 70,000 70,000 70,000 70,000 70,000

3,000

50,000

50,000

11,000 2,000 4,000

11,000 2,000 4,000

40,000

40,000

8,000

8,000

SembCorp Marine Ltd Ordinary shares of $0.10 each fully paid William Liu Wei Hai SIA Engineering Company Limited Ordinary shares of $0.10 each fully paid Boon Swan Foo Singapore Airlines Limited Ordinary shares of $0.50 each fully paid William Liu Wei Hai Tan Cheng Han Venkatachalam Krishnakumar Singapore Airport Terminal Services Limited Ordinary shares of $0.10 each fully paid Boon Swan Foo Singapore Food Industries Limited Ordinary shares of $0.05 each fully paid Boon Swan Foo

41 Singapore Computer Systems Limited Annual Report 2005

$1.55 $1.59 $0.98 $1.14 $1.29 $1.35 $1.52 $2.68 $2.67


Directors’ Report Year Ended 31 December 2005

Name of director and corporation in which interests are held

Exercise price per share

Holdings at beginning of the year / date of appointment

Exercise period

Holdings at end of the year

Related Corporations (cont’d) Singapore Technologies Engineering Ltd Ordinary shares of $0.10 each fully paid Boon Swan Foo

5,000

1,005,000

Options to subscribe for ordinary shares of $0.10 each Peter Seah Lim Huat

$1.92 $1.79 $1.86 $2.09 $2.12 $2.37 $2.57

13/8/2003 to 12/8/2007 7/2/2004 to 6/2/2008 12/8/2004 to 11/8/2008 10/2/2005 to 9/2/2009 11/8/2005 to 10/8/2009 8/2/2006 to 7/2/2010 11/8/2006 to 10/8/2010

89,000 44,500 40,500 44,500 44,500 – –

89,000 44,500 40,500 44,500 44,500 44,500 44,500

Singapore Technologies Engineering Ltd Singapore Computer Systems Limited Annual Report 2005

42

Options to subscribe for ordinary shares of $0.10 each Boon Swan Foo

$2.00 $2.72 $2.72 $2.72 $2.72

11/8/2001 to 10/8/2009 20/2/2002 to 19/2/2006 20/2/2003 to 19/2/2006 20/2/2004 to 19/2/2006 20/2/2005 to 19/2/2006

5,000 56,250 56,250 56,250 56,250

5,000 56,250 56,250 56,250 56,250

Tan Cheng Han

$2.72 $2.29 $1.79 $1.86

20/2/2002 to 19/2/2006 8/2/2003 to 7/2/2007 7/2/2004 to 6/2/2008 12/8/2004 to 11/8/2008

30,000 23,000 11,500 11,500

30,000 23,000 11,500 11,500

Venkatachalam Krishnakumar

$2.37 $2.57

8/2/2006 to 7/2/2010 11/8/2006 to 10/8/2010

25,250 25,250

25,250 25,250

3,176 46,190 17,560 4,340 3,240 662

3,176 46,190 17,560 4,340 3,240 662

Singapore Telecommunications Limited Ordinary shares of $0.15 each fully paid Peter Seah Lim Huat Boon Swan Foo Philip Eng Heng Nee William Liu Wei Hai Tan Cheng Han Tan Tong Hai


Directors’ Report Year Ended 31 December 2005

Name of director and corporation in which interests are held

Exercise price per share

Holdings at beginning of the year / date of appointment

Exercise period

Holdings at end of the year

Related Corporations (cont’d) StarHub Limited Ordinary shares of $0.40 each fully paid Peter Seah Lim Huat Venkatachalam Krishnakumar

60,000 20,000

60,000 20,000

37,500 18,750 18,750 18,750 18,750 –

37,500 18,750 18,750 18,750 18,750 25,500

Options to subscribe for ordinary shares of $0.40 each Peter Seah Lim Huat

$0.88 $0.88 $0.88 $0.96 $0.985 $1.52

30/11/2003 to 29/11/2007 31/5/2004 to 30/5/2008 29/11/2004 to 28/11/2008 3/4/2005 to 2/4/2009 27/11/2005 to 26/11/2009 31/5/2006 to 30/5/2010

STT Communications Ltd

43

Peter Seah Lim Huat

47,000

8,000 39,000 130,000

8,000 39,000 130,000

50,000 10,000

50,000 10,000

100

100

Options to subscribe for ordinary shares of $0.50 each Peter Seah Lim Huat

$0.50 $0.57 $1.08

29/6/2003 to 28/6/2012 30/7/2004 to 29/7/2013 29/7/2005 to 28/7/2014

TeleChoice International Limited Ordinary shares of $0.02 each fully paid Peter Seah Lim Huat William Liu Wei Hai Vertex Technology Fund Ltd Ordinary shares of US$1.00 each fully paid Boon Swan Foo

Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares, debentures or share options of the Company, or of related corporations, either at the beginning of the financial year, or date of appointment, if later, or at the end of the financial year. There were no changes in any of the above-mentioned interests in the Company between the end of the financial year and 21 January 2006.

Singapore Computer Systems Limited Annual Report 2005

Ordinary shares of $0.50 each fully paid


Directors’ Report Year Ended 31 December 2005

Except as disclosed under the “Share Options and Share-Based Incentives” section of this report, neither at the end of, nor at any time during the financial year was the Company a party to any arrangement whose objects are, or one of whose objects is, to enable the directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. Except for salaries, bonuses and fees and those benefits that are disclosed in this report and in Note 25 to the financial statements, since the end of the last financial year, no director has received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporation with the director, or with a firm of which he is a member or with a company in which he has a substantial financial interest.

(I)

The following share plans of the Company are administered by the Executive Resource and Compensation Committee (“ERCC”) of the Company:

(1)

Singapore Computer Systems Executives’ Share Option Scheme (“SCS ESOS”);

(2)

Singapore Computer Systems Share Option Plan (“SCS SOP”);

(3)

Singapore Computer Systems Performance Share Plan (“SCS PSP”); and

(4)

Singapore Computer Systems Restricted Stock Plan (“SCS RSP”).

44

(II)

The ERCC consists of the following members:

Singapore Computer Systems Limited Annual Report 2005

Share Options and Share-Based Incentives

Tay Siew Choon (Chairman)

(Resigned on 1 January 2005)

Peter Seah Lim Huat (Chairman)

(Appointed on 1 January 2005)

Boon Swan Foo

(Appointed on 1 January 2005)

Robert Chua Teck Chew

(Resigned on 31 October 2005)

Philip Eng Heng Nee

(Appointed on 31 October 2005)

(III) During the financial year, except as disclosed below, there were no options granted by the Company or its subsidiaries to any person to take up unissued shares in the Company or its subsidiaries and no awards granted by the Company or its subsidiaries to any person to take delivery of any fully paid-up shares in the Company or its subsidiary: (A) Singapore Computer Systems Executives’ Share Option Scheme (“SCS ESOS”) (1)

During the financial year, no option was granted by the Company under SCS ESOS.

(2)

During the financial year, no shares in the Company were issued pursuant to the exercise of options granted under SCS ESOS before the end of the financial year.

(3)

As at the end of the financial year, unissued ordinary shares of the Company under SCS ESOS are as follows:

Date of grant of options

No. of holders

Exercise period

12/7/2000

4

20/4/2001 to 18/4/2009

No. of unissued ordinary shares under options granted and unexercised

Exercise price per share

63,000

$1.13


Directors’ Report Year Ended 31 December 2005

(4)

From the commencement of SCS ESOS to 31 December 2005, no option has been granted under SCS ESOS to any controlling shareholder of the Company and its associates.

(5)

From the commencement of SCS ESOS to 31 December 2005, none of the participants under SCS ESOS has been granted options to subscribe for 5% or more of the total number of shares available under SCS ESOS.

(6)

During the financial year, no single director or employee of the parent company and its subsidiaries has received options to subscribe for 5% or more of the total number of shares available to all directors and employees of the parent company and its subsidiaries under SCS ESOS.

(7)

During the financial year, no option has been granted under SCS ESOS to any director or employee of the parent company and its subsidiaries.

(8)

Since the commencement of SCS ESOS to 31 December 2005, no option has been granted under SCS ESOS to any director or employee of the parent company and its subsidiaries, except to a director of the parent company, who was also a Director of the Company whereby options were granted to him to subscribe for an aggregate of 245,000 ordinary shares in the Company, and which options have since lapsed on 1 January 2005 upon his resignation as Director of the Company.

(9)

During the financial year, no option was granted under SCS ESOS with the exercise price set at a discount to the market price.

(B) Singapore Computer Systems Share Option Plan (“SCS SOP”) (1)

During the financial year, the following options were granted by the Company under SCS SOP: 45

Exercise price per share

Date of grant of options

No. of holders

Exercise period

9/4/2005

6

10/4/2006 to 9/4/2010

44,250

$0.84

9/4/2005

2

10/4/2007 to 9/4/2010

3,250

$0.84

9/4/2005

2

10/4/2008 to 9/4/2010

3,250

$0.84

9/4/2005

2

10/4/2009 to 9/4/2010

3,250

$0.84

9/4/2005

50

10/4/2006 to 9/4/2015

279,325

$0.84

9/4/2005

50

10/4/2007 to 9/4/2015

279,325

$0.84

9/4/2005

50

10/4/2008 to 9/4/2015

279,325

$0.84

9/4/2005

50

10/4/2009 to 9/4/2015

279,325

$0.84

1,171, 300 (2)

During the financial year, the Company did not issue any share pursuant to the exercise of options granted under SCS SOP.

Singapore Computer Systems Limited Annual Report 2005

No. of unissued ordinary shares under options granted


Directors’ Report Year Ended 31 December 2005

(3)

Singapore Computer Systems Limited Annual Report 2005

46

As at the end of the financial year, unissued ordinary shares of the Company under SCS SOP are as follows: No. of unissued ordinary shares under options granted and unexercised

Exercise price per share

Date of grant of options

No. of holders

Exercise period

18/10/2000 18/10/2000 18/10/2000 18/10/2000

33 33 33 33

19/10/2001 to 18/10/2010 19/10/2002 to 18/10/2010 19/10/2003 to 18/10/2010 19/10/2004 to 18/10/2010

87,500 87,500 87,500 87,500

$2.20 $2.20 $2.20 $2.20

14/3/2001 14/3/2001 14/3/2001 14/3/2001 14/3/2001 14/3/2001

3 1 37 37 37 37

15/3/2002 to 14/3/2006 15/3/2003 to 14/3/2006 15/3/2002 to 14/3/2011 15/3/2003 to 14/3/2011 15/3/2004 to 14/3/2011 15/3/2005 to 14/3/2011

72,500 20,000 86,500 86,500 86,500 86,500

$2.08 $2.08 $2.08 $2.08 $2.08 $2.08

7/3/2002 7/3/2002 7/3/2002 7/3/2002 7/3/2002 7/3/2002 7/3/2002 7/3/2002

2 1 1 1 43 43 43 43

08/3/2003 to 07/3/2007 08/3/2004 to 07/3/2007 08/3/2005 to 07/3/2007 08/3/2006 to 07/3/2007 08/3/2003 to 07/3/2012 08/3/2004 to 07/3/2012 08/3/2005 to 07/3/2012 08/3/2006 to 07/3/2012

17,000 2,000 2,000 2,000 89,000 89,000 89,000 89,000

$1.55 $1.55 $1.55 $1.55 $1.55 $1.55 $1.55 $1.55

21/2/2003 21/2/2003 21/2/2003 21/2/2003 21/2/2003 21/2/2003 21/2/2003 21/2/2003

1 1 1 1 28 28 28 28

22/2/2004 to 21/2/2008 22/2/2005 to 21/2/2008 22/2/2006 to 21/2/2008 22/2/2007 to 21/2/2008 22/2/2004 to 21/2/2013 22/2/2005 to 21/2/2013 22/2/2006 to 21/2/2013 22/2/2007 to 21/2/2013

2,000 2,000 2,000 2,000 69,500 69,500 69,500 69,500

$0.86 $0.86 $0.86 $0.86 $0.86 $0.86 $0.86 $0.86

30/7/2003

4

31/7/2004 to 30/7/2013

150,000

$0.91

29/4/2004 29/4/2004 29/4/2004 29/4/2004 29/4/2004 29/4/2004 29/4/2004 29/4/2004 9/4/2005 9/4/2005 9/4/2005 9/4/2005 9/4/2005 9/4/2005 9/4/2005 9/4/2005

2 1 1 1 20 20 20 20 2 1 1 1 41 41 41 41

30/4/2005 to 29/4/2009 30/4/2006 to 29/4/2009 30/4/2007 to 29/4/2009 30/4/2008 to 29/4/2009 30/4/2005 to 29/4/2014 30/4/2006 to 29/4/2014 30/4/2007 to 29/4/2014 30/4/2008 to 29/4/2014 10/4/2006 to 9/4/2010 10/4/2007 to 9/4/2010 10/4/2008 to 9/4/2010 10/4/2009 to 9/4/2010 10/4/2006 to 9/4/2015 10/4/2007 to 9/4/2015 10/4/2008 to 9/4/2015 10/4/2009 to 9/4/2015

10,000 2,000 2,000 2,000 86,000 86,000 86,000 86,000 10,000 2,000 2,000 2,000 169,925 169,925 169,925 169,925

$0.84 $0.84 $0.84 $0.84 $0.84 $0.84 $0.84 $0.84 $0.84 $0.84 $0.84 $0.84 $0.84 $0.84 $0.84 $0.84

Total

2,659,200


Directors’ Report Year Ended 31 December 2005

(4) Details of options granted to Directors of the Company under SCS SOP are as follows:

Name of director Tay Siew Choon Robert Chua Teck Chew Theresa Foo-Yo Mie Yoen Spencer Lee Tien Chye William Liu Wei Hai Low Sin Leng Donald Albert Ramble Pek Yew Chai

Aggregate Aggregate No. of unissued no. of no. of ordinary shares ordinary shares ordinary shares under options under options under options granted during granted since exercised since the financial commencement commencement year ended of SCS SOP to of SCS SOP to 31/12/2005 31/12/2005 31/12/2005

Lapsed options

Aggregate no. of unissued ordinary shares under options granted and unexercised as at 31/12/2005

– 20,000 8,000 5,000 8,000 5,000 8,000 131,000

405,000 125,000 49,000 30,000 32,000 20,000 16,000 581,000

– – – – – – – –

405,000 125,000 49,000 30,000 – 20,000 – 581,000

– – – – 32,000 – 16,000 –

185,000

1,258,000

1,210,000

48,000

From the commencement of SCS SOP to 31 December 2005, no option has been granted under SCS SOP to any controlling shareholder of the Company and its associates.

(6)

From the commencement of SCS SOP to 31 December 2005, none of the participants under SCS SOP has been granted options to subscribe for 5% or more of the total number of shares available under SCS SOP, SCS PSP and SCS RSP.

(7)

During the financial year, no single director or employee of the parent company and its subsidiaries has received options to subscribe for 5% or more of the total number of shares available to all directors and employees of the parent company and its subsidiaries under SCS SOP, SCS PSP and SCS RSP.

(8)

During the financial year, no option has been granted under SCS SOP to any director or employee of the parent company and its subsidiaries, except to an employee of the parent company, who was also a Director of the Company, whereby options were granted to him to subscribe for an aggregate of 8,000 ordinary shares in the Company.

(9)

Since the commencement of SCS SOP to 31 December 2005, no option has been granted under SCS SOP to any director or employee of the parent company and its subsidiaries, except to a director and an employee of the parent company, who were also Directors of the Company, whereby options were granted to them to subscribe for an aggregate of 437,000 ordinary shares in the Company. The 405,000 options granted to the director of the parent company who was also a Director of the Company have however since lapsed on 1 January 2005 upon his resignation as Director of the Company.

(10) During the financial year, no option was granted under SCS SOP with exercise price set at a discount to the market price.

47 Singapore Computer Systems Limited Annual Report 2005

(5)


Directors’ Report Year Ended 31 December 2005

(C) Singapore Computer Systems Performance Share Plan (“SCS PSP”) (1)

SCS PSP was established with the objective of motivating senior executives to strive for superior performance and sustaining long-term growth for the Company. Awards granted under SCS PSP are conditional on performance targets set based on medium-term corporate objectives.

(2)

During the financial year, no conditional awards were granted by the Company under SCS PSP.

(3)

During the financial year, the Company did not release any Performance Shares under the conditional awards granted under SCS PSP.

(4)

As at the end of the financial year, unreleased Performance Shares under conditional awards granted under SCS PSP are as follows:

Date of grant of conditional awards

No. of holders

Over a 3-year performance cycle

18/8/2004

2

2004 to 2006

No. of unreleased performance shares under conditional awards granted

Total minimum and maximum no. of performance shares deliverable at the end of the 3-year performance cycle

220,000

0 to 440,000

220,000

0 to 440,000

Singapore Computer Systems Limited Annual Report 2005

48

(5)

From the commencement of SCS PSP to 31 December 2005, no award has been granted under SCS PSP to any controlling shareholder of the Company and its associates.

(6)

From the commencement of SCS PSP to 31 December 2005, none of the participants under SCS PSP has been granted award for 5% or more of the total number of shares available under SCS PSP, SCS SOP and SCS RSP.

(7)

During the financial year, no single director or employee of the parent company and its subsidiaries has received award for 5% or more of the total number of shares available to all directors and employees of the parent company and its subsidiaries under SCS PSP, SCS SOP and SCS RSP.

(8)

During the financial year, no award has been granted to any director or employee of the parent company and its subsidiaries under SCS PSP.

(9)

Since the commencement of SCS PSP to 31 December 2005, no award has been granted to any director or employee of the parent company and its subsidiaries under SCS PSP.

(D) Singapore Computer Systems Restricted Stock Plan (“SCS RSP”)

Since SCS RSP was approved by the Company’s Shareholders on 7 July 2000, no award has been granted under SCS RSP.

(IV) Save as disclosed above, there were no unissued shares of the Company or its subsidiaries under options and awards granted by the Company as at the end of the financial year.

(V) The options granted by the Company under SCS ESOS and SCS SOP and the awards granted by the Company under SCS PSP do not entitle the holders of the options and the awards, by virtue of such holdings, to any right to participate in any share issue of any other company.


Directors’ Report Year Ended 31 December 2005

Audit Committee

The members of the Audit Committee during the financial year and at the date of this report are: • • • • •

Robert Chua Teck Chew (Chairman) (Resigned on 31 October 2005) Philip Eng Heng Nee (Chairman) (Appointed on 31 October 2005) Theresa Foo-Yo Mie Yoen (Resigned on 31 October 2005) Tan Cheng Han (Appointed on 16 May 2005) William Liu Wei Hai (Resigned on 9 May 2005, re-appointed on 31 October 2005)

The Audit Committee performs the functions specified in Section 201B of the Companies Act, the Listing Manual and the Best Practices Guide of the Singapore Exchange, and the Code of Corporate Governance.

The Audit Committee has held 7 meetings since the last directors’ report. In performing its functions, the Audit Committee met with the Company’s external and internal auditors to discuss the scope of their work, the results of their examination and evaluation of the Company’s internal accounting control system.

The Audit Committee also reviewed the following: - assistance provided by the Company’s officers to the internal and external auditors; - financial statements of the Group and Company prior to their submission to the directors of the Company for adoption; and - interested person transactions (as defined in Chapter 9 of the Listing Manual of the Singapore Exchange).

The Audit Committee is satisfied with the independence and objectivity of the external auditors and has recommended to the Board of Directors that the auditors, KPMG, be nominated for re-appointment as auditors at the forthcoming Annual General Meeting of the Company.

Auditors The auditors, KPMG, have indicated their willingness to accept re-appointment. On behalf of the Board of Directors

Peter Seah Lim Huat Director

Philip Eng Heng Nee Director

Singapore 17 March 2006

49 Singapore Computer Systems Limited Annual Report 2005

The Audit Committee has full access to management and is given the resources required for it to discharge its functions. It has full authority and the discretion to invite any director or executive officer to attend its meetings. The Audit Committee also recommends the appointment of the external auditors and reviews the level of audit and non-audit fees.


Statement by Directors Year Ended 31 December 2005

In our opinion: (a)

the financial statements set out on pages 52 to 104 are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2005 and of the results, changes in equity and cash flows of the Group and the changes in equity of the Company for the year ended on that date; and

(b)

at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.

The Board of Directors has, on the date of this statement, authorised these financial statements for issue. On behalf of the Board of Directors

Peter Seah Lim Huat Director

Singapore Computer Systems Limited Annual Report 2005

50

Philip Eng Heng Nee Director

Singapore 17 March 2006


Report of the Auditors to the Members of Singapore Computer Systems Limited

We have audited the accompanying financial statements of Singapore Computer Systems Limited for the year ended 31 December 2005 as set out on pages 52 to 104. These financial statements are the responsibility of the Company’s directors. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the directors, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion: (a)

the consolidated financial statements of the Group, the balance sheet and the statement of changes in equity of the Company are properly drawn up in accordance with the provisions of the Companies Act, Chapter 50 (the “Act�) and Singapore Financial Reporting Standards to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2005 and of the results, changes in equity and cash flows of the Group and of the changes in equity of the Company for the year ended on that date; and

(b)

the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act. 51

Certified Public Accountants Singapore

Singapore Computer Systems Limited Annual Report 2005

KPMG


Balance sheet As at 31 December 2005

GROUP

COMPANY

Note

2005 $’000

3 4 5 6 7 8 9

50,161 116 – 22,251 1,933 737 579

45,421 2,256 – 7,344 5,352 12 994

35,882 67 39,873 18,944 1,932 12 290

38,561 408 42,111 6,515 5,352 12 –

75,777

61,379

97,000

92,959

27,790 122,857 1,027 30,360

61,805 112,489 852 20,907

8,776 85,970 2,475 14,765

32,468 74,933 10,430 1,063

182,034

196,053

111,986

118,894

257,811

257,432

208,986

211,853

38,534 57,115

38,534 104,792

38,534 33,222

38,534 76,938

Shareholders’ equity

95,649

143,326

71,756

115,472

Minority interests

11,881

10,827

107,530

154,153

71,756

115,472

17 1,461 544 936

30 – 600 669

– – – –

– – – 531

2,958

1,299

531

13 18

– 123,076

241 92,451

– 128,216

241 93,164

19

7,771 2,555 1,832 12,067 22

5,001 1,478 226 2,530 53

6,659 1,469 886 – –

147,323

101,980

137,230

95,850

Total liabilities

150,281

103,279

137,230

96,381

Total equity and liabilities

257,811

257,432

208,986

211,853

Non-current assets Property, plant and equipment Intangible assets Subsidiaries Associates Other investments Long-term receivables Deferred tax assets

Current assets Inventories and projects-in-progress Trade and other receivables Short-term loan receivables Cash at bank and in hand

10 11 12 13

Total Assets

2004 $’000 (restated)

2005 $’000

2004 $’000 (restated)

Singapore Computer Systems Limited Annual Report 2005

52

Equity attributable to equity holders of the parent Share capital Reserves

14 15

Total equity Non-current liabilities Obligations under hire purchase Bank loans Other payables Deferred tax liabilities

Current liabilities Bank overdrafts (unsecured) Trade and other payables Progress billings in excess of cost of projects-in-progress Current tax payable Provisions Bank loans Current portion of obligations under hire purchase

16 17 9

20 17 16

The accompanying notes form an integral part of these financial statements.

1,329 890 226 – –


Consolidated Profit and Loss Account Year Ended 31 December 2005 Note

Revenue

23

Cost of sales Gross profit

2005 $’000 348,117

427,984

(341,223)

(372,371)

6,894

Other income

2004 $’000 (restated)

814

55,613 3,688

Distribution expenses

(13,189)

(20,690)

Administrative expenses

(26,127)

(21,702)

Other operating expenses

(6,542)

(5,075)

Non-operating (expenses)/income

(2,126)

21,555

Finance costs

(619)

Share of profit of associates

1,300

(Loss)/Profit before taxation

24

Income tax expense

26

(Loss)/Profit for the year

(39,595)

(475) 735 33,649

(2,883)

(4,613)

(42,478)

29,036

Attributable to:

53

(43,576)

27,687

1,098

1,349

(42,478)

29,036

Basic

(28.27)

17.96

Diluted

(28.27)

17.96

Minority interests (Loss)/Profit for the year (Loss)/Earnings per share (cents)

The accompanying notes form an integral part of these financial statements.

27

Singapore Computer Systems Limited Annual Report 2005

Equity holders of the parent


Statement of Changes in Equity Year Ended 31 December 2005

Group

Singapore Computer Systems Limited Annual Report 2005

Asset Share option revaluation reserves reserves

Accumulated profits

Minority interest

Total equity

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

38,534

2,435

(2,149)

80,570

119,390

2,774

122,164

35

(35)

38,534

2,435

(2,149)

35

80,535

119,390

2,774

122,164

Exchange differences on consolidation of subsidiaries and associates

(30)

(30)

(30)

Reserves recognised on disposal of subsidiaries

(103)

(103)

(402)

(505)

Net gains/(losses) recognised directly in equity

(30)

(103)

(133)

(402)

(535)

Profit for the year

27,687

27,687

1,349

29,036

Total recognised income and expense for the year

(30)

27,584

27,554

947

28,501

7,106

7,106

81

81

At 1 January 2004 Effects of adopting FRS 102 At 1 January 2004, restated

54

Currency Share Share translation capital premium reserves

Total attributable to shareholders of the company

Acquisition of subsidiary Cost of share-based payment

81

Final dividend paid of 3 cents per share less tax at 20%

(3,699)

(3,699)

(3,699)

At 31 December 2004

38,534

2,435

(2,179)

116

104,420

143,326

10,827

154,153

The accompanying notes form an integral part of these financial statements.


Statement of Changes in Equity Year Ended 31 December 2005

Group

Currency Share Share translation capital premium reserves

Asset Share option revaluation reserves reserves

Accumulated profits

Total attributable to shareholders of the company

Minority interest

Total equity

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

38,534

2,435

(2,179)

104,536

143,326

10,827

154,153

116

(116)

38,534

2,435

(2,179)

116

104,420

143,326

10,827

154,153

Fair value adjustments

119

119

119

Exchange differences on consolidation of subsidiaries and associates

(607)

(607)

(607)

– –

– –

(607) –

– –

119 –

– (43,576)

(488) (43,576)

– 1,098

(488) (42,478)

(607)

119

(43,576)

(44,064)

1,098

(42,966)

(44)

(44)

86

86

86

(3,699)

(3,699)

(3,699)

38,534

2,435

(2,786)

202

119

57,145

95,649

11,881

107,530

At 31 December 2004, as previously reported Effects of adopting FRS 102 At 31 December 2004, restated

Net gains/(losses) recognised directly in equity Net loss for the year Total recognised income and expense for the year Acquisition of additional interest in subsidiary Cost of share-based payment Final dividend paid of 3 cents per share less tax at 20% At 31 December 2005

The accompanying notes form an integral part of these financial statements.

55 Singapore Computer Systems Limited Annual Report 2005

$’000


Statement of Changes in Equity Year Ended 31 December 2005

Company

Accumulated profits

Minority interest

Total equity

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

38,534

2,435

52,286

93,255

93,255

35

(35)

38,534 –

2,435 –

– –

35 –

– –

52,251 25,835

93,255 25,835

– –

93,255 25,835

25,835

25,835

25,835

81

81

81

(3,699)

(3,699)

(3,699)

At 31 December 2004

38,534

2,435

116

74,387

115,472

115,472

At 31 December 2004, as previously reported

38,534

2,435

74,503

115,472

115,472

116

(116)

38,534 –

2,435 –

– –

116 –

– 119

74,387 –

115,472 119

– –

115,472 119

– –

– –

– –

– –

119 –

– (40,222)

119 (40,222)

– –

119 (40,222)

119

(40,222)

(40,103)

(40,103)

86

86

86

(3,699)

(3,699)

(3,699)

38,534

2,435

202

119

30,466

71,756

71,756

Total recognised income and expense for the year Cost of share-based payment Final dividends paid of 3 cents per share less tax at 20%

Singapore Computer Systems Limited Annual Report 2005

Asset Share option revaluation reserves reserves

$’000 At 1 January 2004 Effects of adopting FRS 102 At 1 January 2004, restated Net profit for the year

56

Currency Share Share translation capital premium reserves

Total attributable to shareholders of the company

Effects of adopting FRS 102 At 31 December 2004, restated Fair value adjustments Net gains recognised directly in equity Net loss for the year Total recognised income and expense for the year Cost of share-based payment Final dividend paid of 3 cents per share less tax at 20% At 31 December 2005

The accompanying notes form an integral part of these financial statements.


Consolidated Statement of Cash Flows Year Ended 31 December 2005 Note

Operating activities (Loss)/Profit before taxation Adjustments for: Allowance made for impairment of other investments Impairment allowance for property, plant and equipment Amortisation, depreciation and write-off Provision for foreseeable losses Distribution received from fund investments Dividend income Finance costs Gain on disposal of investments Loss/(Gain) on disposal of property, plant and equipment Provision for restructuring Interest income Share of profit of associates Provisions made for warranties Share option expense

2005 $’000

2004 $’000 (restated)

33,649

3,577 170 14,337 40,754 (38) (4) 619 (2,607) 77 971 (727) (1,300) 1,081 86

610 – 11,332 3,439 (76) (432) 475 (22,105) (5) – (347) (735) 509 81

Operating profit before working capital changes

17,401

26,395

Changes in working capital: Finance lease receivables Inventories and projects-in-progress Trade and other receivables Employee benefits Trade and other payables Cash from operations Interest received Interest paid Income tax paid

– (2,392) (11,806) (56) 29,215 32,362 690 (506) (1,041)

171 (35,785) (16,394) – 8,055 (17,558) 347 (475) (686)

Cash flows from operating activities

31,505

(18,372)

(16,907) 56 (194) 4 – – 479 5,687 – 173 (17,540)

(250) 930 (573) 1,779 (294) (4,712) 30,486 17,514 150 178 (7,120)

(28,242)

38,088

Investing activities Acquisition of shares in associates Issue of shares to minority shareholders Fund injection in investment Dividends received Loans granted to associates Net cash outflow from acquisition of a subsidiary Net cash inflow from divestment of subsidiaries Proceeds from disposal of an associate Proceeds from disposal of other investments Proceeds from disposal of property, plant and equipment Purchase of property, plant and equipment Cash flows from investing activities

The accompanying notes form an integral part of these financial statements.

29(a) 29(b)

57 Singapore Computer Systems Limited Annual Report 2005

(39,595)


Consolidated Statement of Cash Flows Year Ended 31 December 2005 Note

Financing activities Dividends paid to shareholders of the Company Dividends paid to minority shareholders Hire purchase obligations Proceeds from/(Repayment of) short-term bank loans Proceeds from long-term bank loans Cash flows from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Effect of exchange rate changes on balances held in foreign currency Cash and cash equivalents at end of year

Singapore Computer Systems Limited Annual Report 2005

58

The accompanying notes form an integral part of these financial statements.

13

2005 $’000

2004 $’000 (restated)

(3,699) (345) (44) 9,537 1,461

(3,699) – (73) (24,284) –

6,910

(28,056)

10,173 20,615 (479)

(8,340) 28,992 (37)

30,309

20,615


Notes to the Financial Statements Year Ended 31 December 2005

These notes form an integral part of the financial statements. The financial statements were authorised for issue by the directors on 17 March 2006.

1

Domicile and Activities

Singapore Computer Systems Limited (the Company) is incorporated in the Republic of Singapore and has its registered office at 7 Bedok South Road, Singapore 469272.

The principal activities of the Group and the Company are those relating to the supply and maintenance, system development, project implementation, facilities management, system support, the servicing and sale of computer equipment and provision of consultancy and software development services.

The immediate and ultimate holding companies during the financial year are Green Dot Capital Pte Ltd and Temasek Holdings (Private) Limited respectively. Both were incorporated in Singapore.

The consolidated financial statements relate to the Company and its subsidiaries (referred to as the Group) and the Group’s interests in associates.

2

Summary of Significant Accounting Policies

2.1 Basis of Preparation The financial statements are prepared in accordance with Singapore Financial Reporting Standard (FRS) including related Interpretations (INT) promulgated by the Council on Corporate Disclosure and Governance (CCDG).

In 2005, the Group adopted the following new/revised FRSs which are relevant to its operations:

FRS 1 (revised)

Presentation of Financial Statements

FRS 2 (revised)

Inventories

FRS 8 (revised)

Accounting Policies, Changes in Accounting Estimates and Errors

FRS 10 (revised)

Events After the Balance Sheet Date

FRS 16 (revised)

Property, Plant and Equipment

FRS 17 (revised)

Leases

FRS 21 (revised)

The Effects of Changes in Foreign Exchange Rates

FRS 24 (revised)

Related Party Disclosures

FRS 27 (revised)

Consolidated and Separate Financial Statements

FRS 28 (revised)

Investment in Associates

FRS 31 (revised)

Interests in Joint Ventures

FRS 32 (revised)

Financial Instruments: Disclosure and Presentation

FRS 33 (revised)

Earnings Per Share

FRS 39

Financial Instruments: Recognition and Measurement

FRS 102

Share-based Payment

FRS 105

Non-current Assets Held for Sale and Discontinued Operations

The effects of adopting the new/revised FRSs in 2005 are set out in Note 30.

The financial statements are presented in Singapore dollars and rounded to the nearest thousand, unless otherwise stated. They are prepared on the historical cost basis except for certain financial assets and financial liabilities.

59 Singapore Computer Systems Limited Annual Report 2005


Notes to the Financial Statements Year Ended 31 December 2005

The preparation of financial statements in conformity with FRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying amounts of assets and liabilities that are not readily apparent from other sources.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods, if the revision affects both current and future periods.

Judgements made by management in the application of FRSs that have a significant effect on the financial statements and in arriving at estimates with a significant risk of material adjustment in the following year are discussed in Note 36.

2.2 Functional Currency

Singapore Computer Systems Limited Annual Report 2005

60

The functional currency of the Company is the Singapore dollar. As sales and purchases are denominated primarily in Singapore dollars and receipts from operations are usually retained in Singapore dollars, the directors are of the opinion that the Singapore dollar reflects the economic substance of the underlying events and circumstances relevant to the Company.

2.3 Consolidation

Subsidiaries are those companies controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of a company so as to obtain benefits from its activities.

Investments in subsidiaries are stated in the Company’s balance sheet at cost less impairment losses. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

Business combinations are accounted for under the purchase method. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition.

The excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition is credited to profit and loss account in the period of acquisition.

Associates are companies in which the Group has significant influence, but not control, over the financial and operating policies.

Investments in associates are stated in the Company’s balance sheet at cost, less impairment losses. In the Group’s financial statements, they are accounted for using the equity method of accounting. The Group’s investment in these entities includes goodwill on acquisition.

The consolidated profit and loss account reflects the Group’s share of the post-acquisition results of the associates for the year. For this purpose, the latest audited financial statements are used. Where audited financial statements are not available, unaudited management financial statements are used.

Equity accounting of associates’ results is discontinued when the Group’s share of losses equals or exceeds the cost of investments in the associates unless the Group has incurred obligations or made payments on behalf to satisfy obligations of the associates that the Group has guaranteed or otherwise committed.


Notes to the Financial Statements Year Ended 31 December 2005

2.4 Foreign Currencies

Foreign Currency Transactions

Monetary assets and liabilities in foreign currencies, are translated into Singapore dollars at rates of exchange approximate to those ruling at the balance sheet date. Transactions in foreign currencies are translated at rates ruling on transaction dates. Translation differences are included in the profit and loss account.

Foreign Operations

Assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition of foreign operations are translated to Singapore dollars at the rates of exchange ruling at the balance sheet date. Revenues and expenses of foreign operations are translated at the average exchange rates for the year. Exchange differences arising on translation are recognised directly in equity. On disposal, the accumulated translation differences are recognised in the consolidated profit and loss account as part of the gain or loss on sale.

2.5 Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.

Property, plant and equipment acquired under hire purchase arrangements are capitalised in the financial statements, and the corresponding obligations treated as liabilities. The assets so capitalised are depreciated in accordance with the policy for depreciation of property, plant and equipment as set out below. The total interest, being the difference between the total instalments payable and the capitalised amount, is amortised over the period of the agreement using the “sum-of-digits” method.

Depreciation is provided on a straight-line basis so as to write off items of property, plant and equipment over their estimated useful lives as follows:

Freehold property

– 30 years

Leasehold land

– 30 years

Building

– 30 years

Leasehold improvements

– 3 to 9 years

Computer equipment

– 2 to 5 years

Office equipment

– 3 to 5 years

Furniture and fittings

– 2 to 6 years

Motor vehicles

– 2 to 5 years

2.6 Intangible Assets

Goodwill

Goodwill in a business combination represents the excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired. Goodwill is stated at cost less impairment losses. Goodwill on the acquisition of subsidiaries is presented as intangible assets. Goodwill arising on acquisitions of associates is included in investments in associates.

Goodwill is tested for impairment on an annual basis in accordance with Note 2.11 below.

Goodwill/negative goodwill previously written off against reserves

Goodwill that has previously been taken to reserves is not taken to the profit and loss account when (a) the business is disposed or (b) the goodwill is impaired. Similarly, negative goodwill that has previously been taken to reserves is not taken to the profit and loss account when the business is disposed of.

61 Singapore Computer Systems Limited Annual Report 2005


Notes to the Financial Statements Year Ended 31 December 2005

Research and Development

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in the profit and loss account as an expense as incurred.

Expenditure on development activities, whereby research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalised if the product or process is technically and commercially feasible and the Group has sufficient resources to complete development. The expenditure capitalised includes the cost of materials, direct labour and an appropriate proportion of overheads. Other development expenditure is recognised in the profit and loss account as an expense as incurred. Capitalised development expenditure is stated at cost less accumulated amortisation and impairment losses.

Other Intangible Assets

Intangible assets that have an indefinite life or that are not yet available for use are stated at cost less impairment losses. Such intangible assets are tested for impairment annually in accordance with Note 2.11 below.

Other intangible assets, which comprise intellectual property rights, rights to distribute certain computer products and technology licenses, are stated at cost less accumulated amortisation and impairment losses.

Subsequent Expenditure

Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.

Amortisation

Amortisation of intangible assets with finite lives is charged to the profit and loss account on a straightline basis over their estimated useful lives. Other intangible assets are amortised from the date the asset is available for use over 3 to 5 years.

Singapore Computer Systems Limited Annual Report 2005

62

2.7 Investments in Equity Securities

Investments in unquoted equity securities held by the Group and Company are classified as available-forsale and are stated at cost less impairment losses.

Investments in quoted equity securities held by the Group and Company are classified as being availablefor-sale and are stated at fair value, with any resultant gain or loss being recognised directly in equity. When these investments are derecognised, the cumulative gain or loss previously recognised directly in equity is recognised in the profit and loss account.

The fair value of quoted equity securities classified as available-for-sale is determined as the quoted bid price at the balance sheet date.

Equity securities classified as available-for-sale investments are recognised by the Group and Company on the date it commits to purchase the investments, and derecognised on the date a sale is committed.

2.8 Inventories

Inventories Held for Resale

Inventories are stated at the lower of cost and net realisable value.

Cost is calculated based on the weighted average cost formula and comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.


Notes to the Financial Statements Year Ended 31 December 2005

Projects-in-Progress

Projects-in-progress are valued at cost. Cost includes direct materials, labour and an appropriate proportion of project overhead expenditure. Allowance is made where necessary to account for foreseeable losses so as to reduce the cost of projects-in-progress to their estimated net realisable value. Progress billings on projectsin-progress are reflected in the financial statements upon invoicing and are shown as a deduction from the value of the projects-in-progress.

2.9 Trade and other receivables

Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less allowance for impairment.

2.10 Cash and Cash Equivalents

Cash and cash equivalents comprise cash balances and bank deposits. For the purpose of the statement of cash flows, cash and cash equivalents are presented net of bank overdrafts which are repayable on demand and which form an integral part of the Group’s cash management.

2.11 Impairment The carrying amounts of the Group’s assets, other than inventories, are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the assets’ recoverable amounts are estimated. An impairment loss is recognised whenever the carrying amount of an asset unit exceeds its recoverable amount. The impairment loss is charged to the profit and loss account.

Goodwill, intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually and as and when indicators of impairment are identified.

When a decline in the fair value of an available-for-sale financial asset has been recognised directly in equity and there is objective evidence that the value of the asset is impaired, the cumulative loss that had been recognised directly in equity is recognised in the profit and loss account even though the financial asset has not been derecognised. The amount of the cumulative loss that is recognised in the profit and loss account is the difference between the acquisition cost and current fair value, less any impairment loss on that financial asset previously recognised in the profit and loss account.

Calculation of recoverable amount

The recoverable amount of the Group’s receivables carried at amortised cost is calculated as the present value of estimated future cash flows, discounted at the original effective interest rate (i.e. the effective interest rate computed at initial recognition of these financial assets). Receivables with a short duration are not discounted.

The recoverable amount of assets is the greater of their net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

Reversals of impairment

An impairment loss in respect of receivable carried at amortised cost is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the impairment loss was recognised.

63 Singapore Computer Systems Limited Annual Report 2005


Notes to the Financial Statements Year Ended 31 December 2005

An impairment loss in respect of an investment in an equity instrument classified as available-for-sale is not reversed through the profit and loss account. If the fair value of a debt instrument classified as available-forsale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in the profit and loss account, the impairment loss shall be reversed, with the amount of the reversal recognised in the profit and loss account.

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. However, an impairment loss in respect of goodwill is not reversed.

An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

2.12 Liabilities and Interest-bearing Borrowings

Trade and other payables and interest-bearing borrowings are recognised initially at fair value. Interest-bearing liabilities are recognised initially at fair value less attributable transaction costs.

Subsequent to initial recognition, trade and other payables and interest-bearing liabilities are stated at amortised cost with any difference between cost and redemption value being recognised in the profit and loss account over the period of the borrowings on an effective interest basis.

2.13 Employee Benefits Singapore Computer Systems Limited Annual Report 2005

64

Share options

The share option programme allows the Group employees to acquire shares of the Company. The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. At each balance sheet date, the company revises its estimates of the number of options that are expected to become exercisable. It recognises the impact of the revision of original estimates in employee expense and in a corresponding adjustment to equity over the remaining vesting period.

The proceeds received net of any directly attributable transactions costs are credited to share capital (nominal value) and share premium when the options are exercised.

Performance share plan and restricted stock plan

The performance share plan and restricted stock plan are accounted as equity-settled share-based payments. Equity-settled share-based payments are measured at fair value at the date of grant. The share-based expense is amortised and recognised in the income statement on a straight line basis over the vesting period. At each balance sheet date, the Company revises its estimates of the number of shares that the participating employees are expected to receive based on vesting conditions. The difference is charged or credited to the profit and loss account, with a corresponding adjustment to equity.

Prior to 1 January 2005, the Group and Company did not record any compensation cost or obligation to reflect the benefit received by employees and directors when options or awards of performance shares and/or restricted stock were granted. When the options are exercised, equity is increased by the amount of the cash proceeds received from option holders.

Defined contribution plans

Obligations for contributions to defined contribution pension plans are recognised as an expense in the profit and loss account as incurred.


Notes to the Financial Statements Year Ended 31 December 2005

2.14 Provisions

Warranties

A provision for warranties is recognised when the underlying products or services are sold. The provision is based on historical warranty data and a weighting of all possible outcomes against their associated probabilities.

Claims

A provision is made for claims by third party for constructive obligation arising from a past event where there is a probability of an outflow of economic benefits required to settle the obligation.

Provision for restructuring

A provision for restructuring is recognised when a detailed and formal restructuring plan has been approved, and the restructuring has either commenced or has been announced publicly. Costs relating to ongoing activities are not provided for.

2.15 Deferred Tax

A deferred tax asset is recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not be reversed in the foreseeable future.

2.16 Revenue Recognition

Revenue from service contracts is recognised over the period of contract.

Revenue from the sale of computer hardware is recognised when the significant risks and rewards of ownership have been transferred to the buyer. Revenue excludes goods and services taxes or other sales taxes and is arrived at after deduction of trade discounts.

Revenue from projects is recognised at the time when the project is substantially completed. Losses on contracts are accounted for when their existence is foreseeable.

License fee income is recognised on installation and customer’s acceptance of the license, when it is an assignment of rights for a fixed fee or non-refundable guarantee under a non-cancellable contract which permits the licensee to exploit those rights freely and the licensor has no remaining obligations to perform. If these conditions are not met, license fee income is recognised on a straight-line basis over the life of the licensing agreement. Where license fee to be received is contingent on the occurrence of a future event, revenue is recognised only when it is probable that the fee will be received.

Dividend income is recognised in the profit and loss account when the shareholder’s right to receive payment is established.

Interest income from bank deposits is accrued on a time-apportioned basis.

No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.

65 Singapore Computer Systems Limited Annual Report 2005

Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Temporary differences are not recognised for goodwill not deductible for tax purposes and the initial recognition of assets or liabilities that affect neither accounting nor taxable profit. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.


Notes to the Financial Statements Year Ended 31 December 2005

2.17 Grants

Income-related grants received or receivable are credited to the profit and loss account over the periods necessary to match them with the related expenditure.

2.18 Key Management Personnel

Key management personnel of the Group and the Company are those persons having the authority and responsibility for planning, directing and controlling the activities of the entity. The directors and senior management staff, comprising the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Executive Vice Presidents and Senior Vice Presidents of the Group and the Company are considered as key management personnel.

2.19 Operating Leases

Singapore Computer Systems Limited Annual Report 2005

66

Where the Group has the use of assets under operating leases, payments made under the leases are recognised in the profit and loss account on a straight-line basis over the term of the lease. Lease incentives received are recognised in the profit and loss account as an integral part of the total lease payments made. Contingent rentals are charged to the profit and loss account in the accounting period in which they are incurred.

2.20 Finance Costs

Interest expense and similar charges are expensed in the profit and loss account in the period in which they are incurred.


Notes to the Financial Statements Year Ended 31 December 2005

3 Property, Plant and Equipment Computer equipment

$’000

$’000

$’000

$’000

$’000

168 – – – (163)

25,891 – – 99 –

11,880 – – – –

3,509 177 – – (3,691)

48,413 6,236 (1,223) 4,525 (11,972)

Transferred to deferred expenses

(44)

Translation differences on consolidation

(5)

133

455

5

(48)

(44)

496

At 31 December 2004

25,990

11,880

128

46,390

7,518

23,960

203

116,069

At 1 January 2005

25,990

11,880

128

46,390

7,518

23,960

203

116,069

Additions Disposals/Write-offs Acquisition of subsidiary Disposal of subsidiaries

– – – –

162 – – –

– – – –

– – – –

16,222 (2,613) – (16)

417 (62) – (14)

739 (372) – (18)

– (48) – –

17,540 (3,095) – (48)

Translation differences on consolidation

(1)

(33)

(291)

(52)

39

(338)

At 31 December 2005

26,152

11,879

95

59,692

7,807

24,348

155

130,128

2,715 388 – – –

1,878 130 – 9 (2,060)

41,793 5,541 (1,088) – (9,868)

6,134 1,037 (31) 38 (1,256)

16,225 2,264 (8) 2 (819)

257 13 (1) – (38)

75,397 10,266 (1,128) 49 (14,130)

Group

Cost At 1 January 2004 Additions Disposals/Write-offs Acquisition of subsidiary Disposal of subsidiaries

Leasehold land

$’000

Accumulated depreciation and impairment losses At 1 January 2004 44 6,351 Depreciation for the year – 893 Disposals/Write-offs – – Impairment charges – – Disposal of subsidiaries (89) –

Office Furniture equipment and fittings

Motor vehicles

Total

$’000

$’000

$’000

7,880 124 (56) 989 (1,424)

24,524 553 (8) 27 (1,088)

278 30 (14) – (47)

122,543 7,120 (1,301) 5,640 (18,385)

(44)

Translation differences on consolidation

45

(19)

76

83

99

(43)

(47)

194

At 31 December 2004

7,225

3,103

33

36,461

6,021

17,621

184

70,648

At 1 January 2005 Depreciation for the year Disposals/Write-offs Impairment charges Disposal of subsidiaries

– – – – –

7,225 1,066 – – –

3,103 388 – – –

33 9 – 56 –

36,461 7,453 (2,569) 53 (16)

6,021 720 (55) 41 (12)

17,621 2,506 (173) 20 (6)

184 5 (48) – –

70,648 12,147 (2,845) 170 (34)

Translation differences on consolidation

8

(4)

(101)

(22)

(119)

At 31 December 2005

8,299

3,491

94

41,281

6,693

19,968

141

79,967

Carrying amount At 1 January 2004

124

19,540

9,165

1,631

6,620

1,746

8,299

21

47,146

At 31 December 2004

18,765

8,777

95

9,929

1,497

6,339

19

45,421

At 1 January 2005

18,765

8,777

95

9,929

1,497

6,339

19

45,421

At 31 December 2005

17,853

8,388

1

18,411

1,114

4,380

14

50,161

In 2004, the carrying amount of property, plant and equipment of the Group included amounts totalling $16,000 in respect of computer equipment held under hire purchase agreements.

67 Singapore Computer Systems Limited Annual Report 2005

Building

Leasehold improvement

Freehold property


Notes to the Financial Statements Year Ended 31 December 2005

3 Property, Plant and Equipment (cont’d) Leasehold land

Building

Computer equipment

Motor vehicles

Total

$’000

$’000

$’000

$’000

$’000

$’000

$’000

Cost At 1 January 2004 Additions Disposals/Write-offs Transfer to deferred expenses

25,891 – – –

11,880 – – –

33,068 3,462 (1,130) (44)

5,902 26 (8) –

21,563 1,396 – –

– 6 – –

98,304 4,890 (1,138) (44)

At 31 December 2004

25,891

11,880

35,356

5,920

22,959

6

102,012

At 1 January 2005 Additions Disposals/Write-offs

25,891 – –

11,880 – –

35,356 3,595 (1,987)

5,920 213 (19)

22,959 453 (8)

6 – –

102,012 4,261 (2,014)

At 31 December 2005

25,891

11,880

36,964

6,114

23,404

6

104,259

Accumulated depreciation and impairment losses At 1 January 2004 Depreciation for the year Disposals/Write-offs

6,351 870 –

2,715 388 –

28,934 3,110 (1,120)

4,717 521 (8)

14,751 2,221 –

– 1 –

57,468 7,111 (1,128)

At 31 December 2004

7,221

3,103

30,924

5,230

16,972

1

63,451

At 1 January 2005 Depreciation for the year Disposals/Write-offs

7,221 905 –

3,103 351 –

30,924 2,961 (1,986)

5,230 379 (19)

16,972 2,341 (8)

1 2 –

63,451 6,939 (2,013)

At 31 December 2005

8,126

3,454

31,899

5,590

19,305

3

68,377

Carrying amount At 1 January 2004

19,540

9,165

4,134

1,185

6,812

40,836

At 31 December 2004

18,670

8,777

4,432

690

5,987

5

38,561

At 1 January 2005

18,670

8,777

4,432

690

5,987

5

38,561

At 31 December 2005

17,765

8,426

5,065

524

4,099

3

35,882

Company

Singapore Computer Systems Limited Annual Report 2005

68

Office Furniture equipment and fittings


Notes to the Financial Statements Year Ended 31 December 2005

4 Intangible Assets

Development cost

Intellectual property rights and patents

$’000

$’000

$’000

4,669

1,177

2,585

Write-offs

Acquisition of subsidiary

Group

Technology licences equipment Goodwill

Others

Total

$’000

$’000

$’000

1,645

38

10,114

(38)

(38)

76

76

Cost At 1 January 2004

Translation differences on consolidation

1

1

At 31 December 2004

4,670

1,177

2,585

1,721

10,153

At 1 January 2005

4,670

1,177

2,585

1,721

10,153

51

51

4,670

1,177

2,585

1,772

10,204

Acquisition of additional interest in subsidiary At 31 December 2005

69

Accumulated amortisation and impairment losses 3,105

1,177

2,585

1

6,868

746

746

Write-offs

(1)

(1)

Impairment charges

283

283

Translation differences on consolidation

1

1

At 31 December 2004

3,852

1,177

2,585

283

7,897

At 1 January 2005

3,852

1,177

2,585

283

7,897

741

741

Write-offs

Impairment charges

1,449

1,449

Translation differences on consolidation

1

1

4,594

1,177

2,585

1,732

10,088

1,564

1,645

37

3,246

At 31 December 2004

818

1,438

2,256

At 1 January 2005

818

1,438

2,256

76

40

116

Amortisation for the year

Amortisation for the year

At 31 December 2005 Carrying amount At 1 January 2004

At 31 December 2005

Singapore Computer Systems Limited Annual Report 2005

At 1 January 2004


Notes to the Financial Statements Year Ended 31 December 2005

4 Intangible Assets (cont’d)

Development cost

Intellectual property rights and patents

Technology licences

Total

$’000

$’000

$’000

$’000

1,978

1,000

472

3,450

(472)

(472)

At 31 December 2004

1,978

1,000

2,978

At 1 January 2005 and at 31 December 2005

1,978

1,000

2,978

1,224

1,000

472

2,696

346

346

(472)

(472)

At 31 December 2004

1,570

1,000

2,570

At 1 January 2005

1,570

1,000

2,570

Company

Cost At 1 January 2004 Write-offs

Accumulated amortisation At 1 January 2004 Amortisation for the year Write-offs

Singapore Computer Systems Limited Annual Report 2005

70

Amortisation for the year

341

341

1,911

1,000

2,911

At 1 January 2004

754

754

At 31 December 2004

408

408

At 1 January 2005

408

408

67

67

At 31 December 2005

Carrying amount

At 31 December 2005

5 Subsidiaries

COMPANY 2005 $’000

2004 $’000

Investment in subsidiaries

59,693

59,618

Impairment losses

(19,820)

(17,507)

39,873

42,111


Notes to the Financial Statements Year Ended 31 December 2005

5 Subsidiaries (cont’d)

Details of the subsidiaries are as follows:

Name of subsidiary

29

Country of incorporation

Singapore Singapore Singapore Malaysia Thailand Singapore Malaysia Philippines Brunei Hong Kong Hong Kong United Kingdom Australia Australia United States of America The People’s Republic of China Singapore Singapore Singapore Singapore Singapore Singapore Singapore Singapore India The People’s Republic of China Singapore Indonesia

Effective equity held by the Group 2005 %

2004 %

100 100 100 100 100 100 70 100 75 100 100 100 100 100 100 100 100 100 100 99 98.3 98.3 – 100 100 100 53.95 51

100 100 100 100 100 100 70 100 70 100 100 100 100 100 100 100 100 100 100 99 98.3 88.5 49.9 99.9 100 100 54.5 51

Audited by KPMG Singapore Audited by other member firms of KPMG International 3 Audited by PKF Certified Public Accountants, Hong Kong 4 Audited by Sino Reality Certified Public Accountants, China 5 In process of voluntary members’ liquidation. 6 Not required to be audited according to the laws of the country of incorporation 7 Audited by Prasetio, Sarwoko & Sandjaja, Indonesia 1 2

Due to continued losses at certain of its subsidiaries, the Company performed an impairment review to assess the recoverable amount of its investment in the subsidiaries. The estimated recoverable amounts of its subsidiaries were determined based on the net assets of the subsidiaries as at 31 December 2005.

71 Singapore Computer Systems Limited Annual Report 2005

SCS Enterprise Solutions Pte Ltd 1 SCS Enterprise Systems Pte Ltd and its subsidiaries 1: CSN Systems Pte Ltd 1 CSN Systems Sdn. Bhd. 2 SCS Enterprise Systems Thailand Limited 2 SCS Networks Pte Ltd and its subsidiaries 1: SCS iCT Sdn. Bhd. 2 SCS Channels, Inc. 2 SCS Information Technology Sdn. Bhd. 2 SCS Information Technology (HK) Limited 3 Computer Processing Services Limited 3 SCS Computer Systems (UK) Limited 6 SCS Australia Pty. Ltd and its subsidiary 2: Claustral Pty. Limited 2 SCS Systems, Inc. 6 SCS China Co., Ltd 4 Mach30 Pte Ltd 1 SCS Foresight Pte Ltd 1 iGlobal Services Pte Ltd 1 PeridotHealth Systems Pte Ltd 1 TX123 Pte Ltd and its subsidiaries 1: ICX123 Pte Ltd 1 Viewers Choice Pte Ltd 1 Asia Business Venture Holdings Pte Ltd 1 Softcraft India Private Limited 5 SCS (Chengdu) Technology Company 4 Trusted Hub Ltd 1 PT SCS Astragraphia Technologies 7

Note


Notes to the Financial Statements Year Ended 31 December 2005

6

Associates

Investment in associates Impairment losses

COMPANY

2005 $’000

2004 $’000

2005 $’000

2004 $’000

24,274

10,615

23,134

10,065

(4,280)

(3,640)

24,274

10,615

18,854

6,425

(158)

(251)

10,364

18,854

6,425

Loan receivable

1,573

1,573

1,573

1,573

Allowance for doubtful receivable

(1,483)

(1,133)

(1,483)

(1,483)

90

440

90

90

(1,151)

(2,225)

(804)

(1,235)

22,251

7,344

18,944

6,515

Share of post-acquisition losses Translation differences on consolidation

Singapore Computer Systems Limited Annual Report 2005

24,116

Goodwill written off included as part of accumulated profits

72

GROUP

The loan to associate is unsecured and repayable on demand. The discount implicit in the interest-free loan is immaterial.

Investment in associates includes the following amount of goodwill:

GROUP 2005

2004

$’000

$’000

7,978

Movements in goodwill during the year: At beginning of the year

13,279

Disposal of an associate

(7,978)

Amortisation for the year

13,279

Acquisition of an associate

At end of the year


Notes to the Financial Statements Year Ended 31 December 2005

6

Associates (cont’d) Name of associate

Note

Principal activities

Country of incorporation

Effective equity held by the Group 2005 %

2004 %

Held by the Company SCS Computer Systems (Thailand) Co., Ltd. Ayala Systems Technology, Inc 1 Telescience Singapore Pte Ltd

Thailand

49

49

Provision of computer network products and services

Philippines

30

30

Provision of services relating to telecommunication, data communication systems and the sale of network and computer peripheral equipment

Singapore

50

50

Dormant

Singapore

40

40

Under voluntary liquidation

Hong Kong

30

30

Web hosting services and development of e-commerce hub

Singapore

20

20

Sale of computer equipment related products and provision of computer related services

Singapore

50

Management of a smartcard business

Singapore

36.4

Development and marketing of software and services for high performance computer

Singapore

49

49

Investment holding company

Singapore

30

Retail of general merchandise

Singapore

49.17

Provision of electronic commerce and related internet solutions and services

Malaysia

19.7

19.7

ChemXlog Pte Ltd Trade-link E-Commerce (Holding) Company Limited Green Dot Internet Services Pte Ltd

ST-Straco Pte Ltd

NTUC Link Private Limited

Scalable Systems Pte Ltd

TISCS Pte Ltd 2 Held by TX123 Pte Ltd Viewers Choice Pte Ltd TX123 (M) Sdn. Bhd.

29

The auditors of significant associates are: Joaquin Cunanan & Co 2 Deliotte & Touche, Singapore 1

73 Singapore Computer Systems Limited Annual Report 2005

Dormant


Notes to the Financial Statements Year Ended 31 December 2005

6

Associates (cont’d)

The financial information of the associates based on unaudited management financial statements are as follows:

Group

Assets and liabilities Total assets Total liabilities Results Revenue Profit after tax

2004 $’000

113,466

42,287

35,938

24,467

101,766

42,340

6,827

900

The Group’s share of the capital commitments and contingent liabilities of the associates is $804,530 (2004: $523,384) and $1,294 (2004: $16,374) respectively.

Due to continued losses at certain of its associates, the Company performed an impairment review to assess the recoverable amount of its investment in the associates. The estimated recoverable amounts of its associates were determined based on the net assets of the associates as at 31 December 2005.

74 Singapore Computer Systems Limited Annual Report 2005

2005 $’000

7 Other Investments

GROUP 2005 $’000

COMPANY

2004 $’000

2005 $’000

2004 $’000

Unquoted equity securities available-for-sale, at cost

20,380

20,341

20,080

20,041

Impairment losses

(18,996)

(15,419)

(18,696)

(15,119)

1,384

4,922

1,384

4,922

549

430

548

430

1,933

5,352

1,932

5,352

549

481

548

481

Quoted equity securities available-for-sale, at fair value Market value of quoted shares

With the adoption of FRS 39, the Group classifies equity securities as available-for-sale.

The Group states unquoted equity securities at cost less impairment losses as these securities do not have a quoted market price in an active market and other methods of reasonably estimating their fair values are inappropriate.

The Group states quoted available for-sale securities at fair value. The differences between the fair values and the carrying amounts of these investments are taken to asset revaluation reserve.


Notes to the Financial Statements Year Ended 31 December 2005

8

Long Term Receivables

GROUP

COMPANY

Note

2005 $’000

2004 $’000

2005 $’000

2004 $’000

8(a)

743

12

12

12

8(b)

743

12

12

12

6

737

12

12

12

743

12

12

12

Loans receivable from:

– staff

– investee companies

and others

(a)

Loans Receivable – Staff

Amounts receivable:

– within 12 months

– after 12 months

12

The staff loans are interest free and repayable within 5 years. The discount implicit in the interest-free loan is immaterial. (b)

Loans Receivable – Investee Companies and Others Loans receivable:

– investee companies and others

757

757

757

757

(757)

(757)

(757)

(757)

Allowance for loans to investee companies and others

Singapore Computer Systems Limited Annual Report 2005

75


Notes to the Financial Statements Year Ended 31 December 2005

9

Deferred Tax

Movements in deferred tax assets and liabilities (prior to offsetting of balances) during the year are as follows:

At 1 January 2005

Credited/ (Charged) to profit and loss account

At 31 December 2005

$’000

$’000

$’000

3,850

(528)

3,322

Group Deferred tax assets Provisions and expenses Unutilised tax losses Unutilised capital allowances Total

46

(46)

3,896

(574)

3,322

(2,210)

133

(2,077)

(216)

(760)

(976)

Deferred tax liabilities Accelerated tax depreciation Dividends from foreign associates

Singapore Computer Systems Limited Annual Report 2005

76

Others

(1,145)

519

(626)

Total

(3,571)

(108)

(3,679)

1,777

820

2,597

(2,085)

193

(1,892)

(223)

(192)

(415)

(2,308)

1

(2,307)

Company Deferred tax assets Provisions and expenses Deferred tax liabilities Accelerated tax depreciation Provisions and expenses Total

Deferred tax liabilities and assets are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same taxation authority. The amounts determined after appropriate offsetting are included in the balance sheet as follows:

GROUP 2005 $’000

COMPANY

2004 $’000

2005 $’000

2004 $’000

Deferred tax assets

579

994

290

Deferred tax liabilities

(936)

(669)

(531)


Notes to the Financial Statements Year Ended 31 December 2005

10 Inventories and Projects-In-Progress Note

GROUP 2005 $’000

2004 $’000

COMPANY 2005 $’000

2004 $’000

Inventories held for resale

24,733

48,619

7,970

19,911

Allowance for inventory obsolescence

(11,312)

(10,769)

(2,730)

(2,401)

13,421

37,850

5,240

17,510

14,369

23,955

3,536

14,958

27,790

61,805

8,776

32,468

Cost of projects-in-progress in excess of progress billings less allowance for foreseeable losses

10(a)

(a)

Projects-In-Progress

Projects-in-progress

36,161

37,740

12,835

23,260

Allowance for foreseeable losses

(13,847)

(8,089)

(4,093)

(4,586)

22,314

29,651

8,742

18,674

Progress billings

(7,945)

(5,696)

(5,206)

(3,716)

14,369

23,955

3,536

14,958

Cost of projects-in-progress in excess of progress billings

GROUP

COMPANY

2005 $’000

2004 $’000

2005 $’000

2004 $’000

Trade receivables

93,678

116,051

67,951

83,863

Allowance for doubtful receivables

(9,978)

(8,236)

(14,933)

(11,069)

Net receivables

83,700

107,815

53,018

72,794

Sundry debtors

26,413

2,460

21,694

1,498

Refundable deposits Prepayments Interest receivable Tax recoverable

469

953

78

57

11,523

1,075

11,160

487

60

37

20

37

692

149

60

122,857

112,489

85,970

74,933

Included in receivables are amounts due from:

– subsidiaries

17,387

18,629

– associates

4,507

2,046

3,625

1,567

– related corporations

5,991

8,231

5,808

2,063

Transactions with subsidiaries, associates and related corporations are unsecured and priced on a basis agreed between both parties. Allowance for doubtful debts arising from the outstanding balances from these related parties amounted to $4,064,000 (2004: $3,568,000) and $12,621,000 (2004: $8,726,000) for the Group and Company respectively.

Singapore Computer Systems Limited Annual Report 2005

11 Trade and Other Receivables

77


Notes to the Financial Statements Year Ended 31 December 2005

12 Short-Term Loan Receivables

GROUP

COMPANY

Note

2005 $’000

2004 $’000

2005 $’000

2004 $’000

8(a)

6

10,225

Amounts receivable from:

– staff

– subsidiaries

– investee companies and others

Allowance for loans to subsidiaries Allowance for loans to investee companies and others

10,327

2,367

1,663

1,720

2,542

2,367

11,990

11,945

(8,000)

(1,515)

(1,515)

(1,515)

(1,515)

1,027

852

2,475

10,430

The loan receivables from investee companies and others are unsecured and are repayable within the next 12 months. The discounts implicit in the interest-free loans are immaterial.

The loan receivables from subsidiaries are unsecured, repayable within the next 12 months and bear interest ranging from 1.68% to 3.94% (2004: 1.53% to 2.28%) per annum.

78 Singapore Computer Systems Limited Annual Report 2005

2,536

13 Cash and Cash Equivalents

Cash at bank and in hand Fixed deposits Bank overdrafts (unsecured) Fixed deposits pledged

GROUP

COMPANY

2005 $’000

2004 $’000

2005 $’000

2004 $’000

28,421

17,799

14,765

1,063

1,939

3,108

30,360

20,907

14,765

1,063

(241)

(241)

30,360

20,666

14,765

822

(51)

(51)

30,309

20,615

14,765

822

There is a lien over fixed deposits amounting to $51,000 (2004: $51,000) for bank guarantee facilities to a subsidiary.


Notes to the Financial Statements Year Ended 31 December 2005

14 Share Capital

COMPANY

2005

2004

No. of shares (’000)

$’000

No. of shares (’000)

$’000

400,000

100,000

400,000

100,000

154,136

38,534

154,136

38,534

Authorised: Ordinary shares of $0.25 each Issued and fully paid: Ordinary shares of $0.25 each

At the end of the financial year, there were unexercised options for 2,722,200 (2004: 4,522,390) ordinary shares of $0.25 each in the Company and conditional awards for up to 220,000 (2004: 1,920,000) unreleased performance shares of $0.25 each in the Company.

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All shares rank equally with regard to the Company’s residual assets.

79

GROUP 2005 $’000

COMPANY

2004 $’000

2005 $’000

2004 $’000

Share premium

2,435

2,435

2,435

2,435

Currency translation reserve

(2,786)

(2,179)

Share option reserve

202

116

202

116

Asset revaluation reserve

119

119

57,145

104,420

30,466

74,387

57,115

104,792

33,222

76,938

Accumulated profits

The application of the share premium account is governed by Sections 69 of the Companies Act, Chapter 50.

The currency translation reserve of the Group comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from the functional currency of the Company.

The asset revaluation reserve includes the cumulative net change in the fair value of available for sale investments until the investment is derecognised.

The share option reserve comprises the cumulative value of employee services received for the issue of share options. When the option is exercised, the amount from the share option reserve is transferred to share premium. When the share options expire, the amount from the share option reserve is transferred to accumulated profits.

The accumulated profits of the Group include losses amounting to $1,151,000 (2004: $2,225,000) attributable to associates.

Singapore Computer Systems Limited Annual Report 2005

15 Reserves


Notes to the Financial Statements Year Ended 31 December 2005

16 Obligations Under Hire Purchase

At 31 December 2005, the Group had obligations under hire purchase arrangement that are repayable as follows:

GROUP

2005

2004

Payment $’000

Interest $’000

Principal $’000

Payment $’000

Interest $’000

Principal $’000

Repayable within 1 year

26

(4)

22

60

(7)

53

Repayable after 1 year but within 5 years

19

(2)

17

37

(7)

30

45

(6)

39

97

(14)

83

17 Bank Loans

COMPANY

Note

2005 $’000

2004 $’000

2005 $’000

2004 $’000

(a)

1,461

Current portion of unsecured bank term loan

(a)

2,503

Secured bank loans

(b)

4,250

Unsecured bank loans

(c)

80 Singapore Computer Systems Limited Annual Report 2005

GROUP

Non-current Liabilities Non-current portion of unsecured bank term loan Current Liabilities

Total borrowings

5,314

2,530

12,067

2,530

13,528

2,530

(a)

On July 1, 2005, one of the Group’s subsidiaries, PT SCS Astragraphia Technologies obtained credit facilities from Standard Chartered Bank Jakarta. The credit facilities represented general banking facilities (consist of import facilities, bonds and guarantees facility) and amortising term loan. The maximum amounts of general banking facilities and amortising term loans are $3,336,600 (US$2,000,000) and $4,590,000 (Rp27,000,000,000) respectively. The general banking facilities are secured by corporate guarantees of Singapore Computer Systems Limited and PT Astra Graphia Tbk, the shareholders, and will mature on June 30, 2006. The amortising term loans are secured by corporate guarantees from the shareholders and the assignment of receivables from PT Telekomunikasi Indonesia (Persero) Tbk (Telkom Seat Management Outsourcing Project), and will mature on July 1, 2007. The amortising term loan bears annual interest rate at 11.81% per annum.

During the year, the amortising term loan was drawn down by an amount of $3,964,000 (Rp27,000,000,000). Under the amortising term loan agreement, PT SCS Astragraphia Technologies should make aggregate repayments of $208,590 (Rp1,227,000,000) every month for 21 months starting from October 1, 2005 up to June 1, 2007 and the last payment of $209,610 (Rp1,233,000,000) on July 1, 2007.


Notes to the Financial Statements Year Ended 31 December 2005

(b)

On December 15, 2005, PT SCS Astragraphia Technologies obtained a loan facility from PT Bank UOB Indonesia (UOB) amounting to $4,250,000 (Rp25,000,000,000). This loan is a revolving credit facility and is subject to interest rate at Cost of Fund plus 1.5% per annum. This facility is secured by fiduciary transfer of receivable from PT Telekomunikasi Indonesia (Persero) Tbk (CDC project) amounting to $5,100,000 (Rp30,000,000,000), corporate guarantees of Singapore Computer Systems Limited and PT Astra Graphia Tbk, the shareholders. This loan will mature on December 15, 2006.

(c)

On August 1, 2005, PT SCS Astragraphia Technologies obtained a specific advance facility from PT Bank OCBC Indonesia amounting to $3,342,200 (US$2,000,000). This loan is subject to interest rate at Cost of Fund plus 1.5% per annum. This facility is secured by corporate guarantees of Singapore Computer Systems Limited and PT Astra Graphia Tbk, the shareholders, and will mature on January 31, 2006.

On 21 March, 2005, Singapore Computer Systems Limited issued a corporate guarantee of up to a sum equivalent to $1,668,300 (US$1,000,000) in favour of Standard Chartered Bank, as security for the payment obligations of SCS Information Technology (HK) Ltd, SCS China Co. Ltd and SCS (Chengdu) Technology Company under or in connection with the banking facilities granted or to be granted by Standard Chartered Bank. As at 31 December 2005, $723,000 has been drawn down by SCS China Co. Ltd.

During the year, SCS Information Technology (HK) Ltd obtained an unsecured loan amounting to $1,249,000 (HK$5,800,000). This loan is subject to floating interest rate and is repayable within the next 12 months. The effective interest rate is 5% per annum.

Maturity of liabilities

After 1 year but within 5 years Total borrowings

COMPANY

81

2005 $’000

2004 $’000

2005 $’000

2004 $’000

12,067

2,530

1,461

13,528

2,530

18 Trade and Other Payables

Included in trade and other payables are the following:

GROUP 2005 $’000

COMPANY

2004 $’000

2005 $’000

2004 $’000

Amounts due to: – subsidiaries

49,290

33,349

– associates

25

262

12

48

– related corporations

39

1,555

39

1,216

8,923

6,444

Allowance for foreseeable losses on projects-in-progress

Singapore Computer Systems Limited Annual Report 2005

Within 1 year

GROUP


Notes to the Financial Statements Year Ended 31 December 2005

19 Progress Billings in Excess of Cost of Projects-in-Progress

GROUP 2005 $’000

2004 $’000

COMPANY 2005 $’000

2004 $’000

Progress billings

19,409

6,115

18,260

2,010

Projects-in-progress

(36,776)

(1,114)

(36,739)

(681)

(17,367)

5,001

(18,479)

1,329

25,138

25,138

7,771

5,001

6,659

1,329

Restructuring $’000

Claims $’000

Warranty $’000

Total $’000

62

164

226

971

1,081

2,052

(446)

(446)

971

62

799

1,832

62

164

226

200

703

903

(243)

(243)

200

62

624

886

Allowance for foreseeable losses Progress billings in excess of cost of projects-in-progress

20 Provisions

Singapore Computer Systems Limited Annual Report 2005

82

Group At 1 January 2005 Provisions made during the year Provisions utilised during the year At 31 December 2005 Company At 1 January 2005 Provisions made during the year Provisions utilised during the year At 31 December 2005


Notes to the Financial Statements Year Ended 31 December 2005

21 Equity Compensation Benefits (a) Singapore Computer Systems Executives’ Share Option Scheme (“SCS ESOS”) Holders of share options granted under SCS ESOS are entitled to subscribe for the number of ordinary shares of $0.25 each in the Company at an exercise price and during the exercise period applicable to the share options. The shares allotted pursuant to the exercise of share options granted under SCS ESOS will rank pari passu with the existing issued shares of the Company. Movements of share options granted under SCS ESOS during the period from 1 January 2005 to 31 December 2005 are as follows:

Date of grant of options

$1.13

No. of ordinary shares allotted under options exercise during the year

No. of unissued ordinary shares under options lapsed during the year

No. of unissued ordinary shares under options granted and unexercised as at 31/12/2005

Proceeds on options exercised credited to share capital during the year

Proceeds on options exercised credited to share premium account during the year

$

$

136,000

(73,000)

63,000

136,000

(73,000)

63,000

Exercise period

20/4/2001 to 18/4/2009

83 Singapore Computer Systems Limited Annual Report 2005

12/7/2000

Exercise price per share

No. of unissued ordinary shares under options granted and unexercised as at 1/1/2005


Notes to the Financial Statements Year Ended 31 December 2005

21 Equity Compensation Benefits (cont’d) (b) Singapore Computer Systems Share Option Plan (“SCS SOP”) Holders of share options granted under SCS SOP are entitled to subscribe for the number of ordinary shares of $0.25 each in the Company at an exercise price and during the exercise period applicable to the share options. The shares allotted pursuant to the exercise of share options granted under SCS SOP will rank pari passu with the existing issued shares of the Company. Movements of share options granted under SCS SOP during the period from 1 January 2005 to 31 December 2005 are as follows:

Date of grant of options

Singapore Computer Systems Limited Annual Report 2005

84

18/10/2000 18/10/2000 18/10/2000 18/10/2000 18/10/2000 18/10/2000 18/10/2000 18/10/2000 14/3/2001 14/3/2001 14/3/2001 14/3/2001 14/3/2001 14/3/2001 14/3/2001 14/3/2001

Exercise price per share

No. of unissued ordinary shares under options granted and unexercised as at 1/1/2005

No. of unissued ordinary shares under options granted during the year

$2.20 $2.20 $2.20 $2.20 $2.20 $2.20 $2.20 $2.20 $2.08 $2.08 $2.08 $2.08 $2.08 $2.08 $2.08 $2.08

120,500 87,500 20,000 20,000 128,750 128,750 128,750 128,750 136,500 45,000 25,000 25,000 127,750 127,750 127,750 127,750

– – – – – – – – – – – – – – – –

(120,500) (87,500) (20,000) (20,000) (41,250) (41,250) (41,250) (41,250) (64,000) (25,000) (25,000) (25,000) (41,250) (41,250) (41,250) (41,250)

1,505,500

(717,000)

Balance carried forward

No. of unissued ordinary shares No. of unissued under ordinary shares options under options lapsed granted and during unexercised the year as at 31/12/2005 – – – – 87,500 87,500 87,500 87,500 72,500 20,000 – – 86,500 86,500 86,500 86,500 788,500

Exercise period 19/10/2001 to 18/10/2005 19/10/2002 to 18/10/2005 19/10/2003 to 18/10/2005 19/10/2004 to 18/10/2005 19/10/2001 to 18/10/2010 19/10/2002 to 18/10/2010 19/10/2003 to 18/10/2010 19/10/2004 to 18/10/2010 15/3/2002 to 14/3/2006 15/3/2003 to 14/3/2006 15/3/2004 to 14/3/2006 15/3/2005 to 14/3/2006 15/3/2002 to 14/3/2011 15/3/2003 to 14/3/2011 15/3/2004 to 14/3/2011 15/3/2005 to 14/3/2011


Notes to the Financial Statements Year Ended 31 December 2005

21 Equity Compensation Benefits (cont’d) (b) Singapore Computer Systems Share Option Plan (“SCS SOP”) (cont’d)

Date of grant of options

Exercise price per share

Balance brought forward $1.55 $1.55 $1.55 $1.55 $1.55 $1.55 $1.55 $1.55 $0.86 $0.86 $0.86 $0.86 $0.86 $0.86 $0.86 $0.86 $0.91 $0.91 $0.91 $0.91 $0.91

Balance carried forward

No. of unissued ordinary shares under options granted during the year

No. of unissued ordinary shares under options lapsed during the year

No. of unissued ordinary shares under options granted and unexercised as at 31/12/2005

1,505,500

(717,000)

788,500

70,000 22,000 22,000 22,000 130,000 130,000 130,000 130,000 55,000 22,000 22,000 22,000 140,250 140,250 140,250 140,250 459,890 25,000 25,000 25,000 25,000

– – – – – – – – – – – – – – – – – – – – –

(53,000) (20,000) (20,000) (20,000) (41,000) (41,000) (41,000) (41,000) (53,000) (20,000) (20,000) (20,000) (70,750) (70,750) (70,750) (70,750) (309,890) (25,000) (25,000) (25,000) (25,000)

17,000 2,000 2,000 2,000 89,000 89,000 89,000 89,000 2,000 2,000 2,000 2,000 69,500 69,500 69,500 69,500 150,000 – – – –

3,403,390

(1,799,890)

1,603,500

Exercise period

8/3/2003 to 7/3/2007 8/3/2004 to 7/3/2007 8/3/2005 to 7/3/2007 8/3/2006 to 7/3/2007 8/3/2003 to 7/3/2012 8/3/2004 to 7/3/2012 8/3/2005 to 7/3/2012 8/3/2006 to 7/3/2012 22/2/2004 to 21/2/2008 22/2/2005 to 21/2/2008 22/2/2006 to 21/2/2008 22/2/2007 to 21/2/2008 22/2/2004 to 21/2/2013 22/2/2005 to 21/2/2013 22/2/2006 to 21/2/2013 22/2/2007 to 21/2/2013 31/7/2004 to 31/7/2013 17/8/2004 to 16/8/2013 17/8/2005 to 16/8/2013 17/8/2006 to 16/8/2013 17/8/2007 to 16/8/2013

85 Singapore Computer Systems Limited Annual Report 2005

7/3/2002 7/3/2002 7/3/2002 7/3/2002 7/3/2002 7/3/2002 7/3/2002 7/3/2002 21/2/2003 21/2/2003 21/2/2003 21/2/2003 21/2/2003 21/2/2003 21/2/2003 21/2/2003 30/7/2003 16/8/2003 16/8/2003 16/8/2003 16/8/2003

No. of unissued ordinary shares under options granted and unexercised as at 1/1/2005


Notes to the Financial Statements Year Ended 31 December 2005

21 Equity Compensation Benefits (cont’d) (b) Singapore Computer Systems Share Option Plan (“SCS SOP”) (cont’d)

Date of grant of options

Exercise price per share

Balance brought forward

Singapore Computer Systems Limited Annual Report 2005

86

29/4/2004 29/4/2004 29/4/2004 29/4/2004 29/4/2004 29/4/2004 29/4/2004 29/4/2004 9/4/2005 9/4/2005 9/4/2005 9/4/2005 9/4/2005 9/4/2005 9/4/2005 9/4/2005

$0.84 $0.84 $0.84 $0.84 $0.84 $0.84 $0.84 $0.84 $0.84 $0.84 $0.84 $0.84 $0.84 $0.84 $0.84 $0.84

No. of unissued ordinary shares under options granted and unexercised as at 1/1/2005

No. of unissued ordinary shares under options granted during the year

No. of unissued ordinary shares No. of unissued under ordinary shares options under options lapsed granted and during unexercised the year as at 31/12/2005

3,403,390

(1,799,890)

1,603,500

63,000 22,000 22,000 22,000 213,500 213,500 213,500 213,500 – – – – – – – –

– – – – – – – – 44,250 3,250 3,250 3,250 279,325 279,325 279,325 279,325

(53,000) (20,000) (20,000) (20,000) (127,500) (127,500) (127,500) (127,500) (34,250) (1,250) (1,250) (1,250) (109,400) (109,400) (109,400) (109,400)

10,000 2,000 2,000 2,000 86,000 86,000 86,000 86,000 10,000 2,000 2,000 2,000 169,925 169,925 169,925 169,925

4,386,390

1,171,300

(2,898,490)

2,659,200

Exercise period

30/4/2005 to 29/4/2009 30/4/2006 to 29/4/2009 30/4/2007 to 29/4/2009 30/4/2008 to 29/4/2009 30/4/2005 to 29/4/2014 30/4/2006 to 29/4/2014 30/4/2007 to 29/4/2014 30/4/2008 to 29/4/2014 10/4/2006 to 9/4/2010 10/4/2007 to 9/4/2010 10/4/2008 to 9/4/2010 10/4/2009 to 9/4/2010 10/4/2006 to 9/4/2015 10/4/2007 to 9/4/2015 10/4/2008 to 9/4/2015 10/4/2009 to 9/4/2015

The ESOS/SOP of the Company was approved and adopted by its members at an Extraordinary General Meeting held on 7 July 2000. The ESOS/ESOP is administered by the Executive Resource & Compensation Committee (“ERCC”) comprising Peter Seah Lim Huat, Boon Swan Foo and Philip Eng Heng Nee. Other information regarding the ESOS/ESOP is set out below: (i) The exercise price of the options is determined to be either: – the volume-weighted average price of the Company’s shares on the Singapore Exchange Securities Trading Limited (the “Market Price”) over the three consecutive trading days immediately preceding the date of grant of such options; or – the price which is set at a discount to the Market Price, the quantum of such discount to be determined by the ERCC in its absolute discretion, provided that the maximum discount shall not exceed 20 per cent of the Market Price in respect of the option. (ii) The options can be exercised 12 months after the grant for market prices and 24 months for discounted options. Further vesting period for the exercise of the options may be set. (iii) The options granted expire after 5 years for non-executive directors and 10 years for employees.


Notes to the Financial Statements Year Ended 31 December 2005

21 Equity Compensation Benefits (cont’d) (b) Singapore Computer Systems Share Option Plan (“SCS SOP”) (cont’d) The fair value of the services received in return for share options granted are measured by reference to the fair value of share option granted. The estimate of the fair value of the services received is based on the Black-Scholes model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

Date of grant of options

18 Oct 2000

14 Mar 2001

7 Mar 2002

21 Feb 2003

30 Jul 2003

16 Aug 2003

29 Apr 2004

9 Apr 2005

$0.955

$0.961

$0.524

$0.268

$0.134

$0.142

$0.157

$0.118

$2.07

$2.01

$1.57

$0.865

$0.90

$0.915

$0.80

$0.86

$2.20

$2.08

$1.55

$0.860

$0.91

$0.910

$0.84

$0.84

Fair value of share options and assumptions Fair value at measurement date Share price Exercise price Exercise volatility

63.90% 63.90% 45.78% 45.01% 33.55% 33.37% 31.54% 19.46% 1.5 to 4.5 years

1.5 to 4.5 years

1.5 to 4.5 years

1.5 to 4.5 years

1.5 to 4.5 years

1.5 to 4.5 years

1.5 to 4.5 years

Expected dividends

1.81%

1.49%

2.33%

3.47%

3.33%

3.28%

3.75%

3.51%

Risk-free interest rate

3.03%

3.03%

3.03%

3.03%

3.03%

3.03%

3.03%

3.03%

The expected volatility is based on the historic volatility (calculated based on the weighted average expected life of the share options), adjusted for any expected changes to future volatility due to publicly available information. There are no market conditions associated with the share option grants. Service conditions and nonmarket performance conditions are not taken into account in the grant date fair value measurement of the services received. Movement in the number of share options and their related weighted average exercise prices are as follows: Weighted average exercise price

No. of Weighted average options exercise price

No. of options

2005 $

2005 (‘000)

2004 $

2004 (‘000)

At 1 January

1.40

4,522

1.51

5,330

Granted

0.84

696

0.84

1,118

Forfeited

Expired

1.32

(2,496)

1.37

(1,926)

At 31 December

1.33

2,722

1.40

4,522

Exercisable at 31 December

1.71

1,445

1.65

2,656

Exercised

87 Singapore Computer Systems Limited Annual Report 2005

Expected option life

1.5 to 4.5 years


Notes to the Financial Statements Year Ended 31 December 2005

21 Equity Compensation Benefits (cont’d) (c) Singapore Computer Systems Performance Share Plan (“SCS PSP”) SCS PSP was approved and adopted at the Company’s Extraordinary General Meeting held on 7 July 2000. The SCS PSP is administered by the ERCC. Other information regarding the PSP is set out below: (i) The awards of performance shares are given conditional on performance targets set based on medium-term corporate objectives. (ii) The final number of shares given will depend on the level of achievement of the targets over a rolling three-year performance period and will only be released once the ERCC is satisfied that the prescribed performance target(s) have been achieved. There are no vesting periods beyond the performance achievement periods. SCS PSP was established with the objective of motivating senior executives to strive for superior performance and sustaining long-term growth for the Company. Awards granted under SCS PSP are conditional on performance targets set based on medium-term corporate objectives. Movements of conditional awards granted under SCS PSP during the period from 1 January 2005 to 31 December 2005 are as follows:

Singapore Computer Systems Limited Annual Report 2005

88

No. of unreleased performance shares under conditional awards as at 1/1/2005

No. of unreleased performance shares under conditional awards granted during the year

No. of performance shares No. of released unreleased pursuant performance to the shares under vesting of conditional conditional awards awards lapsed during during the year the year

No. of unreleased performance shares under conditional awards as at 31/12/2005

Minimum and maximum no. of unreleased performance Expenses shares incurred on deliverable the release of under performance conditional shares under awards at conditional the end of awards charged the 3-year to profit and performance loss account cycle during the year

Date of grant of conditional awards

Over a 3-year performance cycle

2/4/2001

2001 to 2003

3/1/2002

2002 to 2004

60,000

(60,000)

8/5/2003

2003 to 2005

210,000

(210,000)

18/8/2004

2004 to 2006

690,000

(470,000)

220,000

960,000

(740,000)

220,000

0 to 440,000

0 to 440,000

The final number of performance shares (the Performance Shares) under awards granted under SCS PSP that will be released to the participants of SCS PSP at the end of the performance cycle (the Performance Cycle) is based on the participants’ level of achievement of the performance targets set for them over the Performance Cycle. Under SCS PSP, the Executive Resource and Compensation Committee (“ERCC”) of the Company may determine to make the release of the ordinary shares under conditional awards, wholly or partly, in the form of fully paid-up shares in the Company and/or cash, in accordance with the rules of SCS PSP.


Notes to the Financial Statements Year Ended 31 December 2005

21 Equity Compensation Benefits (cont’d) (d) Singapore Computer Systems Restricted Stock Plan (“SCS RSP”) The SCS RSP was approved and adopted at the Company’s Extraordinary General Meeting held on 7 July 2000. The SCS RSP is administered by the ERCC. Other information regarding the Restricted Plan is set out below: (i) Time-based restricted awards vest upon the satisfactory completion of time-based service conditions. (ii) Performance-based restricted awards vest upon the satisfactory completion of the period of service beyond a performance-target completion date. Since SCS RSP was approved by the Company’s Shareholders on 7 July 2000, no award has been granted under SCS RSP.

22 Segment Reporting Segment information is presented in respect of the Group’s geographical and business segments. The primary format, geographical segments, is based on the Group’s management and internal reporting structure. Inter-segment pricing is determined on mutually agreed terms.

The Group comprises the following main business segments:

Geographical Segments The computer and computer related services segments are managed on a worldwide basis but operate in five principal geographical areas, comprising Singapore, Malaysia, Greater China, Indonesia and Others. In the prior year, New Zealand was included. In presenting information on the basis of geographical segments, segment information is based on the geographical location of the assets.

Business Segments The main business segments of the Group comprise IT Business Solutions, IT Infrastructure and Others.

Singapore Computer Systems Limited Annual Report 2005

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items mainly comprise corporate assets and expenses, interest income, interest expenses and related assets and liabilities.

89


Notes to the Financial Statements Year Ended 31 December 2005

22 Segment Reporting (cont’d) (a) Geographical Segments

Singapore $’000

New Zealand $’000

Malaysia $’000

Greater China $’000

Indonesia $’000

259,755

5,529

9,185

62,241

11,407

348,117

21,506

8

109

(21,623)

Total revenue

281,261

5,537

9,294

62,241

11,407

(21,623)

348,117

Segment results

(34,364)

(989)

(5,058)

2,501

(240)

(38,150)

Others Eliminations $’000 $’000

Total $’000

Revenue and Expenses (by location of assets) 2005 Total revenue from external customers Inter-segment revenue

Non-operating expenses Finance costs Share of profit of associates Income tax expense

(2,126) (619) 1,300 (2,883)

Loss for the year

Singapore Computer Systems Limited Annual Report 2005

90

Total revenue from external customers (by location of customers) 2005

(42,478)

245,958

5,843

3,548

60,351

32,417

348,117

4,874

427,984

106

(24,624)

Revenue and Expenses (by location of assets) 2004 Total revenue from external customers Inter-segment revenue Total revenue Segment results

296,874 24,354

75,986 –

15,557

6,333

81

83

28,360 –

321,228

75,986

15,638

6,416

28,360

4,980

(24,624)

427,984

8,076

1,896

1,422

(1,705)

3,124

(979)

11,834

Non-operating income Finance costs

21,555 (475)

Share of profit of associates

735

Income tax expense

(4,613)

Profit for the year

29,036

Total revenue from external customers (by location of customers) 2004

280,153

75,986

15,589

14,303

32,584

9,369

427,984


Notes to the Financial Statements Year Ended 31 December 2005

22 Segment Reporting (cont’d) (a) Geographical Segments (cont’d)

Assets and Liabilities 2005 Segment assets Investments in associates Unallocated assets: – tax – others

Singapore $’000

New Zealand $’000

Malaysia $’000

Greater China $’000

Indonesia $’000

195,867 22,251

– –

1,533 –

7,309 –

55,556 –

Others Eliminations $’000 $’000

4,560 –

(31,512) –

257,811 92,684

2,001

8,040

27,251

3,135

(6)

150,281 91

– –

2,974 –

4,149 –

36,535 –

3,416 –

– –

243,697 7,344 994 5,397 257,432

75,419

2,317

2,437

17,046

1,596

98,815 2,530 2,147 (213)

Total liabilities

103,279

Depreciation charge 2005

7,452

103

270

4,820

77

(575)

12,147

2004

7,576

861

118

234

1,396

81

10,266

2005

741

1,449

2,190

2004

1,066

1,066

2005

3,577

3,577

2004

610

610

2005

4,502

39

376

12,585

38

17,540

2004

3,621

849

253

168

2,049

180

7,120

Impairment, amortisation and write off of intangible assets

Allowance for impairment in value of investments

Capital expenditure

Singapore Computer Systems Limited Annual Report 2005

196,623 7,344

Total assets Segment liabilities Unallocated liabilities: – borrowings – tax – others

133,105 13,528 3,491 157

Total liabilities Assets and Liabilities 2004 Segment assets Investments in associates Unallocated assets: – tax – others

233,313 22,251 579 1,668

Total assets Segment liabilities Unallocated liabilities: – borrowings – tax – others

Total $’000


Notes to the Financial Statements Year Ended 31 December 2005

22 Segment Reporting (cont’d) (b) Business Segments IT Business Solutions $’000

IT Infrastructure $’000

Others $’000

Eliminations $’000

Total $’000

2005 Total revenue from external customers

90,389

250,567

7,161

348,117

Segment assets

57,948

170,774

4,591

233,313

2,546

12,208

2,786

17,540

101,416

323,699

2,869

427,984

57,747

184,316

1,634

243,697

2,270

3,880

970

7,120

Capital expenditure 2004 Total revenue from external customers Segment assets Capital expenditure

Singapore Computer Systems Limited Annual Report 2005

92

23 Revenue

Revenue of the Group represents the net invoiced value of goods sold and services rendered in the normal course of business. All intragroup transactions have been eliminated in arriving at the Group’s revenue.

Sale of computer equipment and software Software development, maintenance and other services

GROUP 2005

2004

$’000

$’000

210,807 137,310

231,617 196,367

348,117

427,984


Notes to the Financial Statements Year Ended 31 December 2005

24 (Loss)/Profit before Taxation

The following items have been included in arriving at (loss)/profit before taxation:

GROUP 2005 $’000

2004 $’000

4 77 110 (267)

432 (5) 158 613

202 525

58 289

577 40,754 2,939

841 3,439 (2,064)

741 1,449 12,147

783 283 10,266

72 100 1,081

80 25 2,547

104,445

113,006

7,828

7,609

1,163

950

(519) (2,428) 340

(21,525) (580) 76

3,577

610

619

475

(a) Other income

Dividend income from investment Loss/(Gain) on disposal of property, plant and equipment Gain on foreign exchange Grants income Interest income from investments: – related corporations – others

(b) Other expenses Write off and allowance made/(written back) for: – inventory obsolescences – foreseeable losses – doubtful receivables Amortisation, write-offs and impairment allowances for: – intangible assets – goodwill Depreciation of property, plant and equipment Non-audit fees paid to: – auditors of the Company – other auditors Operating lease expenses

(c) Staff costs

Total staff costs Included in staff costs are: – contributions to defined contribution plans – directors’ remuneration and fees: – directors of the Company

(d) Non-operating (income)/expenses

(Gain)/Loss on disposal of investments in: – subsidiaries – associates – long-term investments Allowance made for impairment of investments in: – unquoted shares

(e) Finance costs Interest expenses paid and payable for bank loans and overdraft

93 Singapore Computer Systems Limited Annual Report 2005


Notes to the Financial Statements Year Ended 31 December 2005

25 Key Management Personnel Compensation

The key management personnel compensation are as follows:

Short-term employee benefits Post-employment benefits Equity compensation benefits

GROUP 2005 $’000

2004 $’000

5,848

4,287

33

5,881

4,287

26 Income Tax Expense

Current tax expense Current year Under provision in prior years

Singapore Computer Systems Limited Annual Report 2005

94

Deferred tax expense Movements in temporary differences Under provision in prior years Foreign tax paid

Reconciliation of effective tax rate (Loss)/Profit before tax Income tax using Singapore tax rate Effect of different tax rates in other countries Income not subject to tax Expenses not deductible for tax purposes Group tax relief Deferred tax assets not recognised Utilisation of previously unrecognised capital allowance Under provision in prior years Others

The utilisation of group tax relief is subject to the agreement of the tax authorities.

GROUP 2005 $’000

2004 $’000

2,095 106 2,201

2,222 1,046 3,268

110 572 682

901 376 1,277

68

2,883

4,613

(40,895)

32,914

(8,179) (242) (38) 2,905 (738) 7,721 – 678 776

6,583 589 (4,367) 325 (650) 1,013 (273) 1,422 (29)

2,883

4,613


Notes to the Financial Statements Year Ended 31 December 2005

26 Income Tax Expense (cont’d)

Deferred tax assets have not been recognised in respect of the following items:

Deductible temporary differences Tax losses

2005 $’000

2004 $’000

38,635 27,238

9,370 17,901

65,873

27,271

As at 31 December 2005, the Group had deductible temporary differences and unabsorbed tax losses available for offset against future profits, subject to agreement by the tax authorities and compliance with tax regulations in the respective countries in which certain subsidiaries operate. Deferred tax assets have not been recognised in respect of the above items in accordance with the accounting policy stated in Note 2.15.

27 (Loss)/Earnings Per Share (a) Basic (loss)/earnings per share

95

2005 $’000

Basic (loss)/earnings per share is based on: (i) Net (loss)/profit attributable to shareholders

(ii)

Weighted average number of shares outstanding during the year

GROUP 2004 $’000

2004 $’000

(restated)

(as previously reported)

27,687

27,768

No. of shares ’000

No. of shares ’000

No. of shares ’000

154,136

154,136

154,136

(43,576)

Singapore Computer Systems Limited Annual Report 2005


Notes to the Financial Statements Year Ended 31 December 2005

27 (Loss)/Earnings Per Share (cont’d) (b) Diluted (loss)/earnings per share When calculating diluted earnings per share, the weighted average number of ordinary shares is adjusted for the effect of all dilutive potential ordinary shares. The unissued ordinary shares under the Singapore Computer Systems Executives’ Share Option Scheme, the Singapore Computer Systems Share Option Plan and the Singapore Computer Systems Performance Share Plan are as follows:

Singapore Computer Systems Limited Annual Report 2005

96

2005

2004

Unissued ordinary shares ’000

Exercise price

Unissued ordinary shares ’000

Exercise price

63

$1.13

136

$1.13

350

$2.20

763

$2.20

438

$2.08

742

$2.08

379

$1.55

656

$1.55

286

$0.86

682

$0.86

150

$0.91

560

$0.91

1,056

$0.84

983

$0.84

220

1,920

2,942

6,442

The average fair value of one ordinary share during 2005 has been $0.78 (2004: $0.79) per share. The weighted average number of ordinary shares adjusted for the unissued ordinary shares under the Singapore Computer Systems Executives’ Share Option Scheme and the Singapore Computer Systems Share Option Plan can be specified as follows: The weighted average number of ordinary shares adjusted for the effect of all dilutive potential ordinary shares is determined as follows:

Weighted average number of shares issued, used in the calculation of basic earnings per share Weighted average number of unissued ordinary shares under options Number of shares that would have been issued at fair value

2005

2004

No. of shares ’000

No. of shares ’000

154,136

154,136

154,136

154,136


Notes to the Financial Statements Year Ended 31 December 2005

28 Commitments

GROUP

COMPANY

2005 $’000

2004 $’000

2005 $’000

2004 $’000

968

1,818

968

1,818

– payable within 1 year

428

819

265

345

– payable within 2 to 5 years

762

763

517

84

Capital Commitment – approved and contracted for Operating lease commitments Under non-cancellable operating leases with terms exceeding 1 year:

– payable after 5 years

The Group leases a number of office facilities and equipment under operating leases. The leases typically run for an initial period of 2 years, with an option to renew the lease after that date. Lease payments are usually increased annually to reflect market rentals. None of the leases includes contingent rentals. 97

Acquisitions and Disposals of Subsidiaries

On 12 May 2005, the Group disposed off 2,000 shares in one of its subsidiaries Viewers Choice Pte Ltd. The effective shareholding decreased from 49.9% to 49.17%, thereby changing its relationship to the Group to an associate.

The effect of acquisition and disposal of subsidiaries is set out below:

GROUP 2005 $’000

2004 $’000

(5,640) (6,983) (13,373) (2,760) 14,254 (14,502) (76) (14,578) 7,106 (7,472) – – – 2,760 (4,712)

(a) Acquisition of a Subsidiary

Property, plant and equipment Inventories and projects-in-progress Trade and other receivables Cash and cash equivalents Trade and other payables Net identifiable assets and liabilities Goodwill paid

Minority interests

Interest in a subsidiary previously accounted for as other investment Capitalisation of loan to subsidiary Consideration yet to be paid Net cash at bank of subsidiary

– – – – – – – – – – – – – –

Cash (outflow)/inflow on acquisition of subsidiary

Singapore Computer Systems Limited Annual Report 2005

29 Consolidated Statement of Cash Flows


Notes to the Financial Statements Year Ended 31 December 2005

29 Consolidated Statement of Cash Flows (cont’d)

GROUP 2005 $’000

2004 $’000

499 8,447 8 (16,521) 4,255 3,865 44,204 1,209 (36,320) 9,646 524 10,170 21,525 (1,209) 30,486

(b) Disposal of Subsidiaries

Singapore Computer Systems Limited Annual Report 2005

98

Deferred tax assets Associated company Investments Bank loans and hire purchase obligations Property, plant and equipment Inventories Trade and other receivables Cash and cash equivalents Trade and other payables Net identifiable assets and liabilities Minority interests

Gain on disposal of investment in subsidiaries Net cash at bank of subsidiaries

– – – – 14 32 559 80 (835) (150) (10) (160) 719 (80)

Cash inflow on disposal of subsidiaries

479

30 Changes in Accounting Policies

The accounting policies set out in Note 2 have been applied in preparing the financial statements for the year ended 31 December 2005.

The changes in accounting policies arising from the adoption of FRS 102 Share-based Payment is summarised below:

In accordance with the transitional provisions, FRS 102 has been applied to all grants after 22 November 2002 that were not yet vested as at 1 January 2005. The adoption of FRS 102 has resulted in a change in the Group’s accounting policy for share-based payments, whereby the Group charges the cost of share options to the profit and loss account.

The adoption of FRS 102 resulted in:

GROUP

COMPANY

2005 $’000

2004 $’000

2005 $’000

2004 $’000

Decrease in opening accumulated profits

116

35

116

35

Increase in opening share option reserve

116

35

116

35

86

81

86

81

Decrease in basic earnings per share (cents)

0.06

0.05

0.06

0.05

Decrease in diluted earnings per share (cents)

0.06

0.05

0.06

0.05

Increase in administrative expenses


Notes to the Financial Statements Year Ended 31 December 2005

31 Significant Related Party Transactions

For the purpose of these financial statements, parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

In addition to the related party information disclosed elsewhere in the financial statements, there were the following significant transactions between the Group and related parties, at terms agreed between the parties, during the year:

Holding Company Management fees paid/payable Related Corporations Sales Purchases

2005 $’000

2004 $’000

2,000

25,712 907

24,545 4,611

1,658 60 407

3,503 32 338

32 Financial Instruments

Financial Risk Management Objectives and Policies

Exposure to credit, interest rate, currency and liquidity risks arises in the normal course of the Group’s business. The Group’s objectives, internal organisation and the environment in which it operates are continually evolving and, as a result, the risks it faces are continually changing. A well-defined policy is hence necessary to help ensure that the Group is not unnecessarily exposed to avoidable financial risks.

The Group’s system of internal control has a key role in the identification and management of financial risks, and contributes to safeguarding the shareholders’ investments and the Group’s assets. In reviewing the effectiveness of the system of internal control, the Board has taken into account the results of all work carried out to audit and review the activities of the Group.

Derivative financial instruments are used to reduce exposure to fluctuations in foreign exchange rates and interest rates. While these are subject to the risk of market rates changing subsequent to acquisition, such changes are generally offset by opposite effects on the items being hedged. The Group does not use complex derivative instruments with embedded or leverage features to mitigate risks.

The Group monitors and controls the hedging of transactions in accordance with established policies and guidelines.

99 Singapore Computer Systems Limited Annual Report 2005

Associates Sales Purchases Rental income

GROUP


Notes to the Financial Statements Year Ended 31 December 2005

32 Financial Instruments (cont’d)

Singapore Computer Systems Limited Annual Report 2005

100

Credit Risk

Management has a credit policy in place and the exposure to credit risk is monitored on an on-going basis. Credit evaluations are performed on all customers requiring credit.

Short-term investments are limited only to bank certificates of deposits, cash deposits and commercial papers with maturity of one year or less. These investments are managed from regular review of the cashflow requirements and the length of investment horizon. The Group’s investment in external parties’ commercial papers does not exceed 20% of total surpluses invested. As at balance sheet date, there were no investments made in commercial papers.

The Group’s exposure to changes in market value of its investments and financial assets are managed by performing on-going evaluations. Any impairment loss will be provided in the accounts.

At balance sheet date, there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheets.

Interest Rate Risk

The Group’s exposure to market risk for changes in interest rates relate primarily to the Group’s investment portfolio and debt obligations. The Group does not use derivative financial instruments to hedge its investment portfolio.

Effective interest rates and repricing analysis

In respect of interest-earning financial assets and interest-bearing financial liabilities, the following table indicates their effective interest rates at balance sheet date and the periods in which they may be repriced. Note Group

Floating Interest

Effective interest rate

Within 1 year

1 to 5 years

%

$’000

$’000

2005 Financial assets Short-term loan receivables Fixed deposits Cash at bank and in hand

12 13 13

– 3.5 – 0.72 –

3.64 2.75

1,027 1,939 573

– – –

Financial liabilities Loans payable to banks Hire purchase creditors

17 16

5 – 11.81 3.85 – 3.95

12,067 22

1,461 17

2004 Financial assets Short-term loan receivables Fixed deposits Cash at bank and in hand

12 13 13

0.83 – 4.60 0.57 – 3.45 0.01 – 0.0375

852 3,108 4,272

– – –

Financial liabilities Short-term loans payable to banks (unsecured) Hire purchase creditors

16

0.99 – 3.85 –

2,530 53

– 30

4.60 5.40


Notes to the Financial Statements Year Ended 31 December 2005

32 Financial Instruments (cont’d) Note Company

Floating Interest

Effective interest rate

Within 1 year

1 to 5 years

%

$’000

$’000

2005 Financial assets Short-term loan receivables Cash at bank and in hand

12 13

1.68 – 3.94 2.07 – 2.75

2,475 139

– –

2004 Financial assets Short-term loan receivables Cash at bank and in hand

12 13

1.53 – 2.28 0.91 – 2.03

10,430 310

– –

Financial liabilities Bank overdrafts (unsecured)

13

241

Foreign Currency Risk

The Group incurs foreign currency risk on sales, purchases and borrowings that are denominated in a currency other than Singapore dollars. The currency giving rise to this risk is primarily US dollars, Indonesian Rupiah and Philippine Peso.

The Group uses natural hedging opportunities like denominating the liabilities or costs in the same currency as the assets or revenue when there are currency exposures in the transactions whenever practicable.

Foreign exchange transactions are only arranged in respect of actual (committed) or forecast (uncommitted) currency exposures. Committed exposures such as trade receivables, trade payables and borrowings denominated in a foreign currency are hedged as soon as they are identified. The Group hedges at least 80% of its committed exposures. Unhedged committed currency exposures are monitored regularly and any markto-market losses for such open positions are limited to 5% of the forecasted net operating profit for the year.

Permitted foreign exchange hedging instruments include spot and forward contracts, currency swaps and currency options. All hedging instruments are of generic variety with no embedded or leverage features. Complex, illiquid instruments are not used. At all times, the outstanding hedging contracts do not exceed the notional amount of the underlying exposures.

Liquidity Risk

Liquidity must be maintained under normal circumstances and is critical in times of stress or crisis. The policy set is designed to achieve a balance of two requirements, namely greater certainties of cashflows and the attendant cost of obtaining that funding. The liquidity profile is reviewed in the context of money market and credit conditions and will be revised from time to time as necessary.

The Group monitors its forecast operational cashflows and secures a range of short-term and long-term funding alternatives on a regular basis to ensure that sufficient liquidity is available to meet its requirements.

101 Singapore Computer Systems Limited Annual Report 2005


Notes to the Financial Statements Year Ended 31 December 2005

32 Financial Instruments (cont’d)

Sensitivity Analysis

As at 31 December 2005, a general increase of one percentage point in interest rate and in value of the Singapore dollar against other foreign currencies has no significant impact on the Group’s loss before tax.

Fair Values

The fair value of the financial assets and liabilities approximates to their carrying value except for that of unquoted equity investments, which is disclosed in Note 7 to the financial statements.

It is not practicable to estimate the fair value of the Group’s long-term unquoted equity investments because of the lack of quoted market prices and the inability to estimate fair value without incurring excessive costs. However, management believes that the carrying amounts recorded at balance sheet date reflect the corresponding fair value.

33 Contingent Liabilities

Singapore Computer Systems Limited Annual Report 2005

102

Other than corporate guarantees disclosed in Note 17 and contingent liabilities disclosed in Note 6, the Company provided corporate guarantees for approximately $3.15 million (2004: $18.11 million) in favour of certain suppliers of its subsidiaries.

34 FRS Not Yet Adopted

The Group has not applied the following FRSs and interpretations that have been issued but are not yet effective: INT FRS 106

Liabilities arising from Participating in a Specific Market – Waste Electrical and Electronic Equipment

Amendments to FRS 19

Amendments to FRS 19 Employee Benefits – Actuarial gains and losses, Group plans and Disclosures

Amendments to FRS 21

Amendments to FRS 21 The Effects of Changes in Foreign Exchange Rates – Net Investment in a Foreign Operation

Amendments to FRS 39

Amendments to FRS 39 Financial Instruments: Recognition and Measurement – Cash Flow Hedge Accounting of Forecast Group Transactions

Amendments to FRS 39

Amendments to FRS 39 Financial Instruments: Recognition and Measurement – The Fair Value Option

Amendments to FRS 39

Amendments to FRS 39 Financial Instruments: Recognition and Measurement – Financial Guarantee Contracts and Credit Insurance

FRS 106

Exploration and Evaluation of Mineral Resources

INT FRS 104

Determining whether an Arrangement contains a Lease

INT FRS 105

Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds

INT FRS 107

Applying the Restatement Approach under FRS 29 Financial Reporting in Hyperinflationary Economies

FRS 40

Investment Property

FRS 107

Financial Instruments: Disclosures


Notes to the Financial Statements Year Ended 31 December 2005

34 FRS Not Yet Adopted (cont’d)

The initial application of these standards and interpretations are not expected to have any material impact on the Group’s financial statements, except for INT FRS 104, Determining whether an Arrangement contains a Lease.

INT FRS 104 addresses arrangements that do not take the legal form of a lease, but convey rights to use items for agreed periods of time in return for a payment or series of payments. INT FRS 104 provides guidance for evaluating whether such arrangements are, or contain, leases should be accounted for under FRS 17 Leases. If an agreements is determined to contain a lease, then INT FRS 104 requires FRS 17 to be applied to classify and account for the lease. The Group is currently evaluating the impact the interpretation will have on the Group’s financial statements.

The group has not considered the impact of accounting standards issued after the balance sheet date.

35 Subsequent Events

Share capital

On the date of commencement of the Companies (Amendment) Act 2005 on 30 January 2006: (i)

The concept of authorised share capital is abolished;

(ii)

Shares of the Company have no par value; and

36 Accounting Estimates and Judgement

Management discussed with the Audit Committee the development, selection and disclosure of the Group and Company’s critical accounting policies and estimates, and the application of these policies and estimates.

Key sources of estimation uncertainty and critical accounting judgements in applying the Group and Company’s accounting policies

Project Costs

The Group conducts regular critical reviews of all its projects. To determine the total project costs, the Group constantly monitors and reviews the progress of all projects taking into considerations all inputs from both internal project managers and external customers. The reviews include evaluating any potential risks and factors which may affect the timely completion of the projects. The review also encompasses the cost analysis process whereby both actual cost incurred and future costs-to-go are critically examined. The estimated future cost-to-go takes into consideration potential manpower resources needed to complete the project, equipment to be delivered, external services required, infrastructure setup cost.

103 Singapore Computer Systems Limited Annual Report 2005

(iii) Amount standing to the credit of the Company’s share premium account becomes part of the Company’s share capital.


Notes to the Financial Statements Year Ended 31 December 2005

36 Accounting Estimates and Judgement (cont’d) Impairment allowances made on goodwill The Group conducts regular review on the financial performance of all its subsidiaries and associates. The Group assesses the potential performance of these companies by looking at its historical and forecasted performance, market situations, competitions and any other factors that may have a material impact on the companies. The assessment arrived at after taking into considerations all these factors will be used to determine the need for making any impairment provisions on the investment in these companies, including the goodwill.

Impairment allowances made on unquoted equity securities Note 5 and 6 contain information about the assumptions and their risks factors relating to impairment of subsidiaries and associates.

37 Comparative Information

Singapore Computer Systems Limited Annual Report 2005

104

Comparatives in the financial statements have been changed from the previous year due to the changes in accounting policies as described in Note 30 and to be consistent with current year’s presentation.


Directors’ Remuneration for the financial year ended 31 December 2005 (SGX-ST Listing Manual Disclosure Requirements)

Company’s directors receiving remuneration from the Group

Company

Number of Directors Remuneration bands

2005

2004

$500,000 and above

1

1

$250,000 to below $500,000

1

-

Below $250,000

11

8

Total

13

9

a) The following table shows a breakdown (in percentage terms) of the average remuneration of Directors and top key executives, which fall within broad bands for the 12 months ended 31 December 2005: Performance Remuneration bands Salary bonuses

Directors’ Total fees Others compensation

%

%

%

%

%

S$500,000 and above Pek Yew Chai

36.5%

55.2%

-

8.3%

100

S$250,000 to below S$500,000 Tan Tong Hai

51.8%

33.3%

-

14.9%

100

- - - - - - - - - - -

- - - - - - - - - - -

100 - 100 - 100 - 100 - 100 - 100 - 100 - 100 100 - 100 - 100 -

100 100 100 100 100 100 100 100 100 100 100

Directors

b) Details of share options granted to Directors are disclosed in the Directors’ Report.

Singapore Computer Systems Limited Annual Report 2005

Below S$250,000 Peter Seah Lim Huat Boon Swan Foo Philip Eng Heng Nee William Liu Wei Hai Tan Cheng Han Donald Albert Ramble Venkatachalam Krishnakumar Robert Chua Teck Chew Theresa Foo-Yo Mie Yoen Spencer Lee Tien Chye Low Sin Leng

105


Employees’ Remuneration for the financial year ended 31 December 2005 (S$150,000 and above per annum)

Total Compensation Bands (S$)

Total No. of Employees

Total Value (S$’000)

150,000 to 199,999

6

1,051

200,000 to 249,999

2

491

250,000 to 499,999

5

1,660

500,000 to 749,999

1

589

14

3,791

Total

Note: Total Compensation includes salary (including CPF), bonus, AWS, commission, dollar contribution by the Company under the Employees’ Share Ownership Scheme and benefits in kind such as car and club allowances.

Singapore Computer Systems Limited Annual Report 2005

106


Interested Person Transactions for the financial year ended 31 December 2005 (SGX-ST Listing Manual Disclosure Requirements)

Interested person transactions carried out during the financial year pursuant to the Shareholders’ Mandate obtained under Chapter 9 of the Listing Manual of the Singapore Exchange Securities Trading Limited (SGX) by the Group are as follows: Name of interested person

Aggregate value of all interested person transactions during the financial year under review (excluding transactions less than $100,000 and transactions conducted under shareholders mandate pursuant to Rule 920)

Aggregate value of all interested person transactions conducted under general mandate from shareholders pursuant to Rule 920 (1)(a)(ii) (excluding transactions less than $100,000)

2005 $’000

2005 $’000

Transactions for the Sales of Goods and Services Singapore Technologies Pte Ltd and its associates Temasek Holdings (Private) Limited and its associates SembCorp Logistics Ltd and its associates

11,682 5,330 103

– – –

744

Management and Support Services Singapore Technologies Pte Ltd and its associates

2,163

322

107 Singapore Computer Systems Limited Annual Report 2005

Transactions for the Purchases of Services Singapore Technologies Pte Ltd and its associates


Corporate Governance

CORPORATE GOVERNANCE STATEMENT Introduction Our principles of corporate governance reflect our heritage and belief in delivering results while building for the future. We believe firmly that integrity, excellence and commitment in our people supported by a sound system of policies, practices and internal controls are the success elements that will help us create long-term value and returns for shareholders. We believe that integrity and professionalism are the cornerstone of our commitment to build a great company of which shareholders, staff, customers, suppliers and other stakeholders can be justifiably proud. Sound corporate governance is one element of a sound corporation. This is an important requisite for our business for their steady growth as a trusted and respected business enterprise. Corporate governance principles and practices must remain relevant in a changing world. Just as we will be open to new ideas and practices, we will also be disciplined in discarding obsolete or ineffective practices and impractical ideas. This will be an on-going effort to remain lean, relevant and supple, as we evolve with the needs of our business and our people to build a great enterprise and deliver on our promises. The Report of the Corporate Governance Committee on the Code of Corporate Governance (“Code”) dated 21 March 2001 was accepted by the Singapore Government on 4 April 2001. It is now part of the Continuing Obligations of the Listing Manual of the Singapore Exchange Securities Limited.

Singapore Computer Systems Limited Annual Report 2005

108

Rule 710(1) of the SGX Listing Manual requires that an issuer must “describe its corporate governance practices with specific reference to the principles of the Code in its annual report. It must disclose any deviation from any guideline of the Code together with an appropriate explanation for such deviation in the annual report”. At the same time, the Code has urged us to adopt a balanced approach by observing “the spirit and not just blindly follow the letter of the Code …”

The Code The Code is divided into four main sections: (a)

Board Matters

(b)

Remuneration Matters

(c)

Accountability and Audit

(d)

Communication with Shareholders

Each section is classified into Principles and Guidance Notes. We recognise and support the Principles and spirit of the Code. We note that each company needs to develop and maintain its corporate governance process to meet the specific needs of its business demands. We note also that the Guidance Notes may serve to flesh out the underlying issues underpinning each of the principle. We intend to manage our company, keeping in focus the substance and spirit of the Principles of the Code. This Report sets out how our company, Singapore Computer Systems Limited, has effectively applied the principles of good corporate governance in a disclosure-based regime where the accountability of the Board to its shareholders and the management to the Board, provides the framework for achieving a mutually beneficial tripartite relationship aimed at creating and growing sustainable shareholder value. The Group is committed to achieving high standards of corporate conduct and has generally complied with the Principles of the Code. In the following sections covering each of the principles, we have outlined our policies and practices.


Corporate Governance Corporate Governance Statement

(a) Board Matters

Board’s Conduct of its Affairs

Principle 1: Every company should be headed by an effective Board to lead and control the company.

Our Policy and Practices: An effective board of our listed companies and groups must be constituted with a majority of non-executive directors independent of management, with the right core competencies and diversity of experience to enable them in their collective wisdoms to contribute effectively. Every director is expected to act in good faith and always in the interest of the Company. The key roles of our Board are to:

• Guide the corporate strategy and directions of the Group.

• Ensure effective management leadership of the highest quality and integrity.

• Provide oversight in the proper conduct of the Group's business. The Chairman and Chief Executive Officer are separate persons in order to maintain an effective oversight. The Board comprises 8 business leaders and professionals with financial and entrepreneurial background, 7 of whom are non-executive Directors. Profiles of the current Directors are found on page 10 of the Annual Report.

We believe that contributions from each director can be reflected in ways other than the reporting of attendances of each director at board and committee meetings. A director would have been appointed on the strength of his calibre, experience, and stature, and his potential to contribute to the proper guidance of the Company and its businesses. To focus on a director's attendance at formal meetings alone may lead to a narrow view of a director's contributions. It may also not do justice to his contributions which can be in many forms including management's access to him for guidance or exchange of views outside the formal environment of board meetings. In addition, he may bring relationships strategic to the interests of the Group. The matrix of the Board members' participation in the various board committees is provided at page 115 of this Report. This reflects each Board member's additional responsibilities and special focus on the respective board committees of the Company. The Board has adopted a set of internal controls which sets out approval limits for capital expenditure, investments and divestments, bank borrowings and cheque signatories arrangements at Board level. Approval sublimits are also provided at management levels to facilitate operational efficiency. Changes to regulations and accounting standards are monitored closely by Management. To keep pace with regulatory changes, where these changes have an important bearing on the Company's or directors' disclosure obligations, directors are briefed either during Board meetings or at specially-convened sessions conducted by professionals. Newly-appointed directors are given briefings by the Management on the business activities of the Group and its strategic directions.

109 Singapore Computer Systems Limited Annual Report 2005

The Board meets to review the key activities and business strategies of the Group. The Board delegates specific responsibilities to board committees described in our Corporate Governance Report for 2005 found on page 116. Regular Board Meetings are held at least quarterly to deliberate strategic policies of the group including significant acquisitions and disposals, the annual budget, review of performance of the business and approve the release of the quarterly reports. Where necessary, additional Board meetings are also held to address significant transactions or issues. A total of 7 Board meetings were held in the year.


Corporate Governance Corporate Governance Statement

Board Composition and Balance Principle 2: There should be a strong and independent element on the Board, which is able to exercise objective judgment on corporate affairs independently, in particular, from Management. No individual or small group of individuals should be allowed to dominate the Board’s decision making.

Our Policy and Practices: The majority of our directors are non-executive and independent of management. This enables the Management to benefit from an outside diverse and objective perspective of issues that are brought before the Board. It would also enable the Board to interact and work with management through a robust exchange of ideas and views to help shape the strategic process. This together with a clear separation of the role of the Chairman and the Chief Executive Officer provides a healthy professional relationship between the Board and Management with clarity of roles and robust oversight. The Board comprises 8 directors, 7 of whom are non-executive directors, independent of management. Of the 7 non-executive directors, 5 are independent non-executive directors, who are independent of the principal shareholder. The Board is supported by key board committees to provide independent oversight of Management. These key committees are the Audit Committee, Executive Committee, Nominating Committee and Executive Resource and Compensation Committee (“ERCC”) made up of independent or non-executive directors or external coopted members. Other committees can be formed from time to time to look into specific areas as and when the need arises. Membership in the different committees are carefully managed to ensure that there is equitable distribution of responsibilities among Board members, to maximise the effectiveness of the Board and foster active participation and contribution from Board members. Diversity of experiences and appropriate skills are also considered. There is need to also ensure that there are appropriate checks and balances between the different committees. Hence, for example, composition of the Executive Committee with more involvement in key business or executive decisions, and that of the Audit Committee with its oversight role is kept mutually exclusive.

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Chairman and Chief Executive Officer Principle 3: There should be a clear division of responsibilities at the top of the company – the working of the Board and the executive responsibility of the company’s business – which will ensure a balance of power and authority, such that no one individual represents a considerable concentration of power.

Our Policy and Practices: We believe there must be a clear separation of the roles and responsibilities between the Chairman and the President & CEO of the Group. The Chairman who is non-executive is responsible for the Board and is free to act independently in the best interests of the Group and shareholders while the CEO is responsible for the running of the Group’s business. The Chairman ensures that the members of the Board work together with the Management with the capability and moral authority to engage Management in constructive debate on various matters, including strategic issues and business planning processes. The President & CEO is a Board member and has full executive responsibilities over the business directions and operational decisions of the Group.

Board Membership Principle 4: There should be a formal and transparent process for the appointment of new directors to the Board. As a principle of good corporate governance, all directors should be required to submit themselves for re-nomination and re-election at regular intervals.


Corporate Governance Corporate Governance Statement

Our Policy and Practices: We believe that Board renewal must be an ongoing process, to both ensure good governance, and maintain relevance to the changing needs of the Company and business. The CEO, where he is also a Board member, must also subject himself to retirement and re-election by shareholders as part of Board renewal. Nominations and election of Board members are the prerogative and proper rights of all shareholders. Our Articles of Association require one-third of our directors to retire and subject themselves to re-election by shareholders at every AGM (“one-third rotation rule”). In other words, no director stays in office for more than three years without being re-elected by shareholders. In addition, a newly-appointed director will submit himself for retirement and re-election at the Annual General Meeting (“AGM”) immediately following his appointment. Thereafter, he is subject to the one-third rotation rule.

Board Performance Principle 5: There should be a formal assessment of the effectiveness of the Board as a whole and the contribution by each director to the effectiveness of the Board.

Our Policy and Practices:

The financial indicators set out in the Code as guides for the evaluation of directors are in our opinion more of a measure of management’s performance and hence are less applicable to directors. In any case, such financial indicators provide a snapshot of a company’s performance, and do not fully measure the sustainable long-term wealth and value creation of the Company. The Board through the delegation of its authority to the Nominating Committee, has used its best efforts to ensure that directors appointed to our Board possess the background, experience and knowledge in technology, business, finance and management skills critical to the Company’s business and that each director with his special contributions brings to the Board an independent and objective perspective to enable balanced and well-considered decisions to be made. Informal reviews of the Board’s performance will be undertaken on a continual basis by the Nominating Committee with inputs from the other Board members and CEO. Renewals or replacements of board members do not necessarily reflect their contributions to date, but may be driven by the need to position and shape the Board in line with the medium term needs of the Company and its business.

Access to Information Principle 6: In order to fulfil their responsibilities, Board members should be provided with complete, adequate and timely information prior to board meetings and on an on-going basis.

Our Policy and Practices: We believe that the Board should be provided with timely and complete information prior to Board meetings and as and when the need arises. New Board members are fully briefed on the business of the Group.

111 Singapore Computer Systems Limited Annual Report 2005

We believe that Board performance is ultimately reflected in the performance of the Group. The Board should ensure compliance with applicable laws and Board members should act in good faith, with due diligence and care in the best interests of the Company and its shareholders. In addition to these fiduciary duties, the Board is charged with two key responsibilities: setting strategic directions and ensuring that the Company is ably led. The measure of a board’s performance is also tested through its ability to lend support to management especially in times of crisis and to steer the Group in the right direction, including the sensitive but most important issue of CEO succession.


Corporate Governance Corporate Governance Statement

The Management is required to provide adequate and timely information to the Board on Board affairs and issues that require the Board’s decision as well as ongoing reports relating to operational and financial performance of the Group. The Articles of Association of Singapore Computer Systems Limited provide for directors to convene meetings by teleconferencing or videoconferencing. Where a physical Board meeting is not possible, timely communication with members of the Board is effected through electronic means which include electronic mail, teleconferencing and videoconferencing. Alternatively, Management will arrange to personally meet and brief each director before seeking the Board’s approval. The Board has separate and independent access to the senior management and the Company Secretary at all times. The Board also has access to independent professional advice where appropriate. Likewise, the Audit Committee must also meet the external and internal auditors separately at least once a year, without the presence of the CEO and other senior management members, in order to have free and unfiltered access to information that it may require.

(b) Remuneration Matters Procedures for Developing Remuneration Policies Principle 7: There should be a formal and transparent procedure for fixing the remuneration packages of individual directors. No director should be involved in deciding his own remuneration.

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Level and Mix of Remuneration Principle 8: The level of remuneration should be appropriate to attract, retain and motivate the directors needed to run the company successfully but companies should avoid paying more for this purpose. A proportion of the remuneration, especially that of executive directors, should be linked to performance.

Disclosure on Remuneration Principle 9: Each company should provide clear disclosure of its remuneration policy, level and mix of remuneration, and the procedure for setting remuneration, in the company’s annual report.

Our Policy and Practices We believe that a framework of remuneration for the Board and key executives should not be taken in isolation. It should be linked to the development of management bench strength and key executives to ensure that there is a continual development of talent and renewal of strong and sound leadership for the continued success of the business and the Company. For this reason, the members of the ERCC and the Nominating Committee are the same as highlighted in our Policy and Practices under Principle 4. The ERCC performs the role of the Remuneration Committee. All the members of the ERCC are independent of management. From time to time, we may co-opt an outside member into the ERCC to provide a global perspective of talent management and remuneration practices. The ERCC reviews the remuneration of its non-executive directors, executive director and senior executives, as well as major human resource management and compensation policies and practices for the rest of the Group. The ERCC is chaired by a non-executive director who is independent of management, and comprises two independent non-executive directors. There are no management members on the ERCC. While the Chairman of the ERCC is not regarded as independent within the context of the definition of “independence” in the Code, he is a non-executive director independent of Management with a clear separation of his role from Management in deliberations of the ERCC. The ERCC has access to expert professional advice on human resource matters whenever there is a need to consult externally. In its deliberations, the ERCC takes into consideration industry practices and norms in compensation. The CEO is not present during the discussions relating to his own compensation, and terms and conditions of service, and the review of his performance. The CEO will be in attendance when the ERCC takes through the discussions on policies and


Corporate Governance Corporate Governance Statement

compensations of his senior team and key staff, as well as major compensation and incentive policies such as share options, stock purchase schemes, framework for bonus, staff salary and other incentive schemes. The ERCC’s scope of responsibilities includes: • Overseeing the development of leadership and management talent in the SCS Group. • Ensuring that companies in the SCS Group have appropriate remuneration policies. • Designing of compensation packages with a view to provide competitive packages but with focus on longterm sustainability of business and long term shareholder's return. The President & CEO as executive director does not receive director's fees. He is a lead member of Management. His compensation consists of his salaries, allowances, bonuses, options and performance share awards conditional upon his meeting certain performance targets. The details of his compensation package are found on page 105 of the Annual Report. Non-executive Directors have remuneration packages which consist of a director's fee component pursuant to the Company's Directors' Fee Policy and a share options component pursuant to the Company's Share Option Plan. The details of Directors' fees and share options are found on page 105 of the Annual Report. Directors' fees for non-executive Directors are subject to the approval of shareholders at AGM. Rather than set out the names of the top five key executives who are not also directors of the Company, we have shown a group-wide cross-section of executives' remuneration by number of employees from $150,000 upwards in bands at page 106. This should give a macro perspective of the remuneration pattern in the Group, while maintaining confidentiality of staff remuneration matters.

(c) Accountability and Audit Accountability Principle 10: The Board is accountable to the shareholders while the Management is accountable to the Board. Our Policy and Practices: We have always believed that we should conduct ourselves in ways that deliver maximum sustainable value to our shareholders. We promote best practices as a means to build an excellent business for our shareholders. We are accountable to shareholders for the Group’s performance. Prompt fulfilment of statutory reporting requirements is but one way to maintain our shareholders’ confidence and trust in our capability and integrity. As we seek to grow our business globally, we implemented quarterly reporting in Year 2001 before the Code made it a requirement. This was the first of many steps to build scalable systems and improve our capability to grow in a sustainable and manageable manner, while minimizing execution and oversight risks. Audit Committee Principle 11: The Board should establish an Audit Committee (“AC”) with written terms of reference which clearly set out its authority and duties. Our Policy and Practices: Our internal policy requires the Audit Committee to have at least three non-executive members, the majority of whom are independent. The AC consists of 3 directors, 2 of whom are independent of both management and principal shareholder. The members bring with them invaluable managerial and professional expertise in the financial, legal and IT domain. The AC has a set of Terms of Reference defining its scope of authority which includes review of the annual audit plan, internal audit process, the adequacy of internal controls and Interested Party Transactions

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Corporate Governance Corporate Governance Statement

for which there is a shareholders’ mandate renewable annually. The AC also reviews the quarterly financial statements and release of results and the appointment and re-appointment of auditors before recommending them to the Board for approval. The AC meets with the external and internal auditors, without the presence of management, at least once a year to review the co-operation rendered by Management to the auditors and the adequacy of audit arrangements. The report of the AC proceedings in 2005 is found in page 116 of the Annual Report. Internal Controls Principle 12: The Board should ensure that the Management maintains a sound system of internal controls to safeguard the shareholders’ investments and the company’s assets. Internal Audit Principal 13: The company should establish an internal audit function that is independent of the activities it audits. Our Policy and Practices: We believe in the need to put in place a system of internal controls of the Group’s procedures and processes to safeguard shareholders’ interests and company’s assets, and to manage risks. Apart from the AC, other board committees may be set up from time to time to address specific issues or risks.

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The internal audit function of the Group has been outsourced to the internal audit team from Deloitte & Touche Enterprise Risk Services Pte Limited (“Deloitte”) in March 2005. Deloitte reports directly to the AC Chairman. Upon engagement, Deloitte performed a preliminary risk assessment of the Group and prepared an annual internal audit plan in consultation with, but independent of management and the plan was submitted to the AC for approval. Quarterly summary reports are also prepared to update the AC on the progress of audits carried out and to track the status of outstanding matters. The AC also meets with Deloitte and the external auditors at least once a year without the presence of management to promote independence of these functions. Deloitte Singapore is a corporate member of the Singapore branch of the Institute of Internal Auditors (“IIA”) and adheres to the Standards for Professional Practice of Internal Auditing developed by the Institute of Internal Auditors. The Directors from Deloitte leading the outsourced internal audit function for the Group are Certified Internal Auditors with the Institute and the team conducting the work complies with the IIA Standards.

(d) Communication with Shareholders Principle 14: Companies should engage in regular, effective and fair communication with shareholders. Greater Shareholder Participation Principle 15: Companies should encourage greater shareholder participation at AGMs, and allow shareholders the opportunity to communicate their views on various matters affecting the company. Our Policy and Practices: We believe in regular and timely communication with shareholders as part of our organization development to build systems and procedures that will enable us to operate globally. Our Corporate and Business Development department manages investor relations and has a series of events planned during the year to brief the media and investment analysts on the Group’s performance. A press and/or analyst briefing by the Management is held for the announcement of our quarterly, half yearly and year-end results. We support the Code’s principle to encourage shareholder participation. Voting in absentia and by email may only be possible following careful study to ensure that integrity of the information and authentication of the identity of shareholders through the web are not compromised and following legislative changes being put in place to recognise electronic voting.


Corporate Governance Corporate Governance Statement

BOARD COMPOSITION AND COMMITTEES AC

EXCO

ERCC

NC

C1

C2 M1

M2

M3 C4

BOARD MEMBERS Peter Seah Lim Huat Boon Swan Foo

C3

Robert Chua Teck Chew

C5

M4

M5

Philip Eng Heng Nee

C6

M6

M7

Theresa Foo-Yo Mie Yoen

M

Tan Cheng Han

M9

William Liu Wei Hai

M10

8

M11

Donald Albert Ramble

M

Venkatachalam Krishnakumar

M12

Spencer Lee Tien Chye Low Sin Leng Pek Yew Chai

M13

Tan Tong Hai 115

– – – – – – – – – – – – – – – – – – – – – – – – –

Audit Committee Executive Committee Executive Resource and Compensation Committee Nominating Committee Chairman Member Appointed 1 January 2005 Resigned 31 October 2005 Appointed 1 January 2005 Appointed 31 October 2005 Resigned 31 October 2005 Appointed 31 October 2005 Appointed 31 October 2005 Appointed 1 January 2005 Appointed 1 January 2005 Resigned 31 October 2005 Resigned 31 October 2005 Appointed 31 October 2005 Appointed 31 October 2005 Resigned 31 October 2005 Appointed 16 May 2005 Resigned on 9 May 2005; Reappointed on 31 October 2005 Appointed on 9 May 2005; Resigned on 31 October 2005 Appointed 31 October 2005 Resigned 9 May 2005

Singapore Computer Systems Limited Annual Report 2005

AC EXCO ERCC NC C M C 1 C 2 C 3 C4 C 5 C 6 M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 M13


Corporate Governance Corporate Governance Report

CORPORATE GOVERNANCE REPORT (1) Board of Directors

Mr. Peter Seah Lim Huat and Mr. Boon Swan Foo joined the board as Chairman and Deputy Chairman respectively on 1 January 2005. Mr. Tay Siew Choon resigned as Chairman of the Board on 1 January 2005.

Mr. Pek Yew Chai resigned as President & CEO and Executive Director of the Board on 9 May 2005. Mr. Philip Eng Heng Nee and Professor Tan Cheng Han joined the Board on 16 May 2005. Mr. Tan Tong Hai, SCS’ President & CEO was appointed Executive Director of the Board on 12 August 2005. Mr. Venkatachalam Krishnakumar joined the Board on 13 August 2005. On 31 October 2005, Datuk Robert Chua Teck Chew, Mrs. Theresa Foo-Yo Mie Yoen and Ms. Low Sin Leng and Mr. Spencer Lee Tien Chye resigned from the Board.

The Board held a total of 7 meetings during the year. There was full attendance at 2 Board meetings and at least 75% attendance at the rest of the Board meetings.

(2) Audit Committee

The Audit Committee (“AC”) has three members, of whom at least two are independent non-executive directors. It was chaired by Datuk Robert Chua Teck Chew till his resignation from the Board on 31 October 2005. Mr. Philip Eng Heng Nee took over as AC Chairman on 31 October 2005. Mrs. Theresa Foo-Yo Mie Yoen was an AC member till her resignation from the Board on 31 October 2005. Mr. William Liu Wei Hai was an AC member till 9 May 2005, and re-joined the AC on 31 October 2005. Professor Tan Cheng Han joined the AC upon his appointment as director on 16 May 2005.

The AC held 7 meetings during the year. There was full attendance at 4 of the meetings, and two-thirds attendance at the other 3 meetings.

The AC monitors the Group’s financial policies and control procedures and reports to the Board the scope and results of regular internal and external audits performed on the Group’s operations.

During the year, the AC reviewed the Group’s financial statements for the first quarter, half year, nine months and full year and recommended to the Board the release of the same, considered and approved the 2005 Internal Audit Plan and reviewed interested person transactions.

The AC also met with the internal and the external auditors to seek their views on internal controls and various accounting issues respectively, without the presence of the Management.

The Audit Committee has reviewed the non-audit services provided by KPMG and is satisfied with the independence of the external auditors.

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116

(3) Executive Committee

The Executive Committee (“Exco”) had three members during the year. By virtue of his resignation from the board, Mr. Tay ceased to be a member of the Exco on 1 January 2005. Mr. Boon Swan Foo, who chairs the Exco and Mr. Don Ramble, who is an Exco member, are independent directors. Mr. Pek Yew Chai was an Exco member till his resignation on 9 May 2005. Mr. William Liu Wei Hai was an Exco member from 9 May 2005 to 31 October 2005. Mr. Venkatachalam Krishnakumar joined the Exco on 31 October 2005.

The role of the Exco is to assist the Board in the appraisal and management of the Group’s investments by overseeing the Group’s overall investment strategy through regular review and consultation with the Management.


Corporate Governance Corporate Governance Report

The Exco is delegated the power by the Board to approve strategic investments by the Group within certain financial limits.

The Exco also reviews, appraises and recommends investments for approval by the Board when the value of such investments falls beyond the Executive Committee’s authority limits.

During the year, the Exco held 14 meetings during the year to review the Group’s strategy and investments and to provide guidance to the Company. There was full attendance at 4 of the meetings and two-thirds attendance at the other 10 meetings.

(4) Executive Resource and Compensation Committee

The Executive Resource and Compensation Committee (“ERCC”) oversees the Group’s strategy in recruitment, retention and development of its human resource including key talents for the Group’s business.

Specifically, the ERCC establishes compensation policies for the Group and approves key appointments, succession plans for key positions, salary reviews, bonuses and incentives including the grant of share options and conditional awards.

The ERCC is chaired by Mr. Peter Seah Lim Huat and has three members including two independent directors. Datuk Robert Chua Teck Chew was a member of the ERCC till his resignation from the Board on 31 October 2005. Mr. Philip Eng Heng Nee joined the ERCC as member from 31 October 2005. The other ERCC member is Mr. Boon Swan Foo. By virtue of his resignation from the board, Mr. Tay ceased to be a member of the ERCC on 1 January 2005. During the year, the ERCC held 2 meetings with full attendance.

(5) Nominating Committee

The primary purpose of the Nominating Committee (“NC”) is to identify suitable candidates for appointment to the Boards of the SCS Group Companies.

The NC was chaired by Mr. Peter Seah Lim Huat till 31 October 2005, when NC member Mr. Boon Swan Foo took over the NC chairmanship. Mr. Seah remains a member of the NC. Datuk Robert Chua Teck Chew was a member of the NC till his resignation from the Board on 31 October 2005. Mr. Philip Eng Heng Nee became a member of the NC on 31 October 2005.

During the year, the NC held 1 meeting in which all NC members attended. The NC also approved various directorship appointments by way of 3 written resolutions in writing passed during the year.

(6) Dealings in Securities

The Company has adopted a Code of Compliance on Dealings in Securities, pursuant to which, the officers of the Company and its subsidiaries are prohibited from dealing in the securities of the Company during the period commencing 2 weeks before the announcement of the Group’s results for the first quarter, half year, nine months, and full year, as the case may be, and ending on the date of announcement of the relevant results.

Directors and executives are also cautioned to observe insider trading laws at all times even when dealing in securities within the permitted trading period.

Accordingly, the Company believes it has complied with the section on dealings in securities in the Best Practices Guide of the SGX-ST Listing Manual.

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117


Shareholding Statistics as at 15 March 2006 (SGX-ST Listing Manual Requirements)

Authorised Share Capital

:

$100,000,000.00

Issued and Paid-Up Share Capital

:

$38,534,000.25

Class of Shares

:

Ordinary Shares of $0.25 each

Voting Rights

:

One Vote Per Share

ANALYSIS OF SHAREHOLDINGS Range of Shareholdings

No. of Shareholders

1 - 999 1,000 - 10,000 10,001 - 1,000,000 1,000,001 and above Total

% of Shareholders

No. of Shares

% of Shares

97

2.51

46,080

0.03

3,166

82.00

10,652,150

6.91

589

15.26

27,409,468

17.78

9

0.23

116,028,303

75.28

3,861

100.00

154,136,001

100.00

Based on the information available to the Company as at 15 March 2006, approximately 39% of the issued ordinary shares of the Company is held by the public and therefore, Rule 723 of the Listing Manual of the Singapore Exchange Securities Trading Limited is complied with.

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118

SUBSTANTIAL SHAREHOLDERS No. of Shares Name of Substantial Shareholder Green Dot Capital Pte Ltd (“GDC”)

Direct Interests Deemed Interests 93,144,501

Total Interests % of Shares 93,144,501

60.43

TOP 20 SHAREHOLDERS No.

Name of Shareholder

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

GREEN DOT CAPITAL PTE LTD KEPPEL LAND LIMITED DBS NOMINEES PTE LTD UNITED OVERSEAS BANK NOMINEES PTE LTD HSBC (SINGAPORE) NOMINEES PTE LTD OCBC SECURITIES PRIVATE LTD NG HIAN CHOW CITIBANK NOMINEES SINGAPORE PTE LTD MERRILL LYNCH (SINGAPORE) PTE LTD TAN LEE YONG OCBC NOMINEES SINGAPORE PTE LTD CHAN KAM FAI PHILLIP SECURITIES PTE LTD UOB KAY HIAN PTE LTD KHNG GUAN LENG STEPHEN LEONG WAH KHEONG CHEONG FOONG YIM CHRISTINA TAN JONG DAVE QUEK HUNG HEONG VASWANI ASHOK RAMCHAND

No. of Shares Held

% of Shares

93,144,501 7,500,000 6,358,402 2,414,500 1,749,000 1,333,500 1,318,000 1,209,900 1,000,500 971,000 921,000 621,000 534,000 529,000 410,000 400,000 370,000 345,000 335,000 310,000

60.43 4.87 4.13 1.57 1.13 0.86 0.85 0.78 0.65 0.63 0.60 0.40 0.35 0.34 0.27 0.26 0.24 0.22 0.22 0.20

121,774,303

79.00


SCS Offices

SINGAPORE HEADQUARTERS Singapore Computer Systems Limited (Co. Regn. No: 198000071W) 7 Bedok South Road Singapore 469272 Telephone: (65) 6827 8888 Facsimile: (65) 6827 8899 Website: www.scs.com.sg

LOCAL OFFICES Trusted Hub Ltd (Co. Regn. No: 200100978H)

119 Singapore Computer Systems Limited Annual Report 2005

7 Bedok South Road Singapore 469272 Telephone: (65) 68273267 Facsimile: (65) 68273173 Website: www.trustedhub.com


SCS Offices Overseas Offices

BRUNEI

MALAYSIA

SCS Information Technology Sdn. Bhd. Lot 5233, SPG 79 Jalan Maulana Kuala Belait KA 1931 Negara Brunei Darussalam Telephone: (673) (3) 342 778 / 342 812 Facsimile: (673) (3) 332 011

CSN Systems Sdn Bhd Unit 9.01, Level 9 PJ Tower, Amcorp Trade Centre No 18 Persiaran Barat 46050 Petaling Jaya Selangor, Malaysia Telephone: (60) (3) 7956 1822 Facsimile: (60) (3) 7956 1117

Office Unit No D7, Blk D, Lot 42876 Shakirin Complex, Spg 88 Kiulap, Bandar Seri Begawan BE1518 Negara Brunei Darussalam Telephone: (673) (2) 237 615 / 239295 Facsimile: (673) (2) 237 633

GREATER CHINA

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120

SCS China Co., Ltd Beijing Office Room 21A6, HanWei Plaza No. 7 Guanghua Road, Chaoyang District Beijing 100004 People’s Republic of China Telephone: (86) (10) 6561 0996 Facsimile: (86) (10) 6561 0997 Website: www.scschina.com Shanghai Office Room 808-809 Cross Tower No 318 Fu Zhou Road Shanghai 200001 People’s Republic of China Telephone: (86) (21) 6360 5600 Facsimile: (86) (21) 6360 9368 SCS (Chengdu) Technology Company B6-6F, Tianfu Software Park Tianfu Avenue, Hi-tech Zone Chengdu, Sichuan 610041 People’s Republic of China Telephone: (86) (28) 6687 6687 Facsimile: (86) (28) 6687 6688 SCS Information Technology (HK) Limited Unit A, 32/F, Manulife Tower, 169 Electric Road, North Point Hong Kong Telephone: (852) 2609 1338 Facsimile: (852) 2607 3042

INDONESIA PT. SCS Astragraphia Technologies 22/F Wisma Standard Chartered Bank Jl. Jend Sudirman Kav. 33A Jakarta 10220, Indonesia Telephone: (62) (21) 572 1177 Facsimile: (62) (21) 574 4241

SCS iCT Sdn Bhd Unit 9.01, Level 9 PJ Tower, Amcorp Trade Centre No 18 Persiaran Barat 46050 Petaling Jaya Selangor, Malaysia Telephone: (60) (3) 7956 1822 Facsimile: (60) (3) 7956 1117

PHILIPPINES Ayala Systems Technology, Inc. 9/F Corporate Center 139 Valero Street Makati City 1227 Philippines Telephone: (63) (2) 813 2494 Facsimile: (63) (2) 813 2493 Ambergris Solutions Philippines, Inc. c/o 31/F Discovery Center 25 ADB Avenue, Ortigas Centre Pasig City 1605 Philippines Telephone: (63) (2) 638 9440 Facsimile (63) (2) 638 9445

THAILAND SCS Enterprise Systems (Thailand) Limited 719 KPN Tower, 21st Floor, Rama 9 Road, Bangkapi, Huay Kwang Bangkok 10320 Telephone: (66) (2) 717 0717 Facsimile: (66) (2) 717 0726


NOTICE OF TWENTY-SIXTH ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN THAT the Twenty-sixth Annual General Meeting of the Company will be held at Auditorium, 7 Bedok South Road, Singapore 469272 on Friday, 28 April 2006 at 3.30 p.m. to transact the following business:

AS ORDINARY BUSINESS Resolution 1: To receive and adopt the Directors’ Report and Audited Accounts of the Company for the year ended 31 December 2005 and the Auditors’ Report thereon.

Resolution 2: (a) To re-elect the following Directors, each of whom will retire from office by rotation pursuant to Article 93 of the Articles of Association of the Company, and who being eligible, will offer themselves for re-election: (i)

Mr. William Liu Wei Hai; and

(ii)

Mr. Donald Albert Ramble.

(b) To re-elect the following Directors, each of whom will cease to hold office pursuant to Article 99 of the Articles of Association of the Company, and who being eligible, will offer themselves for re-election: 121

Mr. Philip Eng Heng Nee

(ii)

Professor Tan Cheng Han

(iii) Mr. Tan Tong Hai (iv) Mr. Venkatachalam Krishnakumar

Resolution 3: To approve the sum of S$244,988 as Directors’ Fees for the year ended 31 December 2005 (2004: S$255,765).

Resolution 4: To re-appoint Messrs KPMG as Auditors of the Company and to authorise the Directors to fix their remuneration.

Singapore Computer Systems Limited Annual Report 2005

(i)


NOTICE OF TWENTY-SIXTH ANNUAL GENERAL MEETING AS SPECIAL BUSINESS To consider and, if thought fit, to pass with or without modifications, the following Resolutions which will be proposed as Ordinary Resolutions:

Resolution 5: Ordinary Resolution RESOLVED That authority be and is hereby given to the Directors to:(a) (i) issue shares in the capital of the Company (“shares”) whether by way of rights, bonus or otherwise; and/or (ii) make or grant offers, agreements or options (collectively, “Instruments”) that might or would require shares to be issued, including but not limited to the creation and issue of (as well as adjustments to) warrants, debentures or other instruments convertible into shares, at any time and upon such terms and conditions and for such purposes and to such persons as the Directors may in their absolute discretion deem fit; and (b) (notwithstanding the authority conferred by this Resolution may have ceased to be in force) issue shares in pursuance of any Instrument made or granted by the Directors while this Resolution was in force, provided that:

Singapore Computer Systems Limited Annual Report 2005

122

(1) the aggregate number of shares to be issued pursuant to this Resolution (including shares to be issued in pursuance of Instruments made or granted pursuant to this Resolution) does not exceed 50 per cent of the issued shares in the capital of the Company (as calculated in accordance with paragraph (2) below), of which the aggregate number of shares to be issued other than on a pro rata basis to shareholders of the Company (including shares to be issued in pursuance of Instruments made or granted pursuant to this Resolution) does not exceed 20 per cent of the issued shares in the capital of the Company (as calculated in accordance with paragraph (2) below); (2) (subject to such manner of calculation as may be prescribed by the Singapore Exchange Securities Trading Limited (“SGX-ST”)) for the purpose of determining the aggregate number of shares that may be issued under paragraph (1) above, the percentage of issued shares shall be based on the number of issued shares in the capital of the Company at the time this Resolution is passed, after adjusting for: (i) new shares arising from the conversion or exercise of any convertible securities or share options or vesting of share awards which are outstanding or subsisting at the time this Resolution is passed; and (ii) any subsequent consolidation or subdivision of shares; (3) in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of the Listing Manual of the SGX-ST for the time being in force (unless such compliance has been waived by the SGXST) and the Articles of Association for the time being of the Company; and (4) (unless revoked or varied by the Company in General Meeting) the authority conferred by this Resolution shall continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is the earlier.

Resolution 6: Ordinary Resolution RESOLVED That authority be and is hereby given to the Directors to issue from time to time such number of ordinary shares in the capital of the Company as may be required to be issued pursuant to the exercise of options granted under the Singapore Computer Systems Executives’ Share Option Scheme.


NOTICE OF TWENTY-SIXTH ANNUAL GENERAL MEETING Resolution 7: Ordinary Resolution RESOLVED That approval be and is hereby given to the Directors to: (a) offer and grant options in accordance with the provisions of the Singapore Computer Systems Share Option Plan (the “Share Option Plan”) and/or to grant awards in accordance with the provisions of the Singapore Computer Systems Performance Share Plan (the “Performance Share Plan”) and/or the Singapore Computer Systems Restricted Stock Plan (the “Restricted Stock Plan”) (the Share Option Plan, the Performance Share Plan and the Restricted Stock Plan, collectively the “Share Plans”); and (b) issue from time to time such number of ordinary shares in the capital of the Company as may be required to be issued pursuant to the exercise of options under the Share Option Plan and/or such number of fully paidup ordinary shares in the capital of the Company as may be required to be issued pursuant to the vesting of awards under the Performance Share Plan and/or the Restricted Stock Plan, provided that the aggregate number of ordinary shares to be issued pursuant to the Share Plans does not exceed 15 per cent of the total number of issued shares in the capital of the Company from time to time.

Resolution 8: To transact such other ordinary business as may be transacted at an Annual General Meeting of the Company. By Order of the Board 123

Ms Tay Bee Choo Company Secretaries 5 April 2006 Singapore

Notes: 1. A member of the Company entitled to attend and vote at the Annual General Meeting is entitled to appoint not more than two proxies to attend and vote in his stead. Such proxy need not be a member of the Company. Where a member appoints more than one proxy, the appointments shall be invalid unless he specifies the proportion of his shareholdings (expressed as a percentage of the whole) to be represented by each proxy. 2. The instrument appointing a proxy must be lodged at the registered office of the Company at 7 Bedok South Road, Singapore 469272 not less than 48 hours before the time appointed for the Annual General Meeting.

Singapore Computer Systems Limited Annual Report 2005

Ms Lena Chow


NOTICE OF TWENTY-SIXTH ANNUAL GENERAL MEETING STATEMENT PURSUANT TO ARTICLE 55 OF THE ARTICLES OF ASSOCIATION OF THE COMPANY 1. Resolution 5 is to empower the Directors to issue shares in the capital of the Company and to make or grant instruments (such as warrants or debentures) convertible into shares, and to issue shares in pursuance of such instruments, up to a number not exceeding in total 50 per cent of the issued shares in the capital of the Company, with a sub-limit of 20 per cent for issues other than on a pro rata basis to shareholders. For the purpose of determining the aggregate number of shares that may be issued, the percentage of issued shares shall be based on the number of issued shares in the capital of the Company at the time Resolution 5 is passed, after adjusting for (a) new shares arising from the conversion or exercise of any convertible securities or share options or vesting of share awards which are outstanding or subsisting at the time Resolution 5 is passed; and (b) any subsequent consolidation or subdivision of shares. 2. Resolution 6 is to empower the Directors to issue ordinary shares in the capital of the Company pursuant to the Singapore Computer Systems Executives’ Share Option Scheme. 3. Resolution 7 is to empower the Directors to offer and grant options and/or awards and to issue shares in the capital of the Company pursuant to the Singapore Computer Systems Share Option Plan, the Singapore Computer Systems Performance Share Plan and the Singapore Computer Systems Restricted Stock Plan (collectively the “Share Plans”) provided that the aggregate number of shares issued pursuant to the Share Plans shall not exceed 15 per cent of the total number of issued shares in the capital of the Company over the 10-year duration of the Share Plans. Approval for the adoption of the Share Plans was given by shareholders at an Extraordinary General Meeting of the Company held on 7 July 2000. The grant of options and awards under the respective Share Plans will be made in accordance with their respective provisions.

Singapore Computer Systems Limited Annual Report 2005

124


SINGAPORE COMPUTER SYSTEMS LIMITED (Incorporated in the Republic of Singapore) Company Registration Number: 198000071W

PROXY FORM

IMPORTANT 1. For investors who have used their CPF monies to buy shares of Singapore Computer Systems Limited, the 2005 Annual Report is forwarded to them on the request of their CPF Approved Nominees and is meant solely FOR INFORMATION ONLY. 2. This Proxy Form is not valid for use by CPF Investors and shall be ineffective for all intents and purposes if used or purported to be used by them. 3. CPF investors who wish to vote should contact their CPF Approved Nominees.

I/We of being a member/members of SINGAPORE COMPUTER SYSTEMS LIMITED hereby appoint

Name

NRIC/ Passport Number

Address

Proportion of Shareholding (%)

and / or (delete as appropriate)

as my/our proxy/proxies to attend and to vote for me/us on my/our behalf and, if necessary, to demand a poll at the Twenty-sixth Annual General Meeting of the Company to be held at Auditorium, 7 Bedok South Road, Singapore 469272 on Friday, 28 April 2006 at 3.30 p.m. and at any adjournments thereof. (Please indicate with an “X” in the spaces provided whether you wish your vote(s) to be cast for or against the Resolutions as set out in the Notice of Annual General Meeting. In the absence of specific directions, the proxy/proxies will vote or abstain as he/they may think fit, as he/they will on any other matter arising at the Annual General Meeting.) No. 1 2

3 4

Ordinary Resolutions

For

Ordinary Business Adoption of Accounts and Reports Re-election of Directors: (a) (i) Mr. William Liu Wei Hai (ii) Mr. Donald Albert Ramble (b) (i) Mr. Philip Eng Heng Nee (ii) Professor Tan Cheng Han (iii) Mr. Tan Tong Hai (iv) Mr. Venkatachalam Krishnakumar Approval of Directors’ Fees Re-appointment of Messrs KPMG as Auditors Special Business

5

Authority for Directors to issue shares in the Company and to make or grant instruments convertible into shares in the Company

6

Authority for Directors to issue shares in the Company pursuant to the Singapore Computer Systems Executives’ Share Option Scheme

7

Authority for Directors to offer and grant options and/or grant awards and to issue shares in the Company pursuant to the Singapore Computer Systems Share Option Plan, the Singapore Computer Systems Performance Share Plan and/or the Singapore Computer Systems Restricted Stock Plan.

8

Any other ordinary business

Dated this_ ________ day of_ _______________________ 2006.

Total Number of Shares Held

Signature(s) of member(s) or Common Seal IMPORTANT: PLEASE READ NOTES OVERLEAF

Against


Notes: 1.

Please insert the total number of shares held by you. If you have shares entered against your name in the Depository Register (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore), you should insert that number of shares. If you have shares registered in your name in the Register of Members, you should insert that number of shares. If you have shares entered against your name in the Depository Register and shares registered in your name in the Register of Members, you should insert the aggregate number of shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the shares held by you.

2.

A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxies to attend and vote instead of him. Such proxy need not be a member of the Company.

3.

Where a member appoints two proxies, the appointments shall be invalid unless he specifies the proportion of his shareholding (expressed as a percentage of the whole) to be represented by each proxy.

4.

The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 7 Bedok South Road, Singapore 469272 not less than 48 hours before the time appointed for the Annual General Meeting.

5.

The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed under its seal or under the hand of an officer or attorney duly authorised.

6.

A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks fit to act as its representative at the Annual General Meeting, in accordance with Section 179 of the Companies Act, Chapter 50 of Singapore.

General: The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies. In addition, in the case of shares entered in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if the member, being the appointor, is not shown to have shares entered against his name in the Depository Register as at 48 hours before the time appointed for holding the Annual General Meeting, as certified by The Central Depository (Pte) Limited to the Company.

fold here

Please Affix Postage Stamp here

The Company Secretary

Singapore Computer Systems Limited

7 Bedok South Road

Singapore 469272


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razorSHARK Design


Singapore Computer Systems Limited Reg No: 198000071W

7 Bedok South Road Singapore 469272 Tel: (65) 6827 8888 Fax: (65) 6827 8899 Website: www.scs.com.sg

Singapore Computer Systems Annual Report 2005  

A razorSHARK design. 2006, March.

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