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A Winning Performance ANNUAL REPORT 2007

SINGAPORE COMPUTER SYSTEMS LIMITED


CONTENTS Corporate Profile

1

Chairman’s Statement

2

Financial Highlights

6

Board of Directors

12

Key Management

17

Corporate Information

20

Operating and Financial Review

24

Corporate Social Responsibility

45

Investor Relations

46

Financial Report

50

Directors’ Remuneration

126

Interested Person Transactions

127

Corporate Governance Report

128

Shareholding Statistics

140

Notice of 28th AGM

142

Proxy Form

147


3 Singapore Computer Systems Limited

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. 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 Application Aware Infrastructure, Infrastructure Aware Applications, converged communications, business rules management systems, business process outsourcing, and business continuity management services. These are flexible solutions that are adaptable to our customers’ needs as their businesses 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 Mainboard of The Singapore Exchange in 1991, SCS has operations in Asia spanning Singapore, Brunei, China, Indonesia, Malaysia, the Philippines and Thailand.

VISION

To be the Trusted Provider of Trusted Services

MISSION

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

Annual Report 2007


CHAIRMAN’S STATEMENT

4 Singapore Computer Systems Limited Annual Report 2007

Dear Shareholders Singapore Computer Systems (SCS) performed well in 2007. We turned in our second consecutive full-year of profit on the back of nine straight quarters of profitability, and more than doubled our profits from a year ago.

IMPROVED PERFORMANCE Revenue grew 21% from S$375.3 million to S$453.4 million. Net profit was S$17.6 million, up from S$7.3 million in FY2006, an improvement of 140%. Net profit margin improved from 2.0% to 3.9%. Earnings per share for FY2007 were 11.4 cents, an increase of 138% from 4.8 cents. Order book, at S$267.6 million as of 31 December 2007, remains to be fulfilled in FY2008 and beyond. Growth was across both Infrastructure and Business Solutions segments. Our strategy to focus on targeted customer engagements and drive for more services contribution to the Infrastructure segment has paid off. Revenue from the Infrastructure segment grew from S$275.3 million to S$283.6 million, and revenue for the Business Solutions segment grew from S$100.0 million to S$169.8 million.

CUSTOMER & PARTNER FOCUS Our focus in serving our customers well and consistently creating value for them has led to the forging of stronger ties and the sealing of business contracts. We will continue to strengthen our partnerships with our customers and establish ourselves as their service provider of choice. The mutual trust between SCS and our business partners, and the desire to win together has led to many successes. We have further developed ourselves to be our partners’ trusted implementation arm and contribute to their growth. This has created a win-win situation for all parties. We intend to keep to our value commitment to our partners by incorporating their winning solutions into our service offerings.


5 Singapore Computer Systems Limited Annual Report 2007

Our strategy to focus on targeted customer engagements and drive for more services contribution to the Infrastructure segment has paid off. Revenue from the Infrastructure segment grew from S$275.3 million to S$283.6 million, and revenue for the Business Solutions segment grew from S$100.0 million to S$169.8 million.


CHAIRMAN’S STATEMENT

INDUSTRY RECOGNITION Our efforts to help businesses to be more resilient in the event of disasters have been recognised. We were awarded the Top Business Continuity Provider of the Year (2007) at the Asia Business Continuity Awards. The award reflects our leadership in our business continuity/disaster recovery (BC/DR) services. Moving forward, we will continue to invest in BC/DR and extend our leadership in this area.

SECURITY CERTIFICATION 6 Singapore Computer Systems Limited Annual Report 2007

We further differentiate our offerings in the market as a secured service provider by attaining the first ISO/IEC 27001:2005 Information Security Management System certification for BC/DR and business process outsourcing in Singapore. This affirms our commitment to provide trusted and quality services to our customers. We will continue to invest in security certification and build partnerships with leading security solution providers to enhance our offerings.

VALUE-CREATION The responsibilities we have as a corporate entity play a vital role in our pursuit of creating growth and lasting value for the stakeholders of our Company. A deep commitment to good corporate conduct and governance, including recognition of our responsibility to society at large, is at the core of our organisation. In 2007, we introduced a Company Charter to define the social fabric of the organisation. This underpins the trust required for business success – trust between employees and management; between SCS, our customers and partners. It also establishes SCS as a responsible corporate citizen.

We are part of the oneMeridian consortium that was awarded the largest Singapore Government IT project – the Standard Operating Environment (SOEasy) project, in early 2008. SOEasy positions SCS to expand such managed infrastructure services to the commercial sector, while we continue to grow our business continuity services to all industries.


DIVIDEND During the year, the Board of Directors declared an interim dividend of 3 cents and a special dividend of 1 cent per ordinary share, less Singapore income tax.

OUTLOOK SCS will continue to leverage on our market differentiation as the Trusted Provider of Trusted Services to grow our Infrastructure and Business Solutions businesses in Singapore and overseas. We are part of the oneMeridian consortium that was awarded the largest Singapore Government IT project – the Standard Operating Environment (SOEasy) project, in early 2008. This win bodes well for our Infrastructure business, strengthening our order book for 2008 and beyond. SOEasy positions SCS to expand such managed infrastructure services to the commercial sector, while we continue to grow our business continuity services to all industries. SCS also aims to export our iGov solutions such as iBizFile (business registration and filing solution) and healthcare solutions such as iPharm (integrated pharmacy solution) to grow our Business Solutions footprint. Barring any unforeseen circumstances, we expect to remain profitable for FY2008.

APPRECIATION The successes achieved in FY2007 would not have been possible without the dedication and hard work of our Board of Directors, management and staff, who have contributed to SCS’ winning performance and second consecutive year of profit. To our business partners, customers and shareholders who believed in us and supported us through the years, we express our heartfelt gratitude.

PETER SEAH CHAIRMAN

7 Singapore Computer Systems Limited Annual Report 2007


FINANCIAL HIGHLIGHTS 10 YEARS FINANCIAL SUMMARY  

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

540.71

466.98

418.93

427.98

348.12

375.33

453.42

CONSOLIDATED INCOME STATEMENT ($MILLION)  Revenue

8 Singapore Computer Systems Limited Annual Report 2007

480.49

420.67

447.50

Share of Results of Associates

1.53

1.40

1.94

2.02

2.11

1.65

0.73

1.30

1.05

0.22

Profit/(Loss) before income tax

51.40

26.75

25.67

22.61

15.84

(35.27)

33.65

39.60

11.34

15.61

Profit/(Loss) attributable   to Shareholders

27.71

19.18

17.25

17.58

11.80

(33.02)

27.69

(43.58)

7.34

17.62

GROUP BALANCE SHEET ($MILLION) Property, Plant & Equipment

55.65

52.95

56.96

54.18

48.14

47.15

45.42

50.16

56.49

47.57

Investments

11.56

18.28

29.59

31.26

30.76

38.61

12.70

24.18

4.63

3.75

0.09

2.70

5.32

10.74

8.21

3.25

2.26

0.12

0.00

0.30

Other Assets

212.72

175.52

235.79

220.32

201.71

184.84

197.05

183.35

213.08

239.95

Total Assets

280.02

249.45

327.66

316.50

288.82

273.85

257.43

257.81

274.20

291.57

Shareholders’ Equity

103.68

119.90

133.59

148.18

155.85

119.39

143.33

95.65

103.76

116.46

3.55

4.66

6.15

4.92

3.91

2.77

10.83

11.88

11.52

11.88

Intangible Assets

Minority Interests Total Borrowings

53.58

13.05

34.17

43.94

11.65

44.73

2.77

13.53

7.90

6.83

Other Liabilities

119.21

111.84

153.75

119.46

117.41

106.96

100.50

136.75

151.02

156.40

Total Equity and Liabilities

280.02

249.45

327.66

316.50

288.82

273.85

257.43

257.81

274.20

291.57

18.29

12.53

11.23

11.41

7.66

(21.42)

17.96

(28.27)

4.76

11.43

Gross Dividend (Cents)

3.00

3.00

3.75

3.00

3.00

3.00

3.00

0.00

0.00

4.00

Average Share Price ($)

0.92

1.93

3.49

1.79

1.34

0.87

0.79

0.81

0.74

0.82

PER SHARE DATA Earnings/(Loss) After Tax (Cents)

3.26

1.55

1.07

1.68

2.24

3.44

3.79

4.88

67.92

76.45

83.39

89.23

95.78

70.18

91.52

61.98

67.32

75.16

Return on Average   Shareholders’ Equity (%)

30.59

17.15

13.61

12.48

7.76

(24.00)

21.08

(36.47)

7.36

16.00

Return on Average Assets (%)

Gross Yield (%) Net Tangible Assets (Cents) FINANCIAL RATIOS

10.94

7.69

5.80

5.13

3.96

(13.04)

11.04

(16.57)

2.76

6.23

Debt Equity Ratio

0.50

0.10

0.24

0.29

0.07

0.37

0.02

0.13

0.07

0.05

Working Capital Ratio

1.23

1.42

1.27

1.36

1.58

1.21

1.92

1.24

1.34

1.47


5-YEAR VALUE ADDED STATEMENT 2003

2004

2005

2006

2007

$’000

$’000

$’000

$’000

$’000

VALUE ADDED FROM: Revenue

418,928

427,984

348,117

375,332

453,418

Bought in Materials

(313,510)

(313,562)

(280,505)

(250,129)

(294,598)

Value Added From Operations

105,418

114,422

67,612

125,203

158,820

(3,114)

25,503

(12)

10,996

3,344

102,304

139,925

67,600

136,199

162,164

105,189

95,569

88,849

101,659

124,826

4,397

4,175

4,318

1,244

5,572

(206)

5,730

3,164

3,241

(2,844)

Balance Retained in Business

(21,543)

36,512

(31,670)

28,055

34,759

Non Production Income/(Cost)

14,467

(2,061)

2,939

2,000

(149)

102,304

139,925

67,600

136,199

162,164

57.39

58.99

30.49

53.55

66.05

Value Added Per Employment Cost ($)

1.00

1.20

0.76

1.23

1.27

Value Added Per Dollar Investment in Property, Plant and Equipment ($)

0.86

1.00

0.52

0.82

1.02

Other Non Operating (Expenses)/Income Total Value Added DISTRIBUTION OF VALUE ADDED To Employees To Providers of Capital To Government

Total Distribution PRODUCTIVITY ANALYSIS Value Added Per Employee ($’000)

Value Added from Operations ($Million)

Value Added Per Employee ($’000)

Value Added Per Employment Cost ($)

158.82

105.42

66.05

125.20

114.42

57.39

58.99

04

05

1.23

1.27

06

07

1.00 0.76

67.61

03

53.55

1.20

30.49

06

07

03

04

05

06

07

03

04

05

9 Singapore Computer Systems Limited Annual Report 2007


10 Singapore Computer Systems Limited Annual Report 2007

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

Revenue ($Million)

Shareholders’ Equity ($Million)

453.42 418.93

427.98 348.12

27.69

375.33

143.33

17.62 119.39

7.34

116.46 95.65

103.76

(33.02) (43.58)

03

04

05

06

07

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

03

04

05

06

07

Return on Average Shareholders’ Equity (%)

03

04

06

07

Return on Average Assets (%)

21.08

17.96

16.00

11.43

11.04

7.36

4.76

2.76

(13.04) (21.42)

05

6.23

(16.57)

(24.00)

(28.27)

(36.47)

03

04

05

06

07

03

04

05

06

07

03

04

05

06

07


DRAWING ON OUR TEAM SPIRIT RESULTS IN

Winning Key Projects


Human Resource Management Information System and Electronic Document Management System implemented for the Brunei Ministry of Defence.


DRAWING ON OUR TEAM SPIRIT RESULTS IN

Winning Key Projects 13

KEY MILESTONES FOR 2007 • Awarded the StudentHub project of over S$10 million by Singapore’s Ministry of Education to provide mega data management and business intelligence services for student-related data on top of an enterprise-wide Service-Oriented Architecture framework • Awarded the renewal of the System Management Centre Outsourcing project for Singapore’s Ministry of Defence to provide IT helpdesk and onsite support for over 20,000 desktops

• Implemented SCS’ iBizFile for the British Virgin Islands (BVI) Financial Services Commission (FSC) to enable BVI-licensed Registered Agents to file all regulatory forms and supporting documents with the FSC via the internet • Implemented SAP’s finance system for NTUC Income, comprising a fully integrated accounting system for general ledger, accounts payable and accounts receivable functions • Upgraded PowerSeraya’s SAP 4.6C to mySAP ERP 2005 for the human resource, FICO, materials management and portal modules

• Awarded the IDA (T) 606 bulk tender to provide security assessment services and training for Singapore government ministries

• Implemented SCS’ integrated enterprise pharmacy system (iPharm) for the Institute of Mental Health, marking the completion of the iPharm implementation for Singapore’s National Healthcare Group

• Awarded a S$10 million application and infrastructure management services contract to provide such services for SPRING Singapore

• Implemented SCS’ integrated hospital information system (iHIS) for Mount Alvernia Hospital (MAH) in Singapore

• Awarded a contract by Singapore’s Accounting and Corporate Regulatory Authority (ACRA) to enhance ACRA’s BizFile System with more customer-centric features

• Implemented the Human Resource Management Information System and Electronic Document Management System for the Brunei Ministry of Defence

• Awarded a multi-million dollar 4-year contract by the National Environmental Agency (NEA) and the Ministry of Environment and Water Resources (MEWR) to provide application management services for 1,600 users in NEA and MEWR

• Implemented mySAP Enterprise Resource Planning Human Capital Management solution for Malayan Banking Berhad

• Awarded a multi-million dollar contract by the Defence Science and Technology Agency to provide application management and operations support to MINDEF’s logistics system – Enterprise System

• P T S C S A s t r a g r a p h i a Te c h n o l o g i e s w a s awarded a US$3.2 million contract to implement the infrastructure for PT Pertamina’s Disaster Recovery Centre and a US$2.1 million contract to set up PT Indosat Mega Media’s 3.3 GHz broadband wireless access service

Singapore Computer Systems Limited Annual Report 2007


BOARD OF DIRECTORS Mr Peter Seah Lim Huat

14 Singapore Computer Systems Limited Annual Report 2007

MR PETER SEAH LIM HUAT CHAIRMAN │ Chairman, Executive Resource & Compensation Committee

Mr Peter Seah Lim Huat, 61, was appointed nonexecutive Chairman of the Board on 1 January 2005, and was last re-elected on 24 April 2007. He is currently a member of the Temasek Advisory Panel. In addition, Mr Seah is Chairman of SembCorp Industries Ltd and Singapore Technologies Engineering Ltd and Deputy Chairman of Singapore Technologies Telemedia Pte Ltd, and Global Crossing Limited. He is also President Commissioner of PT Indosat Tbk. Mr Seah sits on the Boards of CapitaLand Limited, Chartered Semiconductor Manufacturing Ltd, Fullerton Financial Holdings Pte Ltd, Asia Mobile Holdings Pte Ltd, GIC Special Investments Private Limited, Government of Singapore Investment Corporation Pte Ltd, StarHub Ltd, Singapore Technologies Holdings Pte Ltd, STATS ChipPAC Ltd, Alliance Bank Malaysia Berhad, Bank of China Limited and Siam Commercial Bank Public Company Limited.

Mr Seah is also the Deputy Co-Chairman of the Singapore-British Business Council, and a member of the Defence Science and Technology Agency, S Rajaratnam School of International Studies, Singapore Chinese Chamber of Commerce & Industry, and Singapore Business Federation Council. He also chairs the LaSalle Foundation. Mr Seah was a banker for 33 years, before retiring as Vice-Chairman and CEO of the former Overseas Union Bank in 2001 and joining Singapore Technologies Pte Ltd as President & CEO, a position he held until 31 December 2004. Mr Seah graduated from the former University of Singapore in 1968 with an honours degree in Business Administration.


Mr Boon Swan Foo

15 Singapore Computer Systems Limited Annual Report 2007

MR BOON SWAN FOO DEPUTY CHAIRMAN │ Chairman, Executive Committee and Nomination Committee

Mr Boon Swan Foo, 52, was appointed as the Deputy Chairman of the Singapore Computer System Board as well as Chairman of the Executive Committee on 1 January 2005. He is also a non-executive and independent Director of the Board, and was last re-elected to the Board on 24 April 2007.

board of Shin Corp Thailand as shareholder’s representative.  He is a Fellow at the Singapore Institute of Directors and Member of the Institute of Certified Public Accountants of Singapore, the INSEAD Singapore National Council, the Motorola Inc Research Visionary Board and Imperial College (UK)’s Commercialisation Advisory Board.

Mr Boon is the Executive Chairman of Exploit Technologies Pte Ltd (ETPL), the strategic marketing and commercialisation arm of Agency for Science, Technology and Research (A*STAR). He is also a board member of the Science and Engineering Research Council and the Biomedical Research Council of A*STAR. He served as the Managing Director of A*STAR from October 2001 and relinquished this position on 31 December 2006.

Prior to joining A*STAR, Mr Boon was CEO and Deputy Chairman of ST Engineering Pte Ltd, and concurrently the Chief Financial Officer of Singapore Technologies. Mr Boon continues to serve as Advisor to Singapore Technologies Engineering Ltd, and is Special Advisor for Mindef Brunei.

Mr Boon is currently the Chairman of Nothacker Pte Ltd, a spin-off company under ETPL. He is also the Deputy Chairman of Orangestar Investment Holdings Pte Ltd and Merlion Pharmaceuticals Pte Ltd.  He serves on the Boards of Singapore Utilities International Pte Ltd and Keppel Amfels Inc. Mr Boon is also a director of the Thai companies Aspen and Cypress, and sits on the

He was awarded the Singapore Business Award for Outstanding CEO, one of Singapore’s prestigious business awards in 2000. Mr Boon graduated with a Bachelor of Science (First Class Honours) Degree from the University of Newcastle in 1977, a Diploma in Accounting & Finance in 1984, a Masters of Business Administration in 1988, and the Harvard University’s Advanced Management Program in 1992. He is also a registered Professional Engineer.


Mr Philip Eng Heng Nee

Mr William Liu Wei Hai

16 Singapore Computer Systems Limited Annual Report 2007

MR PHILIP ENG HENG NEE

MR WILLIAM LIU WEI HAI

DIRECTOR │ Chairman, Audit Committee

DIRECTOR │ Member, Audit Committee

Mr Philip Eng Heng Nee, 61, was appointed to the Board on 16 May 2005 as a non-executive and independent Director, and was last re-elected on 24 April 2007.

Mr William Liu Wei Hai, 60, was appointed a nonexecutive member of the Board and member of the Audit Committee in September 2001, and was last re-elected on 28 April 2006.

Mr Eng is currently Chairman of mDR Limited and Orchard Energy Pte Ltd. He is Deputy Chairman of MCL Land Limited and is a Director of Sunrise MCL Land Sdn Bhd, MSL Properties Sdn Bhd, Frasers Centrepoint Asset Management Ltd, Chinese Development Assistance Council. Mr Eng is President Commissioner of PT SCS Astragraphia Technologies Tbk and Commissioner of PT Adira Dinamika Multi Finance Tbk. Mr Eng is also Singapore’s Non-resident Ambassador to Greece.

He is currently Chairman of W3 Infocomm Group, Stream Global Pte Ltd and IPR Holdings Inc, and a member of the Boards of Century Oasis Pte Ltd, Century Oasis Ltd (BVI), SISTIC.com Pte Ltd, Ensop Pte Ltd, ALP Energy Pte Ltd and the National Library Board. Mr Liu was President of Green Dot Capital Pte Ltd from 2001 to 2006. Before joining Green Dot Capital, he was President & Chief Executive Officer of ABACUS International Pte Ltd from 1993 to 2001, where he was responsible for the company’s profitable growth and spearheaded the company’s expansion program across the Asia-Pacific region covering 20 countries.

He spent 23 years with the Jardine Cycle & Carriage Group before retiring in February 2005 as Group Managing Director. Mr Eng graduated from the University of New South Wales with a Bachelor of Commerce in Accountancy, and became an Associate Member of the Institute of Chartered Accountants in Australia in 1972.

Mr Liu obtained a Bachelor of Science Honours Degree in Mechanical Engineering from the University of Manchester, U.K. in 1969; and a Master of Science Degree in Operational Research & Management Studies from the Imperial College of London in 1971.


Professor Tan Cheng Han

Mr Donald Albert Ramble

17 Singapore Computer Systems Limited Annual Report 2007

PROFESSOR TAN CHENG HAN DIRECTOR │ Member, Audit Committee

Professor Tan Cheng Han, 44, Dean of the Faculty of Law at the National University of Singapore, joined the Board as non-executive and independent Director on 16 May 2005 and was last re-elected on 28 April 2006. He also serves on the Boards of Chuan Hup Holdings Limited, Singapore Technologies Marine Limited, Anwell Technologies Limited, Centillion Environment & Recycling Ltd, Exploit Technologies Pte Ltd, Asian Society of International Law Ltd, Yellow Pages (Singapore) Ltd and NTUC Income Insurance Cooperative Ltd. His other appointments include being a VicePresident of the Singapore Academy of Law, a Senate member of the National University of Singapore, a Governor of the Asian Law Institute, 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 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.

Professor Tan graduated from the National University of Singapore with a LLB (Hons) in 1987 and obtained his LLM from the University of Cambridge in 1990.

MR DONALD ALBERT RAMBLE

DIRECTOR │ Member, Executive Committee

Mr Donald Albert Ramble, 61, was appointed to the Board on 15 July 2003 as non-executive and independent Director and was last re-elected on 28 April 2006. Mr Ramble is President, Asia Pacific, of Spectris PLC, a group of technology companies that design and manufacture specialist instrumentation and controls. He is also a Director of Spectris Pte Ltd and Spectris Asia Pacific Pte Ltd. 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. Mr Ramble obtained a Masters in Business Administration from the Cranfield Institute of Technology, England in 1975.


Mr Venkatachalam Krishnakumar

Mr Tan Tong Hai

18 Singapore Computer Systems Limited Annual Report 2007

MR VENKATACHALAM KRISHNAKUMAR

and Executive Director on 12 August 2005. Mr Tan was last re-elected on 28 April 2006.

DIRECTOR │ Member, Executive Committee

Mr Tan is an active business leader and serves as a Council Member of Singapore Manufacturers’ Federation, a member of Nanyang Polytechnic’s School of Information Technology Advisory Committee and a member of the Singapore Chinese Chamber of Commerce & Industry IT advisory panel. He was previously a Council Member of Singapore Computer Society and Singapore Infocomm Technology Federation, and also a member of the Chinese editorial advisory committee of Singapore Press Holdings.

Mr Venkatachalam Krishnakumar, 58, was appointed to the Board as non-executive Director on 13 August 2005 and was last re-elected on 28 April 2006. He is a Senior Advisor to Barclays Bank PLC, Global Retail and Commercial Banking. Prior to his present appointment, he was a Senior Advisor to McKinsey and Co. He was the Chief Operating Officer and Chief Financial Officer for the Asia Pacific Consumer Bank of Citigroup until his retirement on 28 February 2005, after a 31-year career with the company. Mr Krishnakumar is also a Director of Singapore Technologies Engineering Limited and Central Depository (Pte) Ltd. Mr Krishnakumar holds a Bachelor of Engineering and Master of Business Administration from the Indian Institute of Management, India in 1974.

MR TAN TONG HAI DIRECTOR │ Member, Executive Committee │ President & Chief Executive Officer

Mr Tan Tong Hai, 45, was appointed President & Chief Executive Officer (CEO) on 11 August 2005,

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 14 consecutive quarters of profits. Before PacNet, Mr Tan was CEO of StarHub Internet. Prior to StarHub, he spent 11 years with IBM, where he held many management positions, including General Manager of International Application Solutions Pte Ltd, a wholly owned subsidiary of IBM, focusing on business applications for SMEs. Mr Tan graduated from the National University of Singapore in 1988 with a Bachelor of Electrical Engineering (Honours) Degree.


KEY MANAGEMENT

19 Singapore Computer Systems Limited Annual Report 2007

Mr Tan Tong Hai

Mr Vincent Lim Shuh Moh

Mr Alvin Kok Kah Sing

Mr Edison Foo Meng Keat

Mr Vincent Phua Chin Chor


KEY MANAGEMENT

20 Singapore Computer Systems Limited Annual Report 2007

MR TAN TONG HAI

MR VINCENT PHUA CHIN CHOR

President & Chief Executive Officer

Chief Financial Officer

Mr Tan Tong Hai was appointed President and Chief Executive Officer (CEO) on 11 August 2005. Under his leadership, SCS regained profitability within a year of his joining. Mr Tan leads a regional team of more than 2,400 ICT professionals to take SCS’ business to greater heights.

Mr Vincent Phua Chin Chor was appointed Chief Financial Officer on 12 September 2005. Mr Phua is responsible for the overall financial management of the SCS Group, with a focus on increasing operational efficiencies to maximise shareholder returns.

Before joining SCS, Mr Tan was President and 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 14 consecutive quarters of profit. Before PacNet, Mr Tan was CEO of StarHub Internet.

Mr Phua has more than 25 years’ experience heading the regional and group finance functions. Before joining SCS, Mr Phua served as Senior Vice-President, Group Financial Controller of MediaCorp Pte Ltd, where he was instrumental in strengthening the finance team and streamlining internal processes.

A graduate (with honours) in electrical engineering from the National University of Singapore, Mr Tan began his career at IBM and worked there for 11 years. 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, a wholly owned subsidiary of IBM, focusing on business applications for small and medium enterprises. An active business leader, Mr Tan currently serves as a Council Member of Singapore Manufacturers’ Federation, a member of Nanyang Polytechnic’s School of Information Technology Advisory Committee and a member of the Singapore Chinese Chamber of Commerce & Industry IT advisory panel. He was previously a Council Member of Singapore Computer Society and Singapore Infocomm Technology Federation, and also a member of the Chinese editorial advisory committee of Singapore Press Holdings.

Between 1993 and 2001, Mr Phua was the Director of Finance (Asia) for EDS International (Singapore) Pte Ltd. At EDS, he started the finance team which subsequently grew to an 85-person unit, implemented effective project management and costing systems in EDS Singapore during its early investment phase, set up subsidiaries and forged joint ventures in ASEAN. Prior to EDS, Mr Phua worked for two German IT MNCs namely Siemens-Nixdorf Information Systems (Singapore) Pte Ltd and Nixdorf Computer (Singapore) Pte Ltd for 10 years.


MR EDISON FOO MENG KEAT Executive Vice-President, Enterprise Risk Management

Mr Edison Foo Meng Keat joined SCS on 14 August 2006 as Executive Vice-President, Enterprise Risk Management. Mr Foo, a lawyer by training, is responsible for the overall enterprise risk management of the SCS Group. In this role, he focuses on establishing best practices for bid and project management, legal and compliance management, and pursuing world-recognised standards and certifications. He is also involved in the valuation, protection and management of SCS’ intellectual property in Singapore and overseas. Prior to joining SCS, Mr Foo was Chief Executive Officer, co-founder and director of Alex, Edison & Bridge Pte Ltd, a Singapore-based company established in late 2002 to provide intellectual property and technology commercialisation services. Concurrently with running Alex, Edison & Bridge, Mr Foo was also the Director of IBM Life Sciences, ASEAN and South Asia, responsible for business development in ASEAN and South Asia for the IBM Life Science solution portfolio. Between 1991 and 2000, Mr Foo rose through the ranks at IBM to become Senior Counsel of IBM’s ASEAN and South Asia Operations, and was recognised for exemplary dedication and outstanding contribution at IBM.

MR VINCENT LIM SHUH MOH Executive Vice-President, Sales & Marketing

Mr Vincent Lim Shuh Moh 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 Vice-President, Sales & Marketing on 1 April 2006.

Mr Lim has more than 25 years’ experience 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, to strengthen SCS’ ties with these stakeholders.

MR ALVIN KOK KAH SING Executive Vice-President, International

Mr Alvin Kok Kah Sing joined SCS as Executive Vice-President, International, on 3 May 2004 from Baan Asia Pacific where he held the position of Vice-President and Managing Director, Asia Pacific. Mr Kok has more than 25 years’ experience in areas such as 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 and to grow SCS’ regional accounts.

21 Singapore Computer Systems Limited Annual Report 2007


22 Singapore Computer Systems Limited

CORPORATE INFORMATION

Annual Report 2007

BOARD OF DIRECTORS

REGISTERED OFFICE

Mr Peter Seah Lim Huat (Chairman)

7 Bedok South Road Singapore 469272

Mr Boon Swan Foo (Deputy Chairman) Mr Philip Eng Heng Nee Mr William Liu Wei Hai Professor Tan Cheng Han

Tel Fax Website

(65) 6827 8888 (65) 6827 8899 www.scs.com.sg

Mr Donald Albert Ramble Mr Venkatachalam Krishnakumar Mr Tan Tong Hai

AUDIT COMMITTEE Mr Philip Eng Heng Nee (Chairman) Mr William Liu Wei Hai Professor Tan Cheng Han

COMPANY SECRETARIES Ms Lena Chow Sow Ying Mr Andrew Cheong Fook Onn

SHARE REGISTRAR M&C Services Pte Ltd 138 Robinson Road #17-00 The Corporate Office Singapore 068906

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

PARTNER-IN-CHARGE Ms Ang Fung Fung (Appointed in financial year commencing 1 January 2007)


ADDING VALUE TO EVERY WORK WE DO EQUATES TO

Winning Awards


ADDING VALUE TO EVERY WORK WE DO EQUATES TO

Winning Awards AWARDS & ACCOLADES ORGANISATION

DESCRIPTION

Alcatel

Alcatel Expert Partner 2007 Alcatel Best Project Award 2007

BEA

BEA Strategic Partner 2007

Blue Coat Systems

Achievement Award 2007 Elite Reseller - Partner Conference 2007

Business Continuity Planning Asia

Asia Business Continuity Award 2007 - SCS - Winner – Business Category, Business Continuity Provider of the Year (Recovery Site)

Cisco Systems

$10 Million Summit Club 2007 CISCO Channel Partner Program – Gold Certified Partner (April 2007- March 2008)

Computer Associates

Authorised CA Elite Partner FY08 Enterprise Tier 1 Partner 2007

EMC

EMC Velocity Partner 2007

Hewlett-Packard

HP Partner Connect Achievers Club 2008 – Top Performing Partner Top Enterprise Premium Business Partner

IBM

IBM IMPACT 2007 Solution Award – SCS Websphere Significant Contribution Websphere – IBM Software 2007 Top Performing Business Partner Enterprise Sales – IBM Software 2007

Juniper Networks

Most Promising Partner (2007)

M.Tech

M. Tech Partner Appreciation Award – 30 October 2007

Ministry of Defence

Total Defence Award 2007

Nokia

Outstanding Performance – 2007

Oracle

For Achieving the Level of Certified Partner – August 2007

Samsung

Outstanding Sales Achievement in Year 2007 (Top contribution for Monitors)

SAP

Best People Development Organisation 2007 – SAP Education Services SAP Services Partner (Singapore) – 01.01.2007 - 31.12.2007 Best New SAP Project (Customer: NTUC Income Insurance Co-Operative Pte Ltd)

Sun Microsystems

SUN Partner Advantage Program – Associate Partner 2007

Symantec

Platinum Partner 2007

VMware

Enterprise Partner 2007

25 Singapore Computer Systems Limited Annual Report 2007


OPERATING AND FINANCIAL REVIEW

26 Singapore Computer Systems Limited Annual Report 2007

OVERVIEW OF SCS Founded in 1980 and listed on the Mainboard of the Singapore Exchange in 1991, Singapore Computer Systems (SCS) is currently a leading information and communications technology service provider in Asia with over 2,400 employees. SCS’ vision is to be the Trusted Provider of Trusted Services. SCS views its commitment to its stakeholders as its top-most priority, and understands that the trust its shareholders, customers, partners and employees have placed in SCS cannot be taken for granted. SCS strives to uphold stakeholders’ trust in every country it has operations in; always seeking to provide quality products, solutions and services, collectively known as SCS’ Trusted Services. SCS’ mission is to empower organisations with competent professionals, using proven processes and living technologies, in a timely and costeffective manner. SCS places great emphasis on training and developing its staff in order to better service its customers, and deploys its staff based on their strengths. As a leading service provider, SCS makes it a point to keep up-to-date with the latest changes in technology. SCS has established

a Technology Innovation Centre (TIC) to test out new technologies, develop proof-of-concepts and advise customers on the latest technology trends and directions. At the same time, SCS adopts international standards and globally proven methodologies to ensure that the solutions and services it delivers are up to expectations in terms of quality, timeliness and cost.


SCS has a set of core values which guides its employees’ conduct. Abbreviated to form the phrase “I LOVE IT”, these core values are Integrity, Leadership, Openness, Value-Creation, Excellence, Innovation and Teamwork. In 2007, SCS introduced a Company Charter to define the social fabric of the organisation. This underpins the trust required for business success – trust between employees and management; between SCS, our customers and partners. It also establishes SCS as a responsible corporate citizen.

CORE VALUES I ntegrity

We conduct ourselves in an upright, trustworthy and fair manner

L eadership O penness V alue-Creation E xcellence

We make decisions at the scene-of-action We share, learn and grow together We delight our customers by adding value We strive to be the best that we can be

I nnovation T eamwork

We create new products and services We work together to achieve success

SCS CHARTER 1. We will operate with integrity towards our customers, partners, our staff and our colleagues. 2. We will endeavour to instill in our people that the job they do makes a difference and take pride in every task that they accomplish. 3. We will embrace an open culture of learning and sharing, knowing that collective thinking and quality relationships bring about greater success. 4. We will help our people discover and play to their strengths. We will keep in mind that sometimes special gifts are found in unusual places. 5. We will take on board our employees as whole people, remembering that work-life integration is the key to happy, healthy employees. 6. We will remember that generally people do not leave their jobs, they leave supervisors. We will find and develop managers who lead by example and inspire respect. 7. We will reinvest part of our skills and resources into the community.

WE’LL BE A COMPANY THAT’S WORTH GETTING OUT OF BED FOR!

Collectively, the SCS vision, mission, core values and charter form the guiding principles for all SCS employees. These are first communicated to new hires during orientation and are reiterated at every opportunity to ensure that the message is understood.

27 Singapore Computer Systems Limited Annual Report 2007


OPERATING AND FINANCIAL REVIEW

RISK MANAGEMENT FRAMEWORK SCS’ Enterprise Risk Management function focuses on establishing a robust risk management practice to allow the Group to identify, assess, manage and monitor key risks. Understanding the risks associated with each activity will ensure that decisions are made after thorough consideration. In 2007, SCS developed and implemented a risk management framework called iRisk. Defined objectives drive risk management within SCS and the stages involved in risk management are:

28 Singapore Computer Systems Limited Annual Report 2007

• I SEE

– Event Identification

• I ASSESS

– Risk Assessment

• I DECIDE

– Risk Response and Control Activities

• WE MONITOR – Monitoring and Feedback

SCS has also developed a Risk Calculator to rate the risks of projects that SCS bids for and executes. The rating is based on risk taxonomy appropriate for the transaction type, and calibrated to the organisational capability assessed by reference to historical performance. The Risk Calculator was built in-house and is integrated into SCS’ iTrack system, which monitors and tracks project health status in compliance with the Capability Maturity Model Integration (CMMI) framework. The ultimate goal of the Enterprise Risk Management function is to align strategy, people, processes, technology and knowledge to enable SCS to manage risks on an enterprise-wide basis. SCS will continue to promote a risk management culture and strengthen its risk management practices even further.

I SEE Scenario Identification

Objective Setting

WE MONITOR

I ASSESS

Monitoring

Risk Assessment Intelligence & Dissemination

I DECIDE Risk Response Control Activites


THREE DIMENSIONS OF SCS’ BUSINESS The Group’s business is broadly categorised into two major segments – Infrastructure and Business Solutions. The Infrastructure business comprises about 70% of the Group’s business, while Business Solutions comprises the remaining 30%. Though the revenue contribution from the Business Solutions segment is smaller, the margins are higher than those from the Infrastructure segment. Apart from viewing SCS’ business by segment, it can also be viewed by vertical or by geography. SCS’ customers are from both the public and commercial sectors. In Singapore, the mix between commercial and public sector customers is about

40:60. As a Group, however, the commercialpublic sector customer mix is about 50:50 due to the predominantly commercial customer base outside Singapore. SCS’ home market in Singapore contributes about 80% of the Group’s revenue. SCS has subsidiaries in Brunei, China (Beijing, Shanghai and Chengdu), Indonesia, Malaysia and Thailand, and an associate in the Philippines. SCS’ strategy is to export its proven solutions to global markets, and has proven recorded successes in countries such as the British Virgin Islands. 29 Singapore Computer Systems Limited Annual Report 2007

The Group’s business is broadly categorised into two major segments – Infrastructure and Business Solutions. Apart from viewing SCS’ business by segment, it can also be viewed by vertical or by geography.


OPERATING AND FINANCIAL REVIEW

GROUP FINANCIAL PERFORMANCE

1H

2007 2H

FY

1H

2006 2H

FY

199.1

254.3

453.4

175.4

199.9

375.3

Profit Before Tax

6.1

9.5

15.6

3.6

7.7

11.3

Profit Attributable to Shareholders

4.8

12.8

17.6

2.7

4.6

7.3

Earnings Per Share After Tax (cents)

3.1

8.3

11.4

1.8

3.0

4.8

70.7

75.4

75.4

64.3

67.3

67.3

In S$M except per share amounts Revenue

Net Asset Value Per Share (cents) 30 Singapore Computer Systems Limited Annual Report 2007

Half Year Performance Group revenue for the second half of FY2007 (2H2007) increased by 28% compared to the first half. Both Infrastructure and Business Solutions reported higher revenue in the second half, traditionally SCS’ stronger half, due to more sales being closed in the fourth quarter. Group net profit after tax for 2H2007 increased by 167% compared to the first half. Bo t h Infrastructure and Business Solutions reported higher profit in the second half, partially aided by a one-time tax credit from deferred tax assets that were not previously recognised.

Full Year Performance Group revenue for FY2007 was S$453.4 million, 21% higher than the S$375.3 million registered in FY2006. The increase was due to improved revenue contributions from both Infrastructure and Business Solutions segments. Profit before tax was S$15.6 million, an increase of 38% compared to the year before. The improvement in profit was due to increased margins from Singapore operations and better management of operating

costs. Net profit after tax was S$17.6 million, up 140% from S$7.3 million, which included a onetime tax credit from deferred tax assets. Revenue from Singapore increased by 23% from S$300.3 million in FY2006 to S$368.3 million in FY2007, with growth in revenues for both Singapore’s Business Solutions and Infrastructure segments. Singapore contributes the majority of the revenue and profit of the Group. By business segment, both Business Solutions and Infrastructure turned in higher revenues and profits. Revenue from the Infrastructure segment increased from S$275.3 million in FY2006 to S$283.6 million in FY2007, while profit was up from S$13.5 million to S$14.5 million due to an increased number of services-related projects. The Business Solutions segment also reported increased revenue, up from S$100.0 million in FY2006 to S$169.8 million in FY2007, while profit increased from S$1.6 million to S$17.8 million due to more targeted customer engagements and better project management. As at December 31, 2007, the Group had cash and cash equivalents amounting to S$38.5 million and a year-end closing order book of S$267.6 million.

Group revenue for FY2007 was S$453.4 million, 21% higher than the S$375.3 million registered in FY2006. Net profit after tax was S$17.6 million, up 140% from S$7.3 million.


REVIEW BY BUSINESS SEGMENT SCS’ Infrastructure segment comprises service offering such as enterprise systems, networks and storage; managed infrastructure services including infrastructure outsourcing, contact centre services, performance management services, security management services and business continuity/disaster recovery (BC/DR) services. The Infrastructure segment has competencies in

systems and network integration, wired and wireless networking, security, unified communications and performance management. The Infrastructure team services organisations from many industries including banking, education, government, healthcare, hospitality, insurance, logistics, manufacturing, oil and gas, pharmaceutical, property, transportation, utilities and many more.

31

INFRASTRUCTURE PRODUCT SALES & IMPLEMENTATION SERVICES

• Desktop, Servers,   Networks, Storage • Unified Communications • Professional Services

MANAGED SERVICES

BUSINESS CONTINUITY

• Managed Operations (Infrastructure Outsourcing) • Contact Centre   Services

Systems & Networks Integration Wired & Wireless Network Competency

• Business Continuity &   Disaster Recovery • Data Centre • iMobicon – Mobile Business Continuity Office

Performance Management Security Competency

Singapore Computer Systems Limited Annual Report 2007


32 Singapore Computer Systems Limited Annual Report 2007

The Business Solutions team also services customers from both the public sector and the commercial sector. The public sector team focuses on designing, building, implementing and managing mission-critical systems for governments around the world. The commercial sector team focuses on designing, building, implementing and managing IT applications for customers, making use of state-ofthe-art software tools to help improve application security and performance. Such services are termed Application Management Services. SCS has an offshore software development centre

in Chengdu, China, which complements the team in Singapore to provide quality Application Management Services. Apart from Application Management Services, SCS also offers Business Process Outsourcing services where SCS manages entire business functions as if the SCS team were part of the customers’ IT department. Competencies in areas such as SAP, business rules management and healthcare also form part of the Business Solutions service offerings.

BUSINESS SOLUTIONS Application Management Services

Business Processing Outsourcing

SAP Competency

Healthcare Solutions

Defence Services

Software Services

Homeland Security Services

Government Services

Business Rules Competency

Chengdu Software Development Centre


NURTURING CREATIVITY ALLOWS US TO PRODUCE

Winning Innovations


“IDA congratulates SCS on developing the first-of-its-kind mobile business continuity office. For a local company to have such an achievement is indeed something that Singapore can be proud of. Not only will this contribute to Singapore’s position as a trusted hub for business continuity and disaster recovery activities, it is also a testimony of Singapore’s infocomm capability.” MS THAM AI CHYN Assistant Chief Executive (Industry & Cluster Development) Infocomm Development Authority of Singapore


NURTURING CREATIVITY ALLOWS US TO PRODUCE

Winning Innovations 35 Singapore Computer Systems Limited Annual Report 2007

FIRST MOBILE BUSINESS CONTINUITY OFFICE IN ASIA-PACIFIC SCS launched iMobicon, Asia-Pacific’s first mobile business continuity office housed in a standard stackable shipping container, in early 2007. iMobicon revolutionises the concept of business continuity by giving organisations the flexibility of bringing their business continuity facilities anywhere, at anytime. No longer is business continuity constrained to traditional business continuity sites within physical buildings! iMobicon contains workstations for up to ten persons and is equipped with its own mobile toilet and diesel generator. iMobicon can be mounted on a trailer and moved anywhere on the island according to the organisation’s business continuity plan. iMobicon is especially useful in the event of a pandemic outbreak, as businesses can relocate their staff into these self-contained offices, which will minimise the spread of the virus. Connected to the internet via a wireless link, iMobicon is able to tap onto Wi-Fi or other wireless networks to access data from the main data centre. Physical and network security is a top priority, thus state-of-the-art security features and monitoring tools have been installed in iMobicon to ensure that security is not compromised. SCS conducts regular peacetime drills for organisations using iMobicon, to ensure that the personnel involved know exactly what to do in the event of an actual disaster. Apart from iMobicon, SCS offers traditional business continuity services ranging from business continuity planning to the provision of business continuity and disaster recovery facilities as well as data centre facilities.


OPERATING AND FINANCIAL REVIEW

INFRASTRUCTURE PERFORMANCE Financial Performance Revenue from the Group’s Infrastructure segment increased from S$275.3 million in FY2006 to S$283.6 million in FY2007. Profits for the Infrastructure segment also increased due to higher margins from services-related projects.

Business Continuity and Disaster Recovery 36 Singapore Computer Systems Limited Annual Report 2007

Business Continuity and Disaster Recovery (BC/DR) is one of SCS’ key service offerings. In times of disasters or pandemic outbreaks, customers can activate their business continuity site at SCS and continue their operations at SCS’ premises, as if they were still in their own offices. SCS is one of the leading BC/DR providers in the region with almost 100,000 square feet of BC/DR and data centre space, equivalent to some 17 tennis courts.

SCS launched iMobicon, Asia-Pacific’s first mobile business continuity office housed in a standard shipping container, in early 2007. This concept of making traditional business continuity mobile was new and innovative. iMobicon contains workstations for up to ten persons and is equipped with its own mobile toilet and diesel generator, making it an ideal facility to use in the event of a pandemic outbreak. For business continuity, SCS also introduced command and control dashboards for organisations to easily view all the data in a consolidated fashion, especially during a crisis; and automation to ensure that business continuity plans are kept updated via electronic means. These innovations, along with SCS’ experience and expertise in providing state-of-the-art BC/DR services, contributed towards SCS being awarded Asia’s top business continuity provider of the year (2007) for its BC/DR site in the Asia Business Continuity Awards. The participants were from countries across Asia, and the judges comprised an independent panel from the United Kingdom, Japan and New Zealand.

With over 20 years of BC/DR experience, SCS provides a range of BC/DR services to assist organisations to create BC/DR plans, implementing and testing the BC/DR plans, and training for the personnel involved in the actual recovery should disaster strike. A fully certified BC/DR service provider based on the stringent SS507 standards established by the Infocomm Development Authority of Singapore (IDA), enterprises can be assured of world-class BC/DR facilities and quality service. In addition, SCS’ BC/DR business attained Information Security Management System (ISMS) certification this year, another testament of the trusted services SCS offers its customers.

SCS – Top Business Continuity Provider of the Year in the Asia Business Continuity Awards.


BC/DR has been gaining traction in Asia. Singapore has positioned itself well as a business and financial hub, attracting multinational corporations to set up their Asia-Pacific headquarters here. Singapore’s attraction includes its location, strong legal framework, intellectual property protection laws, availability of skilled resources as well as its position as a trusted business continuity hub. Free from natural disasters, Singapore is in a prime position as a business continuity hub for the region and SCS is ready to provide BC/DR services for organisations – not just those in Singapore but also from the region.

Security SCS was awarded the IDA (T) 606 bulk tender to provide security assessment services and training for a two year period. IDA (T) 606 is an initiative by the IDA to drive IT Security for all government ministries, statutory boards, organs of state and institutes of higher learning (IHLs). Government agencies and IHLs periodically conduct security reviews of their IT infrastructure and require an experienced securitycleared consultant such as SCS to provide these services. SCS is able to create value for these organisations through providing Security Reviews; Security Policy, Standards, Guidelines and Procedures Review and Development; Technical Security Architecture Design; Security Testing and Security Awareness Training.

Managed Infrastructure Services SCS was awarded the renewal of the System Management Centre (SMC) Outsourcing project for Singapore’s Ministry of Defence (MINDEF). SCS provides IT helpdesk, onsite desktop fault management and system management services for over 20,000 desktops. The renewal is for a year until a new tender for an integrated IT support and service for MINDEF, based on a per-seat model is awarded.

As SCS has strengths in both Business Solutions and Infrastructure, SCS is able to differentiate itself by providing both application and infrastructure management services for organisations. One such project is where SCS was awarded a S$10 million contract to provide these services for SPRING Singapore. The infrastructure management services provided include facilities management services, IT security management, helpdesk and desktop support services and BC/DR services. Under the application management portion of the contract, SCS’ services include corrective maintenance and troubleshooting; providing advice, guidance and training to users; managing and supporting system changes. The applications include web-based intranet and internet applications, client server-based applications and lotus notes-based applications. By outsourcing the management of its application systems and IT infrastructure, SPRING is able to streamline its IT operations and focus on its core business.

Partnerships The strength of SCS’ partnerships defines the success of its Infrastructure business. Vendorneutral SCS works closely with its network of toptier partners to provide best-of-breed solutions to customers. SCS focuses on being the top revenue contributor to its partners and creating additional value for them. By forging this win-win partnership, SCS intends to grow together with its partners to provide their end customers with quality service and support. SCS is pleased that partners have recognised the value it provides. This can be seen through the numerous awards received from industry partners such as Alcatel, Cisco Systems, Computer Associates, EMC, Hewlett-Packard, IBM, Juniper N e t w o r k s , M . Te c h , N o k i a , S a m s u n g , S u n Microsystems, Symantec, VMware, etc.

37 Singapore Computer Systems Limited Annual Report 2007


OPERATING AND FINANCIAL REVIEW

BUSINESS SOLUTIONS PERFORMANCE Financial Performance Revenue from the Group’s Business Solutions segment increased from S$100.0 million in FY2006 to S$169.8 million in FY2007. Profits for the Business Solutions segment also increased due to stronger project management and increased focus in the types of projects SCS bids for.

SAP Competency 38 Singapore Computer Systems Limited Annual Report 2007

SCS’ competencies in SAP implementations and upgrades have led to several contracts being won this year. SCS extended its partnership with NTUC Income by implementing SAP’s finance system for them, comprising a fully integrated accounting system for general ledger, accounts payable and accounts receivable functions. This system was also integrated with other insurancerelated systems for up-to-date general ledger postings, thus enabling seamless information flow across different departments and divisions in NTUC Income. For this implementation, SCS was awarded the Best New SAP Project Award in the recent SAP Excellence Awards. Another key SAP project was for PowerSeraya Ltd, where SCS upgraded PowerSeraya’s SAP 4.6C to mySAP ERP 2005 for the human resource, FICO, materials management and portal modules to capitalise on the latest technologies offered in mySAP ERP 2005. SCS also performed a technical upgrade from the existing Unix environment to Wintel.

that provides a fully automated workflow process between consultation rooms and the pharmacy. With e-prescription, orders are sent electronically to the pharmacy which will start packing the medication while patients are on their way there. This means higher service quality and shorter waiting times at the pharmacy for patients. Crisis management is also improved as contact and drug tracing becomes more efficient and effective in the event of a drug recall since all the data is available in a central database.

iPharm is a patient-centric web-based enterprise integrated pharmacy system that provides a fully automated workflow process between consultation rooms and the pharmacy.

Healthcare SCS’ healthcare competency lies in providing healthcare IT solutions to hospitals, clinics and pharmacies. SCS’ suite of healthcare solutions includes its integrated hospital information system (iHIS), integrated enterprise pharmacy system (iPharm) and integrated electronic medical records system (iEMR). This year, SCS completed the implementation of iPharm for the Institute of Mental Health (IMH). The delivery of iPharm for IMH marks the completion of the iPharm implementation for Singapore’s National Healthcare Group. iPharm is a patient-centric web-based enterprise integrated pharmacy system

In addition to our iPharm success, SCS implemented iHIS for Mount Alvernia Hospital (MAH) in Singapore. The new enterprise-wide system supports MAH’s IT modernisation strategy and reengineering initiatives to enhance patientcentric workflow within departments. The solution features admission, transfer, discharge, billing and claim processing and provides for a seamless flow of information in the administrative process of a patient’s stay. SCS’ iHIS solution is the backbone for the centralised patient data, and integrates with third-party systems such as the laboratory, radiology, and pharmacy information systems.


Government SCS’ strength lies in providing quality iGov solutions to government organisations in Singapore and other parts of the world. Governments are embracing IT to facilitate transformation in the public sector, and to reach out to the citizens, businesses and other government agencies in a more personal and interactive manner. A significant win for SCS in the public sector was the StudentHub project for Singapore’s Ministry of Education (MOE). SCS was awarded a contract of over S$10 million to provide mega data management and business intelligence services for student-related data on top of an enterprise-wide Service-Oriented Architecture (SOA) framework. This project also includes the migration of data to ensure that the system is scalable and extensible to cater for future growth. SCS’ long-term relationship with Singapore’s Accounting and Corporate Regulatory Authority (ACRA) led to the award of a contract to enhance ACRA’s BizFile System with more customer-centric features. SCS initially designed and implemented BizFile, one of the world’s first online corporate registration and filing systems, for ACRA in 2002. Till today, SCS continues to manage ACRA’s BizFile application, customer interaction services and infrastructure. iBizFile is SCS’ electronic registration and filing system which was productised and exported to the British Virgin Islands (BVI). The BVI Financial Services Commission (FSC) awarded SCS a multimillion dollar contract to implement iBizFile for BVI-licensed Registered Agents to file all regulatory business or company forms and supporting documents with the FSC via the internet. This system is available 24 hours a day, 7 days a week, and is fully electronic.

SCS has been providing application management services for the National Environmental Agency (NEA) and the Ministry of Environment and Water Resources (MEWR) since 1981, when it was still known as the Ministry of Environment. These applications include the Enforcement Application System, Waste Management System, and portals such as NEA’s website, the Clean and Green Singapore portal, dengue portal and so on. SCS was awarded a multi-million dollar 4-year contract by the NEA and MEWR to provide application management services for 1,600 users in NEA and MEWR. NEA and MEWR have various IT systems ranging from web-based systems and mainframe systems, to highly complex and customised applications. Some are internal IT systems while others are for members of the public to communicate with NEA and MEWR. The scope of work includes on-site support services for NEA and MEWR for current and new IT systems. Having serviced Singapore’s Ministry of Defence for the last 28 years, SCS has built up a strong track record in the defence sector. SCS was awarded a multi-million dollar contract by the Defence Science and Technology Agency (DSTA) to provide application management and operations support to MINDEF’s logistics system – Enterprise System (ES). SCS is the incumbent vendor providing maintenance and operations support services to ES Navy and Army, with a dedicated team of consultants and developers working onsite at the ES Project Office. SCS has also been supporting the MINDEF/SAF Logistics Management Information System (LMIS) since 1998. The new project win includes support of the tri-forces, Joint Services and MINDEF departments that will use the SAP-based ES platform. The project also includes managing the enterprise portal, workflow administration and providing configuration and data management services.

SCS was awarded the StudentHub project of over S$10 million to provide mega data management and business intelligence services for student-related data on top of an enterprise-wide Service-Oriented Architecture framework for Singapore’s Ministry of Education.

39 Singapore Computer Systems Limited Annual Report 2007


40 Singapore Computer Systems Limited

Partnerships

Annual Report 2007

Photo courtesy of A*STAR.

In September this year, SCS signed an MOU with Exploit Technologies (A*STAR’s commercialisation arm) and Singapore Institute of Manufacturing Technology to apply RFID technology in the healthcare and pharmaceutical services industries. SCS will tap A*STAR’s technological expertise in RFID for healthcare solutions such as electronic in-patient medical records that will enhance patient safety by ensuring that right medication is administered at the right time. This will also improve productivity and reduce human error through RFID-enabled patient identification, tracking and medication dispensing. SCS also intends to enhance its integrated enterprise pharmacy system, iPharm, with A*STAR’s SmartShelf RFID technology for better inventory management and tracking of drugs, medical equipment and people in the pharmaceutical industry.

and Security at NYP. Amongst the IT partners supporting the Centre, SCS is the only systems integrator and end-to-end service provider. The other industry players include Borland, Fortify Software, IBM, McCabe Software, Parasoft Corporation, Systex and SPI Dynamics. SCS has been developing enterprise solutions for customers for the last 28 years and has always placed an emphasis on quality. Through this Centre, customers can now verify that SCS’ solutions are indeed of high quality, reliable and secured.

In August this year, Nanyang Polytechnic (NYP) and the Defence Science and Technology Agency launched the Centre for Software Quality Photo courtesy of Nanyang Polytechnic.


EXPLORING ALL POSSIBILITIES ENABLES US TO GENERATE

Winning Solutions


iBizFile enables the FSC to be more efficient, more responsive and better able to serve its customers.


EXPLORING ALL POSSIBILITIES ENABLES US TO GENERATE

Winning Solutions 43 Singapore Computer Systems Limited Annual Report 2007

LAUNCHED IN BRITISH VIRGIN ISLANDS

The British Virgin Islands (BVI) are amongst the world’s most popular company registration destinations. Registered Agents in the BVI can now file all regulatory business or company forms and supporting documents with the Financial Services Commission (FSC), thanks to SCS’ iBizFile. iBizFile is a web-based electronic registration and filing system designed and built by SCS. To enable the BVI FSC to best serve its business partners and end-customers, SCS has designed and built a secured, flexible, and cost-effective system that is scalable to handle simple to extremely complex transactions. This paperless system makes it fast, easy and convenient to retrieve information. As all electronic records are archived, business continuity is attained. Through iBizFile, agents and FSC divisions can download and submit forms, request and receive information as well as make payments over the Internet. iBizFile also contains a suite of user-friendly and secure features that enable users to conveniently obtain real-time information regarding corporate matters for BVI Companies and regulated entities. Email confirmations are sent upon the processing of electronic documents by the FSC. The implementation of the fully electronic iBizFile thus enables the FSC to be more efficient, more responsive and better able to serve its customers. In Singapore, SCS designed and implemented BizFile, one of the world’s first online corporate registration and filing systems, for the Accounting and Corporate Regulatory Authority (ACRA) in 2002. ACRA was SCS’ first iBizFile customer. Today, SCS continues to manage the BizFile application, customer interaction services (such as the helpdesk and call centre) and infrastructure for ACRA.


44 Singapore Computer Systems Limited Annual Report 2007

OPERATING AND FINANCIAL REVIEW

REVIEW BY GEOGRAPHY Singapore is the main contributor of revenue and profit for the Group. Revenue from Singapore was up by 23% from S$300.3 million in FY2006 to S$368.3 million in FY2007.

SCS’ international strategy is to export its proven iGov solutions such as iBizFile (business registration and filing solution) and healthcare solutions such as iPharm (integrated pharmacy solution) directly to other countries. SCS will work with partners in countries where it does not have direct presence to offer higher value-added products and solutions to those markets. SCS believes that in the long run, this is a better strategy than to establish an office in every single market it does business in.

China SCS has operations in Beijing, Shanghai and Chengdu. Beijing and Shanghai are sales offices while Chengdu is our software development centre (SDC). SCS’ SDC is located at Tianfu HiTech Zone, one of Chengdu’s premier IT hubs. SCS’ SDC currently has about 100 developers building applications for customers in Singapore and China. In addition, SCS’ SDC also spearheads the localisation of SCS’ proven healthcare solutions for the China market, where SCS will continue to focus on penetrating the healthcare market in Beijing and Shanghai. Other than healthcare solutions, SCS China also provides systems integration services for both local and multinational organisations.

Brunei

SCS’ SDC at Tianfu Hi-Tech Zone, one of Chengdu’s premier IT hubs.

SCS has completed the implementation of the Human Resource Management Information System and Electronic Document Management System for the Brunei Ministry of Defence. This is yet another success of SCS’ iGov solutions being exported overseas. SCS will continue to service the Brunei market by exporting our proven solutions there.


SCS’ INTERNATIONAL NETWORK

CHINA

THAILAND

PHILIPPINES

SCS will work with partners in countries where it does not have direct presence to offer higher value-added products and solutions to those markets.

MALAYSIA SINGAPORE

BRUNEI

INDONESIA

45 Singapore Computer Systems Limited

Indonesia PT SCS Astragraphia Technologies (SAT), the Group’s 51%-owned joint venture in Indonesia, continues to contribute revenue and profit to the Group. SAT provides infrastructure implementation services, IT outsourcing services and application management services, with a focus on SAP consulting and implementation. Several key infrastructure projects were won in FY2007. SAT won a US$3.2 million contract to implement the infrastructure for PT Pertamina’s Disaster Recovery Centre, and a US$2.1 million contract to set up PT Indosat Mega Media’s 3.3 GHz broadband wireless access service. SAT upgraded all Based Transceiver Stations and Customer Premises Equipment to support 3G technology. Another telecommunications project was for PT Indosat Tbk where SAT upgraded Indosat’s Core Network Transmission in Jakarta for US$2.0 million. SAT has the largest number of SAP professionals in Indonesia and has been the certified SAP National Implementation Partner since 2001. SAT was also appointed as the regional strategic partner for SAP Bank Analyser in 2007. SAP projects won during the year were for customers in the automotive, banking and telecommunications sectors, such as PT Astra Honda Motor, PT Toyota Astra Motor, PT Coca-Cola Bottling Indonesia, PT Bank Mandiri (Persero), ATPM Group and PT Serasi Autoraya. In FY2007, SAT also completed the implementation of SAP All-in-One for Retail for Ranch Market Indonesia.

SAT introduced automated and optimised business processes for stock distribution and management, which led to improved customer service and better cost management for Ranch Market. SAT has started a new initiative to expand its service offerings to the Indonesia market through a new partnership with Oracle, focusing on Oracle Technology Solutions. Currently, SAT has the most certified professionals in Indonesia for Oracle Technology Solutions.

Malaysia SCS has delivered the mySAP Enterprise Resource Planning Human Capital Management (mySAP ERP HCM) solution for Malayan Banking Berhad (Maybank), which automates talent management, workforce process management, and workforce deployment. This has enabled Maybank to realise increased efficiency and be responsive to global and local regulation changes. Another advantage is that the workforce analytics tools provide Maybank with reporting and analysis options to get comprehensive data on their workforce in real-time.

Thailand In Thailand, SCS is building up its team of network professionals to complement its current infrastructure implementation team to better support its Singapore-based customers as they expand to Thailand and other countries.

Annual Report 2007


OPERATING AND FINANCIAL REVIEW

BUSINESS OUTLOOK FOR 2008 SCS’ home market in Singapore is forecast to remain positive. This is despite the recent turbulence in the international financial markets as a result of uncertainties in the US economy. The Government of Singapore is of the view that Singapore is in a strong position to weather changes in the global economy and can expect to continue growing its economy this year. 46 Singapore Computer Systems Limited Annual Report 2007

According to IDC, the ICT market in Asia/Pacific excluding Japan is predicted to reach US$154 billion in 2008, a 10% rate of growth over 2007. [Source: Asia/Pacific (Excluding Japan) 2008 Top 10 Predictions: Disruption and Segmentation, Dec 2007 (Doc #AP38111SP)] SCS will continue to leverage on its market differentiation as the Trusted Provider of Trusted Services to grow its Infrastructure and Business Solutions businesses in Singapore and overseas.

SCS is part of the oneMeridian consortium that was awarded the largest Singapore Government IT project – the Standard Operating Environment (SOEasy) project, in early 2008. This win bodes well for its Infrastructure business, strengthening its order book for 2008 and beyond. SOEasy positions SCS to expand such managed infrastructure services to the commercial sector, while it continues to grow its business continuity services to all industries. In addition, SCS aims to export its iGov solutions such as iBizFile (business registration and filing solution) and healthcare solutions such as iPharm (integrated pharmacy solution) to grow its Business Solutions footprint. Barring any unforeseen circumstances, the Group expects to remain profitable for 2008.

SCS will continue to leverage on its market differentiation as the Trusted Provider of Trusted Services to grow its Infrastructure and Business Solutions businesses in Singapore and overseas.


CORPORATE SOCIAL RESPONSIBILITY SCS believes in having a positive impact on the communities in which we operate. Our commitment as a responsible corporate citizen has largely been on sponsoring youths for educational scholarships and bursaries and supporting the less privileged, including employment creation for the physically disabled. In 2007, SCS sponsored four students for the IDA National Infocomm Scholarship and disbursed 12 bursaries to students from Nanyang Polytechnic, Singapore Polytechnic and Republic Polytechnic. The company also sponsored Singapore Management University’s Outstanding First Year Student Award and its freshman orientation programme. SCS also sponsored IT equipment to enable the Computing for Voluntary Welfare Organisations group from the National University of Singapore to develop and implement IT systems for the Geylang East Home for the Aged and the Movement for the Intellectually Disabled of Singapore.

T his year, SCS participated in the Great Singapore Duck Race which raised funds for seven beneficiaries, namely, Concern & Care Society, Handicaps Welfare Association, Metta Welfare Association, Tampines Family Service Centre, Tan Tock Seng Hospital Community Charity Fund, TOUCH Community Services and the Methodist Children & Youth Centre.

Mr Tan Tong Hai, SCS President and Chief Executive Officer with Education Minister Tharman Shanmugaratnam.

Showcase of the IT system built for the Geylang East Home for the Aged. Photos courtesy of National University of Singapore.

47 Singapore Computer Systems Limited Annual Report 2007


48 Singapore Computer Systems Limited

INVESTOR RELATIONS

Annual Report 2007

SCS aims to cultivate a long term and synergistic relationship with current and potential investors, as well as with the analyst community. SCS understands the need to keep investors and analysts abreast of the Group’s developments and thus communicates its strategic directions and provides business updates every quarter.

The SCS website contains information for investors such as share price performance, financial information, annual reports, quarterly results press releases, announcements, webcasts and presentation slides. Investors and members of the public can subscribe to SCS’ mailing list to be kept informed of news and updates via email.

SCS briefs the media and analysts every quarter regarding its results and performance for the quarter, and its directions moving forward. The webcast of the briefing is made available on SCS’ website (http://www.scs.com.sg/investor.html) for public viewing, along with the presentation slides.

SCS meets its investors once a year at the Annual General Meeting (AGM) where investors have a chance to interact with the Board of Directors and the Management team. The AGM is also a platform for investors to better understand the strategic directions of the Group and to provide feedback.

FINANCIAL CALENDAR DATE*

EVENT

08 May 2008

Media/Analyst Briefing: 1Q2008 Results

07 August 2008

Media/Analyst Briefing: 2Q2008 Results

06 November 2008

Media/Analyst Briefing: 3Q2008 Results

February 2009

Media/Analyst Briefing: FY2008 Results

* The dates are indicative and subject to change.

Please refer to the financial calendar on the SCS website, http://www.scs.com.sg/calendar.html, for the latest updates.


Winning Hearts OF EMPLOYEES, CLIENTS AND PARTNERS ALIKE THROUGH SHARING, LEARNING AND GROWING TOGETHER


Winning Hearts OF EMPLOYEES, CLIENTS AND PARTNERS ALIKE THROUGH SHARING, LEARNING AND GROWING TOGETHER

51

SCS CHARTER

1 2 3 4 5 6 7

We will operate with integrity towards our customers, partners, our staff and our colleagues. We will endeavour to instill in our people that the job they do makes a difference and take pride in every task that they accomplish. We will embrace an open culture of learning and sharing, knowing that collective thinking and quality relationships bring about greater success. We will help our people discover and play to their strengths. We will keep in mind that sometimes special gifts are found in unusual places. We will take on board our employees as whole people, remembering that work-life integration is the key to happy, healthy employees. We will remember that generally people do not leave their jobs, they leave supervisors. We will find and develop managers who lead by example and inspire respect. We will reinvest part of our skills and resources into the community.

WE’LL BE A COMPANY THAT’S WORTH GETTING OUT OF BED FOR!

Singapore Computer Systems Limited Annual Report 2007


FINANCIAL REPORT Directors’ Report

51

Statement by Directors

64

Independent Auditors’ Report

65

Balance Sheets

66

Consolidated Income Statement

67

Consolidated Statement of Changes in Equity

68

Consolidated Cash Flow Statement

70

Notes to the Financial Statements

72


DIRECTORS’ REPORT

53 Singapore Computer Systems Limited

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 2007.

DIRECTORS The directors in office at the date of this report are as follows: Peter Seah Lim Huat Boon Swan Foo Philip Eng Heng Nee William Liu Wei Hai Tan Cheng Han Donald Albert Ramble Venkatachalam Krishnakumar Tan Tong Hai

DIRECTORS’ INTERESTS According to the register kept by the Company for the purposes of Section 164 of the Singapore 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

Holdings at beginning of the year

Exercise period

Holdings at end of the year

The Company Ordinary shares William Liu Wei Hai Tan Tong Hai

3,000 –

3,000 400,000

8,000 8,000 8,000 8,000 8,000 8,000 500,000

–* 8,000 8,000 8,000 8,000 8,000 200,000

Options to subscribe for ordinary shares: William Liu Wei Hai

Donald Albert Ramble Tan Tong Hai * Lapsed

$1.55 $0.86 $0.84 $0.84 $0.84 $0.84 $0.70

8/3/2003 to 7/3/2007 22/2/2004 to 21/2/2008 30/4/2005 to 29/4/2009 10/4/2006 to 9/4/2010 30/4/2005 to 29/4/2009 10/4/2006 to 9/4/2010 5/4/2007 to 4/4/2016

Annual Report 2007


DIRECTORS’ REPORT

52 Singapore Computer Systems Limited Annual Report 2007

Name of director and corporation in which interests are held

Exercise price per share

Exercise period

Holdings at beginning of the year

Holdings at end of the year

The Company (cont’d) Conditional awards for ordinary shares: Tan Tong Hai

Conditional award of 240,000 performance shares (see Note 1 below) Conditional award of 180,000 performance shares (see Note 2 below) Conditional award of 250,000 performance shares to be delivered after 2008 (see Note 3 below) Conditional award of 250,000 performance shares to be delivered after 2009 (see Note 4 below)

Up to 312,000

Up to 312,000

Up to 234,000

Up to 375,000

Up to 375,000

Up to 375,000

Note 1:

Deemed interest in up to 312,000 shares in SCS by reason of a conditional performance award granted on 1 June 2006 under the Singapore Computer Systems Restricted Share Plan over a 4-year period in accordance with the following schedule:

(a) 33 1/3% upon achieving performance target vested at the end of 31 December 2007.

(b) 33 1/3% upon achieving performance target vested at the end of 31 December 2008.

(c) 33 1/3% upon achieving performance target vested at the end of 31 December 2009.

Note 2:

Deemed interest in up to 234,000 shares in SCS by reason of a conditional performance award granted on 10 April 2007 under the Singapore Computer Systems Restricted Share Plan over a 4-year period in accordance with the following schedule:

(a) 33 1/3% upon achieving performance target vested at the end of 31 March 2009.

(b) 33 1/3% upon achieving performance target vested at the end of 31 March 2010.

(c) 33 1/3% upon achieving performance target vested at the end of 31 March 2011.

Note 3:

The actual number delivered will depend on the achievement of set targets over a 3-year period from 2006 to 2008. Achievement of targets below threshold will mean no performance shares will be delivered, while over-achievement will mean up to 1.5 times the number of conditional performance shares awarded could be delivered.

Note 4:

The actual number delivered will depend on the achievement of set targets over a 3-year period from 2007 to 2009. Achievement of targets below threshold will mean no performance shares will be delivered, while over-achievement will mean up to 1.5 times the number of conditional performance shares awarded could be delivered.


DIRECTORS’ REPORT

53

Name of director and corporation in which interests are held

Exercise price per share

Exercise period

Holdings at beginning of the year

Holdings at end of the year

18,800

18,800

23,443 46,887 40,000 45,000 85,000 85,000 95,000 –

–* –* 40,000 45,000 85,000 85,000 95,000 47,500

Related Corporations Chartered Semiconductor Manufacturing Ltd Ordinary shares Boon Swan Foo Options to subscribe for ordinary shares: Peter Seah Lim Huat

$3.46 $1.86 $0.72 $1.10 $1.70 $1.16 $1.21 $1.07

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 25/8/2007 to 25/8/2011 31/8/2008 to 31/8/2012

* Lapsed

Restricted share units Peter Seah Lim Huat

20,190

1,785

7,771

Global Crossing Limited Common stock of US$0.01 each Peter Seah Lim Huat Restricted stock units of US$0.01 each Peter Seah Lim Huat

Vesting period from 8/3/2005 to 8/3/2009 Vesting on 15/8/2007 Vesting on 12/6/2008

5,625 3,294 –

4,125 – ** 2,420

** Vested

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

US$10.16

12/1/2005 to 11/1/2014

40,000

40,000

3,000

1,000

1,000,000

50,000

25,000

Neptune Orient Lines Ltd Ordinary shares William Liu Wei Hai PT Bank Internasional Indonesia Tbk Ordinary shares of Rp 22.5 each fully paid Philip Eng Heng Nee SIA Engineering Company Limited Ordinary shares Boon Swan Foo

Singapore Computer Systems Limited Annual Report 2007


DIRECTORS’ REPORT

54 Singapore Computer Systems Limited Annual Report 2007

Name of director and corporation in which interests are held

Exercise price per share

Exercise period

Holdings at beginning of the year

Holdings at end of the year

Related Corporations (cont’d) Singapore Airlines Limited Ordinary shares William Liu Wei Hai Tan Cheng Han Venkatachalam Krishnakumar

11,000 2,000 4,000

10,400 2,000 4,000

40,000

40,000

8,000

8,000

– 1,230,000 53,000

307,500 1,230,000 53,000

89,000 44,500 40,500 44,500 44,500 44,500 44,500 44,500 44,500 – – 5,000 11,500 11,500 30,000 25,250 25,250 25,500 25,500 – –

– – – 11,125 11,125 22,250 22,250 33,375 33,375 44,500 44,500 5,000 11,500 11,500 30,000 25,250 25,250 25,500 25,500 25,500 25,500

Singapore Airport Terminal Services Limited Ordinary shares Boon Swan Foo Singapore Food Industries Limited Ordinary shares Boon Swan Foo Singapore Technologies Engineering Ltd Ordinary shares Peter Seah Lim Huat Boon Swan Foo Tan Cheng Han Options to subscribe for ordinary shares: Peter Seah Lim Huat

Boon Swan Foo Tan Cheng Han

Venkatachalam Krishnakumar

$1.92 $1.79 $1.86 $2.09 $2.12 $2.37 $2.57 $3.01 $2.84 $3.23 $3.61 $2.00 $1.79 $1.86 $3.01 $2.37 $2.57 $3.01 $2.84 $3.23 $3.61

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 10/2/2007 to 9/2/2011 11/8/2007 to 10/8/2011 16/3/2008 to 15/3/2012 11/8/2008 to 10/8/2012 11/8/2001 to 10/8/2009 7/2/2004 to 6/2/2008 12/8/2004 to 11/8/2008 10/2/2007 to 9/2/2011 8/2/2006 to 7/2/2010 11/8/2006 to 10/8/2010 10/2/2007 to 9/2/2011 11/8/2007 to 10/8/2011 16/3/2008 to 15/3/2012 11/8/2008 to 10/8/2012


DIRECTORS’ REPORT

55

Name of director and corporation in which interests are held

Exercise price per share

Exercise period

Holdings at beginning of the year

Holdings at end of the year

Related Corporations (cont’d) Singapore Telecommunications Limited Ordinary shares Peter Seah Lim Huat Boon Swan Foo Philip Eng Heng Nee William Liu Wei Hai Tan Cheng Han Tan Tong Hai

3,040 45,250 16,690 4,327 3,100 634

3,040 45,250 16,690 4,327 3,100 634

133,720 17,144

147,560 15,716

6,250 6,250 12,500 17,000

– – 6,250 8,500

Up to 25,800

StarHub Limited Ordinary shares Peter Seah Lim Huat Venkatachalam Krishnakumar Options to subscribe for ordinary shares: Peter Seah Lim Huat

$0.88 $0.96 $0.985 $1.52

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

Conditional awards for ordinary shares: Peter Seah Lim Huat

Conditional award of 17,200 shares granted under the StarHub Restricted Stock Plan (see Note 5 below)

Note 5: The actual number of shares to be delivered under the conditional award will depend on the level of achievement of the set performance targets in the Company over a 2-year period from 1 January 2007 to 31 December 2008. No shares will be delivered if the threshold performance targets are not achieved, while up to 1.5 times the number of shares that are the subject of the award will be delivered if the stretched performance targets are met or exceeded. Shares will be delivered in phases according to the stipulated vesting periods.

STATS ChipPAC Ltd Options to subscribe for ordinary shares: Peter Seah Lim Huat

$1.99 $1.91 $1.06 $1.01 $0.925 $1.08

6/8/2004 to 5/8/2013 17/2/2005 to 16/2/2014 11/8/2005 to 10/8/2014 3/5/2006 to 2/5/2010 31/10/2006 to 30/10/2010 29/5/2007 to 28/5/2011

70,000 35,000 35,000 40,000 40,000 45,000

70,000 35,000 – – – –

20,700

Restricted stock units Peter Seah Lim Huat

Vesting on 16/2/2008, 16/2/2009 and 16/2/2010

Singapore Computer Systems Limited Annual Report 2007


DIRECTORS’ REPORT

56 Singapore Computer Systems Limited Annual Report 2007

Name of director and corporation in which interests are held

Exercise price per share

Exercise period

Holdings at beginning of the year

Holdings at end of the year

Related Corporations (cont’d) STT Communications Ltd Options to subscribe for ordinary shares: Peter Seah Lim Huat

$0.57 $1.08

30/7/2004 to 29/7/2013 29/7/2005 to 28/7/2014

9,750 65,000

– –

50,000 10,000

50,000 10,000

3,000

100

100

TeleChoice International Limited Ordinary shares Peter Seah Lim Huat William Liu Wei Hai Trusted Hub Limited Options to subscribe for ordinary shares: Tan Tong Hai

$1.00

13/3/2008 to 11/3/2017

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 or at the end of the financial year. There were no changes in any of the above-mentioned interests between the end of the financial year and 21 January 2008, except for Mr Peter Seah Lim Huat who on 2 January 2008, received 881 common stock of US$0.01 of Global Crossing Limited as part of Global Crossing Limited’s annual director compensation package. 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.


DIRECTORS’ REPORT

57

SHARE OPTIONS AND SHARE-BASED INCENTIVES (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).

(II)

The ERCC consists of the following members:

Peter Seah Lim Huat (Chairman)

Boon Swan Foo

Philip Eng Heng Nee

(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 options were 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 12/7/2000

No. of holders 2

Exercise period 20/4/2001 to 18/4/2009

No. of unissued ordinary shares under options granted and unexercised

Exercise price per share

27,000

$1.13

(4) From the commencement of SCS ESOS to 31 December 2007, 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 2007, 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.

Singapore Computer Systems Limited Annual Report 2007


DIRECTORS’ REPORT

58

(8) Since the commencement of SCS ESOS to 31 December 2007, 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 whose options had lapsed on 1 January 2005 upon his resignation as director of the Company.

Singapore Computer Systems Limited Annual Report 2007

(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, no options were granted by the Company under SCS SOP. (2) During the financial year, 424,000 ordinary shares in the Company were issued pursuant to the exercise of options granted under SCS SOP. (3) As at the end of the financial year, unissued ordinary shares of the Company under SCS SOP are as follows:

Date of grant of options

No. of holders

Exercise period

No. of unissued ordinary shares under options granted and unexercised

Exercise price per share

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

17 17 17 17

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

43,000 43,000 43,000 43,000

$2.20 $2.20 $2.20 $2.20

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

21 21 21 21

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

46,000 46,000 46,000 46,000

$2.08 $2.08 $2.08 $2.08

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

25 25 25 25

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

54,000 54,000 54,000 54,000

$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 12 12 12 12

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 35,750 35,750 35,750 35,750

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

30/7/2003

2

31/7/2004 to 30/7/2013

64,285

$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

2 1 1 1 9 9 9 10

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

10,000 2,000 2,000 2,000 29,000 29,000 29,000 33,000

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


DIRECTORS’ REPORT

59

Date of grant of options

No. of holders

Exercise period

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 17 17 18 18

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

4/4/2006

2

5/4/2008 to 4/4/2016 Total

No. of unissued ordinary shares under options granted and unexercised

Exercise price per share

10,000 2,000 2,000 2,000 78,225 78,225 82,225 82,225

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

240,000 1,500,185

$0.70

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

Name of director William Liu Wei Hai Donald Albert Ramble Tan Tong Hai

Options granted during the financial year ended 31/12/2007 – – – –

Aggregate options granted since commencement of SCS SOP to 31/12/2007 32,000 16,000 500,000 548,000

Aggregate options exercised/ lapsed since commencement of SCS SOP to 31/12/2007

Aggregate options outstanding as at 31/12/2007

8,000 – 300,000 308,000

24,000 16,000 200,000 240,000

(5) From the commencement of SCS SOP to 31 December 2007, 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 2007, 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. (9) Since the commencement of SCS SOP to 31 December 2007, 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 had however lapsed on 1 January 2005 upon his resignation as director of the Company. Of the remaining 32,000 options, 8,000 options had lapsed on 8 March 2007. (10) During the financial year, no option was granted under SCS SOP with exercise price set at a discount to the market price.

Singapore Computer Systems Limited Annual Report 2007


DIRECTORS’ REPORT

60 Singapore Computer Systems Limited Annual Report 2007

(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, the following conditional awards were granted by the Company under the SCS PSP:

Date of grant of conditional awards 10/4/2007

No. of holders

Over a 3-year performance cycle

5

2007 to 2009

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

540,000 540,000

0 to 810,000 0 to 810,000

The actual number of shares delivered will depend on the achievement of set targets over a 3-year period from 2007 to 2009. (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 1/6/2006 10/4/2007

No. of holders

Over a 3-year performance cycle

2 5

2006 to 2008 2007 to 2009

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

375,000 540,000 915,000

0 to 562,500 0 to 810,000 0 to 1,372,500

(5) From the commencement of SCS PSP to 31 December 2007, 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 2007, 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 2007, no award has been granted to any director or employee of the parent company and its subsidiaries under SCS PSP.


DIRECTORS’ REPORT

61

(D)

Singapore Computer Systems Restricted Stock Plan (SCS RSP) (1) SCS RSP recognises and motivates employees to ensure the long-term success of SCS and enhance returns for the shareholders. Under the SCS RSP, performance conditions are set over a performance period for each grant aligned to medium-term shareholder value creation. (2) During the financial year, the following conditional awards were granted by the Company under the SCS RSP:

Date of grant of conditional awards 10/4/2007

No. of holders

Over a 4-year period

129

2007 to 2011

No. of unreleased performance shares under conditional awards granted

Total minimum and maximum no. of performance shares deliverable at the end of the 4-year period

736,500 736,500

0 to 957,450 0 to 957,450

The actual number of shares vested and released over a 4-year period will be in accordance with the following schedule: (a)

33 1/3% upon achieving performance target vested on 31 March 2009.

(b)

33 1/3% upon achieving performance target vested on 31 March 2010.

(c)

33 1/3% upon achieving performance target vested on 31 March 2011.

(3) During the financial year, the Company did not release any performance shares under the conditional awards granted under SCS RSP. (4) As at the end of the financial year, unreleased performance shares under conditional awards granted under SCS RSP are as follows:

Date of grant of conditional awards 1/6/2006 10/4/2007

No. of holders

Over a 4-year period

43 72

2006 to 2009 2007 to 2011

No. of unreleased performance shares under conditional awards granted

Total minimum and maximum no. of performance shares deliverable at the end of the 4-year period

678,000 588,000 1,266,000

0 to 881,400 0 to 764,400 0 to 1,645,800

(5) From the commencement of SCS RSP to 31 December 2007, no award has been granted under SCS RSP to any controlling shareholder of the Company and its associates. (6) From the commencement of SCS RSP to 31 December 2007, none of the participants under SCS RSP 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.

Singapore Computer Systems Limited Annual Report 2007


DIRECTORS’ REPORT

62

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

Singapore Computer Systems Limited

(9) Since the commencement of SCS RSP to 31 December 2007, no award has been granted to any director or employee of the parent company and its subsidiaries under SCS RSP.

Annual Report 2007

(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 and SCS RSP 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.

AUDIT COMMITTEE The members of the Audit Committee during the financial year and at the date of this report are: Philip Eng Heng Nee (Chairman) Tan Cheng Han William Liu Wei Hai The Audit Committee performs the functions specified in Section 201B of the Act, the SGX Listing Manual and the Code of Corporate Governance. The Audit Committee has held 4 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;

-

quarterly financial information and annual 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 SGX Listing Manual).

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 nonaudit fees. 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.


DIRECTORS’ REPORT

AUDITORS The auditors, KPMG, have indicated their willingness to accept re-appointment.

63 Singapore Computer Systems Limited Annual Report 2007

On behalf of the Board of Directors

Peter Seah Lim Huat Director

Philip Eng Heng Nee Director

14 March 2008


STATEMENT BY DIRECTORS

64 Singapore Computer Systems Limited

In our opinion: (a)

the financial statements set out on pages 66 to 125 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 2007 and of the results, changes in equity and cash flows of the Group for the year ended on that date in accordance with the provisions of the Singapore Companies Act, Chapter 50 and Singapore Financial Reporting Standards; 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.

Annual Report 2007

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

Philip Eng Heng Nee Director

14 March 2008


INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF SINGAPORE COMPUTER SYSTEMS LIMITED

65

We have audited the financial statements of Singapore Computer Systems Limited (the Company) and its subsidiaries (the Group), which comprise the balance sheets of the Group and the Company as at 31 December 2007, the income statement, statement of changes in equity and cash flow statement of the Group for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 66 to 125. Directors’ responsibility for the financial statements The Company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Singapore Companies Act, Chapter 50 (the Act) and Singapore Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors’ responsibility 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 comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion: (a)

the consolidated financial statements of the Group and the balance sheet of the Company are properly drawn up in accordance with the provisions of 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 2007 and of the results, changes in equity and cash flows of the Group 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.

KPMG Certified Public Accountants Singapore 14 March 2008

Singapore Computer Systems Limited Annual Report 2007


BALANCE SHEETS AS AT 31 DECEMBER 2007

66 Singapore Computer Systems Limited Annual Report 2007

Group Note

2007 $’000

Company 2006 $’000

2007 $’000

2006 $’000

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

3 4 5 6 7 8 9

47,565 300 – 2,519 1,233 645 3,046 55,308

56,494 – – 3,410 1,218 611 330 62,063

33,734 – 30,252 1,663 1,233 – 2,511 69,393

34,476 – 37,138 2,679 1,218 12 290 75,813

Current assets Inventories and projects-in-progress Trade and other receivables Short-term loan receivables Cash and cash equivalents

10 11 12 13

56,025 141,712 7 38,517 236,261 291,569

49,327 124,794 5 38,015 212,141 274,204

48,280 120,714 1,007 17,715 187,716 257,109

40,890 98,120 1,385 23,060 163,455 239,268

14 15

41,347 75,113 116,460 11,882 128,342

40,969 62,790 103,759 11,526 115,285

41,347 60,062 101,409 – 101,409

40,969 31,533 72,502 – 72,502

16

2,250 550 – 2,800

132 591 186 909

– – – –

– – – –

17

144,917

133,319

145,848

157,179

18

6,153 381 4,273 4,703 160,427 163,227 291,569

11,818 4,487 382 8,004 158,010 158,919 274,204

5,486 93 4,273 – 155,700 155,700 257,109

5,360 3,845 382 – 166,766 166,766 239,268

Total assets Equity attributable to equity holders of the Company Share capital Reserves Shareholders’ equity Minority interests Total equity Non-current liabilities Financial liabilities Other payables Deferred tax liabilities Current liabilities Trade and other payables Progress billings in excess of cost of projects-in-progress Current tax payable Provisions Financial liabilities Total liabilities Total equity and liabilities

9

19 16

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


CONSOLIDATED INCOME STATEMENT YEAR ENDED 31 DECEMBER 2007

67

Note

Revenue

2007 $’000

22

Cost of sales

2006 $’000

453,418

375,332

(386,294)

(333,858)

Gross profit

67,124

41,474

Distribution expenses

(18,311)

(14,170)

Administrative expenses

(35,537)

(27,022)

2,617

11,252

15,893

11,534

Other income Results from operating activities Finance expenses

(502)

Share of profit of associates (net of tax) Profit before income tax

(1,244)

220

1,051

15,611

11,341

Income tax

23

3,146

(2,937)

Profit for the year

24

18,757

8,404

17,623

7,341

Minority interests

1,134

1,063

Profit for the year

18,757

8,404

Basic earnings per share

11.43

4.76

Diluted earnings per share

11.28

4.75

Attributable to: Equity holders of the Company

Earnings per share (cents)

26

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

Singapore Computer Systems Limited Annual Report 2007


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY YEAR ENDED 31 DECEMBER 2007 68 Singapore Computer Systems Limited Annual Report 2007

At 1 January 2006

Share capital $’000

Share premium $’000

38,534

2,435

Total attributable Currency Equity Asset to equity translation compensation revaluation Accumulated holders of the reserve reserve reserve profits Company $’000 $’000 $’000 $’000 $’000

Minority interests $’000

Total equity $’000

(2,786)

202

119

57,145

95,649

11,881

107,530

Fair value adjustments on available-forsale investments

67

67

67

Translation differences relating to financial statements of foreign subsidiaries and associates

355

355

(912)

(557)

Net gains/(losses) recognised directly in equity

355

67

422

(912)

(490)

Profit for the year

7,341

7,341

1,063

8,404

Total recognised income and expense for the year

355

67

7,341

7,763

151

7,914

Reversal of fair value reserve upon disposal of available-for-sale investments

(75)

(75)

(75)

Disposal of subsidiaries and associates

479

479

479

Acquisition of additional interests in subsidiaries

(506)

(506)

Cost of share-based payment

(57)

(57)

(57)

(1,952)

145

111

64,486

103,759

11,526

Transfer from share premium account to share capital upon implementation of the Companies (Amendment) Act 2005

2,435

At 31 December 2006

40,969

(2,435) –

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

115,285


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY YEAR ENDED 31 DECEMBER 2007 69

Share capital $’000 At 1 January 2007

Currency translation reserve $’000

Equity compensation reserve $’000

Asset revaluation reserve $’000

40,969

(1,952)

145

111

Fair value adjustments on available-for-sale investments

9

Translation differences relating to financial statements of foreign subsidiaries and associates

(829)

Net gains/(losses) recognised directly in equity

(829)

Profit for the year

Total recognised income and expense for the year

Accumulated profits $’000

Singapore Computer Systems Limited

Minority interests $’000

Total equity $’000

103,759

11,526

115,285

9

9

(829)

(778)

(1,607)

9

(820)

(778)

(1,598)

17,623

17,623

1,134

18,757

(829)

9

17,623

16,803

356

17,159

Disposal of subsidiaries and associates

6

6

6

Cost of share-based payment

600

56

656

656

378

(72)

306

306

(5,070)

(5,070)

(5,070)

41,347

(2,775)

673

120

77,095

116,460

11,882

128,342

Issuance of shares Payment of interim dividend of 3 cents per share and special dividend of 1 cent per share, less tax at 18% At 31 December 2007

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

64,486

Total attributable to equity holders of the Company $’000

Annual Report 2007


CONSOLIDATED CASH FLOW STATEMENT YEAR ENDED 31 DECEMBER 2007

70 Singapore Computer Systems Limited Annual Report 2007

Note

2007 $’000

2006 $’000

15,611

11,341

Operating activities Profit before income tax Adjustments for: Allowance made for impairment of other investments Amortisation, depreciation and write-off of non-current assets Provision for foreseeable losses Dividend income Finance expenses Gain on disposal of investments Negative goodwill credited to income statement upon acquisition of additional interest in subsidiaries

13

191

21,072

19,711

12,912

(12)

502

1,244

(162)

(6,782)

(1,010)

(192)

Write-off of loan receivable from associate

90

(Gain)/Loss on disposal of property, plant and equipment

(4)

232

(971)

Provision made for restructuring written back Interest income Share of profit of associates Net loss in changes in associate’s capital structure Provisions made for warranty Provision for claims written back Cost of share-based payment

(1,036)

(969)

(220)

(1,051)

55

1,619

185

(62)

656

(57)

37,029

35,877

Changes in working capital: Inventories and projects-in-progress Trade and other receivables Trade and other payables Cash from operations Interest received Interest paid (Grant)/Repayment of staff loan

(9,124)

(13,548)

(15,005)

(19,504)

4,616

10,500

17,516

13,325

1,068 (505) (34)

1,052 (1,313) 126

Income tax paid

(3,731)

(1,506)

Cash flows from operating activities

14,314

11,684

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


CONSOLIDATED CASH FLOW STATEMENT YEAR ENDED 31 DECEMBER 2007

71

Note

2007 $’000

2006 $’000

Investing activities Acquisition of shares in associates

(304)

Proceeds from share options exercised

306

Fund injection into investment

(55)

(64)

91

143

Redemption of preference shares by investment fund Dividends received from associates and other investments

162

988

Net cash inflow/(outflow) from disposal of subsidiaries

28

19

(235)

Acquisition of additional interests in subsidiary, previously an associate

28

5,126

Acquisition of additional interests in subsidiaries

Proceeds from disposal of associates

– (318)

26,157

Proceeds from disposal of other investments

77

489

Proceeds from disposal of property, plant and equipment

33

34

Purchase of property, plant and equipment

(12,806)

Cash flows (used in)/from investing activities

(7,047)

(25,925) 965

Financing activities Repayment of short term loan receivables

Dividends paid to shareholders of the Company Deposits pledged Hire purchase obligations

(5,070)

(143)

(113)

Proceeds from short-term bank loans

3,832

Repayment of short-term bank loans

(7,898)

Proceeds from long-term bank loans

2,995

Repayment of long-term bank loans

Cash flows used in financing activities

(6,397)

Net increase 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

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

(27) 791 (4,960) – (1,461) (4,630)

870

8,019

37,964

30,309

(511) 13

1,027

38,323

(364) 37,964

Singapore Computer Systems Limited Annual Report 2007


NOTES TO THE FINANCIAL STATEMENTS

72 Singapore Computer Systems Limited Annual Report 2007

These notes form an integral part of the financial statements. The financial statements were authorised for issue by the Board of Directors on 14 March 2008.

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 system development, project implementation, facilities management, system support, the servicing, supply, maintenance, 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 are incorporated in the Republic of Singapore. The consolidated financial statements relate to the Company and its subsidiaries (together 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 have been prepared in accordance with Singapore Financial Reporting Standards (FRS). The financial statements have been prepared on the historical cost basis except for certain financial assets and financial liabilities which are measured at fair value and/or amortised cost. The financial statements are presented in Singapore dollars which is the Company’s functional currency. All financial information presented in Singapore dollars has been rounded to the nearest thousand, unless otherwise stated. The preparation of financial statements in conformity with FRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. 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 and in any future periods affected.


NOTES TO THE FINANCIAL STATEMENTS

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are described in the following notes: • Note 10 – allowance for foreseeable losses on projects • Note 11 – impairment assessment of trade receivables • Note 19 – provision for warranty • Note 23 – recognition of deferred tax assets The accounting policies used by the Group have been applied consistently by the Group to all periods presented in these financial statements.

2.2 CONSOLIDATION Business combinations Business combinations are accounted for under the purchase method. The cost of an acquisition is measured at 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 income statement in the period of acquisition. Subsidiaries Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights presently exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed where necessary to align them with the policies adopted by the Group. Associates Associates are those entities in which the Group has significant influence, but not control, over their financial and operating policies. Significant influence is presumed to exist when the Group holds between 20% and 50% of voting power of another entity. Associates are accounted for using the equity method. The consolidated financial statements include the Group’s share of the income, expenses and equity movements of associates after adjustments to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases. When the Group’s share of losses exceeds its interest in an associate, the carrying amount of that interest (including any long-term investments) is reduced to zero and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the associate. Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised income or expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with associates are eliminated against the investment to the extent of the Group’s interest in the associates. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

73 Singapore Computer Systems Limited Annual Report 2007


NOTES TO THE FINANCIAL STATEMENTS

74 Singapore Computer Systems Limited Annual Report 2007

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) Accounting for subsidiaries and associates by the Company Investments in subsidiaries and associates are stated in the Company’s balance sheet at cost less accumulated impairment losses.

2.3 FOREIGN CURRENCIES Foreign currency transactions Transactions in foreign currencies are translated to the respective functional currencies of Group entities at the exchange rate at the date of the transaction. The functional currencies of the Group’s entities are Singapore dollar, Indonesian Rupiah, Chinese Renminbi, Brunei dollar, Thai Baht and Malaysian Ringgit. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date on which the fair value was determined. Foreign currency differences arising on retranslation are recognised in the income statement, except for differences arising on the retranslation of available-for-sale equity instruments. Foreign operations The assets and liabilities of foreign operations are translated to Singapore dollars at exchange rates prevailing at the reporting date. The income and expenses of foreign operations are translated to Singapore dollars at exchange rates prevailing at the dates of the transactions. Goodwill and fair value adjustments arising on the acquisition of a foreign operation on or after 1 January 2006 are treated as assets and liabilities of the foreign operation and translated at the closing rate. For acquisitions prior to 1 January 2006, the exchange rates at the date of acquisition were used. Foreign currency differences are recognised in the foreign currency translation reserve. When a foreign operation is disposed of, in part or in full, the relevant amount in the foreign exchange translation reserve is transferred to the income statement.

2.4 PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use, and the cost of dismantling and removing the items and restoring the site on which they are located. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in the income statement as incurred.


NOTES TO THE FINANCIAL STATEMENTS

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) Depreciation on property, plant and equipment is recognised in the income statement on a straight-line basis over their estimated useful lives (or lease term, if shorter) of each part of an item of property, plant and equipment. The estimated useful lives are as follows: Leasehold land

-

30 years

Leasehold building

-

30 years

Leasehold improvements

-

3 to 9 years

Computer equipment under lease

-

2 to 4 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

Depreciation methods, useful lives and residual values are reviewed, and adjusted as appropriate, at each reporting date.

2.5 INTANGIBLE ASSETS Goodwill Goodwill and negative goodwill arise on the acquisition of subsidiaries and associates. Acquisitions prior to 1 January 2001 Goodwill represents the excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifiable assets and liabilities of the acquiree. Goodwill and negative goodwill on acquisitions were written off against accumulated profits in the year of acquisition. Goodwill and negative goodwill that have previously been taken to accumulated profits are not taken to the income statement when (a) the business is disposed of or (b) the goodwill is impaired. Acquisitions occurring between 1 January 2001 and 1 January 2005 Goodwill represents the excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifiable assets and liabilities of the acquiree. Goodwill arising on the acquisition of subsidiaries is presented in intangible assets. Goodwill arising on the acquisition of associates is presented together with investments in associates. Goodwill was stated at cost from the date of initial recognition and amortised over its estimated useful life of 3 to 10 years. On 1 January 2005, the Group discontinued amortisation of this goodwill. This remaining goodwill balance is subject to testing for impairment, as described in Note 2.8. Acquisitions on or after 1 January 2005 Goodwill represents the excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree. Goodwill arising on the acquisition of subsidiaries is presented in intangible assets. Goodwill arising on the acquisition of associates is presented together with investments in associates. Goodwill is measured at cost less accumulated impairment losses. Goodwill is tested for impairment as described in Note 2.8. Negative goodwill is recognised immediately in the income statement.

75 Singapore Computer Systems Limited Annual Report 2007


NOTES TO THE FINANCIAL STATEMENTS

76 Singapore Computer Systems Limited Annual Report 2007

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) Acquisition of minority interest Goodwill arising on the acquisition of a minority interest in a subsidiary represents the excess of the cost of the additional investment over the carrying amount of the net assets acquired at the date of exchange. 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 2.8 below. Development costs which relate to a definable product that is demonstrated to be technically and commercially feasible, and for which the Group has sufficient resources to market, are recognised as assets to the extent that such costs are probably recoverable from future economic benefits. All deferred development costs are reviewed annually to determine the amount, if any, that is no longer recoverable from expected economic benefits. Any such amount is written off and recognised as an expense in the income statement. Other intangible assets, which comprise intellectual property rights, rights to distribute certain computer products, technology licenses and the loyalty and frequent flyer programme business contract, that are acquired by the Group and which have finite useful lives, are measured 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 Other intangible assets are amortised in the income statement on a straight-line basis over their estimated useful lives of 3 to 5 years from the date on which they are available for use.

2.6 FINANCIAL INSTRUMENTS Non-derivative financial instruments Non-derivative financial instruments comprise investments in equity securities, trade and other receivables, cash and cash equivalents, financial liabilities, and trade and other payables. Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs. Subsequent to initial recognition, non-derivative financial instruments are measured as described below. A financial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Group’s contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial asset to another party without retaining control or transfers substantially all the risks and rewards of the asset. Regular way purchases and sales of financial assets are accounted for at trade date, ie, the date that the Group commits itself to purchase or sell the asset. Financial liabilities are derecognised if the Group’s obligations specified in the contract expire or are discharged or cancelled.


NOTES TO THE FINANCIAL STATEMENTS

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) Cash and cash equivalents comprise cash balances and bank deposits. Bank overdrafts that are repayable on demand and that form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the cash flow statement. Available-for-sale financial assets The Group’s investments in equity securities are classified as available-for-sale financial assets. Subsequent to initial recognition, they are measured at fair value and changes therein, other than for impairment losses are recognised directly in equity. When an investment is derecognised, the cumulative gain or loss in equity is transferred to the income statement. Other Other non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses. Impairment of financial assets A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate. An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its current fair value. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in the income statement. Any cumulative loss in respect of an availablefor-sale financial asset recognised previously in equity is transferred to the income statement upon disposal/ derecognition of the asset. Impairment losses in respect of financial assets measured at amortised cost are reversed if the subsequent increase in fair value can be related objectively to an event occurring after the impairment loss was recognised. Impairment losses are recognised in the income statement in respect of available-for-sale equity securities are not reversed through the income statement. Any subsequent increase in fair value of such assets is recognised directly in equity. Financial guarantees Financial guarantees are financial instruments issued by the Group that requires the issuer to make specified payments to reimburse the holder for the loss it incurs because a specified debtor fails to meet payment when due in accordance with the original or modified terms of a debt instrument. Financial guarantees are recognised initially at fair value and are classified as financial liabilities. Subsequent to initial measurement, the financial guarantees are stated at the higher of the initial fair value less cumulative amortisation and the amount that would be recognised if they were accounted for as contingent liabilities. When financial guarantees are terminated before their original expiry date, the carrying amount of the financial guarantees is transferred to the income statement.

77 Singapore Computer Systems Limited Annual Report 2007


NOTES TO THE FINANCIAL STATEMENTS

78 Singapore Computer Systems Limited Annual Report 2007

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects.

2.7 LEASES When entities within the Group are lessees of a finance lease Leased assets in which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, property, plant and equipment acquired through finance leases are capitalised at the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Leased assets are depreciated over the shorter of the lease term and their useful lives. Lease payments are apportioned between finance expense and reduction of the lease liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. When entities within the Group are lessees of an operating lease Where the Group has the use of assets under operating leases, payments made under the leases are recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised in the income statement as an integral part of the total lease payments made. When entities within the Group are lessors of an operating lease Assets leased out under operating leases are included in property, plant and equipment and are stated at cost less accumulated depreciation. Rental income is recognised on a straight-line basis over the lease term. At inception, an arrangement that contains a lease is accounted for as such based on the terms and conditions even though the arrangement is not in the legal form of a lease.

2.8 IMPAIRMENT – NON-FINANCIAL ASSETS The carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the assets’ recoverable amounts are estimated. For goodwill, the recoverable amount is estimated at each reporting date, and as and when indicators of impairment are identified. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that are largely independent from other assets and groups. Impairment losses are recognised in the income statement. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.


NOTES TO THE FINANCIAL STATEMENTS

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. 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 or cash-generating unit. An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. 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.

2.9 INVENTORIES Inventories held for resale Inventories are stated at the lower of cost and net realisable value. Cost is calculated using 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. Net realisable value is the estimated selling price in the ordinary course of business, less the selling expenses. 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 where total costs to complete the projects exceed the contract revenue. Progress billings on projects-in-progress are reflected in the financial statements upon invoicing and are shown as a deduction from the value of the projectsin-progress. Projects-in-progress are presented as part of inventories in the balance sheet. If payments received from customers exceed projects-in-progress, the net amount is presented as part of current liabilities in the balance sheet.

2.10 EMPLOYEE BENEFITS Defined contribution plans Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement as incurred. Other long-term employee benefits The Group’s net obligation in respect of long-term employee benefits other than pension plans is the amount of future benefit that employees have earned in return for their service in current and prior periods; that benefit is discounted to determine its present value, and the fair value of any related assets is deducted. The discount rate is the yield at the reporting date on AA credit-rated bonds that have maturity dates approximating the terms of the Group’s obligations. The calculation is performed using the projected unit credit method. Any actuarial gains or losses are recognised in the income statement in the period in which they arise.

79 Singapore Computer Systems Limited Annual Report 2007


NOTES TO THE FINANCIAL STATEMENTS

80 Singapore Computer Systems Limited Annual Report 2007

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) Short-term benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A provision is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. Defined benefit plans The Group’s net obligations in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine the present value, and any unrecognised past service costs and the fair value of any plan assets is deducted. The discount rate is the yield at the balance sheet date on AA credit-rated government bonds that have maturity dates approximating the terms of the Group’s obligations. The calculation is performed by a qualified actuary every year using the projected unit credit method. When the calculation results in a benefit to the Group, the recognised asset is limited to the net total of any unrecognised past service cost and the present value of any future refunds from the plan or reductions in future contributions to the plan. When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employee is recognised as an expense in the income statement on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognised immediately in the income statement. In calculating the Group’s obligation in respect of a plan, to the extent that any cumulative unrecognised actuarial gain or loss exceeds 10 per cent of the greater of the present value of the defined benefit obligation and the fair value of plan assets, that portion is recognised in the income statement over the expected average remaining working lives of the employees participating in the plan. Otherwise, the actuarial gain or loss is not recognised. Share-based payments 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 vesting 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 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 income statement, with a corresponding adjustment to equity.


NOTES TO THE FINANCIAL STATEMENTS

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 2.11 PROVISION A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Warranty A provision for warranty 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.

2.12 REVENUE RECOGNITION Service contracts Provided it is probable that the economic benefits will flow to the Group, and that the revenue and costs, if applicable, can be measured reliably, revenue from service contracts is recognised over the period of contract. Sale of computer hardware Revenue from the sale of computer hardware is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. Transfer of risks and rewards vary depending on the individual terms of the contract of sale. Project revenue Revenue from projects is recognised when it is probable that the economic benefits of the contracts will flow to the Company; the revenue and costs of the contracts can be measured reliably; and the outcome of the contracts can be estimated reliably. Contract revenue and expenses are recognised in the income statement in proportion to the stage of completion of the contract. Contract revenue includes the initial amount agreed in the contract plus any variations in contract work, claims and incentive payment to the extent that it is probable that they will result in revenue and can be measured reliably. The state of completion is assessed by reference to surveys of work performed. When the outcome of a contract cannot be estimated reliably, contract revenue is recognised only to the extent of contract costs incurred that are likely to be recoverable. An expected loss on a contract is recognised immediately in the income statement. Licence fee income 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.

81 Singapore Computer Systems Limited Annual Report 2007


NOTES TO THE FINANCIAL STATEMENTS

82 Singapore Computer Systems Limited Annual Report 2007

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) Other income Dividend income is recognised in the income statement when the shareholder’s right to receive payment is established. Interest income from bank deposits is recognised as it accrues, using the effective interest method. Rental income receivable under operating leases is recognised in the income statement on a straight-line basis over the term of the lease.

2.13 FINANCE EXPENSE Finance expense comprises interest expense on borrowings and are recognised in the income statement. All borrowing costs are recognised in the income statement using the effective interest method.

2.14 INCOME TAX EXPENSE Income tax expense comprises current and deferred tax. Income tax expense is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they probably will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets and they relate to income taxes levied by the same tax authority on the same taxable entity or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

2.15 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 Financial Officer, Executive Vice President and Senior Vice President, of the Group and the Company are considered as key management personnel.


NOTES TO THE FINANCIAL STATEMENTS

83

3 PROPERTY, PLANT AND EQUIPMENT Computer Leasehold equipment improvements under lease

Singapore Computer Systems Limited

Motor vehicles

Total

$’000

$’000

$’000

7,807 667 (181) (22)

24,348 1,429 (317) (34)

155 15 (106) –

130,128 25,925 (3,228) (372)

(12) 43,642 – 4,515 (12,708) (494)

(3) 8,268 – 674 (3,634) –

132 25,558 – 1,732 (3,576) –

(44) 152,409 – 12,806 (20,028) (494)

(2,964) 39,695

4 34,959

(114) 5,194

(1) 23,713

– 64 – 44 (5) – – 103

(3,083) 141,610

94

5,234

36,047

6,693

19,968

141

79,967

388 (160) –

– (83) –

11,342 – –

4,088 (2,326) (309)

866 (184) (19)

1,990 (116) (23)

7 (106) –

19,590 (2,975) (351)

– 9,208 (241)

– 3,719 241

– 11 –

(329) 16,247 –

(15) 37,485 –

(10) 7,346 –

38 21,857 –

 – 42 –

(316) 95,915 –

880 – – –

413 – –

1 – –

12,774 (105) –

4,667 (12,698) (494)

589 (3,622) –

1,433 (3,570) –

20,772 (19,999) (494)

9,847

(9) 4,364

– 12

(2,046) 26,870

(5) 28,955

(89) 4,224

– 19,720

15 (4) – –

Carrying amount At 1 January 2006

17,853

8,388

1

12,966

5,445

1,114

At 31 December 2006

16,939

8,017

1

20,735

6,157

At 31 December 2007

16,305

7,372

46

12,825

6,004

Group

Cost At 1 January 2006 Additions Disposals/Write-offs Disposal of subsidiaries Translation differences on consolidation At 31 December 2006 Reclassification Additions Disposals/Write-offs Disposal of subsidiaries Translation differences on consolidation At 31 December 2007 Accumulated depreciation and impairment losses At 1 January 2006 Depreciation for the year Disposals/Write-offs Disposal of subsidiaries Translation differences on consolidation At 31 December 2006 Reclassification Depreciation for the year Disposals/Write-offs Disposal of subsidiaries Translation differences on consolidation At 31 December 2007

Leasehold land

Leasehold building

Computer equipment

Office Furniture equipment and fittings

$’000

$’000

$’000

$’000

$’000

$’000

26,152 – (5) –

11,879 17 (160) –

95 – (83) –

18,200 18,943 – –

41,492 4,854 (2,376) (316)

– 26,147 5 – – – –

– 11,736 (5) 13 – –

– 12 – 46 – –

(161) 36,982 – 5,782 (105) –

26,152

(8) 11,736

– 58

8,299

3,491

909 – –

53

(2,149) 94,045

4,380

14

50,161

922

3,701

22

56,494

970

3,993

50

47,565

The carrying amount of property, plant and equipment included an amount of $137,000 (2006: $219,000) in respect of computer equipment and motor vehicles acquired under finance leases.

Annual Report 2007


NOTES TO THE FINANCIAL STATEMENTS

84 Singapore Computer Systems Limited Annual Report 2007

3 PROPERTY, PLANT AND EQUIPMENT (CONT’D) Company

Leasehold Leasehold Leasehold Computer land building improvements equipment $’000 $’000 $’000 $’000

Office equipment $’000

Furniture Motor and fittings vehicles $’000 $’000

Total $’000

Cost At 1 January 2006

25,891

11,880

Additions

Disposals/Write-offs

25,891 261 –

At 31 December 2006 Reclassification Additions Disposals/Write-offs At 31 December 2007

36,964

6,114

23,404

6

104,259

4,290

387

1,302

5,979

(1,468)

(39)

(144)

(1,651)

11,880

39,786

6,462

24,562

6

108,587

(261)

46

4,259

517

1,720

6,542

(11,125)

(3,576)

(3,351)

(5)

(18,057)

26,152

11,619

46

32,920

3,403

22,931

1

97,072

31,899

5,590

19,305

3

68,377

Accumulated depreciation At 1 January 2006

8,126

3,454

Depreciation for the year

907

351

3,744

415

1,817

2

7,236

Disposals/Write-offs

(1,441)

(38)

(23)

(1,502)

9,033

3,805

34,202

5,967

21,099

5

74,111

Reclassification

(66)

66

Depreciation for the year

880

392

1

4,342

335

1,313

1

7,264

Disposals/Write-offs

(11,112)

(3,572)

(3,348)

(5)

(18,037)

9,847

4,263

1

27,432

2,730

19,064

1

63,338

At 1 January 2006

17,765

8,426

5,065

524

4,099

3

35,882

At 31 December 2006

16,858

8,075

5,584

495

3,463

1

34,476

At 31 December 2007

16,305

7,356

45

5,488

673

3,867

33,734

At 31 December 2006

At 31 December 2007 Carrying amount


NOTES TO THE FINANCIAL STATEMENTS

85

4 INTANGIBLE ASSETS

Group Cost At 1 January 2006 Acquisition of additional interest in subsidiary At 31 December 2006 Acquisition of additional interest in subsidiary, previously an associate At 31 December 2007 Accumulated amortisation and impairment losses At 1 January 2006 Amortisation for the year Impairment charges At 31 December 2006 Amortisation for the year At 31 December 2007

Singapore Computer Systems Limited

Development costs $’000

Intellectual property rights and patents $’000

Technology licences $’000

Goodwill $’000

Total $’000

4,670

1,177

2,585

1,772

10,204

– 4,670

– 1,177

– 2,585

5 1,777

5 10,209

– 4,670

600 1,777

– 2,585

– 1,777

600 10,809

4,594 76 – 4,670 – 4,670

1,177 – – 1,177 300 1,477

2,585 – – 2,585 – 2,585

1,732 – 45 1,777 – 1,777

10,088 76 45 10,209 300 10,509

76

40

116

Carrying amount At 1 January 2006 At 31 December 2006

At 31 December 2007

300

300

Development costs $’000

Intellectual property rights and patents $’000

Total $’000

Cost At 1 January 2006, 31 December 2006 and 31 December 2007

1,978

1,000

2,978

Accumulated amortisation At 1 January 2006 Amortisation for the year At 31 December 2006 and 31 December 2007

1,911 67 1,978

1,000 – 1,000

2,911 67 2,978

67

67

At 31 December 2006

At 31 December 2007

Company

Carrying amount At 1 January 2006

Impairment and amortisation expenses for the Group and Company are included in administrative expenses in the income statement.

Annual Report 2007


NOTES TO THE FINANCIAL STATEMENTS

86 Singapore Computer Systems Limited Annual Report 2007

4 INTANGIBLE ASSETS (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 consideration all these factors will be used to determine the need for making any impairment provisions on the investment in these companies, including the goodwill.

5 SUBSIDIARIES Company

Equity investments, at cost Impairment losses

2007 $’000

2006 $’000

44,646 (14,394) 30,252

55,740 (18,602) 37,138

Details of significant subsidiaries are as follows: Name of subsidiary

SCS Networks Pte Ltd and its subsidiaries: SCS iCT Sdn. Bhd. SCS Channels, Inc. PT SCS Astragraphia Technologies SCS Information Technology Sdn. Bhd. SCS Enterprise Systems Pte Ltd and its subsidiaries: CSN Systems Pte Ltd CSN Systems Sdn Bhd SCS Enterprise Systems (Thailand) Limited

Country of incorporation

Singapore Malaysia Philippines Indonesia Brunei Singapore Singapore Malaysia Thailand

Effective equity held by the Group 2007 2006 % % 100 100 100 51 100 100 100 100 100

100 100 100 51 100 100 100 100 100

KPMG Singapore are the auditors of all Singapore-incorporated subsidiaries. Other member firms of KPMG International are auditors of significant foreign-incorporated subsidiaries except for PT SCS Astragraphia Technologies which is audited by Purwantono, Sarwoko & Sandjaja, Indonesia. For this purpose, a subsidiary is considered significant as defined under the Singapore Exchange Limited Listing Manual if its net tangible assets represent 20% or more of the Group’s consolidated net tangible assets, or if its pre-tax profits account for 20% or more of the Group consolidated pre-tax profits. 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 2007, which approximates the net selling price of these subsidiaries as the net assets comprise predominantly monetary items. During the year, an impairment loss of $4,296,000 was utilised following the liquidation of certain subsidiaries.


NOTES TO THE FINANCIAL STATEMENTS

87

6 ASSOCIATES Group

Investments in associates Impairment losses Goodwill written off included as part of accumulated profits Share of post-acquisition profits/(losses) Translation differences on consolidation

Singapore Computer Systems Limited

Company

2007 $’000

2006 $’000

2007 $’000

2006 $’000

2,878 – 2,878

4,982 – 4,982

1,737 (74) 1,663

3,841 (1,162) 2,679

(243) 2,635

(158) 4,824

– 1,663

– 2,679

713 (829) 2,519

(508) (906) 3,410

– – 1,663

– – 2,679

Details of significant associates are as follows: Name of associate

Ayala Systems Technology, Inc Telescience Singapore Pte Ltd Green Dot Internet Services Pte Ltd

Country of incorporation

Philippines Singapore Singapore

Effective equity held by the Group 2007 2006 % % 30 50 –*

30 50 22.7

* On 3 January 2007, the Company acquired additional interest of 77.3% in Green Dot Internet Services Pte Ltd, following which, it became a wholly-owned subsidiary of the Company.

The summarised financial information relating to associates is not adjusted for the percentage of ownership held by the Group. 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/(Loss) after tax

2007 $’000

2006 $’000

13,898

23,889

7,857

18,345

37,119

49,338

811

(3,205)

The Group has not recognised losses relating to certain associates where the Group’s share of losses exceeds the carrying amount of its investments in these associates. The Group’s share of cumulative unrecognised losses is $400 (2006: $43,000). The Group has no obligations in respect of these losses.

Annual Report 2007


NOTES TO THE FINANCIAL STATEMENTS

88 Singapore Computer Systems Limited Annual Report 2007

6 ASSOCIATES (CONT’D) 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 2007, which approximate the net selling price of these associates. During the year, an impairment loss of $1,000,000 was utilised following the disposal of an associate. An impairment loss of $88,000 was reclassified to impairment losses on investments in subsidiaries when the Company acquired the remaining interests in the associate during the year.

7 OTHER INVESTMENTS Group

Unquoted equity securities available-for-sale, at cost Impairment losses Quoted equity securities available-for-sale, at fair value

Company

2007 $’000

2006 $’000

2007 $’000

2006 $’000

19,366 (18,202) 1,164 69 1,233

20,045 (18,887) 1,158 60 1,218

19,366 (18,202) 1,164 69 1,233

20,045 (18,887) 1,158 60 1,218

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.

8 LONG TERM RECEIVABLES Group

Loans receivable from: – staff – a subsidiary – investee companies and others

Company

Note

2007 $’000

2006 $’000

2007 $’000

2006 $’000

8(a) 8(b) 8(c)

645 – – 645

611 – – 611

– – – –

12 – – 12

Group

(a) Loans Receivable – Staff Amounts receivable: – after 12 months

Company

2007 $’000

2006 $’000

2007 $’000

2006 $’000

645

611

12


NOTES TO THE FINANCIAL STATEMENTS

89

8 LONG TERM RECEIVABLES (CONT’D) The staff loans are interest-free and repayable within 5 years. The carrying amounts are not materially different from the fair values. Group

(b) Loans Receivable – Subsidiary Loans to a subsidiary Impairment losses

Company

2007 $’000

2006 $’000

2007 $’000

2006 $’000

– – –

– – –

7,200 (7,200) –

7,200 (7,200) –

The loan to a subsidiary forms part of the Company’s net investment in the subsidiary. The loan is unsecured and interest-free, and settlement is neither planned nor likely to occur in the foreseeable future. As the amount is, in substance, a part of the Company’s net investment in the entity, it is stated at cost less impairment losses. Group 2007 $’000 (c) Loans Receivable – Investee Companies and Others Loans receivable investee companies and others Impairment losses

586 (586) –

Company 2006 $’000

757 (757) –

2007 $’000

586 (586) –

2006 $’000

757 (757) –

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

Group

At 1 January 2006 $’000

Credited/ (Charged) to income statement $’000

At 31 December 2006 $’000

Credited to income statement $’000

At 31 December 2007 $’000

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

3,322 – – 3,322

(685) – – (685)

2,637 – – 2,637

173 659 48 880

2,810 659 48 3,517

Deferred tax liabilities Accelerated tax depreciation Other receivables Others Total

(2,077) (976) (626) (3,679)

185 976 25 1,186

(1,892) – (601) (2,493)

1,421 – 601 2,022

(471) – – (471)

Singapore Computer Systems Limited Annual Report 2007


NOTES TO THE FINANCIAL STATEMENTS

90 Singapore Computer Systems Limited Annual Report 2007

9 DEFERRED TAX (CONT’D)

Company

At 1 January 2006 $’000

Credited/ (Charged) to income statement $’000

At 31 December 2006 $’000

Credited/ (Charged) to income statement $’000

At 31 December 2007 $’000

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

2,597 – – 2,597

– – – –

2,597 – – 2,597

(322) 659 48 385

2,275 659 48 2,982

Deferred tax liabilities Accelerated tax depreciation Other receivables Total

(1,892) (415) (2,307)

– – –

(1,892) (415) (2,307)

1,421 415 1,836

(471) – (471)

Deferred tax assets and liabilities 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 2007 $’000 Deferred tax assets Deferred tax liabilities

Company 2006 $’000

3,046 –

330 (186)

2007 $’000

2006 $’000

2,511 –

290 –

10 INVENTORIES AND PROJECTS-IN-PROGRESS Group Note Inventories held for resale Allowance for inventory obsolescence Cost of projects-in-progress in excess of progress billings less allowance for foreseeable losses

10(a)

Company

2007 $’000

2006 $’000

2007 $’000

2006 $’000

50,495 (3,792) 46,703

39,589 (3,399) 36,190

46,136 (2,435) 43,701

34,658 (1,791) 32,867

9,322 56,025

13,137 49,327

4,579 48,280

8,023 40,890


NOTES TO THE FINANCIAL STATEMENTS

91

10 INVENTORIES AND PROJECTS-IN-PROGRESS (CONT’D) Group

(a) Projects-in-progress Cost of projects-in-progress Allowance for foreseeable losses

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

Singapore Computer Systems Limited

Company

2007 $’000

2006 $’000

2007 $’000

2006 $’000

14,584 (1,856) 12,728 (3,406)

68,682 (34,614) 34,068 (20,931)

7,446 (100) 7,346 (2,767)

63,128 (34,194) 28,934 (20,911)

9,322

13,137

4,579

8,023

Allowance for foreseeable losses on projects The Group conducts critical review of all its projects regularly. Allowance is made where necessary to account for foreseeable losses where total costs to complete the projects exceed the contract revenue. To determine the total project costs, the Group monitors and reviews constantly the progress of all projects taking into consideration 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 costs to complete the projects take into consideration potential manpower resources needed to complete the project, equipment to be delivered, external services required and infrastructure setup costs.

11 TRADE AND OTHER RECEIVABLES Group

Trade receivables Allowance for doubtful receivables Net receivables Deferred cost of sales Sundry debtors Refundable deposits Prepayments Interest receivable Tax recoverable Included in receivables are amounts due from: – subsidiaries – associates – related corporations

Company

2007 $’000

2006 $’000

2007 $’000

2006 $’000

121,205 (1,320) 119,885 16,817 469 362 1,554 15 2,610 141,712

103,175 (2,134) 101,041 16,518 1,129 411 2,286 26 3,383 124,794

116,215 (13,058) 103,157 16,481 61 116 856 8 35 120,714

93,584 (11,135) 82,449 13,297 87 88 1,721 478 – 98,120

– 199 8,062

– 655 7,078

20,960 93 4,525

22,720 267 6,846

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 $286,000 (2006: $340,000) and $12,799,000 (2006: $10,954,000) for the Group and Company respectively.

Annual Report 2007


NOTES TO THE FINANCIAL STATEMENTS

92 Singapore Computer Systems Limited Annual Report 2007

11 TRADE AND OTHER RECEIVABLES (CONT’D) The Group’s primary exposure to credit risk arises through its trade receivables. The Group evaluates whether there is any objective evidence that receivables are impaired and determines the amount of impairment loss as a result of the inability of the debtor to make required payments. The Group determines the estimates based on the ageing of the receivables, credit worthiness and historical write-offs experience. The Group’s historical experience in the collection of accounts receivable falls within the recorded allowances. Due to these factors, management believes that no additional credit risk beyond amounts provided for collection losses is inherent in the Group’s trade receivables. The maximum exposure to credit risk for loans and receivables at the reporting date (by type of customer respectively) is: Group

Public sector Private sector

Company

2007 $’000

2006 $’000

2007 $’000

2006 $’000

44,250 75,635 119,885

31,938 69,103 101,041

41,843 61,314 103,157

30,366 52,083 82,449

The Group’s most significant customer belongs to the public sector and accounts for $22,989,000 (2006: $13,349,000) of the carrying amount of trade receivables at 31 December 2007. Impairment losses The ageing of trade receivables at the reporting date is:

Gross 2007 $’000 Group Not past due Past due 1 – 90 days Past due 91 – 180 days Past due 181 – 360 days More than 360 days

Company Not past due Past due 1 – 90 days Past due 91 – 180 days Past due 181 – 360 days More than 360 days

Impairment losses 2007 $’000

Gross 2006 $’000

Impairment losses 2006 $’000

84,013 29,938 4,027 1,668 1,559 121,205

– – 54 51 1,215 1,320

74,346 20,025 2,459 1,545 4,800 103,175

– – 281 106 1,747 2,134

74,324 25,061 4,733 4,746 7,351 116,215

678 891 1,277 3,146 7,066 13,058

60,149 17,854 3,920 4,658 7,003 93,584

1,057 1,093 1,693 2,378 4,914 11,135


NOTES TO THE FINANCIAL STATEMENTS

93

11 TRADE AND OTHER RECEIVABLES (CONT’D)

Singapore Computer Systems Limited

The change in impairment loss in respect of trade receivables during the year is as follows: Group

At 1 January Impairment loss utilised Impairment loss (reversed)/recognised At 31 December

Annual Report 2007

Company

2007 $’000

2006 $’000

2007 $’000

2006 $’000

2,134 (666) (148) 1,320

9,978 (5,844) (2,000) 2,134

11,135 (217) 2,140 13,058

14,933 (3,698) (100) 11,135

Based on historical default rates, the Group believes that no impairment allowance is necessary in respect of trade receivables from external customers not past due or past due up to 90 days. These receivables are mainly owing by customers that have a good track record with the Group. Trade receivables that are past due but not impaired are substantially companies with good collection track record. Impairment losses are recognised in other expenses in the income statement.

12 SHORT-TERM LOAN RECEIVABLES Group

Amounts receivable from: – subsidiaries – investee companies and others Impairment losses: – loans to subsidiaries – loans to investee companies and others

Company

2007 $’000

2006 $’000

2007 $’000

2006 $’000

– 1,663 1,663

– 1,663 1,663

3,918 1,663 5,581

4,040 1,663 5,703

– (1,656) 7

– (1,658) 5

(2,918) (1,656) 1,007

(2,660) (1,658) 1,385

The loan receivables from investee companies and others are unsecured, interest-free and are repayable on demand. The loan receivables from subsidiaries are unsecured, bear interest ranging from 3.94% to 4.21% (2006: 3.94% to 4.21%) per annum and are repayable on demand.


NOTES TO THE FINANCIAL STATEMENTS

94 Singapore Computer Systems Limited

13 CASH AND CASH EQUIVALENTS Group

Annual Report 2007

Company

2007 $’000

2006 $’000

2007 $’000

2006 $’000

Cash at bank and in hand

21,462

18,675

10,715

7,041

Fixed deposits

17,055

19,340

7,000

16,019

Cash and cash equivalents

38,517

38,015

17,715

23,060

(84)

Cash at bank pledged Fixed deposits pledged Cash and cash equivalents in the cash flow statement

(110)

(51)

38,323

37,964

The effective interest rates per annum relating to cash and cash equivalents at balance sheet date for the Group and Company are 0.24% - 3.75% and 1.00% - 1.30% (2006: 3.13% - 5.15% and 3.19% - 5.15%) respectively. Included in cash at bank is an amount of $1,044,000 (2006: $1,883,000) held in countries under foreign exchange controls. Fixed deposits and cash at bank pledged represent bank balances of certain subsidiaries pledged as security for bank guarantee facilities.

14 SHARE CAPITAL No. of shares

Fully paid ordinary shares with no par value As at 1 January Share options exercised As at 31 December

2007 ’000

2006 ’000

2007 $’000

2006 $’000

154,136 424 154,560

154,136 – 154,136

40,969 378 41,347

40,969 – 40,969

The Group has issued share options under its Singapore Computer Systems Share Option Plan (see Note 20). 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.


NOTES TO THE FINANCIAL STATEMENTS

95

14 SHARE CAPITAL (CONT’D)

Singapore Computer Systems Limited

Capital management The primary objective of the Group’s capital management is to ensure that it maintains a strong capital base to maximise shareholders’ value and to sustain future growth of the business. The Board of Directors monitors the return on equity, which the Group defines as profit attributable to shareholders divided by average shareholders’ equity. The Group’s target is to achieve a return on equity of between 12% to 18%; in 2007 the return was 16% (2006: 7%). The Board also monitors the level of dividends to ordinary shareholders. The management monitors gearing ratio and seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position. The gearing ratio is calculated as debt divided by total capital. The Group defines debt as borrowings and capital as the total of equity and debt. The Group’s target is to maintain a gearing ratio of between 5% to 20%; in 2007 the gearing ratio was 5% (2006: 6%). There were no changes in the Group’s approach to capital management during the year. The Company and its subsidiaries are not subject to externally imposed capital requirements.

15 RESERVES Group

Currency translation reserve Equity compensation reserve Asset revaluation reserve Accumulated profits

Company

2007 $’000

2006 $’000

2007 $’000

2006 $’000

(2,775) 673 120 77,095 75,113

(1,952) 145 111 64,486 62,790

– 673 120 59,269 60,062

– 145 111 31,277 31,533

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 equity compensation reserve comprises the cumulative value of employee services received for the issue of share options as well as the cumulative fair value of equity-settled share-based payments under the performance share plan and restricted stock plan recorded during the vesting period. When the option is exercised, the amount from the share option reserve is transferred to share capital. When the share option expires, the amount from the share option reserve is transferred to accumulated profits. The asset revaluation reserve includes the cumulative net change in the fair value of available-for-sale investments held until the investment is derecognised. In 2006, the accumulated profits of the Group include accumulated losses amounting to $508,000 attributable to associates.

Annual Report 2007


NOTES TO THE FINANCIAL STATEMENTS

96 Singapore Computer Systems Limited

16 FINANCIAL LIABILITIES Group

Annual Report 2007

Non-current liabilities Secured bank term loans Finance lease liabilities

Current liabilities Unsecured bank term loan Secured bank term loan Secured bank loans Unsecured bank loan Finance lease liabilities

2007 $’000

2006 $’000

2,213 37 2,250

– 132 132

– 782 3,832 – 89 4,703 6,953

1,448 – 5,659 791 106 8,004 8,136

The bank loans obtained by one of the group’s subsidiary – PT SCS Astragraphia Technologies are secured by corporate guarantees from Singapore Computer Systems Limited and PT Astra Graphia Tbk and the fiduciary transfer of certain receivables amounting to $5,621,000 (US$3,850,000) (2006: $5,100,000 (Rp30,000,000)). Finance lease liabilities

Group

Payment $’000

2007 Interest $’000

Principal $’000

Payment $’000

2006 Interest $’000

Principal $’000

Payable within 1 year

94

(5)

89

111

(5)

106

Payable after 1 year but within 5 years

39

(2)

37

139

(7)

132

133

(7)

126

250

(12)

238


NOTES TO THE FINANCIAL STATEMENTS

97

16 FINANCIAL LIABILITIES (CONT’D)

Singapore Computer Systems Limited

Terms and debt repayment schedule

Annual Report 2007

Terms and conditions of outstanding loans and borrowings are as follows: 2007

2006

Nominal interest rate

Year of maturity

Face value $’000

Carrying amount $’000

Face Value $’000

Carrying amount $’000

11.63% 11.81% 5.58% Cost of Fund+2% SIBOR+2% SIBOR+1.75% Cost of Fund+1.0% Cost of Fund+1.5% Cost of Fund+1.0% Cost of Fund+1.5% 4.00%-4.31%

2008 - 2010 2007 2007 2008 2008 - 2011 2008 2008 2007 2008 2007 2007 - 2009

826 – – 939 2,170 754 1,518 – 620 – 126 6,953

826 – – 939 2,170 754 1,518 – 620 – 126 6,953

– 1,448 791 – – – – 3,303 – 2,356 238 8,136

– 1,448 791 – – – – 3,303 – 2,356 238 8,136

Group Rp fixed rate loan Rp fixed rate loan RMB fixed rate loan US$ floating rate loan US$ floating rate loan US$ floating rate loan US$ floating rate loan US$ floating rate loan Rp floating rate loan Rp floating rate loan Finance lease liabilities

The following are the expected contractual undiscounted cash inflows (outflows) of financial liabilities, including interest payments and excluding the impact of netting agreements:

Group 2007 Non-derivative financial liabilities Fixed interest rate loans Variable interest rate loans Finance lease liabilities Trade and other payables* 2006 Non-derivative financial liabilities Fixed interest rate loans Variable interest rate loans Finance lease liabilities Trade and other payables*

* Excludes accrued operating expenses and deferred sales

Carrying amount $’000

Contractual cash flows $’000

Cash flows Within 1 year $’000

Within 1 to 5 years $’000

826 6,001 126 33,652 40,605

(1,074) (6,561) (133) (33,652) (41,420)

(684) (4,488) (94) (33,652) (38,918)

(390) (2,073) (39) – (2,502)

2,239 5,659 238 33,017 41,153

(2,322) (5,912) (250) (33,017) (41,501)

(2,322) (5,912) (111) (33,017) (41,362)

– – (139) – (139)


NOTES TO THE FINANCIAL STATEMENTS

98 Singapore Computer Systems Limited Annual Report 2007

16 FINANCIAL LIABILITIES (CONT’D) Carrying amount $’000

Contractual cash flows $’000

Cash flows Within 1 year $’000

2007 Non-derivative financial liabilities Trade and other payables*

52,398

(52,398)

(52,398)

2006 Non-derivative financial liabilities Trade and other payables*

77,224

(77,224)

(77,224)

Company

Within 1 to 5 years $’000

* Excludes accrued operating expenses and deferred sales

17 TRADE AND OTHER PAYABLES Group

Trade payables Deferred sales Deposits and advances Loans due to subsidiaries Accrued expenses Non-trade payables

Included in trade payables are balances due to: – subsidiaries – associates – related corporations Included in accrued expenses is: Allowance for foreseeable losses

Company

2007 $’000

2006 $’000

2007 $’000

2006 $’000

32,846 19,973 2,732 – 88,560 806 144,917

32,274 24,023 4,379 – 71,900 743 133,319

30,500 18,779 1,817 21,898 72,854 – 145,848

47,786 20,883 5,305 29,438 53,767 – 157,179

– 30 240

– 36 188

5,928 30 202

22,995 36 187

2,875

3,974

1,011

1,600

The outstanding balances with the above related parties are unsecured. The loans due to subsidiaries are unsecured, bear interest rates ranging from 0.0% to 4.40% (2006: 3.83% to 4.40%) per annum and are repayable on demand.


NOTES TO THE FINANCIAL STATEMENTS

99

17 TRADE AND OTHER PAYABLES (CONT’D) Included in other payables of the Group are defined benefit obligations amounting to $550,000 (2006: $591,000). Details of defined benefit obligations are as follows: Group

Present value of unfunded obligations Present value of funded obligations Total present value of obligations Fair value of plan assets Unrecognised actuarial gain/(losses) Unrecognised past service costs Recognised liability for defined benefit obligations

2007 $’000

2006 $’000

687 1,092 1,779 (1,005) 774 134 (358) 550

1,389 919 2,308 (832) 1,476 (474) (411) 591

Plan assets consist of the following: Group

Corporate bonds Equity securities Time deposits Government bonds Mutual funds and others

2007 $’000

2006 $’000

401 287 128 91 98 1,005

332 237 106 75 82 832

Singapore Computer Systems Limited Annual Report 2007


NOTES TO THE FINANCIAL STATEMENTS

100 Singapore Computer Systems Limited

17 TRADE AND OTHER PAYABLES (CONT’D) Movements in the liability for defined benefit obligations:

Annual Report 2007

Group

Liability for defined benefit obligations at 1 January Benefits paid by the plan Current service costs and interest (see below) Actuarial (gains)/losses Exchange differences on foreign plans Liability for defined benefit obligations at 31 December

2007 $’000

2006 $’000

2,308 (197) 383 (553) (162) 1,779

1,653 (183) 420 432 (14) 2,308

Movements in the present value of plan assets: Group

Fair value of plan assets at 1 January Contributions paid into the plan Benefits paid by the plan Expected return on plan assets Actuarial gains/(losses) Exchange differences on foreign plans Fair value of plan assets at 31 December

2007 $’000

2006 $’000

832 168 (57) 69 60 (67) 1,005

687 110 (24) 68 (3) (6) 832

Expenses recognised in the income statement: Group

Current service costs Interest on obligation Expected return on plan assets Net actuarial (gains)/losses recognised during the year Amortisation of past service costs – non vested Exchange differences on foreign plans

2007 $’000

2006 $’000

171 212 (69) (43) 20 – 291

240 180 (68) 8 26 (4) 382


NOTES TO THE FINANCIAL STATEMENTS

101

17 TRADE AND OTHER PAYABLES (CONT’D)

Singapore Computer Systems Limited

The expense is recognised in the following line items in the income statement:

Annual Report 2007

Group

Cost of sales Administrative expenses

Actual return on plan asset

2007 $’000

2006 $’000

133 158 291

183 199 382

21.1%

22.4%

Principal actuarial assumptions at the balance sheet date (expressed as weighted averages): Group

Discount rate at 31 December Expected return on plan assets at 1 January Future salary increases

2007

2006

10% 9% 8%

11% 10% 9%

Assumptions regarding future mortality are based on published statistics and mortality tables: Group

Effect on aggregate service and interest cost Effect on defined benefit obligation

1% point increase $’000

1% point decrease $’000

388 1,599

381 1,987

Historical information: Group

Present value of the defined benefit obligation Fair value of plan assets Deficit in the plan

2007 $’000

2006 $’000

(1,779) 1,005 (774)

(2,308) 832 (1,476)

The Group expects to pay $144,000 in contributions to defined benefit plans in 2008.


NOTES TO THE FINANCIAL STATEMENTS

102 Singapore Computer Systems Limited

18 PROGRESS BILLINGS IN EXCESS OF COST OF PROJECTS-IN-PROGRESS

Annual Report 2007

Group

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

Company

2007 $’000

2006 $’000

2007 $’000

2006 $’000

11,829 (10,308) 1,521 (632) 889 5,264

11,531 (11,880) (349) – (349) 12,167

11,264 (10,308) 956 (632) 324 5,162

3,794 (4,833) (1,039) – (1,039) 6,399

6,153

11,818

5,486

5,360

19 PROVISIONS Restructuring $’000

Claims $’000

Warranty $’000

Total $’000

Group At 1 January 2006 Provisions made Provision utilised Provision reversed At 31 December 2006 Provisions made Provision transferred from allowance for foreseeable losses Provision utilised At 31 December 2007

971 – – (971) – – – – –

62 – – (62) – – – – –

799 185 (602) – 382 1,619 3,239 (967) 4,273

1,832 185 (602) (1,033) 382 1,619 3,239 (967) 4,273

Company At 1 January 2006 Provisions made Provision utilised Provision reversed At December 2006 Provisions made Provision transferred from allowance for foreseeable losses Provision utilised At 31 December 2007

200 – (200) – – – – – –

62 – – (62) – – – – –

624 185 (427) – 382 1,619 3,239 (967) 4,273

886 185 (627) (62) 382 1,619 3,239 (967) 4,273

Provision for warranty is made for all the possible liability for rectification work on contracts undertaken by the Group. This provision is based on estimates prepared by project managers, taking into consideration potential manpower costs needed and external services required to fulfil these obligations.


NOTES TO THE FINANCIAL STATEMENTS

103

20 EQUITY COMPENSATION BENEFITS

Singapore Computer Systems Limited

(a) Singapore Computer Systems Executives’ Share Option Scheme (SCS ESOS) Holders of share options granted under SCS ESOS are entitled to subscribe for ordinary shares 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 2006 to 31 December 2006 are as follows:

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 31/12/2006

Date of grant of options

Exercise price per share

No. of unissued ordinary shares under options granted and unexercised as at 1/1/2006

12/7/2000

$1.13

63,000

63,000

63,000

63,000

Exercise period 20/4/2001 to 18/4/2009

As at 31 December 2006, all outstanding share options granted under SCS ESOS were exercisable. Movements of share options granted under SCS ESOS during the period from 1 January 2007 to 31 December 2007 are as follows:

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 31/12/2007

Date of grant of options

Exercise price per share

No. of unissued ordinary shares under options granted and unexercised as at 1/1/2007

12/7/2000

$1.13

63,000

(36,000)

27,000

63,000

(36,000)

27,000

Exercise period 20/4/2001 to 18/4/2009

As at 31 December 2007, all outstanding share options granted under SCS ESOS were exercisable.

Annual Report 2007


NOTES TO THE FINANCIAL STATEMENTS

104 Singapore Computer Systems Limited Annual Report 2007

20 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 ordinary shares 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 2006 to 31 December 2006 are as follows:

Date of grant of options

Exercise price per share

No. of unissued ordinary shares under options granted and unexercised as at 1/1/2006

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 31/12/2006

18/10/2000

$2.20

350,000

(40,000)

310,000

14/3/2001

$2.08

438,500

(135,500)

303,000

7/3/2002

$1.55

379,000

(22,000)

357,000

21/2/2003

$0.86

286,000

(36,000)

250,000

30/7/2003

$0.91

150,000

(64,286)

85,714

29/4/2004

$0.84

360,000

(42,000)

318,000

9/4/2005

$0.84

695,700

(84,800)

610,900

4/4/2006

$0.70

– 2,659,200

– (424,586)

600,000 2,834,614

Exercisable at 31 December

600,000 600,000

1,564,939

Exercise period 19/10/2001 to 18/10/2010 15/3/2002 to 14/3/2011 8/3/2003 to 7/3/2012 22/2/2004 to 21/2/2013 31/7/2004 to 31/7/2013 30/4/2005 to 29/4/2014 10/4/2006 to 9/4/2015 5/4/2007 to 4/4/2016


NOTES TO THE FINANCIAL STATEMENTS

105

20 EQUITY COMPENSATION BENEFITS (CONT’D)

Singapore Computer Systems Limited

(b) Singapore Computer Systems Share Option Plan (SCS SOP) (cont’d) Movements of share options granted under SCS SOP during the period from 1 January 2007 to 31 December 2007 are as follows:

Exercise price per share

No. of unissued ordinary shares under options granted and unexercised as at 1/1/2007

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

No. of unissued ordinary shares under options exercised 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 31/12/2007

18/10/2000

$2.20

310,000

(138,000)

172,000

14/3/2001

$2.08

303,000

(119,000)

184,000

7/3/2002

$1.55

357,000

(141,000)

216,000

21/2/2003

$0.86

250,000

(24,000)

(75,000)

151,000

30/7/2003

$0.91

85,714

(21,429)

64,285

29/4/2004

$0.84

318,000

(24,000)

(158,000)

136,000

9/4/2005

$0.84

610,900

(16,000)

(258,000)

336,900

4/4/2006

$0.70

600,000 2,834,614

– –

(360,000) (424,000)

– (910,429)

240,000 1,500,185

Date of grant of options

Exercisable as at 31 December

1,056,735

Exercise period 19/10/2001 to 18/10/2010 15/3/2002 to 14/3/2011 8/3/2003 to 7/3/2012 22/2/2004 to 21/2/2013 31/7/2004 to 31/7/2013 30/4/2005 to 29/4/2014 10/4/2006 to 9/4/2015 5/4/2007 to 4/4/2016

Annual Report 2007


NOTES TO THE FINANCIAL STATEMENTS

106 Singapore Computer Systems Limited

20 EQUITY COMPENSATION BENEFITS (CONT’D)

(b) Singapore Computer Systems Share Option Plan (SCS SOP) (cont’d)

Annual Report 2007

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/SOP 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. 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 measured based on a 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. Fair value of share options and assumptions Date of grant of options

18 Oct 2000

14 Mar 2001

7 Mar 2002

21 Feb 2003

30 Jul 2003

29 Apr 2004

9 Apr 2005

4 Apr 2006

Fair value at measurement date

$0.955

$0.961

$0.524

$0.268

$0.134

$0.157

$0.118

$0.173

Share price

$2.07

$2.01

$1.57

$0.865

$0.90

$0.80

$0.86

$0.74

Exercise price

$2.20

$2.08

$1.55

$0.860

$0.91

$0.84

$0.84

$0.70

Exercise volatility

63.90%

63.90%

45.78%

45.01%

33.55%

31.54%

19.46%

29.26%

Expected option life

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

1.5 to 4.5 years

Expected dividends

1.81%

1.49%

2.33%

3.47%

3.33%

3.75%

3.51%

4.05%

Risk-free interest rate

3.03%

3.03%

3.03%

3.03%

3.03%

3.03%

3.03%

3.31%

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.


NOTES TO THE FINANCIAL STATEMENTS

107

20 EQUITY COMPENSATION BENEFITS (CONT’D)

Singapore Computer Systems Limited

(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 mediumterm 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 2006 to 31 December 2006 are as follows:

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

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

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

No. of unreleased performance shares under conditional awards as at 31/12/2006

Minimum and maximum no. of unreleased performance shares deliverable under conditional awards at the end of the 3-year performance cycle

Date of grant of conditional awards

Over a 3-year performance cycle

No. of unreleased performance shares under conditional awards as at 1/1/2006

18/8/2004

2004 to 2006

220,000

220,000

0 to 440,000

1/6/2006

2006 to 2008

375,000

375,000

0 to 375,000

220,000

375,000

595,000

0 to 815,000

Annual Report 2007


NOTES TO THE FINANCIAL STATEMENTS

108 Singapore Computer Systems Limited

20 EQUITY COMPENSATION BENEFITS (CONT’D)

(c) Singapore Computer Systems Performance Share Plan (SCS PSP) (cont’d)

Annual Report 2007

Movements of conditional awards granted under SCS PSP during the period from 1 January 2007 to 31 December 2007 are as follows: Minimum and maximum no. of unreleased No. of performance No. of performance No. of shares unreleased shares unreleased deliverable No. of performance released performance No. of under unreleased shares under pursuant to shares under unreleased conditional performance conditional the vesting of conditional performance awards at shares under awards conditional awards shares under the end of conditional granted awards lapsed conditional the 3-year awards as at during the during the during the awards as at performance 1/1/2007 year year year 31/12/2007 cycle

Date of grant of conditional awards

Over a 3-year performance cycle

18/8/2004

2004 to 2006

220,000

(220,000)

1/6/2006

2006 to 2008

375,000

375,000

0 to 562,500

10/4/2007

2007 to 2009

540,000

540,000

0 to 810,000

595,000

540,000

(220,000)

915,000

0 to 1,372,500

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 ERCC of the Company may determine to release 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.

(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.


NOTES TO THE FINANCIAL STATEMENTS

109

20 EQUITY COMPENSATION BENEFITS (CONT’D)

Singapore Computer Systems Limited

(d) Singapore Computer Systems Restricted Stock Plan (SCS RSP) (cont’d) Movements of conditional awards granted under SCS RSP during the period from 1 January 2006 to 31 December 2006 are as follows:

Date of grant of conditional awards

No. of No. of performance No. of unreleased shares unreleased No. of performance released performance No. of unreleased shares under pursuant to shares under unreleased performance conditional the vesting of conditional performance shares under awards conditional awards shares under conditional granted awards lapsed conditional Over a 4-year awards during the during the during the awards as at period as at 1/1/2006 year year year 31/12/2006

1/6/2006

2006 to 2009

Minimum and maximum no. of unreleased performance shares deliverable under conditional awards over the 4-year period

838,000

838,000

0 to 838,000

838,000

838,000

0 to 838,000

Movements of conditional awards granted under SCS RSP during the period from 1 January 2007 to 31 December 2007 are as follows:

Date of grant of conditional awards

No. of No. of No. of performance unreleased unreleased shares performance No. of performance released shares under No. of unreleased shares under pursuant to conditional unreleased performance conditional the vesting of awards performance shares under awards conditional lapsed/ shares under conditional granted awards cancelled conditional Over a 4-year awards during the during the during the awards as at period as at 1/1/2007 year year year 31/12/2007

1/6/2006

2006 to 2009

10/4/2007

2007 to 2011

678,000

Minimum and maximum no. of unreleased performance shares deliverable under conditional awards over the 4-year period

838,000

(160,000)

0 to 881,400

736,500

(148,500)

588,000

0 to 764,400

838,000

736,500

(308,500)

1,266,000

0 to 1,645,800

Fair values of SCS PSP and SCS RSP The fair value of services received in return for shares awarded is measured by reference to the fair value of shares granted each year under the SCS PSP and RSP. The estimate of the fair value of the services received is measured based on Monte Carlo simulation model, which involves projection of future outcomes using statistical distributions of key random variables including share price and volatility of returns.

Annual Report 2007


NOTES TO THE FINANCIAL STATEMENTS

110 Singapore Computer Systems Limited Annual Report 2007

20 EQUITY COMPENSATION BENEFITS (CONT’D) The following table lists the inputs to the model used for the awards: ­ Expected dividend yield (%) Expected volatility (%) Risk-free interest rate (%) Expected term (years) Share price at date of grant ($)

PSP

RSP

1 June 2006

10 April 2007

1 June 2006

10 April 2007

4.29 17.27 3.06 3 0.77

4.29 16.99 2.45 3 0.83

4.29 17.72 2.88 – 3.14 3-4 0.77

4.29 16.99 2.37 – 2.52 2–4 0.83

For non-market conditions, achievement factors have been estimated based on inputs from the management for the purpose of accrual for the RSP until the achievement of the targets can be accurately ascertained. Based on the Monte Carlo simulation model, the fair values at date of grant for each share granted during the RSP ranges from $0.56 - $0.61 (2006: $0.54 - $0.59) and the estimated weighted average fair value at date of grant for each share granted under the PSP is $0.64 (2006: $0.48). As described in FRS 102, when estimating the fair value of the compensation cost, market-based performance conditions shall be taken into account. Therefore, for performance share grants with market-based performance conditions, the compensation cost shall be charged to the income statement on a basis that fairly reflects the manner in which the benefits will accrue to the employee under the plan over the remaining service period from date of grant to which the performance period relates, irrespective of whether this performance condition is satisfied. For performance share grants with non-market conditions, the Company revises its estimates of the number of shares grants expected to vest and corresponding adjustments are made to the income statement and equity compensation reserve. For the financial year that just ended, the Group has provided approximately $549,000 (2006: $nil) in respect of the RSP and PSP based on the fair values determined on grant date and estimation of share grants that will ultimately vest. The total amount recognised in the income statement for share-based compensation transactions with employees can be summarised as follows: Group

Employee share option plans Restricted stock plan Performance share plan

2007 $’000

2006 $’000

107 355 194 656

– – – –


NOTES TO THE FINANCIAL STATEMENTS

111

21 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. 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 comprise mainly corporate assets and expenses, interest income, interest expenses and related assets and liabilities. Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment and intangible assets other than goodwill. Geographical segments The computer and computer-related services segments are managed on a worldwide basis but operate in four principal geographical areas, comprising Singapore, Greater China, Indonesia and Others. 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.

(a) Geographical segments

Indonesia $’000

Greater China $’000

368,326

60,071

4,460

20,561

453,418

17,892

253

1,562

(19,707)

386,218

60,324

6,022

20,561

(19,707)

453,418

9,513

3,459

(408)

203

12,767

Singapore $’000

Others $’000

Eliminations $’000

Total $’000

Revenue and Expenses (by location of assets) 2007 Total revenue from external customers Inter-segment revenue Total revenue Segment results Unallocated income

3,126

Finance costs

(502)

Share of profit of associates

220

Income tax

3,146

Profit for the year

18,757

Total revenue from external customers (by location of customers) 2007

363,239

60,092

5,045

25,042

453,418

Singapore Computer Systems Limited Annual Report 2007


NOTES TO THE FINANCIAL STATEMENTS

112 Singapore Computer Systems Limited

21 SEGMENT REPORTING (CONT’D)

(a) Geographical segments (cont’d)

Annual Report 2007

Singapore $’000

Indonesia $’000

Greater China $’000

61,466

3,279

Others $’000

Eliminations $’000

Total $’000

Revenue and Expenses (by location of assets) 2006 Total revenue from external customers Inter-segment revenue Total revenue Segment results

300,330

10,257

375,332

4,773

1,362

(6,135)

305,103

61,466

4,641

10,257

(6,135)

375,332

(1,308)

3,530

(1,138)

496

1,580

Unallocated income

9,954

Finance costs

(1,244)

Share of profit of associates

1,051

Income tax expense

(2,937)

Profit for the year

8,404

Total revenue from external customers (by location of customers) 2006

290,767

61,550

5,463

17,552

375,332


NOTES TO THE FINANCIAL STATEMENTS

113

21 SEGMENT REPORTING (CONT’D)

Singapore Computer Systems Limited

(a) Geographical segments (cont’d)

Singapore $’000

Indonesia $’000

Greater China $’000

Others $’000

Total $’000

39,758 –

2,365 –

8,504 –

282,160 2,519

Assets and Liabilities 2007 Segment assets Investments in associates Unallocated assets: – tax – others Total assets

231,533 2,519

Segment liabilities Unallocated liabilities: – borrowings – tax Total liabilities

123,889

5,656 1,234 291,569 17,008

7,181

7,941

156,019 6,827 381 163,227

Assets and Liabilities 2006 Segment assets Investments in associates Unallocated assets: – tax – others Total assets

213,089 3,410

Segment liabilities Unallocated liabilities: – borrowings – tax Total liabilities

120,551

40,780 –

4,150 –

7,844 –

265,863 3,410 3,713 1,218 274,204

17,354

3,815

4,628

146,348 7,898 4,673 158,919

Depreciation charge 2007

7,436

13,032

149

155

20,772

2006

7,418

11,810

284

78

19,590

Impairment, amortisation and write-off of intangible assets 2007

300

300

2006

121

121

Capital expenditure 2007

6,729

5,947

38

92

12,806

2006

6,262

19,209

130

324

25,925

Annual Report 2007


NOTES TO THE FINANCIAL STATEMENTS

114 Singapore Computer Systems Limited

21 SEGMENT REPORTING (CONT’D)

(b) Business segments

Annual Report 2007

IT Business Solutions $’000

IT Infrastructure $’000

Others $’000

Total $’000

2007 Total revenue from external customers

169,774

283,644

453,418

Segment assets

105,650

176,510

282,160

4,795

8,011

12,806

100,018

275,314

375,332

70,847

195,016

265,863

4,050

19,819

2,056

25,925

Capital expenditure 2006 Total revenue from external customers Segment assets Capital expenditure

22 REVENUE Group 2007 $’000

2006 $’000

Sale of computer equipment and software

213,716

275,314

Software development, maintenance and other services

217,634

82,868

Rental income

22,068

17,150

453,418

375,332


NOTES TO THE FINANCIAL STATEMENTS

115

23 INCOME TAX

Singapore Computer Systems Limited

Group 2007 $’000

2006 $’000

(303)

2,659

59

779

(244)

3,438

Current tax (credit)/expense Current year Under provision in prior years

Deferred tax (credit)/expense Movements in temporary differences

(2,902)

(501)

(3,146)

2,937

18,757

8,404

Reconciliation of effective tax rate Profit for the year Income tax (credit)/expense

(3,146)

2,937

Profit excluding income tax

15,611

11,341

Less associates’ results presented net of tax

Tax calculated using Singapore tax rate of 18% (2006: 20%)

(220)

(1,051)

15,391

10,290

2,770

2,058

Effect of different tax rates in other countries

285

272

Income not subject to tax

(442)

(1,887)

Expenses not deductible for tax purposes

889

2,136

Group tax relief

(257)

Utilisation of deferred tax assets not previously recognised

(4,210)

Recognition of previously unrecognised deferred tax assets

(2,253)

374

59

779

Deferred tax assets not recognised Under provision in prior years Others

13

(795)

(3,146)

2,937

The utilisation of group tax relief is subject to the agreement of the tax authorities. The Singapore corporate tax rate has been reduced from 20% to 18% with effect from the financial year ended 31 December 2007.

Annual Report 2007


NOTES TO THE FINANCIAL STATEMENTS

116 Singapore Computer Systems Limited

23 INCOME TAX (CONT’D) Deferred tax assets have not been recognised in respect of the following items:

Annual Report 2007

Deductible temporary differences Unutilised tax losses Unutilised capital allowances

2007 $’000

2006 (restated) $’000

2006 (as previously reported) $’000

3,716

45,082

45,642

10,031

4,841

12,081

271

14,018

49,923

57,723

The comparatives have been changed to reflect the revised deductible temporary differences and unutilised tax losses after the tax authorities finalised the tax status of certain outstanding years of assessment. As at 31 December 2007, 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 2.14.


NOTES TO THE FINANCIAL STATEMENTS

117

24 PROFIT FOR THE YEAR

Singapore Computer Systems Limited

The following items have been included in arriving at profit for the year:

Annual Report 2007

Group 2007 $’000 Gain/(Loss) on disposal of property, plant and equipment

2006 $’000

4

(232)

390

368

1,036

1,109

– restructuring

971

– claims

62

(1,457)

(726)

(12,912)

148

2,000

(300)

(76)

(45)

(20,772)

(19,590)

– auditors of the Company

(58)

(65)

Operating lease expenses

(710)

(483)

Gain on foreign exchange Interest income Provision written back for:

Write-off and allowances (made)/written back for: – inventory obsolescence – 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:

Gain/(Loss) on disposal of investments in: – subsidiaries

29

(365)

– associates

7,070

133

77

– long-term investments Allowance made for impairment of investments in unquoted shares

(13)

(191)

(136,378)

(114,400)

(11,566)

(8,510)

– directors of the Company

(1,480)

(1,111)

Negative goodwill credited to income statement upon acquisition of additional interests in subsidiaries

1,010

192

(502)

(1,244)

12

Staff costs Contributions to defined contribution plans, included in staff costs Directors’ remuneration and fees:

Interest expenses on bank loans and overdrafts Dividend income


NOTES TO THE FINANCIAL STATEMENTS

118 Singapore Computer Systems Limited

25 KEY MANAGEMENT PERSONNEL COMPENSATION

The key management personnel compensation are as follows:

Annual Report 2007

Group 2007 $’000

2006 $’000

Short-term employee benefits

4,499

3,341

Equity compensation benefits

50

4,549

3,341

2007 $’000

2006 $’000

17,623

7,341

26 EARNINGS PER SHARE

(a) Basic earnings per share

Basic earnings per share is based on: Profit attributable to shareholders

No. of shares ’000 Issued ordinary shares at beginning of the year Effect of share options exercised Weighted average number of ordinary shares outstanding at the end of the year

154,136 67

154,136 –

154,203

154,136

2007 $’000

2006 $’000

17,623

7,341

(b) Diluted earnings per share

Diluted earnings per share is based on: Profit attributable to shareholders

No. of shares ’000

For the purpose of calculating the diluted earnings per ordinary share, the weighted average number of ordinary shares in issue is adjusted for the effect arising from the dilutive share options and contingently issuable shares, with the potential ordinary shares weighted for the period outstanding. The potential dilutive impact is from unissued ordinary shares under the Singapore Computer Systems Executives’ Share Option Scheme, the Singapore Computer Systems Share Option Plan, the Singapore Computer Systems Performance Share Plan and the Singapore Computer Systems Restricted Stock Plan.


NOTES TO THE FINANCIAL STATEMENTS

119

26 EARNINGS PER SHARE (CONT’D)

Singapore Computer Systems Limited

(b) Diluted earnings per share (cont’d) The effect of the exercise of share options and issuable performance shares on the weighted average number of ordinary shares in issue is as follows:

Weighted average number of ordinary shares issued, used in the calculation of basic earnings per share Potential ordinary shares issuable under: – share options – performance share and restricted stock plans Weighted average number of ordinary shares issued and potential shares assuming full conversion

2007 No. of shares ’000

2006 No. of shares ’000

154,203

154,136

206 1,869

428 –

156,278

154,564

Options to purchase 1,260,185 (2006: 2,297,614) ordinary shares at prices ranging from $0.84 to $2.20 were not included in the computation of diluted earnings per share because these options were anti-dilutive. In 2006, the unreleased performance shares under the Performance Share Plan and Restricted Stock Plan of 1,443,000 were not included in the computation of diluted earnings per share because the conditions for release of the shares had not been met.

27 COMMITMENTS Group

Capital commitment – approved and contracted for Operating lease commitments Under non-cancellable operating leases with terms exceeding 1 year: – payable within 1 year – payable within 2 to 5 years

Company

2007 $’000

2006 $’000

2007 $’000

2006 $’000

377

973

377

973

892 1,158

477 416

483 896

222 310

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.

Annual Report 2007


NOTES TO THE FINANCIAL STATEMENTS

120 Singapore Computer Systems Limited Annual Report 2007

27 COMMITMENTS (CONT’D) The Group leases out certain of its computer equipment. Non-cancellable operating lease rentals are receivable as follows: Group

Within 1 year After 1 year but within 5 years

2007 $’000

2006 $’000

15,861

20,427

5,397

19,618

21,258

40,045

28 CONSOLIDATED STATEMENT OF CASH FLOWS Disposals of subsidiaries During the year, the following subsidiaries were liquidated: - SCS Systems, Inc - SCS Australia Pty Limited - Asia Business Venture Holdings Pte Ltd - SCS Foresight Pte Ltd - iGlobal Services Pte Ltd - Mach30 Pte Ltd - ICX123 Pte Ltd The effects of liquidation and/or disposal of subsidiaries are set out below: Group 2007 $’000

2006 $’000

Property, plant and equipment

21

Inventories

337

Trade and other receivables

371

Cash and cash equivalents

864

194

Trade and other payables

(10)

(599)

Net identifiable assets and liabilities

854

324

Gain/(Loss) on disposal of investment in subsidiaries

29

(365)

Disposal proceeds

883

(41)

Less cash and cash equivalents disposed

(864)

(194)

19

(235)

Cash inflow/(outflow) on disposal of subsidiaries


NOTES TO THE FINANCIAL STATEMENTS

121

28 CONSOLIDATED STATEMENT OF CASH FLOWS (CONT’D)

Singapore Computer Systems Limited

Acquisition of subsidiaries On 3 January 2007, the Group acquired an additional equity interest in an associate, Green Dot Internet Services Pte Ltd (GDIS) for a cash consideration of $2,432,000, increasing its interest in GDIS from 22.7% to 100%. For the 12 months to 31 December 2007, the company contributed a net profit of $516,000 to the consolidated net profit for the year. The effects of the acquisition of subsidiary are set out below:

2007 Intangible assets Trade and other receivables Cash and cash equivalents Trade and other payables Net identifiable assets and liabilities Cost of investment as an associate Negative goodwill on consolidation recognised in income statement Consideration paid, satisfied in cash Cash acquired Cash inflow on acquisition of subsidiary

Carrying amount $’000 600 2,709 7,558 (6,390)

Fair value adjustments $’000 – – – –

Recognised values $’000 600 2,709 7,558 (6,390) 4,477 (1,035) (1,010) 2,432 (7,558) (5,126)

29 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: Group

Related corporations Sales Purchases Associates Sales Purchases Rental income

2007 $’000

2006 $’000

37,640 5,847

17,059 2,590

300 220 –

1,400 – 389

Annual Report 2007


NOTES TO THE FINANCIAL STATEMENTS

122 Singapore Computer Systems Limited Annual Report 2007

30 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 the safeguarding of 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. It is the Group’s policy not to engage in foreign exchange and/or derivatives speculation or trading in treasury transactions. The purpose of engaging in treasury transactions is solely for hedging purposes and are currently limited to spot and forward contracts. The Group does not use complex derivative instruments with embedded or leverage features to mitigate risks. 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. The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistics for similar financial assets. The allowance account in respect of trade and other receivables is used to record impairment losses unless the Group is satisfied that no recovery of the amount owing is possible. At that point, the financial asset is considered irrecoverable and the amount charged to the allowance account is written off against the carrying amount of the impaired financial asset. Short-term investments are limited only to bank certificates of deposits and cash deposits placed with reputable banks. 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. Market risk Market risk is the risk that changes in market prices, such as interest rates, foreign exchange rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.


NOTES TO THE FINANCIAL STATEMENTS

123

30 FINANCIAL INSTRUMENTS (CONT’D)

Singapore Computer Systems Limited

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. Foreign currency risk The Group is exposed to foreign currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of the Group entities. The currencies giving rise to this risk is primarily US dollar and Euro. 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. The Group’s and Company’s exposures to foreign currencies are as follows:

Group As at 31 December 2007 Trade and other receivables Cash and cash equivalents Financial liabilities Trade and other payables As at 31 December 2006 Trade and other receivables Cash and cash equivalents Financial liabilities Trade and other payables

Company As at 31 December 2007 Trade and other receivables Cash and cash equivalents Financial liabilities Trade and other payables As at 31 December 2006 Trade and other receivables Cash and cash equivalents Financial liabilities Trade and other payables

Singapore dollar $’000

United States dollar $’000

7 – – (1,610) (1,603)

Euro $’000

Others $’000

13,815 3,686 (5,381) (19,171) (7,051)

33 70 – (1) 102

26 36 – (97) (35)

88 1,077 – (195) 970

10,923 5,558 (2,356) (12,519) 1,606

1,519 167 – (13) 1,673

865 – – (20) 845

– – – – –

2,952 540 – (10,234) (6,742)

– – – – –

57 – – (48) 9

– – – – –

4,976 1,969 – (6,276) 669

– – – – –

865 – – (52) 813

Annual Report 2007


NOTES TO THE FINANCIAL STATEMENTS

124 Singapore Computer Systems Limited Annual Report 2007

30 FINANCIAL INSTRUMENTS (CONT’D) Sensitivity analysis A 10% strengthening of Singapore dollar against the following currencies at the reporting date would increase/ (decrease) income statement by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. Group Income statement $’000

Company Income statement $’000

United States dollar

705

674

Euro

(10)

United States dollar

(161)

(67)

Euro

(167)

31 December 2007

31 December 2006

A 10% weakening of Singapore dollar against the above currencies would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant. Liquidity risk The Group manages its liquidity risk by monitoring its forecast operational cashflows and through matching of payment and receipt cycles. It also 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 working capital and capital investments requirements. In addition, the Group maintains the following lines of credit: – $18 million overdraft facility that is unsecured. Interest would be payable at the bank’s prime rate. – $28.7 million that can be drawn down to meet short-term financing needs. Interest in respect of $24 million credit lines would be payable at the prevailing interest rate agreed upon at the time of drawdown. Interest payable would be SBI + 4% and Cost of Fund + 1% for credit facility of $3.9 million and $0.8 million respectively. Estimation of fair values Investments in equity securities The fair value of available-for-sale financial assets is determined by reference to their quoted bid prices at the reporting date, except for 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.


NOTES TO THE FINANCIAL STATEMENTS

30 FINANCIAL INSTRUMENTS (CONT’D) Other financial assets and liabilities The notional amounts of financial assets and liabilities with a maturity of less than one year (including trade and other receivables, cash and cash equivalents, and trade and other payables) are assumed to approximate their fair values because of the short period to maturity. All other financial assets and liabilities are discounted to determine their fair values.

31 CORPORATE GUARANTEES Other than corporate guarantees disclosed in Note 16, the Company provided corporate guarantees for approximately $2.14 million (2006: $2.12 million) in favour of certain suppliers of its subsidiaries.

32 NEW ACCOUNTING STANDARDS AND INTERPRETATIONS NOT YET ADOPTED The Group has not applied the following accounting standards (including its consequential amendments) and interpretations that have been issued as of the balance sheet date but are not yet effective: FRS 23

Borrowing Costs

FRS 108

Operating Segments

INT FRS 111

FRS 102 Group and Treasury Share Transactions

INT FRS 112

Service Concession Arrangements

FRS 23 will become effective for financial statements for the year ending 31 December 2009. FRS 23 removes the option to expense borrowing costs and requires an entity to capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. FRS 108 will become effective for financial statements for the year ending 31 December 2009. FRS 108, which replaces FRS 14 Segment Reporting, requires identification and reporting of operating segments based on internal reports that are regularly reviewed by the Group’s chief operating decision maker in order to allocate resources to the segment and to assess its performance. Currently, the Group presents segment information in respect of its business and geographical segments (see Note 21). Under FRS 108, the Group will present segment information in respect of its operating segments: Infrastructure and Business Solutions segments. Other than the change in disclosures relating to FRS 108, the initial application of these standards (and its consequential amendments) and interpretations is not expected to have any material impact on the Group’s financial statements. The Group has not considered the impact of accounting standards issued after the balance sheet date.

125 Singapore Computer Systems Limited Annual Report 2007


DIRECTORS’ REMUNERATION

YEAR ENDED 31 DECEMBER 2007 (SGX-ST LISTING MANUAL DISCLOSURE REQUIREMENTS) 126 Singapore Computer Systems Limited Annual Report 2007

Company’s directors receiving remuneration from the Group Company 2007 2006 No. of directors No. of directors

Remuneration Bands

(a)

$500,000 and above

1

1

$250,000 to below $500,000

Below $250,000

7

7

Total

8

8

The following table shows a breakdown (in percentage terms) of the remuneration of directors for the 12 months ended 31 December 2007: Name of Director

Salary *

Bonus #

%

%

– – – – – – – 42.9

– – – – – – – 11.1

Peter Seah Lim Huat Boon Swan Foo Philip Eng Heng Nee William Liu Wei Hai Donald Albert Ramble Tan Cheng Han Venkatachalam Krishnakumar Tan Tong Hai

(b)

Directors’ Fees % 100 100 100 @ 100 100 100 100 –

Others

Total

%

%

– – – – – – – 46.0

100 100 100 100 100 100 100 100

* The salary amount shown is inclusive of allowances and CPF. # The bonus amount shown is inclusive of CPF.

@

Fees are payable to Director’s employer.

Details of share options and share awards granted to directors are disclosed in the Directors’ Report.


INTERESTED PERSON TRANSACTIONS YEAR ENDED 31 DECEMBER 2007 (SGX-ST LISTING MANUAL DISCLOSURE REQUIREMENTS)

127 Singapore Computer Systems Limited

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: 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 shareholders’ mandate pursuant to Rule 920 (excluding transactions less than $100,000)

2007 $’000

2007 $’000

Singapore Technologies Semiconductors Pte Ltd and its Associates

1,626

Singapore Technologies Engineering Ltd and its Associates

2,062

Singapore Technologies Telemedia Pte Ltd and its Associates

24,212

Temasek Holdings (Private) Limited & its Associates

9,221

293

37,414

Name of interested person

Transactions for the Sales of Goods and Services

Transactions for the Purchases of Goods and Services Temasek Holdings (Private) Limited & its Associates

Annual Report 2007


CORPORATE GOVERNANCE REPORT

128 Singapore Computer Systems Limited Annual Report 2007

INTRODUCTION Our principles of corporate governance reflect our heritage and belief in delivering results while building for the future. We firmly believe 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 cornerstones 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 its 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. SCS is committed to achieving high standards of corporate conduct and supports the principles and spirit of the Singapore Code of Corporate Governance 2005 (the “Code”). This report describes the corporate governance policies and practices of SCS, with specific references to the principles of the Code. In the following sections covering each of the principles, we have outlined our policies and practices.

A. BOARD MATTERS Board’s Conduct of its Affairs (Principle 1) The Board oversees the key activities and business strategies of the SCS Group, and provides leadership and guidance to the Group. SCS’ directors have been appointed on the strength of their calibre, experience, stature, and their potential to contribute to the proper guidance of SCS and its businesses. 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. Matters that require board approval include the announcement of financial results, key investments and divestments above a certain dollar limit, approval of budgets and financial authority limits, board changes and dividend policies. The Board has also adopted a set of internal controls which sets out approval limits for capital expenditure, investments and divestments, bank borrowings and cheque signatories arrangements. Approval sub-limits 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 SCS’ or directors’ disclosure obligations, directors are briefed either during Board meetings or at specially-convened sessions conducted by professionals. Newly-appointed directors are provided with a formal letter, setting out the director’s duties and obligations. They are also given briefings by Management on the business activities of the Group and its strategic directions.


CORPORATE GOVERNANCE REPORT

129

Executive Committee The Board has established an Executive Committee to assist the Board in the discharge of its duties. The Executive Committee comprises the following 4 members, who are (save for Mr Tan Tong Hai) non-executive: (a) Mr Boon Swan Foo (Chairman); (b) Mr Donald Albert Ramble; (c) Mr Venkatachalam Krishnakumar; and (d) Mr Tan Tong Hai. The Executive Committee meets regularly with Management to assist and advise Management in shaping appropriate business strategies, reviewing investments and divestment transactions within $10 million and endorsing proposals on investments above $10 million for submission for approval to the Board. Additional Board meetings may also be held to address other significant transactions/issues if the Executive Committee or directors deem fit. The Board is supported by other key board committees as indicated in the table below to provide independent oversight of Management. These key committees are the Audit Committee, Executive Resource and Compensation Committee and Nominating Committee, made up of independent and/or non-executive directors. Other committees can be formed from time to time to look into specific areas as and when the need arises. Committee Membership

Audit Committee (AC)

Executive Committee (EXCO)

Executive Resource and Compensation Committee (ERCC)

Nominating Committee (NC)

Director

Board Membership

Peter Seah Lim Huat

Non-Executive Chairman

Chairman

Member

Boon Swan Foo

Non-Executive & Independent Director

Chairman

Member

Chairman

Philip Eng Heng Nee

Non-Executive & Independent Director

Chairman

Member

Member

Tan Cheng Han

Non-Executive & Independent Director

Member

William Liu Wei Hai

Non-Executive Director

Member

Donald Albert Ramble

Non-Executive & Independent Director

Member

Venkatachalam Krishnakumar

Non-Executive & Independent Director

Member

Tan Tong Hai

Executive Director

Member

Memberships 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.

Singapore Computer Systems Limited Annual Report 2007


CORPORATE GOVERNANCE REPORT

130 Singapore Computer Systems Limited Annual Report 2007

During the financial year, the Board held four meetings and the attendance of each director at every Board and Board Committee meeting is stated in the table below. Besides Board meetings, the directors also actively participate as members of the Audit Committee, Executive Committee, Nominating Committee and Executive Remuneration and Compensation Committee. Our directors have also contributed in ways other than attendances at Board and Committee meetings. Management has access to the directors at all times, for guidance or exchange of views outside the formal environment of board meetings. In addition, directors may bring relationships strategic to the interests of the Group.

Board

Name

Audit Committee

Executive Committee

Nominating Committee

Executive Remuneration & Compensation Committee

No. of No. of No. of No. of No. of No. of No. of No. of No. of No. of Meetings Meetings Meetings Meetings Meetings Meetings Meetings Meetings Meetings Meetings held attended held attended held attended held attended held attended

Peter Seah Lim Huat

4

4

1

1

1

1

Boon Swan Foo

4

4

6

5

1

1

1

1

Philip Eng Heng Nee

4

4

4

4

1

1

1

1

William Liu Wei Hai

4

4

4

4

Donald Albert Ramble

4

2

6

5

Tan Cheng Han

4

2

4

4

Venkatachalam Krishnakumar

4

3

6

6

Tan Tong Hai

4

4

6

6

Note: Numbers indicated in table for committee attendance are for appointed committee members only and do not include attendances of directors who attend committee meetings by invitation.

Board Composition and Guidance (Principle 2) The Board comprises 8 business leaders and professionals with financial and entrepreneurial backgrounds. Profiles of the current Directors are found on page 12 to 16 of the Annual Report. All members of the Board are non-executive except for Executive Director Mr Tan Tong Hai who is also the President and Chief Executive Officer of SCS. The composition of the Board allows the Board to exercise objective judgment on corporate affairs independently from Management and enables 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.


CORPORATE GOVERNANCE REPORT

131

Of the 7 non-executive directors, 5 are independent non-executive directors. Three of the 5 independent non-executive directors could be perceived under the Guidelines of the Code as being non-independent, namely Mr Boon Swan Foo (Guideline 4.1), Mr Venkatachalam Krishnakumar (Guideline 2.1(d)) and Professor Tan Cheng Han (Guideline 2.1(d)). The Board assesses these 3 directors as independent directors due to their manifest ability to exercise objective and strong independent judgment in their deliberations in the interests of SCS. The Board is satisfied that these 3 directors have conducted themselves with professionalism and in observing strict standards of disclosure and duty of care with regard to any conflict of interest that may arise due to such relationships. The Board also recognises and values their invaluable contributions from the wealth of their experience. Access to Information (Principle 6) 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. 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. SCS’ Articles of Association 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 and teleconferencing. 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 senior Management and the Company Secretary at all times. The Board also has access to independent professional advice where appropriate. The Audit Committee also meets the external and internal auditors separately at least once a year, without the presence of the CEO and other senior Management, in order to have free and unfiltered access to information that it may require. Chairman and Chief Executive Officer (Principle 3) The Chairman of the Board, Mr Peter Seah, is a non-executive director 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 Management with the capability and moral authority to engage Management in constructive debate on various matters, including strategic issues and business planning processes. SCS’ President & CEO, Mr Tan Tong Hai, is a Board member and has full executive responsibilities over the business directions and operational decisions of the Group.

Board Committees Nominating Committee (“NC”) Board Membership (Principle 4) Board Performance (Principle 5) The current NC comprises the following 3 members, all non-executive, the majority of whom, including the Chairman, are independent: (a) Mr Boon Swan Foo (Chairman); (b) Mr Peter Seah Lim Huat; and (c) Mr Philip Eng Heng Nee.

Singapore Computer Systems Limited Annual Report 2007


CORPORATE GOVERNANCE REPORT

132 Singapore Computer Systems Limited Annual Report 2007

The NC is responsible for ensuring that SCS’ Board is comprised of individuals who are able to discharge their responsibilities as directors and who possess the background, experience and knowledge in technology, business, finance and management skills critical to SCS’ business. The NC shall from time to time, review nominations received from directors or Management for prospective candidates, and make recommendations to the Chairman of the Board on candidates it considers appropriate for appointment to SCS’ Board, taking into consideration each director’s contributions to the Board for an independent and objective perspective to enable balanced and well-considered decisions to be made. Formal and informal reviews of the Board’s performance are also 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 SCS and its business. We believe that Board renewal must be an ongoing process, to both ensure good governance, and maintain relevance to the changing needs of SCS and business. 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. 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 SCS and its shareholders. In addition to these fiduciary duties, the Board is charged with two key responsibilities: setting strategic directions and ensuring that SCS 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.

B. REMUNERATION MATTERS Procedures for Developing Remuneration Policies (Principle 7) Level and Mix of Remuneration (Principle 8) Disclosure on Remuneration (Principle 9)

Executive Resource and Compensation Committee (“ERCC”) The ERCC performs the role of the Remuneration Committee and 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’s scope of responsibilities include: •

Reviewing 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;

Designing of compensation packages (including review of salaries, bonuses and incentives such as the grant of share options and conditional awards) with a view to provide competitive packages but with focus on long-term sustainability of business and long term shareholder's return.

Overseeing the development of leadership and management talent in the SCS Group such as approval of key appointments, succession plans for key positions, etc.


CORPORATE GOVERNANCE REPORT

133

The ERCC is chaired by the Chairman of the Board and comprises the following 3 members, all non-executive, the majority of whom are independent: (a) Mr Peter Seah Lim Huat (Chairman);

Annual Report 2007

(b) Mr Boon Swan Foo; and (c) Mr Philip Eng Heng Nee. The Chairman of the ERCC, could be deemed as not being independent under Guideline 2.1 of the Code. However, as a non-executive director independent of Management, he functions 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 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. Non-executive Directors have remuneration packages which consist of a director's fee component and a share options component pursuant to SCS' Share Option Plan. The details of Directors' fees and share options are found on page 126 of the Annual Report. Directors' fees for non-executive Directors are subject to the approval of shareholders at AGM. 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 126 of the Annual Report. To maintain confidentiality of staff remuneration matters, we have provided a breakdown of the employees as a group whose remuneration exceeds $250,000 but not the names of the top five key executives who are not also directors of SCS. Remuneration Band

Singapore Computer Systems Limited

Salary

Bonus

Others

Total

66%

28%

6%

100%

$250,000 to $749,999 8 Employees

Details of employee share schemes are set out in the Directors’ Report on page 57 to 62 of this Annual Report.

C. ACCOUNTABILITY AND AUDIT Accountability (Principle 10) Audit Committee (“AC”) (Principle 11) 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.


CORPORATE GOVERNANCE REPORT

134 Singapore Computer Systems Limited Annual Report 2007

The current AC comprises the following 3 members, all non-executive, the majority of whom, including the Chairman, are independent: (a) Mr Philip Eng Heng Nee (Chairman); (b) Professor Tan Cheng Han; and (c) Mr William Liu Wei Hai. The members bring with them invaluable managerial and professional expertise in the financial, legal and IT domain. The AC meets regularly and also holds informal meetings and discussions with Management from time to time. 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; reviews interested person transactions, the Group’s quarterly and full year financial statements and recommends to the Board for approval of the same. The AC has full discretion to invite any Director or executive officer to attend its meetings. The AC has been given full access to and is provided with the cooperation of Management. In addition, the AC has independent access to the internal and external auditors. The AC meets with the external & internal auditors, without the presence of Management, at least once a year to seek their views on the adequacy of internal controls & audit arrangements, review the co-operation rendered by Management to the auditors, review accounting issues and matters that might be raised privately. The AC has reasonable resources to enable it to discharge its functions properly. The AC has reviewed the volume of non-audit services to the Group by the external auditors, and being satisfied that the nature and extent of such services will not prejudice the independence and objectivity of the external auditors, is pleased to recommend their re-appointment. We also have in place a Whistleblower policy by which the employees of SCS may, in confidence, raise concerns about possible improprieties in matters of financial reporting or matters regarding unethical conduct, within the Group. Such concerns are escalated to senior Management and to the AC (where appropriate) to facilitate independent investigation of such matters and for appropriate follow up. Internal Controls (Principle 12) 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. SCS has established an Enterprise Risk Management function which focuses on establishing a robust risk management practice to allow the Group to identify, assess, manage and monitor key risks (details are available at page 26 of this Annual Report). Internal Audit (Principle 13) The internal audit function of the Group has been outsourced to Deloitte & Touche Enterprise Risk Services Pte Limited (“Deloitte”) since March 2005. Deloitte reports directly to the AC Chairman, and supports the AC in reviewing the adequacy of internal control system. All audit reports are submitted to the AC and copies of the reports are extended to Management for implementing the recommendations. Summary reports and updates are discussed at AC meetings. Updates are furnished to the AC on the status of audits in progress and Management’s implementation. The AC also meets with Deloitte and the external auditors at least once a year without the presence of Management to promote independence of the internal and external audit functions. Deloitte Singapore is a corporate member of the Singapore Chapter of the Institute of Internal Auditors (“IIA”) and their work adheres to the Standards for Professional Practice of Internal Auditing of the IIA.


CORPORATE GOVERNANCE REPORT

D. COMMUNICATION WITH SHAREHOLDERS Principle 14: Regular, Effective and Fair Communication with Shareholders Principle 15: Greater Shareholder Participation at Annual General Meetings We support the Code’s principle of promoting transparency and accountability to our shareholders by engaging our shareholders in regular communications and encouraging their participation at general meetings. Our Value Creation Centre, being in charge of investor relations, attends to shareholder queries and proactively manages investor relations and plans regular events to brief the media and investment analysts. Material and price-sensitive information as guided by the Listing Manual is publicly released via SGXNET announcements and news releases in a timely manner to ensure that shareholders and the public have fair access to such information. To provide opportunity for interaction and exchange, we conduct quarterly briefings to media and investment analysts on the Group’s quarterly and full year performances and such briefings are also available through webcast on our website. The Annual General Meeting (“AGM”) of SCS is a principal forum for dialogue and interaction with all shareholders. All shareholders will receive the Annual Report and the Notice of AGM. At the AGM, shareholders will be given the opportunity to voice their views and to direct questions regarding the Group to the Directors including the chairpersons of each of the Board committees. The external auditors are also present to assist the Directors in addressing any relevant queries from the shareholders. The notice and conduct at the general meeting is also structured to ensure that there are separate resolutions on each distinct issue. Substantial comments or queries from shareholders at the AGM, and responses from the Board and Management, are available to shareholders upon their request. Our Articles of Association allow a member of SCS to appoint one or two proxies to attend and vote at general meetings. Voting in absentia such as by way of email, etc. may be implemented when studies show that pertinent issues like security, document integrity and authentication of shareholder identity are not compromised.

DEALINGS IN SECURITIES SCS has a Code of Compliance on Dealings in Securities, pursuant to which, Directors and executive officers of SCS and its subsidiaries are prohibited from (a) dealing in SCS’ securities during the period commencing 2 weeks before the announcement of the SCS’ results for each of the first three quarters of its financial year, and 1 month before the announcement of its full year results (“black-out periods”); (b) dealing in SCS’ securities on short-term considerations; and (c) when they are in possession of unpublished price-sensitive information, dealing or procuring another person to deal in SCS’ securities or securities of another company with which SCS does business. The Code has been distributed to SCS’ Directors and executive officers and regular reminders are issued to observe insider trading laws at all times even when dealing in securities outside the black-out periods.

APPENDIX Audit Committee’s Terms of Reference 1. The Audit Committee (“AC”) assists the Board of Directors (“Board”) in fulfilling its fiduciary responsibilities of the Company to act in the interest of the shareholders as a whole, in undertaking such statutory and regulatory functions of an AC as are prescribed from time to time, in Section 201B of the Companies Act (Cap.50) and the Singapore Exchange Securities Trading Ltd (“SGX”) Listing Manual (including such Best Practices Guides and Codes issued by the Council of Corporate Disclosure and Governance as are adopted by the SGX).

135 Singapore Computer Systems Limited Annual Report 2007


CORPORATE GOVERNANCE REPORT

136 Singapore Computer Systems Limited Annual Report 2007

2. The AC has the following duties and responsibilities: a. The AC will review the reports of the external and internal auditors and the AC’s review of the same are to provide a further layer of assurance of the:

Integrity, confidentiality and availability of critical information;

Effectiveness and efficiency of operations;

Safeguarding of assets; and

Compliance with applicable laws, regulations and code of practice.

b. The AC will review the external auditor's reports (including any qualifications in their opinion), the management letter and Company management's response and the level of cooperation and provision of all information by management during the course of audit. c. The AC will review the appropriate levels of resources devoted to internal audit (“IA”). AC will from time to time seek external auditor advice on the IA audit plan, scope of IA functions and appropriate staffing levels. d. The AC will regularly require updates from the external auditors in relation to the impact of any new or proposed changes in accounting standards and regulatory requirements on Company's financial statements and accounting policies. e. The AC's evaluation and recommendation to the Board to appoint/re-appoint and compensate external auditors are to be based on the external auditors' team experience and resources and independence. f. Management shall regularly report to the AC on the supply and magnitudes of non-audit services provided by the external auditors to the Company. The AC will monitor such levels of non-audit services and satisfy itself that they do not compromise the independence and effectiveness of the external auditors. g. The AC's review of all financial statements and any financial reporting of the Company, with management and external auditors prior to their presentation to the Board for approval for publication or for release to any relevant authority, will be in the context of ensuring compliance with applicable standards of disclosure. Executive Committee’s Terms of Reference 1. The Executive Committee (“ExCo”) assists and advises the Board in shaping the business direction and strategy of the Company by identifying, evaluation, reviewing and approving the investment activities and key businesses undertaken by the Company. 2. The ExCo has the following duties and responsibilities: a. review and approve all investment and divestment transactions up to a value of $10 million (including but not limited to joint ventures, acquisitions and divestments of assets including securities, capital funding of subsidiaries and associates) and ensure that such transactions are in line with the business strategy of the Company; b. review and endorse proposals on investments in excess of the approval limits for submission to the Board; c. conduct reviews from time to time of transactions approved and undertaken by the management of the Company; d. monitor and review investments approved by the management, ExCo or the Board; e. review annual business plans, budgets and policies and determine the impact on the Company’s performance; f. carry out any other functions which the Board may delegate to the ExCo from time to time.


CORPORATE GOVERNANCE REPORT

137

Executive Remuneration and Compensation Committee’s Terms of Reference 1. The Executive Remuneration and Compensation Committee (“ERCC”) supports and advises the Company, its unlisted subsidiaries and, where applicable, unlisted associated companies (“SCS Group” and each company in the SCS Group shall be referred to as a SCS Group Company) on remuneration matters and leadership development of the SCS Group by: a. Overseeing the development of leadership and management talent in the SCS Group. b. Ensuring that companies in the SCS Group have appropriate remuneration policies. c. Designing competitive compensation packages with focus on long term sustainability of business and long term shareholders’ return. 2. The ERCC has the following duties and responsibilities: 2.1

Executive Remuneration Policy a. Review and approve the SCS Group’s policy for determining executive remuneration including the remuneration of the Chief Executive Officer and the key management executives of the SCS Group Companies (thereafter, each referred to as a Senior Management Executive); b. Review the on-going appropriateness and relevance of the executive remuneration policy and other benefit programmes.

2.2

Executive Directors and Senior Management a. Consider, review and approve and/or vary (if necessary) the entire specific remuneration package and service contract terms for each Senior Management Executive (including salaries, allowances, bonuses, payments, options, benefits in kind, retirement rights, severance packages and service contracts) having regard to the executive remuneration policy for each SCS Group Company;

2.3

Consider and approve termination payments, retirement payments, gratuities, ex-gratia payments, severance payments and other similar payments to Senior Management Executives. Equity Based Plans a. Review and approve the design of all option plans, stock plans and/or other equity based plans; b. For each equity based plan, determine each year whether awards will be made under that plan; c. Review and approve each award as well as the total proposed awards under each plan in accordance to the rules governing each plan, including awards to directors and each Senior Management Executive; d. Review, approve and keep under review performance hurdles and/or fulfillment of performance hurdles for each equity based plan.

2.4 2.5

Non-Executive Director Remuneration Approve the remuneration framework (including directors fees) for non-executive Directors on the relevant Group Boards. Executive and Leadership Development The ERCC shall oversee the development of management with the aim of a continual build up of talent and renewal of strong and sound leadership to ensure the continued success of the SCS Group and its businesses. It shall: •

Approve appointment of Senior Management Executive positions in the SCS Group and review succession plans for key positions in the SCS Group; and

Oversee the development of key executives and talented executives.

Singapore Computer Systems Limited Annual Report 2007


CORPORATE GOVERNANCE REPORT

138 Singapore Computer Systems Limited Annual Report 2007

Nominating Committee’s Terms of Reference 1. The Nominating Committee (“NC”) assists the SCS Group in fulfilling their responsibilities to shareholders in ensuring that there is a formal and transparent process for the appointment and re-appointment of directors to the Boards in the SCS Group (“Group Boards”) (including sub-Boards as appropriate), and ensuring that there is a formal assessment of the effectiveness of such Boards as a whole and the contributions made by each director to the effectiveness of the Group Boards. 2. The NC ensures that the Group Boards are comprised of individuals who are best able to discharge their responsibilities as directors having regard to the law and the highest standards of governance by: a. Identifying suitable candidates for appointment to the Group Boards, in particular, candidates who can value-add to the management through their contributions in the relevant strategic business areas and which appointments will result in the constitution of strong and diverse boards; and b. Ensuring that the SCS Board includes a balance of executive and non-executive directors (and in particular independent non-executive directors) such that no individual or small group of individuals can dominate the SCS Board’s decision-making. 3. The NC has the following duties and responsibilities: a. The NC shall conduct a regular review of the Board composition to ensure that suitable directors are appointed to address relevant industry and business needs of the Company and its key subsidiaries. The NC shall also undertake a review of directors of the Board when a director is due for retirement and re-election, and is responsible for re-nomination of the director having regard to the director’s contribution and performance. b. In its performance evaluation of the directors, the NC shall take into account the company’s share price performance over a 5-year period vis-à-vis the Singapore Straits Times Index and a benchmark index of its industry peers. c. The NC is responsible for determining annually if a director is independent, bearing in mind the circumstances set forth in Guideline 2.1 of the 2005 Code and any other salient factors d. The NC shall make plans for succession, in particular of the Chairman and the Chief Executive Officer. e. The NC shall from time to time, review nominations received from directors or management for prospective candidates, and make recommendations to the Chairman of the SCS Board on candidates it considers appropriate for appointment on the SCS Board, or approve director nominations to the other Group Boards, as the case may be. f. The NC shall ensure that all new appointments, and all re-nominations, of Directors are subject to the recommendation of the NC based on the following objective criteria: •

Integrity

Independent mindedness

Diversity – possess core competence that meet the current needs of the Company (eg. knowledgeable about technology, financially literate) and complement the skills and competencies of the existing Directors

Able to commit time and effort to carry out duties and responsibilities effectively

Track record of making good decisions

Experience in high-performing companies


CORPORATE GOVERNANCE REPORT

139

CODE OF CORPORATE GOVERNANCE 2005

Singapore Computer Systems Limited

– SPECIFIC PRINCIPLES AND GUIDELINES FOR DISCLOSURE

Relevant guideline or principle

Page reference in this Annual Report

Guideline 1.3

Delegation of authority, by the board to any board committee, to make decisions on certain board matters

Page 129

Guideline 1.4

The number of board and board committee meetings held in the year, as well as the attendance of every board member at these meetings

Page 130

Guideline 1.5

The type of material transactions that require board approval under internal guidelines

Page 128

Guideline 2.2

Where the company considers a director to be independent in spite of the existence of a relationship as stated in the Code that would otherwise deem him as non-independent, the nature of the director’s relationship and the reason for considering him as independent should be disclosed

Page 131

Guideline 3.1

Relationship between the Chairman and CEO where they are related to each other

Not Applicable

Guideline 4.1

Composition of nominating committee

Page 131

Guideline 4.5

Process for selection and appointment of new directors to the board

Page 132

Guideline 4.6

Key information regarding directors, which directors are executive, nonexecutive or considered by the nominating committee to be independent

Page 129

Guideline 5.1

Process for assessing the effectiveness of the board as a whole and the contribution of each individual director to the effectiveness of the board

Page 132

Principle 9

Clear disclosure of its remuneration policy, level and mix of remuneration, procedure for setting remuneration and link between remuneration paid to directors and key executives, and performance

Page 132 to 133

Guideline 9.1

Composition of remuneration committee

Page 133

Guideline 9.2

Names and remuneration of each director. The disclosure of remuneration should be in bands of $250,000. There will be a breakdown (in percentage terms) of each director’s remuneration earned through base/fixed salary, variable or performance-related income/bonuses, benefits in kind, and stock options granted and other long-term incentives

Page 126

Names and remuneration of at least the top 5 key executives (who are not also directors). The disclosure should be in bands of $250,000 and include a breakdown of remuneration

Page 133

Remuneration of employees who are immediate family members of a director or the CEO, and whose remuneration exceed $150,000 during the year. The disclosure should be made in bands of $250,000 and include a breakdown of remuneration

Not Applicable

Details of employee share schemes

Page 57 to 62

Guideline 9.3

Guideline 9.4

Guideline 11.8 Composition of audit committee and details of the committee’s activities

Page 134

Guideline 12.2 Adequacy of internal controls, including financial, operational and compliance controls, and risk management systems

Page 26 and 134

Annual Report 2007


SHAREHOLDING STATISTICS AS AT 12 MARCH 2008 (SGX-ST LISTING MANUAL REQUIREMENTS)

140 Singapore Computer Systems Limited Annual Report 2007

Total number of issued ordinary shares

:

154,560,001

Class of Shares

:

Ordinary Shares

Voting Rights

:

One vote per share

ANALYSIS OF SHAREHOLDINGS Range of Shareholdings 1 - 999 1,000 - 10,000 10,001 - 1,000,000 1,000,001 and above Total

No. of Shareholders

% of Shareholders

No. of Shares

% of Shares

97

2.92

45,282

0.03

2,701

81.28

8,824,150

5.71

518

15.59

30,583,666

19.79

7

0.21

115,106,903

74.47

3,323

100.00

154,560,001

100.00

Based on the information available to the Company as at 12 March 2008, approximately 35% 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.

SUBSTANTIAL SHAREHOLDERS

No. of Shares

Substantial Shareholder

Direct Interest

%

Deemed Interest

%

Green Dot Capital Pte Ltd

93,144,501

60.26

Temasek Capital (Private) Limited

93,144,501(1)

60.26

Temasek Holdings (Private) Limited

100,644,501(2)

65.12

Notes:

(1)

Temasek Capital (Private) Limited is deemed to have an interest in the 93,144,501 shares held by Green Dot Capital Pte Ltd.

(2)

Temasek Holdings (Private) Limited is deemed to have an interest in the 93,144,501 shares held by Green Dot Capital Pte Ltd and 7,500,000 shares held by Keppel Land Limited.


SHAREHOLDING STATISTICS AS AT 12 MARCH 2008 (SGX-ST LISTING MANUAL REQUIREMENTS)

141 Singapore Computer Systems Limited Annual Report 2007

TOP 21 SHAREHOLDERS No.

Name of Shareholder

1

GREEN DOT CAPITAL PTE LTD

2

No. of Shares Held

% of Shares

93,144,501

60.26

KEPPEL LAND LIMITED

7,500,000

4.85

3

DBS NOMINEES PTE LTD

6,335,402

4.10

4

UNITED OVERSEAS BANK NOMINEES PTE LTD

2,326,000

1.50

5

NG HIAN CHOW

2,160,000

1.40

6

MERRILL LYNCH (SINGAPORE) PTE LTD

1,912,000

1.24

7

HSBC (SINGAPORE) NOMINEES PTE LTD

1,729,000

1.12

8

TAN LEE YONG

971,000

0.63

9

OCBC SECURITIES PRIVATE LTD

915,000

0.59

10

UOB KAY HIAN PTE LTD

879,000

0.57

11

OCBC NOMINEES SINGAPORE PTE LTD

850,000

0.55

12

CHEONG FOONG YIM CHRISTINA

800,000

0.52

13

MORPH INVESTMENTS LTD

800,000

0.52

14

KIM ENG SECURITIES PTE LTD

570,000

0.37

15

FONG SOON YONG

515,000

0.33

16

LEONG FEE FOON

500,000

0.32

17

PHILLIP SECURITIES PTE LTD

457,000

0.30

18

KHNG GUAN LENG STEPHEN

432,000

0.28

19

QUEK HUNG HEONG

405,000

0.26

20

LEONG WAH KHEONG

400,000

0.26

21

TAN TONG HAI

400,000

0.26

124,000,903

80.23


NOTICE OF TWENTY-EIGHTH ANNUAL GENERAL MEETING 142 Singapore Computer Systems Limited Annual Report 2007

NOTICE IS HEREBY GIVEN THAT the Twenty-Eighth Annual General Meeting of Singapore Computer Systems Limited (the “Company”) will be held at Auditorium, 7 Bedok South Road, Singapore 469272 on Thursday, 24 April 2008 at 4.00 p.m. to transact the following business:

AS ORDINARY BUSINESS 1.

To receive and adopt the Directors’ Report and Audited Accounts of the Company for the year ended 31 December 2007 and the Auditors’ Report thereon. (Resolution 1)

2.

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) Professor Tan Cheng Han

(Resolution 2)

(ii) Mr Venkatachalam Krishnakumar

(Resolution 3)

(iii) Mr William Liu Wei Hai

(Resolution 4)

3.

To approve the sum of S$476,458 as Directors’ Fees for the year ended 31 December 2007 (2006: S$392,000). (Resolution 5)

4. To re-appoint Messrs KPMG as Auditors of the Company and to authorise the Directors to fix their remuneration. (Resolution 6)

AS SPECIAL BUSINESS 5.

To consider and, if thought fit, to pass with or without modifications, the following Resolutions which will be proposed as Ordinary Resolutions:

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,

(b)

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 (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,


NOTICE OF TWENTY-EIGHTH ANNUAL GENERAL MEETING 143

provided that: (1)

(2)

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% of the issued Shares excluding treasury shares (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 10% of the issued Shares excluding treasury shares (as calculated in accordance with paragraph (2) below); (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 excluding treasury shares 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 7)

Ordinary Resolution RESOLVED That authority be and is hereby given to the Directors to issue from time to time such number of ordinary Shares as may be required to be issued pursuant to the exercise of options granted under the Singapore Computer Systems Executives’ Share Option Scheme. (Resolution 8)

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 as may be required to be issued pursuant to the exercise of options under the Share Option Plan and/or such number of ordinary Shares 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% of the total number of issued Shares excluding treasury shares from time to time. (Resolution 9)

Singapore Computer Systems Limited Annual Report 2007


NOTICE OF TWENTY-EIGHTH ANNUAL GENERAL MEETING 144 Singapore Computer Systems Limited

Ordinary Resolution RESOLVED That:

Annual Report 2007

(a)

approval be and is hereby given, for the purposes of Chapter 9 of the Listing Manual (“Chapter 9”) of the SGX-ST, for the Company, its subsidiaries and associated companies that are entities at risk (as that term is used in Chapter 9), or any of them, to enter into any of the transactions falling within the types of interested person transactions described in the Appendix to the Company’s Letter to Shareholders dated 3 April 2008 (the “Letter”) with any party who is of the class of interested persons described in the Appendix to the Letter, provided that such transactions are made on normal commercial terms and in accordance with the review procedures for such interested person transactions;

(b)

the approval given in paragraph (a) above (the “Shareholders Mandate”) shall, unless revoked or varied by the Company in General Meeting, continue in force until the conclusion of the next Annual General Meeting of the Company; and

(c)

the Directors be and are hereby authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary or in the interests of the Company to give effect to the Shareholders Mandate and/or this Resolution. (Resolution 10)

Ordinary Resolution RESOLVED That: (a)

for the purposes of Sections 76C and 76E of the Companies Act, Chapter 50 of Singapore (the “Companies Act”), the exercise by the Directors of all the powers of the Company to purchase or otherwise acquire issued ordinary Shares not exceeding in aggregate the Maximum Limit (as hereafter defined), at such price or prices as may be determined by the Directors of the Company from time to time up to the Maximum Price (as hereafter defined), whether by way of: (i) on-market purchase(s), transacted on the SGX-ST or through the SGX-ST’s trading system or, as the case may be, such stock exchange on which such Shares are listed or quoted, through one or more duly licensed dealers appointed by the Company for the purpose; and/or (ii) off-market purchase(s) effected pursuant to an equal access scheme(s) as may be determined or formulated by the Directors as they consider fit, which scheme(s) shall satisfy all conditions prescribed by the Companies Act;

and otherwise in accordance with all the other laws and regulations and rules of the SGX-ST as may for the time being be applicable, be and is hereby authorised and approved generally and unconditionally (the “Share Purchase Mandate”);

(b)

unless varied or revoked by the Company in general meeting, the authority conferred on the Directors pursuant to the Share Purchase Mandate may be exercised by the Directors at any time and from time to time during the period commencing from the date of the passing of this Resolution and expiring on the earlier of: (i) the date on which the next Annual General Meeting of the Company is held; and (ii) the date by which the next Annual General Meeting of the Company is required by law to be held;

(c)

in this Resolution:

“Maximum Limit” means that number of Shares representing 10% of the issued ordinary Shares as at the date of the passing of this Resolution (excluding any Shares which are held as treasury shares as at that date); and


NOTICE OF TWENTY-EIGHTH ANNUAL GENERAL MEETING 145

“Maximum Price”, in relation to a Share to be purchased or acquired, means the purchase price (excluding brokerage, commission, applicable goods and services tax and other related expenses) which shall not exceed: (i) in the case of a market purchase of a Share, 105% of the Average Closing Price of the Shares; and (ii) in the case of an off-market purchase of a Share pursuant to an equal access scheme, 110% of the Average Closing Price of the Shares,

where:

“Average Closing Price” means the average of the last dealt prices of a Share for the five consecutive market days on which the Shares were transacted on the SGX-ST or, as the case may be, such stock exchange on which such Shares are listed or quoted, immediately preceding the date of the market purchase by the Company or, as the case may be, the date of making of the offer pursuant to the off-market purchase, and deemed to be adjusted in accordance with the listing rules of the SGX-ST for any corporate action which occurs after the relevant five-day period; and

“date of making the offer” means the date on which the Company announces its intention to make an offer for an off-market purchase, stating therein the purchase price (which shall not be more than the Maximum Price calculated on the foregoing basis) for each Share and the relevant terms of the equal access scheme for effecting the off-market purchase.

(d)

the Directors and/or any of them be and are hereby authorised to complete and do all such things and execute all such documents as they and/or he may consider necessary or expedient to give effect to the transactions contemplated and/or authorised by this Resolution. (Resolution 11)

Ordinary Resolution To transact such other ordinary business as may be transacted at an Annual General Meeting of the Company. (Resolution 12) By Order of the Board

Lena Chow Andrew Cheong Company Secretaries 3 April 2008 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 2007


NOTICE OF TWENTY-EIGHTH ANNUAL GENERAL MEETING 146 Singapore Computer Systems Limited Annual Report 2007

STATEMENT PURSUANT TO ARTICLE 55 OF THE ARTICLES OF ASSOCIATION OF THE COMPANY 1. Resolution 7 is to empower the Directors to issue Shares 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% of the issued Shares excluding treasury shares, with a sub-limit of 10% 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 excluding treasury shares at the time Resolution 7 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 7 is passed; and (b) any subsequent consolidation or subdivision of Shares. 2. Resolution 8 is to empower the Directors to issue Shares pursuant to the Singapore Computer Systems Executives’ Share Option Scheme. 3. Resolution 9 is to empower the Directors to offer and grant options and/or awards and to issue Shares pursuant to the Share Plans provided that the aggregate number of Shares to be issued pursuant to the Share Plans shall not exceed 15% of the total number of issued Shares from time to time. 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. 4. Resolution 10 relates to the renewal of a mandate given by shareholders to the Company on 24 April 2007, allowing the Company, its subsidiaries and associated companies that are entities at risk (as that term is used in Chapter 9), or any of them, to enter into transactions with interested persons as defined in Chapter 9. 5. Resolution 11 relates to the renewal of a mandate approved by shareholders on 24 April 2007 authorising the Company to purchase its own Shares subject to and in accordance with the listing rules of the SGX-ST.

The Company will use its internal sources of funds, external borrowings, or a combination of internal resources and external borrowings, to finance the Company’s purchase or acquisition of the Shares. The amount of financing required for the Company to purchase or acquire its Shares, and the impact on the Company’s financial position, cannot be ascertained as at the date of this Notice as these will depend on, inter alia, the number of Shares purchased or acquired, whether the purchase or acquisition is made out of capital or profits of the Company, the price at which such Shares were purchased or acquired and whether the Shares purchased or acquired are held in treasury or cancelled. Based on the number of Shares as at 12 March 2008 (the “Latest Practicable Date”), the purchase by the Company of 10% of its Shares will result in the purchase or the acquisition of 15,456,000 Shares. In the case of market purchases by the Company and assuming that the Company purchases or acquires 15,456,000 Shares at the Maximum Price of S$0.8883 for one Share (being the price equivalent to 5% above the Average Closing Price of the Shares for the last five consecutive market days on which the Shares were traded on the SGX-ST immediately preceding the Latest Practicable Date), the maximum amount of funds required for the purchase or acquisition of 15,456,000 Shares is S$13,729,565. In the case of off-market purchases by the Company and assuming that the Company purchases or acquires 15,456,000 Shares at the Maximum Price of S$0.9306 for one Share (being the price equivalent to 10% above the Average Closing Price of the Shares for the last five consecutive market days on which the Shares were traded on the SGX-ST immediately preceding the Latest Practicable Date), the maximum amount of funds required for the purchase or acquisition of 15,456,000 Shares is S$14,383,354.The financial effects the purchase or acquisition of such Shares by the Company pursuant to the proposed Share Purchase Mandate on the audited financial statements of the Company and its subsidiaries for the financial year ended 31 December 2007 based on these assumptions, are set out in paragraph 5.8.4 of the Letter.


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 2007 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 (the “Company”) hereby appoint Name

Address

NRIC/Passport Number

147 Singapore Computer Systems Limited Annual Report 2007

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-Eighth Annual General Meeting of the Company to be held at Auditorium, 7 Bedok South Road, Singapore 469272 on Thursday, 24 April 2008 at 4.00 p.m. or 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. 5. 6. 7. 8. 9. 10. 11. 12.

Ordinary Resolutions Ordinary Business Adoption of Directors’ Reports and Audited Accounts for the year ended 31 December 2007 Re-election of Professor Tan Cheng Han Re-election of Mr Venkatachalam Krishnakumar Re-election of Mr William Liu Wei Hai Approval of Directors’ Fees for the year ended 31 December 2007 Re-appointment of Messrs KPMG as Auditors and authorising Directors to fix their remuneration Special Business Authority for Directors to issue shares in the Company and to make or grant instruments convertible into shares in the Company Authority for Directors to issue shares in the Company pursuant to the Singapore Computer Systems Executives’ Share Option Scheme 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 Approval for Renewal of Shareholders Mandate for Interested Person Transactions Approval for Renewal of Share Purchase Mandate Any other ordinary business

Dated this

day of

For

Against

2008. Total Number of Shares Held

Signature(s) of member(s) or Common Seal

IMPORTANT: PLEASE READ NOTES OVERLEAF


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. 148 Singapore2. Computer Systems Limited3. Annual Report4. 2007

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. 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. 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

AFFIX POSTAGE STAMP

THE COMPANY SECRETARY Singapore Computer Systems Limited 7 Bedok South Road Singapore 469272


SCS OFFICES SINGAPORE CORPORATE HEADQUARTERS:

Singapore Computer Systems Limited (Co. Regn. No: 198000071W)

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

BRANCH:

Singapore Computer Systems Limited (Co. Regn. No: 198000071W)

1 International Business Park, The Synergy #04-15, Singapore 609917 Tel: (65) 6826 1300 Fax: (65) 6826 1311 Website: www.scs.com.sg

LOCAL SUBSIDIARY:

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

51 Kaki Bukit View, Singapore 415974 Tel: (65) 6846 6280 Fax: (65) 6846 8186 Website: www.trustedhub.com

OVERSEAS BRUNEI

INDONESIA

SCS Information Technology Sdn. Bhd.

PT. SCS Astragraphia Technologies

Unit No D7, Blk D, Lot 42876, Shakirin Complex, Spg 88, Kiulap, Bandar Seri Begawan BE1518 Negara Brunei Darussalam

22/F Wisma Standard Chartered Bank, Jl. Jend Sudirman Kav. 33A, Jakarta 10220, Indonesia

Tel : (673) (2) 237 615 / 239295 Fax: (673) (2) 237 633 CHINA SCS China Co., Ltd

Tel: (62) (21) 572 1177 Fax: (62) (21) 572 1178 MALAYSIA CSN Systems Sdn Bhd

Beijing Office

27-3-1, Jalan 3/101C, Cheras Business Centre 5th mile, Jalan Cheras, 56100 Kuala Lumpur, Malaysia

Room 8B12, HanWei Plaza No. 7 Guanghua Road, Chaoyang District Beijing 100004, People’s Republic of China

Tel: (60) (3) 9130 0303 Fax: (60) (3) 9130 9201

Tel: (86) (10) 6561 0996 Fax: (86) (10) 6561 0997

SCS iCT Sdn Bhd 27-3-1, Jalan 3/101C, Cheras Business Centre 5th mile, Jalan Cheras, 56100 Kuala Lumpur, Malaysia

Shanghai Office Room 17B, Xin Mei Union Square No. 999 Pudong South Road Shanghai 200120, People’s Republic of China Tel : (86) (21) 6859 8680 Fax: (86) (21) 6859 8670

Tel: (60) (3) 9130 0303 Fax: (60) (3) 9130 9201 PHILIPPINES Ayala Systems Technology, Inc.

SCS (Chengdu) Technology Company

9/F Corporate Center, 139 Valero Street Makati City 1227, Philippines

B6-6F, Tianfu Software Park, Tianfu Avenue, Hi-tech Zone, Chengdu, Sichuan 610041 People’s Republic of China

Tel: (63) (2) 813 2494 Fax: (63) (2) 813 2493

Tel: (86) (28) 6687 6687 Fax: (86) (28) 6687 6688

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


Singapore Computer Systems Limited Reg No: 198000071W

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

Singapore Computer Systems Annual Report 2007  

A razorSHARK design. 2008, March.

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