What a ride! - Morningstar
-
Upload
khangminh22 -
Category
Documents
-
view
6 -
download
0
Transcript of What a ride! - Morningstar
I018 I SCS Annual Report 2001 I Contents I
019 Mission Statement and Corporate Profile020 Message to Shareholders024 Board of Directors026 Group Structure027 Corporate Information028 Financial Highlights034 EVA Statement036 Value Added Statement037 10-Year Financial Summary038 Operations Review 038 Networking039 E-Business040 Systems Integration042 Outsourcing043 Consultancy044 Enterprise Systems045 Competency Centres046 Overseas Operations048 Corporate Development050 Highlights of the Year052 Financial Report124 Shareholding Statistics125 Group of Companies126 SCS Share Prices and Monthly Volume128 SCS Offices132 Notice of Twenty-Second Annual General Meeting
Proxy Form
I Mission Statement I I019 ISCS Annual Report 2001
Corporate ProfileSingapore Computer Systems Limited (SCS) is a leading information and communications technology (ICT) service provider in the Asia-Pacific region.
Our key competencies are in IT and Business Consultancy, Systems Integration, Outsourcing, Networking, E-business and R&D/Product Development. Our other services include design and implementation of systems,business recovery and call centre services, provision of a wide range of computer hardware and software throughsystems integration and many more.
Incorporated in 1980, SCS has more than 2,000 employees who operate from Singapore and eight countries –Australia, Brunei, China, Hong Kong, Malaysia, New Zealand, Philippines, Thailand and the United States. TheGroup’s subsidiaries include: SCS Enterprise Solutions, SCS Enterprise Systems, SCS Foresight, SCS Networks,iGlobal Services, Mach30, PeridotHealth Systems, EC1 and TX123.
SCS is a member of the Singapore Technologies Group, a multinational conglomerate headquartered in Singapore.
The mission of Singapore Computer Systems(SCS) is to be a leading globalcorporation in information andcommunications technology,providing a comprehensiverange of quality solutions andservices to our customersand meeting our commitmentto our stakeholders.
I Message to Shareholders II020 I SCS Annual Report 2001
Year 2001 was a difficult year for theSingapore IT industry, with the nationaleconomy shrinking by 2.0 per cent1 and IT spending declining due to cautiouscorporate investment. Against thisbackdrop, SCS turned in a creditableperformance. Revenue climbed 21 per centto S$ 540.7 million, crossing the half-billion-dollar mark for the first time. Profit after taxand minority interests (PATMI) grew 0.5 per cent to S$17.3 million. PATMI wouldhave been S$21.3 million, representing a24 per cent growth, if not for a $4.0 millionafter tax write-off of a terminated systemsintegration project.
Earnings per share has been maintained at 11.3 cents. The Board of Directors has recommended a gross dividend of 12 per cent per share (less tax of 24.5 per cent).
Financial Performance Review The main drivers of growth in FY2001 were SCS’outsourcing and networking businesses. Profits fromoutsourcing grew by 36 per cent to S$10.0 million.Turnover surged by 26 per cent on the back of higher sales in call centre, helpdesk and professional ITmanpower services.
Networking contributed S$6.4 million to the bottomline,an increase of 16 per cent, due to the completion of large government projects, higher sales in Malaysia and a buoyant telecommunications business.
Enterprise Systems was another profit centre despite a decline in its profit margins due to fierce competition. It made S$9.4 million, which represented a slight dip of 3 per cent compared to FY2000.
SCS’ consultancy, e-business and systems integrationbusinesses slipped into the red for differing reasons.Consultancy suffered from deferred corporate spendingdue to the economic downturn while start-up losses atthe TX123 group of companies and the poor performanceof our New Zealand e-business operations affected our e-business. Systems integration saw a growth of 17 per cent in revenue but recorded a loss due to theS$5.4 million project write-off.
Our overseas subsidiaries as a whole contributed a thirdof the Group’s total revenue. However, difficult tradingconditions led to a fall in profits. Start-ups were similarlyaffected and their profits fell by 45 per cent. However,most of the start-ups, including TX123, are expected to break even in 2002.
1 Source: Ministry of Trade and Industry
I021 ISCS Annual Report 2001
Strategies for growth In the challenging circumstances of the past and currentyear, we have taken a focused approach to growth byfollowing a five-pronged strategy:
– Internationalising our markets by further expansion overseas
– Consolidating our key capabilities to serve specific domains
– Developing our own products with their unique selling points
– Branching into the IT-based services business as well as expanding e-business
– Making strategic acquisitions and investments formarket share, technology and profitability
Internationalisation – priority has been given toexpanding in China. In June 2001, we opened a branchoffice in Shanghai to spearhead our thrust into easternChina. In November, we appointed Mr Robert Koh, whohas 20 years of experience in the IT industry, as ExecutiveVice President, International, to focus on our expansionplans, particularly in North Asia. In the coming year, weintend to bring our healthcare systems business into Chinato take advantage of the large healthcare market there.At the same time, we are also exploring opportunities to expand into China’s inner cities.
Looking East has not blinded us to opportunities inEurope, which we see as another potentially lucrativemarket. We plan to set up a representative office in theUnited Kingdom. This will be our springboard to strategicpartnerships in Europe.
Domain practices – we will leverage on our corecompetencies to address the needs of customers inspecific domains, particularly e-government, manufacturing,healthcare, education, energy, and financial services. Wehave started to consolidate our capabilities into Practices,with senior management becoming Practice Partners whowill lead the drive to develop business opportunities in eachdomain. In the energy sector, we have identified strategicpartners and tested solutions geared to the requirementsof power generators and suppliers in preparation for theopening up of the sector.
Product development – we launched a number of newproducts in 2001 and will continue to develop more in2002. Last year, we launched a wholly-owned subsidiary,Mach30, to market its in-house developed e-business suiteof solutions. Since then, Mach30 has sold five licencesworth S$3.1 million to local and overseas companies thatwant to jump-start their e-business. Currently, Mach30 is building a reverse auction engine to enhance its suite of applications.
As electronic document management becomes morewidespread, security and authenticity becomes a growingconcern. SCS has developed a secure documentmanagement software in-house in collaboration withAvanade Asia. The solution to create electronic documentsand maintain their authenticity and integrity complies strictlywith local and international security guidelines. It is beingused by our Trusted Hub joint venture to offer securedocument management services.
I Message to Shareholders II022 I SCS Annual Report 2001
In 2002, SCS will release an enhanced Web-based versionof its training management system, peopleBuilder II.PeopleBuilder II, which is designed to support the People Developer standard promoted by the SingaporeProductivity and Standards Board, integrates trainingadministration and management operations from trackinglearning histories and tailoring personal training roadmapsto evaluating staff training.
2002 will also see us launch a new release of Solidus, an e-learning management system. Solidus manages theprocess of online learning such as registration and coursecontent. The system, which is capable of supporting upto 2,000 concurrent users and managing more than30,000 learners, was used to build the Virtual Institute ofTraining and Learning (VITAL) for the Ministry of Educationin 2001. It has also been commissioned by other publicsector institutions such as the SAFTI Military Institute andthe Civil Defence Academy and by the private sector –Shell Eastern Petroleum, Matsushita Electronics and AIA among others.
IT-based services and e-business – in all our businesssegments, we are branching from IT services into IT-relatedservices. One such area is training. We have introduced aprogramme to train instructional designers for the e-learningindustry. As a Cisco certified training partner, we arerunning certification courses for network professionals. Ournew Linux Competency Centre also provides Red Hatcertified engineer certifications.
In the later part of 2002, we will enter the security servicessector by partnering PrivateExpress Inc to offer the
US-based company’s secure messaging network solutions.PrivateExpress offers user authentication, Public KeyInfrastructure (PKI) encryption, Virtual Private Network (VPN)delivery, delivery tracking, document content verificationand non repudiation for business communications on the Internet.
Another area of IT-based services is in outsourcing. Weentered the Web hosting market in 2001 with our InternetData Centre. It offers 24x7 managed hosting services forthose customers who wish to outsource their applications.
In 2001, we continued to widen our e-business initiatives.We deployed TX123 – an online trading hub launched inSingapore in 2000 – in Malaysia and Brunei with partnersMalayan Banking Bhd and Softek Solutions Sdn Bhdrespectively. SCS also went into a joint venture withTrade-Link E-Commerce (Holding) Co., Ltd to launch a trading portal for the textile industry in China.
Acquisitions and investments – in 2001, we identified an Indian IT company for acquisition but the company didnot meet our requirements in the final analysis. While wehave delayed our acquisition, we have not abandonedour strategy to buy up partners and channels that offer synergies for SCS. In particular, we are looking atcompanies that will help us accelerate our expansion into North Asia and Europe.
We are also keen to invest in companies that would bringus new technologies, services, and markets. Some of oursignificant investments in 2001 include the TX123 portalsin Malaysia and Brunei, Trusted Hub Pte Ltd, and Green
I023 ISCS Annual Report 2001
Dot Internet Services Pte Ltd (GDIS). Trusted Hub was apartnership with ST Electronics and Dinervest Investments,while GDIS, which operates MINDEF’s miw.com.sg lifestyleportal for the NSmen community, was set up with GreenDot Capital and Singapore Engineering Software.
Acquisitions and investments are not the only paths to growth. We believe that our businesses will maturefaster if they are given greater flexibility, once they havereached a certain critical mass. In line with that, we spunoff our IT hardware unit to form SCS Enterprise SystemsPte Ltd in 2001 so that it can team up with strategicpartners to accelerate its expansion into the region.
Looking ahead We are confident that 2002 will be a better year than2001. The outlook shows promise. The latest SingaporeGovernment predictions forecast growth of one to threeper cent for the year. Our sales teams report signs ofcustomers implementing orders that had been put onhold last year. More tenders have come in since the year began.
We also anticipate a surge of IT investments from thebanking sector in Singapore. In the wake of the bankmergers in 2001, integration of the IT systems of themerged banks will generate new business.
In view of the better prospects, we are targeting a 15 per cent growth in revenue and a 27 per cent growth in profits. Our order book as at 31 December 2001 stood at $135.7 million.
A final word I would like to express my appreciation for the extra effortmade by management and staff to ensure that SCS wasnot derailed by the economic recession. They acceptedthe sacrifices involved in implementing cost-containmentmeasures, whether it be remuneration, staff or resources,without allowing morale to be lowered. Instead, theyworked harder than ever to achieve a healthy bottomlinein spite of the challenges they faced.
With their commitment and talent, I look forward to thecontinuing success of SCS in 2002 and beyond.
Tay Siew ChoonChairman
I024 I SCS Annual Report 2001 I Board of Directors I
1. Mr Tay Siew Choon Chairman
Mr Tay Siew Choon was appointed Chairman of the board in 1995,
following ten years of service as Chief Executive Officer of SCS.
He is the Managing Director and Chief Operating Officer of Singapore
Technologies Pte Ltd (STPL) and Deputy Chairman and CEO of
Green Dot Capital Pte Ltd, a wholly-owned subsidiary of STPL.
Mr Tay left SCS in 1995 to head Singapore Technologies Industrial
Corporation (STIC) as President and Chief Executive Officer. He was
subsequently appointed as the Managing Director and Deputy Chief
Executive Officer of SembCorp Industries in 1998, a company
formed from the merger of STIC and Sembawang Corporation Ltd.
Mr Tay holds a Bachelor of Engineering (Electrical) with Honours
degree and a Masters of Science in Systems Engineering. He is
also co-inventor of two patents.
2. Mr Robert Chua Teck ChewDirector
Chairman, Audit Committee
Mr Chua was appointed as a director in 1994 and as the Chairman
of the Audit Committee in 1997. He is the Executive Chairman of
A.C.E. Daikin Group, a leading manufacturer of air conditioners. An
active player in Singapore’s Economic and Trade Promotion arena,
Mr Chua currently co-chairs the Malaysia-Singapore Business Council
and the Joint Committees on Business Cooperation of Johor-
Singapore, Pahang-Singapore and Malacca-Singapore. He has also
headed the Singapore Trade Development Board as Deputy Chairman;
the Singapore Federation of Chambers of Commerce and Industry
as President and the Asean Chambers of Commerce and Industry as
Vice President. From 1989 to 1991, Mr Chua sat on the Economic
Planning Committee of the Ministry of Trade and Industry as a
member and was instrumental in formulating Singapore’s Strategic
Economic Plan.
3. Mrs Theresa Foo-Yo Mie YoenDirector
Member, Audit Committee
Mrs Foo joined the board as a director in 1994. She is also a member
of the Audit Committee. Mrs Foo is the Chairman (non-executive) and
Senior Advisor of BNP Paribas Peregrine (Singapore) Ltd. Prior to her
present appointment, she was with Standard Chartered Bank (SCB)
from 1987 to 2001. In 1994, she became the first Asian female to be
appointed Chief Executive by SCB. Mrs Foo was also the first female in
senior rank to be recruited by Oversea-Chinese Banking Corporation
(OCBC) in 1984 and the first female to be appointed as Vice President
in Asia by Bank of America in the early 1980’s. Mrs Foo sits on the
boards of various companies, including PSA Corporation Ltd, NTUC
Insurance Co-operative Ltd, Singapore Totalisator Board, The
Esplanade Co Ltd, Singapore Symphonia Co Ltd, and Preservation
of the Monuments Board.
4. Mr William Liu Wei HaiDirector
Member, Audit Committee
Mr Liu was appointed a member of the board and member of the
audit committee in September 2001. He is the President of Green Dot
Capital Pte Ltd, a wholly-owned subsidiary of Singapore Technologies
Pte Ltd. Before joining Green Dot Capital in September 2001, Mr Liu
was the President & Chief Executive Officer of ABACUS International
Pte Ltd. During his service in ABACUS from 1993 to 2001, Mr Liu
spearheaded the company’s expansion programme in the Asia-Pacific
region and was responsible for the company’s profitable growth.
He is also Chairman of the Singapore IT Disputes Resolution
Advisory Council, Advisory and Council Member of the Singapore
IT Federation, Council Member of the Singapore/British Business
Council and a member of the boards of the Institute of Systems
Science and SISTIC.
1
2
3
4
I025 ISCS Annual Report 2001
5. Mr Garfield Vorhes NelsonDirector
Mr Nelson has served the board since 1998. He is the co-founder
and Chairman of Nelson Buchanan & Oostergard Pte Ltd, an
international consulting and management development firm. Prior
to founding NBO in 1988, Mr Nelson was the Vice President and
General Manager for IBM’s Pacific Rim markets. During his
twenty-five years’ service with IBM, he headed IBM’s marketing,
manufacturing and services operations for 16 countries. Mr Nelson
is also on the board of directors of Thomas Management Systems
Pte Ltd, Nelson Buchanan & Oostergard Ltd (Hong Kong),
Thomas Asia Pacific (Hong Kong) and Asia Pacific Software Ltd.
S
6. Mr Spencer Lee Tien Chye Director
Mr Lee was appointed as a director in 1998. He is the Chief
Executive Officer of Maybank Singapore since 1992. Mr Lee has
been with Maybank since 1975 and has served in various senior
positions in Internal Audit, Banking Operations and IT. He also sits
on the boards of various companies. These include MFSL Ltd,
Singapore Unit Trusts Ltd, Mayban International (L) Ltd and
Bosbury Pte Ltd.
7. Ms Low Sin LengDirector
Ms Low was appointed as a director in September 2001. She is the
Group Chief Operating Officer as well as Chief Financial Officer of
SembCorp Industries. Prior to her current appointment, Ms Low was
the Executive Vice-President (Finance & Administration) of Singapore
Power Ltd from 1995 until 2000. From 1979 to 1995, Ms Low served
with the Administrative Service of the Singapore Government. She held
various positions, including the role of Director in both the Ministry of
Education (MOE) and Ministry of Finance, and eventually served as
Deputy Secretary in the Finance and Trade and Industry Ministries.
During her service with MOE, Ms Low sat on the National Computer
Board as a member from 1986 to 1994 and was instrumental in
implementing the computerisation of MOE and the Singapore schools.
8. Mr Stephen Yeo Siew Chye Director
President & CEO
Mr Yeo joined SCS as President & Chief Executive Officer and Director
in December 1999. Prior to his current appointment, Mr Yeo was
the Chief Executive of National Computer Board (NCB), now known
as Infocomm Development Authority of Singapore. During his tenure
in NCB, Mr Yeo initiated major activities that led to the accelerated
implementation of the IT2000 masterplan, such as his contribution
to the development and implementation of Singapore ONE and the
masterplan for the development of electronic commerce in Singapore.
Mr Yeo started his career in 1980 in the Systems & Computer
Organisation (SCO) of the Ministry of Defence. He held various technical
and managerial positions in SCO, including the role of Director before
leaving to head NCB in 1995. He is currently the Treasurer of the
Singapore IT Federation, a council member of the Australia-Singapore
Joint ICT Council and an Executive Board Member of the Centre for
Advanced Media Technology.
5
6
7
8
I026 I SCS Annual Report 2001 I Group Structure I
Malaysia
SCS Computer Systems Sdn. Bhd.
Hong Kong
SCS InformationTechnology (HK) Ltd
Singapore ComputerSystems Limited
Hong Kong
Trade-Link E-Commerce (Holding) Co., Ltd
Thailand
SCS Computer Systems(Thailand) Co., Ltd
China
SCS China Co., Ltd
United Statesof America
SCS Systems, Inc.
CoreBusinesses
Subsidiaries
Brunei
SCS Information Technology Sdn. Bhd.
Associates
Philippines
Ayala SystemsTechnology, Inc.
Systems IntegrationE-Business Outsourcing
NetworkingEnterpriseSystems
ConsultancySingapore
SCS Networks Pte LtdSCS Enterprise Solutions Pte LtdSCS Enterprise Systems Pte LtdSCS Foresight Pte LtdPeridotHealth Systems Pte LtdiGlobal Services Pte LtdMach30 Pte LtdEC1 Pte LtdTX123 Pte Ltd
New Zealand
Ceritas New Zealand Ltd
Singapore
ChemXlog Pte LtdNTUC Link Pte LtdST-Straco Pte LtdTelescience (Singapore) Pte Ltd
Malaysia
Computer Recovery
Centre Sdn. Bhd.
Australia
SCS Australia Pty. Ltd.
United Kingdom
SCS ComputerSystems (UK) Ltd
I Corporate Information I I027 ISCS Annual Report 2001
Audit Committee
Mr Robert Chua Teck Chew (Chairman)Mrs Theresa Foo-Yo Mie YoenMr William Liu Wei Hai
Company Secretary
Ms Irene Low
Auditors
KPMG
Certified Public Accountants16 Raffles Quay#22-00 Hong Leong BuildingSingapore 048581
Partner-in-chargeMr Chan Soon Hee, Eric
Corporate Information Board of Directors
Mr Tay Siew Choon (Chairman)Mr Robert Chua Teck ChewMrs Theresa Foo-Yo Mie YoenMr William Liu Wei HaiMr Garfield Vorhes NelsonMr Spencer Lee Tien ChyeMs Low Sin LengMr Stephen Yeo Siew Chye
Registered Office
7 Bedok South RoadSingapore 469272
Telephone (65) 6827 8888Facsimile (65) 6827 8899Telex RS 35584Website www.scs.com.sg
Registrar and ShareTransfer OfficeM&C Services Pte Ltd
138 Robinson Road #17-00The Corporate OfficeSingapore 068906
I Financial Highlights II028 I SCS Annual Report 2001
Networking E-Business SystemsIntegration
Outsourcing Consultancy EnterpriseSystems
2001 2000
(S$Million) (S$Million) %Change*
Networking 125.1 89.2 40
E-Business 23.8 14.2 67
Systems Integration 81.7 69.7 17
Outsourcing 56.8 45.0 26
Consultancy 3.4 3.9 (12)
Enterprise Systems 246.9 223.7 10
Others 3.0 1.8 66
Total 540.7 447.5
Others
Revenue by Business Segments (S$Million)447.5540.7 2001 2000
89.2
69.7
3.9
125.1
81.7
56.8
3.4
246.9
1.83.0
45.0
223.7
14.223.8
350
300
250
200
150
100
50
0
* Calculated based on thousands.
I029 ISCS Annual Report 2001
Networking E-Business SystemsIntegration
Outsourcing Consultancy EnterpriseSystems
2001 2000#
(S$Million) (S$Million) %Change*
Networking 6.4 5.5 16
E-Business (3.8) (0.7) (463)
Systems Integration (1.6) 5.5 (130)
Outsourcing 10.0 7.4 36
Consultancy (0.3) 0.4 (161)
Enterprise Systems 9.4 9.6 (3)
Others 2.5 (2.0) 217
Total 22.6 25.7
Others
Net Profit Before Tax by Business Segments (S$Million)25.722.6 2001 2000#
5.5 5.5
0.4
6.4
(1.6)
10.0
(0.3)
9.4
(2.0)
2.5
7.4
(0.7)
(3.8)
9.610
8
6
4
2
0
-2
-4
* Calculated based on thousands.
# Financials of FY2000 have been restated due to the adoption of new accounting standards.
I Financial Highlights II030 I SCS Annual Report 2001
Singapore New Zealand Malaysia Greater China Brunei Others
2001 2000
(S$Million) (S$Million) %Change*
Singapore 351.4 285.2 23
New Zealand 79.3 81.4 (3)
Malaysia 76.3 70.6 8
Greater China 31.0 7.0 342
Brunei 2.7 3.2 16
Others – 0.1 NM
Total 540.7 447.5
Revenue by Geographical Segments (S$Million)447.5540.7 2001 2000
285.2
70.6
3.2
351.4
76.3
31.0
2.7 –7.0
0.1
81.479.3
350
300
250
200
150
100
50
0
* Calculated based on thousands.
I031 ISCS Annual Report 2001
Singapore New Zealand Malaysia Greater China Brunei Others
2001 2000#
(S$Million) (S$Million) %Change*
Singapore 17.6 15.2 16
New Zealand (1.1) (0.1) (743)
Malaysia 6.0 8.8 (31)
Greater China 0.1 0.9 (86)
Brunei – 0.3 (106)
Others – 0.6 (106)
Total 22.6 25.7
Net Profit Before Tax by Geographical Segments(S$Million) 25.722.6 2001 2000#
15.2
8.8
0.3
17.6
6.0
0.1 – –0.9 0.6
(0.1)(1.1)
30
25
20
15
10
5
0
-5
* Calculated based on thousands.
# Financials of FY2000 have been restated due to the adoption of new accounting standards.
I032 I SCS Annual Report 2001 I Financial Highlights I
1997 1998 1999 2000 2001
Group Revenue(S$Million) 540.7 2001
480.5
540.7
377.7
447.5420.7
700
600
500
400
300
200
100
0
1997 1998 1999 2000# 2001
Group Net ProfitAfter Tax (S$Million) 17.3 2001
17.316.8 17.2
19.2
27.7
35
30
25
20
15
10
5
0
1997 1998 1999 2000# 2001
Shareholders’Funds (S$Million) 147.4 2001
147.4
77.5
133.6
119.9
103.7
280
240
200
160
120
80
40
0
# Financials of FY2000 have been restated due to the adoption of new accounting standards.
I033 ISCS Annual Report 2001
1997 1998 1999 2000# 2001
Earnings Per Share(cents) 11.3* 2001
11.3*11.2* 11.2*
12.5*
18.3*
35
30
25
20
15
10
5
0
1997 1998 1999 2000# 2001
Return on AverageShareholders Funds(%)
12.3 2001
12.3
25.5
13.6
17.2
30.6
35
30
25
20
15
10
5
0
1997 1998 1999 2000# 2001
Return on AverageAssets (%) 5.1 2001
5.1
7.5
5.8
7.7
10.9
14
12
10
8
6
4
2
0
* Weighted average basis has been used.
# Financials of FY2000 have been restated due to the adoption of new accounting standards.
I034 I SCS Annual Report 2001 I Financial Highlights I EVA Statement I
1997 1998 1999 2000
Economic ValueAdded (S$’000) 3,847 2001
5,472
3,847
7,163
6,197
(1,080)
2001
8000
6000
4000
2000
0
-2000
-4000
-6000
I035 ISCS Annual Report 2001
1997 1998 1999 2000 2001
$’000 $’000 $’000 $’000 $’000
Net Operating Profit Before Tax 16,234 15,575 22,199 26,584 20,588Adjust for:
Share of Associate Profits 5,691 1,533 1,400 1,936 2,018Interest Expense 4,342 4,281 1,597 1,139 2,022Unusual/Exceptional Items (4) (3,424) (30) 244 696Others 2,654 4,026 (1,051) (787) 3,182
Adjusted Profit Before Interest & Tax 28,917 21,991 24,115 29,116 28,506Cash Operating Taxes (7,609) (6,063) (5,533) (9,028) (6,626)
Net Operating Profit After Tax (NOPAT) 21,308 15.928 18,582 20,088 21,880Average Capital Employed 152,562 149,190 128,472 131,482 195,053Weighted - Average Cost of Capital (%) 10.38 11.40 9.64 9.83 9.25
Capital Charge (15,836) (17,008) (12,385) (12,925) (18,033)
Economic Value Added 5,472 (1,080) 6,197 7,163 3,847
Note 1: Unusual/Exceptional items comprise loss on disposal of property, plant and equipment, income earned on proceeds arising from the
sale of investments and a business, goodwill amortisation and allowance for impairment losses made for investments.
Note 2: Other adjustments comprise allowances for doubtful receivables and inventory obsolescence.
Note 3: Based on current tax after adjusting for the statutory tax impact of interest expenses.
Note 4: Monthly average of the total assets less non-interest bearing liabilities plus present value of operating leases, timing provisions and
non-operating items.
Note 5: The weighted average cost of capital is calculated in accordance with Singapore Technologies (ST) Group EVA Policy as follows:
(i) Cost of equity using Capital Asset Pricing Model with market risk premium at 7%. This is set with reference to the returns of the
MSCI Index less US 30-year Treasury Bond yield rate from 1987 to 1999.
(ii) Risk-free rate of 4.12% (2000: 4.57%) based on yield-to-maturity of Singapore Government ten-year bonds.
(iii) Ungeared beta at 0.85 (2000: 0.85) based on ST risk categorisation.
(iv) Cost of debt rate at 4.58% (2000: 5.25%) using five-year Singapore Dollar Swap Offered Rate plus 75 basis points.
I Financial Highlights I Value Added Statement II036 I SCS Annual Report 2001
1997 1998 1999 2000# 2001
Value Addedfrom Operations(S$’000)
156.9 2001
136.2
110.2
156.9
119.2 117.5
140
120
100
80
60
40
20
0
160
VA from Operations (S$’000)
1997 1998 1999 2000# 2001
Value Added PerEmployee andEmployment Cost
76.98 1.43
74.47
1.40
76.98
1.34 1.34
70
60
50
40
30
20
10
0
80
1.40
1.20
1.0
0.8
0.6
0.4
0.2
0
1.60
1.43
1.38
73.77
78.8076.27
VA Per Employee VA Per Employee Cost
5 Year Value Added Statement1997 1998 1999 2000# 2001
Value Added From:Revenue 377,646 480,486 420,666 447,504 540,712Bought in Materials (267,432) (361,336) (303,146) (311,298) (383,817)
Value Added from Operations 110,214 119,150 117,520 136,206 156,895 Other Non Operating (Expenses) / Income 5,322 23,152 7,619 (510) (4,617)
Total Value Added 115,536 142,302 125,139 135,696 152,278
Distribution of Value AddedTo Employees 78,913 89,005 87,617 98,847 109,492To Providers of Capital 6,343 7,338 4,732 4,423 6,265To Government 4,311 4,956 6,161 8,383 6,394Balance Retained in Business 24,298 36,775 27,568 25,571 27,379Non Production Income / (Cost) 1,671 4,228 (939) (1,528) 2,748
Total Distribution 115,536 142,302 125,139 135,696 152,278
Productivity AnalysisValue Added Per Employee 76.27 78.80 73.77 74.47 76.98Value Added Per Employment Cost 1.40 1.34 1.34 1.38 1.43Value Added Per Dollar Investment in Property, Plant and Equipment 1.16 1.23 1.21 1.26 1.37
# Value Added Statement of FY2000 has been restated due to the adoption of new accounting standards.
I 10-Year Financial Summary I Financial Highlights I I037 ISCS Annual Report 2001
1992 1993 1994 1995 1996 1997 1998 1999 2000# 2001
Group Profit & Loss Account (S$Million)Revenue 150.47 199.26 279.94 320.96 327.31 377.65 480.49 420.67 447.50 540.71Share of Results of
Associates (0.06) (0.49) (0.45) (0.28) 0.97 5.69 1.53 1.40 1.94 2.02Profit before taxation 6.49 8.41 9.77 11.54 10.24 21.93 17.11 23.60 25.67 22.61Profit before taxation
adjusted for Finance Costs & Depreciation 12.79 15.60 18.33 21.36 19.56 34.11 31.89 35.04 38.00 37.86
Profit attributable to Shareholders 3.97 5.21 6.32 7.59 6.93 16.84 27.71 19.18 17.25 17.33
Group Balance Sheet (S$Million)Property, Plant
& Equipment 12.30 15.49 12.60 11.34 54.26 59.78 55.65 52.95 56.96 54.18Investments 10.50 10.74 10.54 16.99 18.92 28.17 11.56 18.28 29.59 31.26Intangible Assets 0.00 0.57 0.45 0.92 0.41 0.18 0.09 2.70 5.32 10.74Other Assets 92.11 132.69 156.74 176.71 156.64 166.71 212.72 175.52 235.79 220.32Total Assets 114.91 159.49 180.33 205.96 230.23 254.84 280.02 249.45 327.66 316.50
Shareholders’ Funds 39.47 42.85 46.84 51.34 54.80 77.52 103.68 119.90 133.59 147.43Minority Interest 1.83 2.44 2.96 2.47 2.55 9.93 3.55 4.66 6.15 4.90Total Borrowings 11.61 32.94 47.53 43.86 71.95 62.73 53.58 13.05 34.17 43.94Other Liabilities 62.00 81.26 83.00 108.29 100.93 104.66 119.21 111.84 153.75 120.23Total Liabilities 114.91 159.49 180.33 205.96 230.23 254.84 280.02 249.45 327.66 316.50
Per Share DataEarnings After Tax (Cents) 3.96 5.21 6.32 7.59 6.93 11.22* 18.29* 12.53* 11.23* 11.25Gross Dividend (Cents) 1.38 2.50 3.00 3.00 3.00 3.00 3.00 3.00 3.75 3.00Average Share Price ($) 0.92 1.27 1.42 1.11 1.09 1.15 0.92 1.93 3.49 1.79Gross Yield (%) 1.50 1.97 2.11 2.70 2.75 2.61 3.26 1.55 1.07 1.68Net Tangible Assets
(Cents) 39.47 42.28 46.38 50.42 54.39 77.34 67.92 76.45 83.39 88.74
Financial RatiosReturn on Average
Shareholders’ Funds (%) 10.44 12.66 14.09 15.45 13.06 25.45 30.59 17.15 13.61 12.33
Return on Average Assets (%) 3.73 4.14 4.05 4.57 3.56 7.52 10.94 7.69 5.80 5.05
Debt Equity Ratio 0.28 0.73 0.95 0.82 1.25 0.72 0.50 0.10 0.24 0.29Working Capital Ratio 1.28 1.17 1.30 1.16 1.13 1.21 1.23 1.42 1.27 1.37
* Weighted average basis has been used.
# Financials of FY2000 have been restated due to the adoption of new accounting standards.
I038 I SCS Annual Report 2001 I Operations Review I Networking I
In the net-centric environment of today, our networking business, driven by SCS Networks andnetworking units within our overseas subsidiaries, wasone of the star performers in FY2001. Revenue grewby 40 per cent to S$125.1 million while net profitbefore tax grew by 16 per cent to S$6.4 million.
We clinched several multi-million-dollar projects in our corenetworking infrastructure operations. We implementedS$5.0 million worth of Local Area Network (LAN)infrastructure for 20 schools in a project for the Ministryof Education and equipped Ngee Ann Polytechnic with a wireless network at its campus for S$1.2 million.
Other major contracts secured included a project to wireup the Woodlands Regional Library. We equipped it witha LAN network infrastructure and a wireless solution. As a result, the library has a network with a backuprouter and switch that provides seamless networkoperation and full redundancy. SCS also implementedthe LAN networks at Singapore Press Holdings’ newcorporate headquarters and at the new premises of theMaritime and Port Authority of Singapore (MPA). Theformer required a design to cater to exceptionally highbandwidth while the latter required very high operationaluptime. In the case of MPA, we also installed a WideArea Network (WAN) infrastructure and migrated thenetwork from the old to the new premises.
We also upgraded the network infrastructure for theNational Parks Board and the Health Sciences Authority.We supplied, installed and commissioned a network
and an office automation system for the Kallang andPaya Lebar Expressway/Circle Line Stage 1 projectoffices of the Land Transport Authority. The InfocommDevelopment Authority of Singapore (IDA) awarded usthe contract to supply the network equipment for its new data centre.
In line with the convergence of telecommunications and IT, SCS Networks also offers telecommunicationssolutions and services.
A major project we undertook was the installation of aPABX and Unified Messaging System for the Ministry of Home Affairs’ new offices. Oversea-Chinese BankingCorporation (OCBC Bank) also entrusted us with theintegration of its voice network across seven sites into a single, seamless infrastructure.
International SOS, the world’s largest medical assistancecompany, also turned to us to upgrade its PABX: itinstalled a multi-channel voice recording system as wellas a call centre system. Other major contracts on themaintenance front came from Overseas Union Bank andfrom Singapore Network Services (now known asCrimson Logic).
Our Networks Education Centre, a Cisco-certified TrainingPartner, performed well in FY2001. We trained more than600 networking professionals from the public and privatesectors in Singapore, Hong Kong, Malaysia, Japan and Brunei.
Networking
I E-Business I Operations Review I I039 ISCS Annual Report 2001
Revenue from e-business, contributed by Mach30,TX123, EC1 and Ceritas New Zealand (formerly knownas SCS New Zealand), rose 67% to S$23.8 million inFY2001. However, we made a loss of S$3.8 millioncompared to a loss of S$0.7 million in FY2000. Thiswas because TX123 took in a full year of losses inFY2001 compared to nine months in FY2000. Weexpect TX123 to break even in 2002. Some of our other e-businesses were also affected by theeconomic slowdown in the second half of 2001.
Our wholly-owned e-business subsidiary, Mach30, soldfive licenses for its e-business suite of solutions andimplemented an e-procurement solution for Shell Sarawak during the year.
EC1, our joint venture with General Electric GlobaleXchange Services (GXS) made a profit before taxbefore corporate charges of S$25,000 in FY2001.
A major project it undertook was to provide Hitachi Asiawith a Web-based ordering system. Its eSpace hostedservice allowed Hitachi Asia’s back office systems totransact in real time with its suppliers and distributors.The significant time and cost savings achieved hasprompted Hitachi groups in other parts of the world to consider adopting the same solution.
EC1 provided Molex Singapore with secure Internetconnectivity based on RosettaNet Partner InterfaceProcess standards. Without making any newinfrastructure investments, Molex, an electronicsmanufacturer, was able to integrate its processes with those of its Taiwanese customers in record time.
In FY2001, we continued our strategy of teaming up withstrategic partners to form e-ventures to China, with aninvestment of US$1.05 million in Hong-Kong-basedTrade-Link E-Commerce (Holding) Co., Ltd. Trade-Linkand SCS developed and operate chinaetex. com, anonline B2B trading portal for the textile industry in China.
TX123, our e-business joint venture with Oversea-ChineseBanking Corporation (OCBC Bank) further strengthenedits position as a leading horizontal portal by formingstrategic alliances with household names in banking andfinance, logistics, food & beverage and technology. Theyinclude American Express, Bank of Singapore, IPACS,Singapore Food Industries and Oracle.
TX123 also went regional in 2001, setting up similar B2B portals in Malaysia and Brunei. A joint venture withMaybank, Malaysia’s largest bank, and Mayban VenturesHoldings, TX123 (M) leverages on Maybank’s largecustomer base to fill a void in Malaysia’s B2B marketplace.It offers an e-business platform for procurement, systemsintegration services as well as e-payment and cashmanagement services of companies. In Brunei, it partneredSoftek Solutions to set up TX123 Brunei.
Its construction portal and subsidiary, ICX123 took in morethan 100 hub users in FY2001, its first year of operations.It partnered another construction hub, HDBuilders.comto provide greater value to its hub users as well as easyaccess to both portals. ICX123 also formed a strategicalliance with Singapore Productivity and Standards Board(PSB) to help hub users find foreign business partnersthrough the partnerSingaporeTM programme.
The outlook for TX123 is optimistic. With the introductionof new features such as reverse auction on its hub andthe influx of revenue contributed by the portals it initiatedin 2001, TX123 is expected to breakeven in FY2002.
Another e-business venture that SCS has taken a stake inis OmixAsia. An e-marketplace for the marine and offshoreoil and gas industries, it has registered month-on-monthgrowth since its launch in November 2000 and has beenregistering 12,500 transactions per month. With anexpanding pool of buyers and suppliers, OmixAsia plansto tap into markets in Malaysia, China, Korea and Japan.
E-Business
Revenue of our systems integration business increasedby 17 per cent to S$81.7 million in FY2001. However, we made a loss of $1.6 million compared to a profit of$5.5 million in FY2000 mainly due to a one-time projectloss of $5.4 million. The project, which was terminatedby mutual agreement, required SCS to absorb its in-house investment in the undertaking.
In the course of FY2001, we implemented a range ofsophisticated applications from office administration to food distribution. The Registry of Companies andBusinesses (RCB) awarded us the BizFile project todesign, develop and implement a secure, Web-basedfiling system to allow members of the public to filecompany information online. With BizFile, users candownload and submit forms and make payments overthe Internet. As part of the project, SCS upgraded RCB’sback-end storage and retrieval processes. We built asystem to automate and organise information processingwithin RCB to facilitate multi-directional exchange ofinformation among RCB, other government agenciesand the public, all within a secure, trusted environment.
The Ministry of Defence (MINDEF) engaged us to developthe eCookhouse application which aims to assist in themanagement of the SAF cookhouse operations. SCSdesigned and implemented a seamless workflow fromration indent to payment to the caterer. The Internet-based eCookhouse solution was integrated with the
miw.com.sg portal to capitalise on the commoninfrastructure available. Putting the cookhouse serviceonline has also enabled information exchange betweenMINDEF and the caterers to be more efficient.
Michelin Asia-Pacific, the headquarters of Michelin inAsia, selected us to deploy a human resource applicationto improve productivity and achieve a better quality ofservice. After a smooth implementation for the Asia-Pacificoffice in Singapore, SCS was engaged to implement thesystem for Michelin in Australia and Thailand.
The Singapore Armed Forces (SAF) appointed us as itssystems integrator to upgrade PACES, their patient careenhancement system. PACES2, the upgraded system,boosted information management in several ways. Theelectronic medical records reduced the need to duplicatedata and provided one-stop access to patients’ currentand historical medical records. By allowing for alerts andreminders, the system also helped reduce errorscommitted in the delivery of healthcare services.
During the year, SCS implemented financial and fooddistribution management solutions for Singapore FoodIndustries. We set up a fully-integrated and highly scalablesystem that interfaced with the e-business front-end andother existing business areas in the company.
I Operations Review I Systems Integration II040 I SCS Annual Report 2001
Systems Integration
In FY2001, SCS continued to gain market share in thefast-growing world of e-learning. We developed VirtualInstitute of Training and Learning (VITAL) for the Ministryof Education (MOE). The portal allows some 32,000 MOEstaff to access e-learning packages for their personal andcareer development. MOE has since received favourablefeedback from users of the system. We are currentlyworking with MOE to develop enhancements for the system.
As the Strategic Sourcing Partner, six years running, to the Ministry of Defence in developing computer andWeb-based training courseware, we not only service the Strategic Sourcing Contracts, but have also wonnumerous term contracts for various SAF schools/units.In FY2001, we delivered over 150 titles to the SAFunder these contracts.
During the year we also made strategic alliances withseveral content providers to enlarge our product offerings.Among others, we now represent Serebra LearningCorporation which offers a best-of-class course library intechnology-based training. We have also teamed up withRobotel in the area of providing “live” instruction in aclassroom environment. Robotel’s SmartClass Systemsprovide teachers and instructors with a powerful set oftools for sharing information interactively and efficientlyin today’s computer-equipped classrooms.
To capitalise on our skills and domain knowledge in high potential industries, we have spawned specialisedsubsidiaries for various niche markets. PeridotHealthSystems (PHS), our subsidiary which leads our entry into the healthcare sector, implemented its hospitalmanagement system H.careONE in Singapore’s newestprivate hospital, Raffles Hospital, and a private hospitalunder the Pantai Medical Group in Malaysia.
In addition, it was one of the partners instrumental indeveloping a data exchange platform for Netcare InternetServices under the National Healthcare Group. PHS alsostruck new ground in offering Application Service Provider(ASP) services for SNEC Eye Associates, a private practiceclinic at Mount Elizabeth Medical Centre established by the Singapore National Eye Centre under theSingHealth Group.
Although PHS’ revenue increased by 83% to hit S$4.5 million in FY2001, it slipped into the red becauseof a substantial provision for debt. However, it has astrong pipeline of potential projects in Singapore and China.
I041 ISCS Annual Report 2001
Outsourcing performed well in FY2001 with net profit before tax jumping 36 per cent to S$10.0 million on the back of a 26 per cent growth in revenue to S$56.8 million.
Good growth was recorded across all units – infrastructureservices, business recovery, data centre, IT outsourcing,call centre and professional services. Professional serviceswas the engine of growth with our 300-strong pool ofprofessionals contributing $8.8 million or 86 per cent ofthe profits. Our IT manpower placement agency, iGlobalServices, was profitable by the end of its first full year ofoperations. The staff it deployed were IT professionalswhose areas of expertise cut across the entire spectrumof technologies, from mature technologies like SAP as wellas newer Web-based ones such as Java.
In facility-based outsourcing, we won a major contract to host NTT’s regional Internet centre. The NTT centreoccupies more than 6,000 sq ft of space.
Our Business Recovery Centre had a busy year inFY2001. We introduced the concept of standby datastorage to slash recovery time for our customers from twenty-four to four hours. Besides providing consultancyand project management services, we also helped ourclients develop their disaster recovery plans.
Revenue from JuzCall, our third-party call centre, grewfrom S$0.2 million in FY2000 to S$2.4 million in FY2001.Among its new clients were Green Dot Internet Services
(GDIS), which operates the miw.com.sg portal, a lifestyleportal that serves the MINDEF community of NationalServicemen, MINDEF employees and their families. GDIS outsourced its eServices Centre to JuzCall.
Standard Chartered Bank also chose to set up itscorporate call centre using JuzCall’s infrastructure. Its staff operate more than thirty seats at our call centre to take calls from their customers while SCS provides the technical support and connections to the bank’s main computers.
During the year, Juzcall invested in a new InteractiveVoice Response System (IVRS) that expanded thelanguages supported to include Mandarin, Malay andTamil in addition to English. Speech recognition facilitieswere also introduced for some clients.
We provided IT outsourcing services to several newcustomers during the year. The Ministry of Information,Communications and the Arts awarded us an applicationmaintenance and outsourcing services contract while the Monetary Authority of Singapore entrusted themaintenance of its SAP systems to us.
Alexandra Hospital turned to us to support its 800 desktops, servers and peripherals. We providedthem with helpdesk, on-site problem solving, assetmanagement, server management and related services in a contract worth S$1.3 million.
I Operations Review I Outsourcing II042 I SCS Annual Report 2001
Outsourcing
Our consultancy business, which includes servicesoffered by various business units as part of technologyimplementation as well as strategic businessconsultancy provided by our wholly-owned subsidiarySCS Foresight, was adversely affected by the economicslowdown. Customers, particularly those in theelectronics and manufacturing sectors, deferredcorporate spending. Revenue dropped by 12 per centto $3.4 million and the business made a loss of $0.3 million. SCS Enterprise Solutions, which providesconsultancy services in conjunction with ERP systemsimplementation, saw the biggest dip as its customerswere mainly in the manufacturing sector. SCS Foresight,which was into its first full year of operations in FY2001,broke even on revenue of S$1.0 million. It saw itsbusiness pick up in the fourth quarter with the awardand completion of several projects.
SCS Foresight played a key role in the introduction of a National Service Personnel and AdministrationManagement (NSPAM) system for the Singapore CivilDefence Force and the Singapore Police Force. Itdeveloped an IT master plan which included re-designingthe systems and processes to facilitate interface amongthe different parties involved in the administration andmanagement of NSForce and NSmen.
SCS Foresight also conceptualised and executed thechange management plan for the implementation of theVirtual Institute of Training and Learning (VITAL) that waslaunched by the Ministry of Education (MOE) in FY2001.It took a targetted change management approach thataimed to communicate the benefits of e-learning to each
of MOE’s 32,000 staff. It engaged them at all levelsthrough focus group discussions to address their needs and concerns about e-learning. It also raised awareness ofVITAL in schools through an integrated publicity campaign.
SATS Security Services enlisted SCS Foresight to conducta business process re-engineering study with a view toleverage on IT to improve efficiency. The areas addressedincluded lost and found, armoury, forgery detection andvisitor tracking. SCS Foresight was able to develop an ITframework that consolidated business processes, gaveonline access to real-time information and integratedseamlessly with existing IT systems.
In another project, SCS Foresight took Kandang KerbauWomen’s and Children’s Hospital through a comprehensivereview of key processes through process mapping.Strategies for quantum leap improvements were developedfor the children’s emergency service, the specialistoutpatient clinics, bed management and cross-functionalteam synergy. It expects its processes to yield shorterwaiting times, more bed availability and streamlinedcross-functional workflow within the hospital.
Overseas, SCS Foresight worked with the MacauGovernment in a series of e-Government projects. Itassisted the Macau Government to identify e-services andto plan their implementation. It also conducted workshopsfor various government agencies. Together with seniorofficials, it assessed the current workflow systems of theagencies, set goals to be achieved and brainstormed withthe officials on how to attain them.
I Consultancy I Operations Review I I043 ISCS Annual Report 2001
Consultancy
I Operations Review I Enterprise Systems II044 I SCS Annual Report 2001
The hardware market was badly hit in FY2001, with a slump in the sale of PCs, servers, peripherals andworkstations resulting in price erosion. Althoughrevenue from our enterprise systems businessincreased by 10 per cent, profits did not rise intandem. We experienced a 3 per cent decline in netprofits before tax to S$9.4 million. The fall in earningswould have been steeper if we had not aggressivelyexpanded our market share.
We secured deals in both sales of hardware and ofservices, including the sale of high-end projectionsystems to MINDEF and another year of an InfocommDevelopment Authority of Singapore (IDA) term contractto supply servers, desktops, notebooks and printers to all Government ministries and statutory boards.
We chalked up substantial orders from the bankingsector in FY2001. Citibank, one of our key customers,awarded us a two-year contract to provide hardware,
software and support services. We clinched helpdeskservices contracts totalling S$1.7 million from StandardChartered Bank (SCB) and Maybank.
A leading value-added reseller of enterprise systems inSingapore, we were presented with the Top ServiceProvider Award by Compaq, and the Super Value-AddedReseller Award by Hewlett Packard Asia-Pacific.
Our target is to become a major player in the region,particularly in the growing China market. With this aim in mind, our enterprise systems unit was spun off as awholly-owned subsidiary in October 2001. As SCSEnterprise Systems Pte Ltd, it will have more flexibility to team up with other regional players to maintain ourstrong growth in the IT hardware business. It will alsotake under its wing the value-added reseller arms of oursubsidiaries in Malaysia, Thailand and the Philippines to strengthen and unify our push into the regional IThardware market.
Enterprise Systems
I Competency Centres I Operations Review I I045 ISCS Annual Report 2001
SCS has two competency centres, specialising in SAPand Linux solutions and services.
The SCS Linux Competency Centre (LCC), initiated in thelast quarter of 2001, represents a new revenue stream forSCS. The LCC is SCS’ one-stop shop for Linux hardware,software, solutions and services.
Within a short span of two months in the last quarter, the LCC has become a major Linux and open sourcesolutions provider. Staffed by engineers experienced inLinux deployment, the LCC team has pioneered work in the area of High Performance Technical Computing(HPTC) clusters. It was engaged to build one of Asia-Pacific’s largest HPTC cluster for two local researchand educational institutes in FY2001. We expect LCC to profit from the growing demand for Linux deploymentin the tertiary and research institutions as well as from the finance and defence sectors.
LCC also offers Linux training and certification. It hasbeen appointed as the Authorised Training Partner inSingapore, Malaysia and Thailand by Red Hat, aninternational open source and Linux provider.
Our SAP Competency Centre, which was established in FY2000, has started to pay off. A one-stop solutionscentre offering infrastructure, implementation andoutsourcing services for SAP projects, the centre won,among others, a contract to provide SAP support for theHuman Resource Information System of the MonetaryAuthority of Singapore. It was also engaged by BruneiLNG Sdn Bhd to conduct a feasibility study.
The centre has a strong team of 70 professionals with a wide range of SAP expertise. Some of these staff arestationed at customers’ sites to provide SAP-relatedsupport and services.
Competency Centres
I Operations Review I Overseas Operations II046 I SCS Annual Report 2001
Revenue from our overseas subsidiaries rose 17% toreach S$189.3 million in FY2001. However, net profitbefore tax dropped from S$10.5 million in FY2000 toS$5.0 million in FY2001. This was due to the moredifficult business environment which had an impact on margins.
New ZealandSCS New Zealand had a difficult year in which both itsrevenue and profits took a dip. Revenue declined by 3 per cent to S$79.3 million. The subsidiary made a lossof S$1.1 million. However, it is in a good position to take advantage of the economic rebound under its re-branded name Ceritas New Zealand Ltd.
Now known as Ceritas New Zealand Ltd, it has drawntogether the wide-ranging units within the group underthe Ceritas brand for a more coherent identity. TuringSolutions, a software development company, is alreadyre-branded as Ceritas Digital. The remaining units,Computerland New Zealand, SQL Services and AppServwill begin their transition to the Ceritas umbrella in thenext one to two years.
In FY2001, Ceritas New Zealand garnered a variety of projects through its subsidiaries. Computerlandundertook a consultancy study for Tip Top, a leadingfood production company, and proposed a flexible, cost-effective application serving solution that providedtime and cost savings by Web-enabling applications.
The subsidiary delivered, in partnership with InteleradMedical Systems, a sizable Picture Archive andCommunications System (PACS) to one of New Zealand’slargest Health Boards. The system was designed, installedand project managed by Computerland with round-the-
clock support. The solution consisted of enterprise servers, a 14TB tape archive library and several high-enddiagnostic workstations. Computerland also supportsANZ Bank’s New Zealand operations in 150 locationsthroughout the country. We are proud to note that in astudy on total cost of ownership by GartnerGroup, thecost-performance ratio of the helpdesk service providedby Computerland to ANZ Bank was rated within the top15 per cent of GartnerGroup’s worldwide database. Thestudy, which focused on the desktop and server area,including support, showed that ANZ enjoyed savings of30 per cent in support costs when compared to peercompanies of a similar size and complexity.
MalaysiaOur Malaysian operations saw revenue rising by 8 per centto S$76.3 million from S$70.6 million. However, marginerosion due to the economic downturn hit profitability,and it dropped by 31 per cent to S$6.0 million.
In the networking and communications area, SCSMalaysia provided more than RM$9.0 million of hardwareand networking equipment to a major oil and gascompany to set up its IT infrastructure. It also landed a RM$4.0 million contract to install the infocomminfrastructure for two ‘smart’ schools.
In a turnkey project for Jabatan Tenaga Rakyat (JTR),SCS Malaysia provided the networking infrastructuretogether with IT and multimedia systems for JTR’sindustrial training institute.
In the software arena, SCS Malaysia implemented a Sun accounting system for Elken, Malaysia’s leadingmulti-level marketing company. The sophisticatedsystem provides senior management with detailed
OverseasOperations
I047 ISCS Annual Report 2001
analytical information for better decision-making. Duringthe year, SCS Malaysia secured a major contract to equipDigi Telecommunications, one of Malaysia’s largestmobile phone service providers, with an interconnectbilling and settlement system. Besides supplying andcustomising the solution, it also provided post-implementation support and maintenance services. The system captures costs to and from Digi’s businesspartners. It will assist Digi in providing quality customerservice by allowing it to present billings that are promptand accurate.
SCS Malaysia continued to help Shell upgrade its petrolstations through the automation of convenience storeand forecourt services. In FY2001, it upgraded 120 sitesin Malaysia by installing pump control and card readerswith online card payment functionality. As a result, these Shell petrol stations now offer customers greaterconvenience. They also support the MalaysianGovernment’s drive for more self-service transactions.
Greater ChinaTo ride the rising tide in the eastern China region, weopened a branch office in Shanghai in FY2001 in additionto our existing Beijing Office. However, we were affectedby difficult trading conditions: while our revenue catapultedfrom S$7.0 million in FY2000 to S$31.0 million in FY2001,our profits dropped to S$0.1 million from S$0.9 million.
During the year we started chinaetex.com, a B2B portalfor the textile industry, with Trade-Link E-Commerce(Holding) Co., Ltd. Built on SCS’ Mach30 platform, itwas the first to offer value-added services such ascollaborative content management, in-depth analysis,auctioning, and settlement for the textile trade community.
SCS China also clinched a systems integration projectfrom the Shanghai Ocean Aquarium. It was responsiblefor the overall design and implementation of the enterprisesystem from cabling infrastructure to the financial andadmission systems.
Unlike China, Hong Kong faced a stagnant market inFY2001. Despite that, SCS Hong Kong continued to winmore than HK $1.0 million worth of networking/hardwareprojects from our customers in the education sector.During the year, it also introduced a network diagnosisservice to target the cost-conscious SME market.
BruneiSCS Information Technology, our Brunei subsidiary,brought in revenue of S$2.7 million in FY2001. Althoughits turnover was lower in FY2001 than in FY2000, it endedthe year with a healthy order backlog of B$1.7 million.
During the year, it supplied and installed the first SunMicrosystems networks attached storage system in theregion. It also secured contracts to provide professionalservices and Sun Microsystems hardware maintenancesupport from our customers.
The business outlook going forward is promising, withprojected investments of B$7.3 billion under Brunei’slatest National Development Plan in the next five years.With the main focus in information communications andtechnology, they represent new opportunities for us.
I Corporate Development II048 I SCS Annual Report 2001
Our PeopleOur staff strength increased from 2,000 in FY2000 to2,075 in FY2001 to support the growing volume of ourbusiness. More than 1,300 staff work in Singapore at ourheadquarters and local subsidiaries. SCS continues toattract talented IT professionals from Singapore andaround the world, with nearly 50 per cent of staff comingfrom countries such as Malaysia, India, China, Indonesia,New Zealand, Australia and UK. Eighty-five per cent ofour staff have at least diploma or tertiary qualification.
Staff Training We believe in investing in our staff. InFY2001, we devoted S$1.3 million on staff trainingdespite being on a corporate-wide cost-containmentexercise. We have a growing pool of staff with highly-recognised certifications from CISCO, Red Hat, SAP and Disaster Recovery Institute International (DRII). Wehave also rolled out a programme to eventually have allour project managers qualified as Certified IT ProjectManagers. To give staff the flexibility to undergo training at their own time and pace, we have made some of the core courses available online, including projectmanagement and quality practices. New staff alsoundergo their staff orientation online.
Share Ownership We want to build employee loyalty by giving them a stake in the company. To foster shareownership, SCS staff can participate in the SCS ShareOwnership Scheme where they can buy company sharesworth up to 5 per cent of their basic monthly salary. SCScontributes S$0.50 for every S$1.00 that the staff paystowards his shares. More than 50 per cent of our staffparticipate in this scheme.
Healthy Lifestyle We understand that a balanced lifestylewill boost our staff’s performance and regularly organisehealth talks and physical workouts at the workplace. Forour efforts, we were awarded a bronze Helping EmployeesAchieve Life-Time Health (H.E.A.L.T.H.) Award.
Satisfied Employees SCS carries out annual employeesatisfaction surveys to poll the satisfaction level of ourstaff so that we can continuously improve on the workingenvironment at SCS. We are proud that the surveyconducted in November 2001 showed a 85.35 per centsatisfaction level. Leading the chart of specific factorsthat made up the plus points of working at SCS wasworking relationships with colleagues. The next twofactors that staff cited were best place to work andsense of pride in the company.
Internal Communication SCS organises two staffconventions a year to bring all staff under one roof fordialogue sessions with management. At these sessions,management reviews the company’s performance, andshares directions and strategies to ensure that all staffunderstand their roles in the growth of the company.The conventions also offer staff the opportunity to askquestions or raise work issues. Besides the conventions,there are on-going CEO dialogues with individual businessunits. Regular communication is also disseminated viaemail and a monthly online staff newsletter.
I049 ISCS Annual Report 2001
Community RelationsAs a responsible corporate citizen, we believe in directlyhelping the community we serve as well as fostering aspirit of caring among staff through fund raising forcommunity projects.
In FY2001, SCS contributed 25 bursaries to needypolytechnic students. Our aim was to help youths fromunder-privileged families fulfil their academic potential.The $40,000 required for this project came from SCSand funds raised by our staff in a bowling tournament.During the year, SCS staff also raised nearly $5,000 forearthquake victims in Gujerat, India.
Investor RelationsWe are responsive to the information needs of theinvestment community and have initiated measures toprovide timely and consistent reports of our activities. In FY2001, we instituted quarterly announcements of ourfinancial results coupled with the opportunity for analystsand media to interview senior management. This is inaddition to frequent analysts meetings and presentationsthroughout the year.
We also introduced a dedicated Investor Relations (IR)section in our corporate website. The IR section contains our press releases, annual reports, financialannouncements, presentations made at analysts’briefings and frequently asked questions (FAQs) aboutSCS and its stock.
Harnessing ITAs befits a leading infocomm technology service provider,we ourselves leverage on online applications to achievegreater effectiveness at reduced overheads.
Customer support has been streamlined through theinnovative use of Short Messaging System (SMS). Insteadof paging a field engineer when a customer calls, Applix,our Customer Relationship Management (CRM) software,will SMS him with the case details without going througha human operator. Through SMS, the engineer is also ableto update the case records immediately after completinga job, even if it is after office hours. The SMS system isexpected to reduce the number of calls handled by ourcustomer call centre by one third.
Our purchasing supply chain benefits from online links withkey suppliers via an extranet. For example, orders madeto our partners are seamlessly integrated with our financeand distribution systems.
Our Human Resource (HR) department launchedrecruitment online in FY2001. Job seekers can submittheir resumes to us via the Internet at any time. Resumesstored in our databank are automatically reviewed whenvacancies occur.
Other HR processes such as leave applications andclaims are also handled electronically over an extensiveintranet. Besides obtaining workflow efficiency gains, ourintranet serves as an all-purpose communications tool,from sharing contact intelligence to disseminatingcorporate policies and dispensing product informationacross all business units.
During the year, we outfitted our conference rooms with a wireless Local Area Network (LAN), allowing users easyaccess to online services without being constrained bycables and sockets.
I050 I SCS Annual Report 2001 I Highlights of the Year I
January_February_
May_July_
September_October_
November_December_
2001
I051 ISCS Annual Report 2001
January– TX123 Pte Ltd and NTT Singapore
Pte Ltd formed ICX123 Pte Ltd tooperate icx123.com, a Business-to-Business (B2B) digital exchange tofacilitate online transactions for thebuilding and construction industry.
– TX123 Pte Ltd, together with STEInternational (Singapore) Pte Ltd,launched kafe123.com, the firstB2B portal in Singapore whichallows members of the coffee shop community to transact viathe Internet.
– SCS, its parent company, GreenDot Capital Pte Ltd and SingaporeEngineering Software Pte Ltd, jointlyestablished Green Dot InternetServices Pte Ltd (GDIS) to operatemiw.com.sg, a lifestyle portal toserve the NSmen community.
February– SCS launched Mach30 Pte Ltd, an
e-business company that providesa suite of e-enabling solutions usingits in-house developed e-platform.
– SCS Computer Systems Sdn Bhd,TX123 Pte Ltd, Maybank andMayban Venture Capital CompanySdn Bhd, partnered to establishTX123 (M) Sdn Bhd. TX123 (M)Sdn Bhd operates a B2B portal inMalaysia for the trading of goodsand services through a real-time,online digital market place system.
– SCS set up an Internet data centre(SCS-iDC) to provide round-the-clock managed hosting services to help keep its customers’ ITinfrastructure and services running24 hours a day, 7 days a week.
May– SCS took a 30% stake in
Hong Kong-based Trade-Link E-Commerce (Holding) Co., Ltd.Together, SCS and Trade-link will develop and operatechinaetex.com, an online B2Btrading portal for the textile industry in China.
July– Virtual Institute of Training and
Learning (VITAL), an e-learningportal developed by SCS for theMinistry of Education (MOE), waslaunched. VITAL allows some32,000 staff to access e-learningpackages for their personal andcareer development.
– SCS New Zealand Ltd took on anew corporate branding to create amore coherent identity for theGroup. Now known as CeritasNew Zealand Ltd, it bringstogether under one brand thewide-ranging capabilities of unitswithin the Group – ComputerlandNew Zealand, Turing Solutions,SQL Services and AppServ.
– SCS Foresight launched its KM services at KM Asia 2001,a Knowledge Management (KM) exhibition.
– SCS, together with SingaporeTechnologies Electronics Ltd andDinervest Investment Pte Ltd,launched Trusted Hub Pte Ltd.Trusted Hub specialises inmanaging and providing securesolutions for the management of digital content.
September– SCS appointed two new directors
to its board - Mr William Liu Wei Haiand Ms Low Sin Leng. Mr Liu isthe President of Green Dot CapitalPte Ltd and Ms Low is the ChiefOperating Officer and Chief FinancialOfficer of SembCorp Industries Ltd.
October– SCS provided 25 education
bursaries to assist Polytechnicstudents who come from low-income families.
– SCS spun off its hardware businessunit into a separate subsidiaryknown as SCS EnterpriseSystems Pte Ltd.
November– SCS was awarded the Bronze
H.E.A.L.T.H. (Helping EmployeesAchieve Life-Time Health) Award.
December– TX123 Pte Ltd partnered Softek
Solutions Sdn Bhd to establish TX Technology Sdn Bhd in Brunei. TX Technology will create, operateand maintain an e-business hub forprocurement activities in Brunei.
I Financial Report II052 I SCS Annual Report 2001
053 Directors’ Report069 Statement by Directors070 Report of the Auditors to the Members of
Singapore Computer Systems Limited071 Balance Sheets072 Profit and Loss Accounts073 Consolidated Statement of Changes in Equity074 Statement of Changes in Equity075 Consolidated Statement of Cash Flows077 Notes to the Financial Statements120 Additional Information
I053 ISCS Annual Report 2001 Singapore Computer Systems Limited and its Subsidiaries
For the Year ended 31 December 2001
On behalf of all the directors of the Company, we are pleased to submit this annual report to the members together with the auditedfinancial statements of the Group and of the Company for the financial year ended 31 December 2001.
DirectorsThe directors in office at the date of this report are as follows:–Tay Siew Choon
Robert Chua Teck Chew
Theresa Foo-Yo Mie Yoen
Spencer Lee Tien Chye
Garfield Vorhes Nelson
Stephen Yeo Siew Chye
William Liu Wei Hai (Appointed on 20 September 2001)
Low Sin Leng (Appointed on 20 September 2001)
Principal ActivitiesThe principal activities of the Company during the financial year have been those relating to the supply and maintenance, systemdevelopment, project implementation, facilities management, system support, the servicing and sale of computer equipment andprovision of consultancy and software development services.
The principal activities of the subsidiaries are set out in note 5 to the financial statements.
There have been no significant changes in the activities of the Group or of the Company during the financial year.
Acquisition and Disposal of Interests in Subsidiaries
(a) Additional Interests in Subsidiaries
The Company’s effective interest in Ceritas New Zealand Limited (formerly known as SCS New Zealand Limited) increased from86.4% to 88.4% as a result of the cancellation of 50,000 ordinary shares in Ceritas New Zealand Limited. This in turn increasedthe Company’s effective interest in Abot Investments Limited and Featherston Centre Limited, both wholly-owned subsidiaries ofCeritas New Zealand Limited from 86.4% to 88.4%. Arising therefrom, the Group’s share of net tangible assets increased by anadditional $15,822.
(b) Dilution of Interests in Subsidiaries
(i) The Company’s effective interest in PeridotHealth Systems Pte Ltd was reduced from 100% to 99.7% as a result of the transferof interest to KRDL Holdings Pte Ltd. The transfer was the first part of the purchase consideration of $1,000,000 to be made overthree years for the purchase of the Carehaven business, a healthcare enterprise solution undertaken by Kent Ridge Digital Labs.The Group’s share of net tangible assets diluted amounted to $6,150.
(ii) The Company’s effective interest in ICX123 Pte Ltd was reduced from 59% to 53.1% as a result of 1,400,000 new ordinaryshares issued that were not fully subscribed by the Company in respect of its entitlements. The Group’s share of net tangibleassets diluted amounted to $166,945.
Except as disclosed above, there were no acquisitions or disposals of any other subsidiaries/interest in subsidiaries during the financial year.
IDirectors’ Report I
Singapore Computer Systems Limited and its Subsidiaries
Financial ResultsThe results of the Group and of the Company for the financial year are as follows:–
Group Company
$’000 $’000
Profit after taxation 15,864 10,508Minority interests 1,464 –
Profit attributable to members of the Company 17,328 10,508
Accumulated profits brought forward, as previously reported 93,671 78,086Effect of adopting new/revised accounting standards:–– SAS 10 (dividends proposed in 2000 and declared in 2001) 4,297 4,297– SAS 17 (employee benefits) (2,958) (1,965)– SAS 34 (intangible assets) (56) –
Accumulated profits brought forward, as restated 94,954 80,418
Profits available for appropriation 112,282 90,926
Loss on share buy-back by a subsidiary (58) – Appropriations:–Final dividends paid of 15% per share less tax at 24.5% in respect of year 2000 (4,360) (4,360)
Accumulated profits carried forward 107,864 86,566
Transfers to or from Reserves or ProvisionsThe following material transfers to or from reserves were made during the financial year:–
Group Company
$’000 $’000
Increase in reserves:Share premium reserve:– Premium arising from issue of ordinary shares under share option scheme 156 156
Foreign currency translation reserve:– Net gain on translation of net investment in foreign activities 723 –
Material movements in provisions (including allowance, impairment, depreciation and amortisation) are as set out in the accompanyingfinancial statements.
For the Year ended 31 December 2001
I054 I SCS Annual Report 2001
IDirectors’ Report I
IDirectors’ Report I
I055 ISCS Annual Report 2001 Singapore Computer Systems Limited and its Subsidiaries
For the Year ended 31 December 2001
Issue of Shares or DebenturesDuring the financial year, there were the following issues of shares:–
By the Company
Upon the exercise of the options previously granted by the Company under the Singapore Computer Systems Executives’ ShareOption Scheme, the following shares were issued:
Number of shares Price per share Premium per share
75,000 $0.69 $0.44139,500 $1.13 $0.88
By the Subsidiaries
Name of subsidiary Description of shares issued Purpose of issue
Mach30 Pte Ltd 4,000,000 ordinary shares of $1 each To provide additional working capitalfully paid at par for cash
ICX123 Pte Ltd 1,400,000 ordinary shares of $1 each To provide additional working capitalfully paid at par for cash
SCS China Co., Ltd Capital injection of US$225,000 To provide additional working capital
Except for the above, the Company and its subsidiaries did not issue any shares or debentures during the financial year.
Arrangements to Enable Directors to Acquire Shares or Debentures
Except as disclosed under the “Share Options and Share-Based Incentives” section of this report, neither at the end of nor at anytime during the financial year was the Company a party to any arrangement whose objects are, or one of whose objects is, to enablethe directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any otherbody corporate.
IDirectors’ Report I
I056 I SCS Annual Report 2001
For the Year ended 31 December 2001
Singapore Computer Systems Limited and its Subsidiaries
Directors’ Interests in Shares or DebenturesAccording to the register kept by the Company for the purposes of Section 164 of the Companies Act, Chapter 50 (the “Act”),particulars of interests of directors who held office at the end of the financial year in shares, debentures and share options in theCompany and in related corporations (other than wholly-owned subsidiaries) are as follows:–
Holdings in the name
of the director, spouse
and infant children
At beginning
of the year/date At
Exercise of appointment end of
Price Exercise Period (if later) the year
THE COMPANYOrdinary shares of $0.25 each fully paid
Tay Siew Choon 171,000 371,000William Liu Wei Hai 3,000 3,000Stephen Yeo Siew Chye 10,000 10,000
Options to subscribe for ordinary shares of $0.25 each
Tay Siew Choon $2.20 19 / 10 / 2001 to 18 / 10 / 2005 20,000 20,000$2.20 19 / 10 / 2002 to 18 / 10 / 2005 20,000 20,000 $2.20 19 / 10 / 2003 to 18 / 10 / 2005 20,000 20,000 $2.20 19 / 10 / 2004 to 18 / 10 / 2005 20,000 20,000$2.08 15 / 3 / 2002 to 14 / 3 / 2006 – 25,000$2.08 15 / 3 / 2003 to 14 / 3 / 2006 – 25,000$2.08 15 / 3 / 2004 to 14 / 3 / 2006 – 25,000$2.08 15 / 3 / 2005 to 14 / 3 / 2006 – 25,000
Robert Chua Teck Chew $2.20 19 / 10 / 2001 to 18 / 10 / 2005 20,000 20,000$2.08 15 / 3 / 2002 to 14 / 3 / 2006 – 25,000
Theresa Foo-Yo Mie Yoen $2.20 19 / 10 / 2001 to 18 / 10 / 2005 8,000 8,000$2.08 15 / 3 / 2002 to 14 / 3 /2006 – 9,000
Spencer Lee Tien Chye $2.20 19 / 10 / 2001 to 18 / 10 / 2005 5,000 5,000$2.08 15 / 3 / 2002 to 14 / 3 / 2006 – 5,000
Garfield Vorhes Nelson $2.20 19 / 10 / 2001 to 18 / 10 / 2005 12,000 12,000$2.08 15 / 3 / 2002 to 14 / 3 / 2006 – 15,000
Stephen Yeo Siew Chye $2.20 19 / 10 / 2001 to 18 / 10 / 2010 35,000 35,000$2.20 19 / 10 / 2002 to 18 / 10 / 2010 35,000 35,000$2.20 19 / 10 / 2003 to 18 / 10 / 2010 35,000 35,000$2.20 19 / 10 / 2004 to 18 / 10 / 2010 35,000 35,000$2.08 15 / 3 / 2002 to 14 / 3 / 2011 – 37,500$2.08 15 / 3 / 2003 to 14 / 3 / 2011 – 37,500$2.08 15 / 3 / 2004 to 14 / 3 / 2011 – 37,500$2.08 15 / 3 / 2005 to 14 / 3 / 2011 – 37,500
Award for conditional performance shares of $0.25 each fully paid
Stephen Yeo Siew Chye – Up to200,000
(see note below)
Note: The actual number of the shares delivered at the end of a 3-year performance cycle from 2001 to 2003 will be based on the achievement of the performance targets set
under the conditional performance shares award granted under the Singapore Computer Systems Performance Share Plan.
IDirectors’ Report I
I057 ISCS Annual Report 2001 Singapore Computer Systems Limited and its Subsidiaries
For the Year ended 31 December 2001
Directors’ Interests in Shares and Debentures (cont’d)Holdings in the name
of the director, spouse
and infant children
At beginning
of the year/date At
Exercise of appointment end of
Price Exercise Period (if later) the year
RELATED CORPORATIONSChartered Semiconductor Manufacturing LtdOrdinary shares of $0.26 each fully paid
Spencer Lee Tien Chye 24,000 24,000
Options to subscribe for ordinary shares of $0.26 each
Tay Siew Choon $4.99 16 / 8 / 2002 to 15 / 8 / 2006 – 20,000
ST Assembly Test Services LtdOrdinary shares of $0.25 each fully paid
Tay Siew Choon 4,000 4,000
Stephen Yeo Siew Chye 4,000 4,000
CapitaLand LimitedOrdinary shares of $1.00 each fully paid
Spencer Lee Tien Chye – 2,000
Low Sin Leng 2,000 2,000
Stephen Yeo Siew Chye 19,000 19,000
Options to subscribe for ordinary shares of $1.00 each
Tay Siew Choon $2.54 12 / 6 / 2001 to 12 / 6 / 2005 13,462 13,462$2.54 12 / 6 / 2002 to 12 / 6 / 2005 13,463 13,463$2.54 12 / 6 / 2003 to 12 / 6 / 2005 13,462 13,462$2.54 12 / 6 / 2004 to 12 / 6 / 2005 13,463 13,463$2.50 19 / 6 / 2002 to 18 / 6 / 2006 – 12,500$2.50 19 / 6 / 2003 to 18 / 6 / 2006 – 12,500$2.50 19 / 6 / 2004 to 18 / 6 / 2006 – 12,500$2.50 19 / 6 / 2005 to 18 / 6 / 2006 – 12,500
SNP Corporation LtdOptions to subscribe for ordinary shares of $0.50 each
Tay Siew Choon $0.50 23 / 4 / 2002 to 22 / 4 / 2011 – 5,000$0.50 23 / 4 / 2003 to 22 / 4 / 2011 – 5,000$0.50 23 / 4 / 2004 to 22 / 4 / 2011 – 5,000$0.50 23 / 4 / 2005 to 22 / 4 / 2011 – 5,000
Raffles Holdings LimitedOrdinary shares of $0.50 each fully paid
Tay Siew Choon 10,000 10,000
IDirectors’ Report I
I058 I SCS Annual Report 2001
For the Year ended 31 December 2001
Singapore Computer Systems Limited and its Subsidiaries
Directors’ Interests in Shares and Debentures (cont’d)Holdings in the name
of the director, spouse
and infant children
At beginning
of the year/date At
Exercise of appointment end of
Price Exercise Period (if later) the year
RELATED CORPORATIONS (cont’d)STT Communications LtdOptions to subscribe for ordinary shares of $0.50 each
Tay Siew Choon $1.42 19 / 9 / 2001 to 18 / 9 / 2010 25,000 25,000$1.42 19 / 9 / 2002 to 18 / 9 / 2010 25,000 25,000$1.42 19 / 9 / 2003 to 18 / 9 / 2010 25,000 25,000$1.42 19 / 9 / 2004 to 18 / 9 / 2010 25,000 25,000$0.92 28 / 4 / 2002 to 27 / 4 / 2011 – 3,750 $0.92 28 / 4 / 2003 to 27 / 4 / 2011 – 3,750$0.92 28 / 4 / 2004 to 27 / 4 / 2011 – 3,750 $0.92 28 / 4 / 2005 to 27 / 4 / 2011 – 3,750 $0.50 24 / 11 / 2002 to 23 / 11 / 2011 – 7,500 $0.50 24 / 11 / 2003 to 23 / 11 / 2011 – 7,500 $0.50 24 / 11 / 2004 to 23 / 11 / 2011 – 7,500$0.50 24 / 11 / 2005 to 23 / 11 / 2011 – 7,500
Vertex Investment (II) LtdOrdinary shares of US$1.00 each fully paid
(Held in trust by Overseas Union Bank Trustees Limited)
Tay Siew Choon 2 2
Vertex Venture Holdings Ltd*Ordinary shares of $0.20 each fully paid
Tay Siew Choon – 71,208
Vertex Technology Fund LtdOrdinary shares of US$1.00 each fully paid
(Held in trust by HSBC Trustees (Singapore) Limited)
Tay Siew Choon 20 20
Redeemable preference shares of US$0.01 each fully paid
(Held in trust by HSBC Trustees (Singapore) Limited)
Tay Siew Choon 1 –
Vertex Technology Fund (II) LtdOrdinary shares of US$1.00 each fully paid
(Held in trust by Ballas Nominees (Private) Limited)
Tay Siew Choon 500 500
Stephen Yeo Siew Chye 5 5
* During the financial year, the holders of ordinary shares of $0.25 each in the capital of Vickers Capital Limited (“VCap”) and Vertex Venture Holdings Ltd (“VVH”)
entered into a Scheme of Arrangement under Section 210 of the Companies Act, Chapter 50. The Scheme took effect on 8 November 2001 whereupon VCap became
a wholly-owned subsidiary of VVH. Upon the Scheme taking effect, VVH issued new shares in exchange for previous holdings of shares in VCap in accordance with
the terms of the Scheme. On 12 November 2001, VCap was delisted and the shares of VVH were listed on the Singapore Exchange Securities Trading Limited.
IDirectors’ Report I
I059 ISCS Annual Report 2001 Singapore Computer Systems Limited and its Subsidiaries
For the Year ended 31 December 2001
Directors’ Interests in Shares and Debentures (cont’d)Holdings in the name
of the director, spouse
and infant children
At beginning
of the year/date At
Exercise of appointment end of
Price Exercise Period (if later) the year
RELATED CORPORATIONS (cont’d)Vertex Technology Fund (II) Ltd (cont’d)Redeemable preference shares of US$0.01 each fully paid
(Held in trust by Ballas Nominees (Private) Limited)
Tay Siew Choon 500 500
Stephen Yeo Siew Chye 5 5
SembCorp Industries LtdOrdinary shares of $0.25 each fully paid
Tay Siew Choon 54,598 54,598
William Liu Wei Hai 2,629 2,629
Stephen Yeo Siew Chye 30,000 30,000
Options to subscribe for ordinary shares of $0.25 each
Tay Siew Choon $2.175 3 / 10 / 1998 to 1 / 10 / 2001 110,672 –$2.535 11 / 4 / 1999 to 10 / 4 / 2002 144,611 144,611$1.294 22 / 4 / 2000 to 20 / 4 / 2003 224,295 224,295$2.26 20 / 5 / 2001 to 19 / 5 / 2009 500,000 500,000$1.99 27 / 6 / 2001 to 26 / 6 / 2010 125,000 125,000$1.99 27 / 6 / 2002 to 26 / 6 / 2010 125,000 125,000$1.99 27 / 6 / 2003 to 26 / 6 / 2010 125,000 125,000$1.99 27 / 6 / 2004 to 26 / 6 / 2010 125,000 125,000$1.55 20 / 4 / 2002 to 19 / 4 / 2006 – 12,500$1.55 20 / 4 / 2003 to 19 / 4 / 2006 – 12,500$1.55 20 / 4 / 2004 to 19 / 4 / 2006 – 12,500$1.55 20 / 4 / 2005 to 19 / 4 / 2006 – 12,500
Stephen Yeo Siew Chye $1.99 27 / 6 / 2001 to 26 / 6 / 2010 6,250 6,250$1.99 27 / 6 / 2002 to 26 / 6 / 2010 6,250 6,250$1.99 27 / 6 / 2003 to 26 / 6 / 2010 6,250 6,250$1.99 27 / 6 / 2004 to 26 / 6 / 2010 6,250 6,250
Low Sin Leng $1.55 20 / 4 / 2002 to 19 / 4 / 2011 75,000 75,000$1.55 20 / 4 / 2003 to 19 / 4 / 2011 75,000 75,000$1.55 20 / 4 / 2004 to 19 / 4 / 2011 75,000 75,000$1.55 20 / 4 / 2005 to 19 / 4 / 2011 75,000 75,000
Award for conditional performance shares of $0.25 each fully paid
Low Sin Leng – Up to 300,000
(see note below)
Note: The actual number of the shares delivered at the end of a 3-year performance cycle from 2001 to 2003 will be based on the achievement of the performance targets
set under the conditional performance shares award granted under the SembCorp Industries Performance Share Plan.
IDirectors’ Report I
I060 I SCS Annual Report 2001
For the Year ended 31 December 2001
Singapore Computer Systems Limited and its Subsidiaries
Directors’ Interests in Shares and Debentures (cont’d)Holdings in the name
of the director, spouse
and infant children
At beginning
of the year/date At
Exercise of appointment end of
Price Exercise Period (if later) the year
RELATED CORPORATIONS (cont’d)SembCorp Marine LtdOptions to subscribe for ordinary shares of $0.10 each
Low Sin Leng $0.66 28 / 9 / 2002 to 27 / 9 / 2011 – 12,500 $0.66 28 / 9 / 2003 to 27 / 9 / 2011 – 12,500$0.66 28 / 9 / 2004 to 27 / 9 / 2011 – 12,500$0.66 28 / 9 / 2005 to 27 / 9 / 2011 – 12,500
SembCorp Logistics LtdOptions to subscribe for ordinary shares of $0.25 each
Tay Siew Choon $2.50375# 29 / 6 / 2001 to 28 / 9 / 2002 60,000# 60,000
Low Sin Leng $1.8375 16 / 5 / 2002 to 15 / 5 / 2011 10,000 10,000$1.8375 16 / 5 / 2003 to 15 / 5 / 2011 10,000 10,000$1.8375 16 / 5 / 2004 to 15 / 5 / 2011 10,000 10,000$1.8375 16 / 5 / 2005 to 15 / 5 / 2011 10,000 10,000
Singapore Food Industries LimitedOrdinary shares of $0.05 each fully paid
Tay Siew Choon 270,000 270,000
Stephen Yeo Siew Chye 18,000 18,000
Options to subscribe for ordinary shares of $0.05 each
Tay Siew Choon $0.78 30 / 10 /2001 to 29 /10 / 2004 200,000 200,000$0.55 24 / 8 / 2001 to 23 / 8 / 2005 50,000 50,000 $0.55 24 / 8 / 2002 to 23 / 8 / 2005 50,000 50,000$0.55 24 / 8 / 2003 to 23 / 8 / 2005 50,000 50,000$0.55 24 / 8 / 2004 to 23 / 8 / 2005 50,000 50,000
Singapore Airlines LimitedOrdinary shares of $0.50 each fully paid
Theresa Foo-Yo Mie Yoen 13,000 13,000
William Liu Wei Hai 11,000 11,000
Low Sin Leng 7,000 7,000
# The exercise price and the number of shares have been duly adjusted pursuant to the subdivision of 1 ordinary share of $1 each into 4 ordinary shares of $0.25 each
in the share capital of SembCorp Logistics Ltd during the year.
IDirectors’ Report I
I061 ISCS Annual Report 2001 Singapore Computer Systems Limited and its Subsidiaries
For the Year ended 31 December 2001
Directors’ Interests in Shares and Debentures (cont’d)Holdings in the name
of the director, spouse
and infant children
At beginning
of the year/date At
Exercise of appointment end of
Price Exercise Period (if later) the year
RELATED CORPORATIONS (cont’d)Singapore Airport Terminal Services LimitedOrdinary shares of $0.10 each fully paid
Stephen Yeo Siew Chye 2,000 2,000
Singapore Telecommunications LimitedOrdinary shares of $0.15 each fully paid
Tay Siew Choon 3,110 3,110
Robert Chua Teck Chew 2,980 2,980
Theresa Foo-Yo Mie Yoen 22,980 22,980
Spencer Lee Tien Chye 6,000 14,000
William Liu Wei Hai 3,000 3,000
Low Sin Leng 3,380 3,380
Stephen Yeo Siew Chye 18,440 18,440
Pacific Internet LimitedOrdinary shares of $2.00 each fully paid
William Liu Wei Hai 500 500
Options to subscribe for ordinary shares of $2.00 each
Tay Siew Choon US$32.48 10 / 11 / 2000 to 9 / 11 / 2004 2,000 2,000US$32.48 10 / 11 / 2001 to 9 / 11 / 2004 2,000 2,000 US$32.48 10 / 11 / 2002 to 9 / 11 / 2004 4,000 4,000
Low Sin Leng US$3.60 10 / 1 / 2002 to 9 / 1 / 2006 1,500 1,500US$3.60 10 / 1 / 2003 to 9 / 1 / 2006 1,500 1,500US$3.60 10 / 1 / 2004 to 9 / 1 / 2006 3,000 3,000
The Ascott Group LimitedOptions to subscribe for ordinary shares of $0.20 each
Tay Siew Choon $0.37 20 / 12 / 2001 to 19 / 12 / 2010 – 2,500 $0.37 20 / 12 / 2002 to 19 / 12 / 2010 – 2,500$0.37 20 / 12 / 2003 to 19 / 12 / 2010 – 2,500$0.37 20 / 12 / 2004 to 19 / 12 / 2010 – 2,500$0.32 29 / 6 / 2002 to 28 / 6 / 2011 – 3,000 $0.32 29 / 6 / 2003 to 28 / 6 / 2011 – 3,000$0.32 29 / 6 / 2004 to 28 / 6 / 2011 – 3,000$0.32 29 / 6 / 2005 to 28 / 6 / 2011 – 3,000
There was no change in any of the above-mentioned interests in the Company between the end of the financial year and 21 January 2002.
IDirectors’ Report I
I062 I SCS Annual Report 2001
For the Year ended 31 December 2001
Singapore Computer Systems Limited and its Subsidiaries
Directors’ Interests in Shares and Debentures (cont’d)Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares, debentures orshare options of the Company or of related corporations either at the beginning of the financial year, or date of appointment, if later, or at the end of the financial year.
DividendsSince the end of the last financial year, the Company paid a net final dividend of $4,355,000 in respect of the previous year as proposedin the directors’ report of that year, adjusted for the effect of the change in tax rate from 25.5% to 24.5%. In addition, a net finaldividend of $5,000 was paid to employees who had exercised their share options under the Singapore Computer Systems Executives’Share Option Scheme prior to the books closure date for the payment of 2000 final dividend.
The directors now propose the payment of a net final dividend of $3,489,000 in respect of the financial year under review.
Bad and Doubtful DebtsBefore the profit and loss account and the balance sheet of the Company were made out, the directors took reasonable steps toascertain what action had been taken in relation to writing off bad debts and providing for doubtful debts of the Company. The directorshave satisfied themselves that all known bad debts have been written off and that adequate provision has been made for doubtful debts.
At the date of this report, the directors are not aware of any circumstances which would render any amounts written off for bad debtsor provided for doubtful debts in the Group inadequate to any substantial extent.
Current AssetsBefore the profit and loss account and the balance sheet of the Company were made out, the directors took reasonable steps toascertain that current assets of the Company which were unlikely to realise their book values in the ordinary course of business havebeen written down to their estimated realisable values and that adequate provision has been made for the diminution in value of suchcurrent assets.
At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report which would renderthe values attributable to current assets in the Group misleading.
Charges and Contingent LiabilitiesSince the end of the financial year:(i) no charge on the assets of the Group or of the Company has arisen which secures the liabilities of any other person; and(ii) no contingent liability of the Group or of the Company has arisen.
Ability to Meet ObligationsNo contingent liability or other liability of the Group or of the Company has become enforceable or is likely to become enforceablewithin the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantiallyaffect the ability of the Group or of the Company to meet their obligations as and when they fall due.
Other Circumstances Affecting the Financial StatementsAt the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or the financialstatements which would render any amount stated in the financial statements of the Group or of the Company misleading.
Unusual ItemsExcept for the changes in accounting policies and exceptional items as stated in notes 29 and 26 respectively, in the opinion of thedirectors, no item, transaction or event of a material and unusual nature has substantially affected the results of the operations of theGroup or of the Company during the financial year.
In the opinion of the directors, no item, transaction or event of a material and unusual nature has arisen in the interval between theend of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group or of the Company for the financial year in which this report is made.
IDirectors’ Report I
I063 ISCS Annual Report 2001 Singapore Computer Systems Limited and its Subsidiaries
For the Year ended 31 December 2001
Directors’ Interests in ContractsSince the end of the last financial year, no director has received or become entitled to receive a benefit by reason of a contract madeby 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.
Share Options and Share-Based Incentives(I) The following share plans of the Company are administered by the Executive Resource and Compensation Committee of
the Company (“ERCC”):–(1) Singapore Computer Systems Executives’ Share Option Scheme;(2) Singapore Computer Systems Share Option Plan;(3) Singapore Computer Systems Performance Share Plan; and(4) Singapore Computer Systems Restricted Stock Plan.
(II) The ERCC consists of the following members:–Tay Siew Choon (Chairman)
Robert Chua Teck Chew
Garfield Vorhes Nelson
Stephen Yeo Siew Chye
Cheo Hock Kuan
(III) During the financial year, except as disclosed below, there were no options granted by the Company or its subsidiaries to any person to take up unissued shares in the Company or its subsidiaries and no awards granted by the Company or its subsidiaries to any person to take delivery of any fully paid-up shares in the Company or its subsidiary:–
(A) Singapore Computer Systems Executives’ Share Option Scheme (“SCS ESOS”)
(1) During the financial year, no option was granted by the Company under SCS ESOS.
(2) During the financial year, a total of 214,500 ordinary shares of $0.25 each 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 No. of No. of Unissued
of Options Holders Exercise Period Ordinary Shares Exercise Price
14 / 4 / 1997 1 15 / 4 / 1999 to 13 / 4 / 2002 60,000 $0.6521 / 4 / 1998 6 22 / 4 / 2000 to 20 / 4 / 2003 236,000 $1.2712 / 7 / 2000 20 20 / 4 / 2001 to 18 / 4 / 2009 582,000 $1.13
878,000
(4) Details of options granted to a Director of the Company under SCS ESOS are as follows:–
Options granted Aggregate options Aggregate options
during the financial granted since exercised since
year ended commencement commencement Aggregate options
31.12.2001 of the scheme to of the scheme to outstanding as at
Name of Director (including terms) 31.12.2001 31.12.2001 31.12.2001
Tay Siew Choon – 245,000 (245,000) –
IDirectors’ Report I
I064 I SCS Annual Report 2001
For the Year ended 31 December 2001
Singapore Computer Systems Limited and its Subsidiaries
Share Options and Share-Based Incentives (cont’d)(A) Singapore Computer Systems Executives’ Share Option Scheme (“SCS ESOS”) (cont’d)
(5) From the commencement of SCS ESOS to 31 December 2001, no option has been granted under SCS ESOS to any controlling shareholder of the Company and/or its associates.
(6) From the commencement of SCS ESOS to 31 December 2001, not a single participant under SCS ESOS has been granted 5% or more of the total number of options available under SCS ESOS.
(7) During the financial year, no option has been granted to any parent group employee under SCS ESOS.
(8) Since the commencement of SCS ESOS to 31 December 2001, no option has been granted to any parent group employeeunder SCS ESOS except to a parent group employee who is 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.
(B) Singapore Computer Systems Share Option Plan (“SCS SOP”)
(1) During the financial year, the following options were granted by the Company under SCS SOP. The fair value of each optiongranted at the date of grant is estimated using the Black-Scholes option-pricing model on the basis of the followingassumptions on dividend yield, risk-free interest rate, expected volatility and expected lives.
No. of
Unissued
Ordinary
Shares Risk- free
Under Fair Dividend Interest Expected Expected
Date of Grant No.of Options Exercise Value of Yield Rate Volatility Lives
of Options Holders Exercise Period Granted Price Option % % % (years)
14 / 3 / 2001 6 15 / 3 / 2002 to 14 / 3 / 2006 81,250 $2.08 0.60 1.49 4.58 63.15 1.514 / 3 / 2001 2 15 / 3 / 2003 to 14 / 3 / 2006 27,250 $2.08 0.77 1.49 4.58 63.15 2.514 / 3 / 2001 2 15 / 3 / 2004 to 14 / 3 / 2006 27,250 $2.08 0.89 1.49 4.58 63.15 3.514 / 3 / 2001 2 15 / 3 / 2005 to 14 / 3 / 2006 27,250 $2.08 0.98 1.49 4.58 63.15 4.514 / 3 / 2001 105 15 / 3 / 2002 to 14 / 3 / 2011 353,750 $2.08 0.60 1.49 4.58 63.15 1.514 / 3 / 2001 105 15 / 3 / 2003 to 14 / 3 / 2011 353,750 $2.08 0.77 1.49 4.58 63.15 2.514 / 3 / 2001 105 15 / 3 / 2004 to 14 / 3 / 2011 353,750 $2.08 0.89 1.49 4.58 63.15 3.514 / 3 / 2001 105 15 / 3 / 2005 to 14 / 3 / 2011 353,750 $2.08 0.98 1.49 4.58 63.15 4.5
1,578,000
(2) During the financial year, the Company did not issue any share pursuant to the exercise of options granted under SCS SOP.
IDirectors’ Report I
I065 ISCS Annual Report 2001 Singapore Computer Systems Limited and its Subsidiaries
For the Year ended 31 December 2001
Share Options and Share-Based Incentives (cont’d)(B) Singapore Computer Systems Share Option Plan (“SCS SOP”) (cont’d)
(3) As at the end of the financial year, unissued ordinary shares of the Company under SCS SOP are as follows:–
Date of Grant No. of No. of Unissued
of Options Holders Exercise Period Ordinary Shares Exercise Price
18 / 10 / 2000 5 19 / 10 / 2001 to 18 / 10 / 2005 65,000 $2.2018 / 10 / 2000 1 19 / 10 / 2002 to 18 / 10 / 2005 20,000 $2.2018 / 10 / 2000 1 19 / 10 / 2003 to 18 / 10 / 2005 20,000 $2.2018 / 10 / 2000 1 19 / 10 / 2004 to 18 / 10 / 2005 20,000 $2.2018 / 10 / 2000 80 19 / 10 / 2001 to 18 / 10 / 2010 312,500 $2.2018 / 10 / 2000 80 19 / 10 / 2002 to 18 / 10 / 2010 312,500 $2.2018 / 10 / 2000 80 19 / 10 / 2003 to 18 / 10 / 2010 312,500 $2.2018 / 10 / 2000 80 19 / 10 / 2004 to 18 / 10 / 2010 312,500 $2.2014 / 3 / 2001 5 15 / 3 / 2002 to 14 / 3 / 2006 79,000 $2.0814 / 3 / 2001 1 15 / 3 / 2003 to 14 / 3 / 2006 25,000 $2.0814 / 3 / 2001 1 15 / 3 / 2004 to 14 / 3 / 2006 25,000 $2.0814 / 3 / 2001 1 15 / 3 / 2005 to 14 / 3 / 2006 25,000 $2.0814 / 3 / 2001 98 15 / 3 / 2002 to 14 / 3 / 2011 341,000 $2.0814 / 3 / 2001 98 15 / 3 / 2003 to 14 / 3 / 2011 341,000 $2.0814 / 3 / 2001 98 15 / 3 / 2004 to 14 / 3 / 2011 341,000 $2.0814 / 3 / 2001 98 15 / 3 / 2005 to 14 / 3 / 2011 341,000 $2.08
2,893,000
(4) Details of options granted to Directors of the Company under SCS SOP are as follows:–
Options granted Aggregate options Aggregate options Aggregate options
during the financial granted since exercised since lapsed since
year ended commencement of commencement of commencement of Aggregate options
31.12.2001 the scheme to the scheme to the scheme to outstanding as at
Name of Director (including terms) 31.12.2001 31.12.2001 31.12.2001 31.12.2001
Tay Siew Choon 100,000 180,000 – – 180,000Robert Chua Teck Chew 25,000 45,000 – – 45,000Theresa Foo-Yo Mie Yoen 9,000 17,000 – – 17,000Eaw Kok Hin, David 9,000 17,000 – (17,000) –(Resigned as Director on 10/7/2001)
Spencer Lee Tien Chye 5,000 10,000 – – 10,000Garfield Vorhes Nelson 15,000 27,000 – – 27,000Stephen Yeo Siew Chye 150,000 290,000 – – 290,000
313,000 586,000 – (17,000) 569,000
(5) From the commencement of SCS SOP to 31 December 2001, no option has been granted under SCS SOP to any controllingshareholder of the Company and/or its associates.
(6) From the commencement of SCS SOP to 31 December 2001, not a single participant under SCS SOP has been granted 5% ormore of the total number of options available under SCS SOP.
(7) During the financial year, not a single parent group employee has received 5% or more of the total number of options availableto parent group employees under SCS SOP.
(8) Since the commencement of SCS SOP to 31 December 2001, no option has been granted to any parent group employee underSCS SOP except to a parent group employee who is also a Director of the Company whereby options were granted to him tosubscribe for an aggregate of 180,000 ordinary shares in the Company.
Share Options and Share-Based Incentives (cont’d)(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 sustaininglong-term growth for the Company. Awards granted under SCS PSP are conditional on performance targets set based onmedium-term corporate objectives.
(2) (i) During the financial year, the following conditional awards were granted by the Company under SCS PSP:–
Total Minimum and
No. of Maximum No. of
Ordinary Shares Ordinary Shares
in the Company Deliverable at the
Date of Grant of Over a 3-Year Awarded but end of the 3-Year
Conditional Awards No. of Holders Performance Cycle not Released Performance Cycle
2 / 4 / 2001 4 2001 to 2003 245,000 0 to 490,000
(ii) The final number of fully paid-up ordinary shares of $0.25 each in the Company (“Shares”) that will be released to the participants of SCS PSP at the end of the 3-year performance cycle (“the Performance Cycle”) is based on the participants’level of achievement of the performance targets set for them over the Performance Cycle.
(iii) At the end of the Performance Cycle,
(a) participants who do not achieve a performance level of at least 80% of the targets set for them will not receive any of the Shares;
(b)participants who achieved a performance level of more than 200% of the targets set for them will receive Shares of up to two times the number of shares under the conditional awards granted to them; and
(c) participants who achieved a performance level in the range of more than 80% and less than 200% will receive Sharescalculated based on certain multiplying factor.
(iv) Under SCS PSP, the ERCC may determine to make the release of the awards granted, wholly or partly, in the form of cashrather than fully paid-up shares in the Company, in accordance with the rules of SCS PSP.
(3) During the financial year, the Company did not release any ordinary share of $0.25 each in the Company under the conditionalawards granted under SCS PSP.
(4) As at the end of the financial year, the number of unreleased ordinary shares in the Company under conditional awards grantedunder SCS PSP are as set out in item (C)(2)(i) above.
(5) Details of conditional awards granted to a Director of the Company under SCS PSP are as follows:–
Total Minimum
No. of and Maximum
Ordinary Shares No. of Shares
in the Company Deliverable at the
Date of Grant of Over a 3-Year Awarded but end of the 3-Year
Conditional Awards No. of Holders Performance Cycle not Released Performance Cycle
2 / 4 / 2001 1 2001 to 2003 100,000 0 to 200,000
IDirectors’ Report I
I066 I SCS Annual Report 2001
For the Year ended 31 December 2001
Singapore Computer Systems Limited and its Subsidiaries
IDirectors’ Report I
I067 ISCS Annual Report 2001 Singapore Computer Systems Limited and its Subsidiaries
For the Year ended 31 December 2001
Share Options and Share-Based Incentives (cont’d)(C) Singapore Computer Systems Performance Share Plan (“SCS PSP”) (cont’d)
(6) From the commencement of SCS PSP to 31 December 2001, no conditional award has been granted under SCS PSP to any controlling shareholder of the Company and/or its associates.
(7) From the commencement of SCS PSP to 31 December 2001, not a single participant under SCS PSP has been granted 5%or more of the total number of shares available under SCS PSP.
(8) During the financial year, not a single parent group employee has received 5% or more of the total number of shares availableto parent group employees under SCS PSP.
(9) Since the commencement of SCS PSP to 31 December 2001, no award has been granted to any parent group employeeunder SCS PSP.
(D) Singapore Computer Systems Restricted Stock Plan (“SCS RSP”)
Since SCS RSP was approved by the Company’s Shareholders on 7 July 2000, no award has been granted under SCS RSP.
(IV) Save as disclosed above, there were no unissued shares of the Company or its subsidiaries under options and awards granted bythe 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 PSPdo not entitle the holders of the options and the awards, by virtue of such holdings, to any right to participate in any share issue ofany other company.
(VI) Proforma Financial Effect under United States Financial Accounting Standard No.123
Strictly for information purposes only, the proforma profit after taxation and minority interests and the earnings per share wouldhave been as follows had the Company accounted for the fair value of the options granted under United States Financial AccountingStandard No.123:
2001
$’000
Profit after taxation and minority interests– as reported 17,328– proforma 16,238Earnings per share– as reported 11.25– proforma 10.54Diluted earnings per share– as reported 11.02– proforma 10.32
These proforma amounts may not be representative of future disclosures since the estimated fair value of share options are determined in respect of options granted since the financial year ended 31 December 1999 and which is amortisedover the vesting period and additional options may be granted in future years.
IDirectors’ Report I
I068 I SCS Annual Report 2001
For the Year ended 31 December 2001
Singapore Computer Systems Limited and its Subsidiaries
Audit CommitteeThe members of the Audit Committee at the date of this report are as follows:–
Robert Chua Teck Chew (Chairman)
Theresa Foo-Yo Mie Yoen
William Liu Wei Hai (Appointed on 20 September 2001)
The financial statements, accounting policies and system of internal accounting controls are the responsibility of the Board of Directorsacting through the Audit Committee. The Audit Committee met to review the scope of work of the internal and external auditors, andthe results arising therefrom, including their evaluation of the system of internal controls. The Audit Committee also reviewed theassistance given by the Company’s officers to the auditors. The financial statements of the Company and the consolidated financialstatements of the Group were reviewed by the Audit Committee prior to their submission to the directors of the Company for adoption.
In addition, the Audit Committee has in accordance with Chapter 9A of the Listing Manual of the Singapore Exchange SecuritiesTrading Limited reviewed the requirements for approval and disclosure of interested person transactions, reviewed the procedures set up by the Company to identify and report and where necessary seek approval for interested person transactions and with theassistance of the internal auditors, reviewed interested person transactions.
The Audit Committee has recommended to the Board of Directors that the auditors, KPMG, be nominated for re-appointment asauditors at the forthcoming Annual General Meeting of the Company.
AuditorsThe auditors, KPMG, have indicated their willingness to accept re-appointment.
On behalf of the Board of Directors
STEPHEN YEO SIEW CHYE
Director
TAY SIEW CHOON
Director
Singapore
18 February 2002
Singapore Computer Systems Limited and its Subsidiaries
We, STEPHEN YEO SIEW CHYE and TAY SIEW CHOON, being directors of SINGAPORE COMPUTER SYSTEMS LIMITED, do hereby statethat in our opinion:–
(a) the financial statements set out on pages 71 to 119 are drawn up so as to give a true and fair view of the state of affairs of theGroup and of the Company as at 31 December 2001 and of the results of the business and changes in equity of the Group andof the Company and cash flows of the Group for the year ended on that date; and
(b) at the date of this statement there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.
The board of directors has authorised these financial statements for issue on the date of this statement.
On behalf of the Board of Directors
STEPHEN YEO SIEW CHYE
Director
TAY SIEW CHOON
Director
Singapore
18 February 2002
For the Year ended 31 December 2001
I069 ISCS Annual Report 2001
IStatement by Directors I
IReport of the Auditors to the Members of Singapore Computer Systems Limited I
I070 I SCS Annual Report 2001 Singapore Computer Systems Limited and its Subsidiaries
We have audited the consolidated financial statements of the Group and the financial statements of the Company for the year ended 31 December 2001 as set out on pages 71 to 119. These financial statements are the responsibility of the Company’s directors. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates made by the directors, as well as evaluating the overall financialstatement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion:–(a) the financial statements are properly drawn up in accordance with the provisions of the Companies Act, Chapter 50 (the “Act”)
and Singapore Statements of Accounting Standard and so as to give a true and fair view of:–
(i) the state of affairs of the Group and of the Company as at 31 December 2001 and of the results and changes in equity of the Group and of the Company and of the cash flows of the Group for the year ended on that date; and
(ii) the other matters required by Section 201 of the Act to be dealt with in the financial statements;
(b) the accounting and other records and the registers required by the Act to be kept by the Company and by those subsidiariesincorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.
We have considered the financial statements and auditors’ reports of all the subsidiaries of which we have not acted as auditors, andalso considered the financial statements of those subsidiaries which are not required by the law in their country of incorporation to beaudited, being financial statements that have been included in the consolidated financial statements of the Group. The names of thesesubsidiaries are stated in note 5 to the financial statements.
We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of theCompany are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statementsof the Group and we have received satisfactory information and explanations as required by us for those purposes.
The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification, and in respect of thesubsidiaries incorporated in Singapore, did not include any comment made under Section 207(3) of the Act.
KPMG
Certified Public Accountants
Singapore
18 February 2002
IBalance Sheets I
I071 ISCS Annual Report 2001 Singapore Computer Systems Limited and its Subsidiaries
As at 31 December 2001
Group Company
Note 2001 2000 2001 2000
$’000 $’000 $’000 $’000
Non-current assetsProperty, plant and equipment 3 54,175 56,956 48,939 49,967Intangible assets 4 10,736 5,316 1,892 – Investments in subsidiaries 5 – – 41,587 36,978Investments in associates 6 11,885 12,207 6,829 5,017Financial assets 7 19,372 17,387 16,400 17,222Long term receivables 8 14 57 14 80
96,182 91,923 115,661 109,264Current assetsInventories and projects-in-progress 9 34,056 38,795 15,333 20,169Trade receivables 10 136,424 157,929 67,206 83,540Finance lease receivables– due within 12 months 8c 314 529 314 529Other receivables, deposits and prepayments 11 13,867 9,391 4,007 6,106Short term loan receivables 12 8,426 8,832 17,927 8,190Fixed deposits 6,081 2,605 – – Cash at banks and in hand 21,149 17,652 1,813 474
220,317 235,733 106,600 119,008
Current liabilitiesTrade payables and accruals 13 103,725 135,570 59,392 77,287Progress billings in excess of cost of projects-in-progress 14 901 2,582 901 2,582Provisions 15 2,442 1,609 1,269 686Provision for taxation 5,999 8,288 3,047 5,877Short term loans payable to banks (unsecured) 43,941 32,512 26,000 15,000Bank overdrafts (unsecured) – 1,661 – 1,661Employee benefits 16 4,152 3,741 2,081 1,965Current portion of obligations under hire purchases 17 67 – – –
161,227 185,963 92,690 105,058
Net current assets 59,090 49,770 13,910 13,950
Non-current liabilitiesDeferred taxation 18 (2,667) (1,958) (2,124) (2,124) Obligations under hire purchases 17 (277) – – –
152,328 139,735 127,447 121,090
Minority interests (4,898) (6,147) – –
Net Assets 147,430 133,588 127,447 121,090
Capital and ReservesShare capital 19 38,508 38,455 38,508 38,455Reserves 20 108,922 95,133 88,939 82,635
147,430 133,588 127,447 121,090The accompanying notes form an integral part of these financial statements.
Singapore Computer Systems Limited and its Subsidiaries
Group Company
Note 2001 2000 2001 2000
$’000 $’000 $’000 $’000
Revenue 22 540,712 447,504 257,087 220,823Cost of sales (445,054) (362,737) (214,615) (179,403)
Gross profit 95,658 84,767 42,472 41,420
Other income 23 1,853 2,137 5,003 4,025
Distribution expenses (32,878) (20,108) (12,905) (8,296)Administrative expenses (29,753) (32,840) (12,870) (13,574)Other operating expenses (6,405) (6,655) (365) (1,806)
Profit from operations 24 28,475 27,301 21,335 21,769
Finance costs 25 (1,905) (988) (801) (104)
Exceptional items 26 (5,983) (2,577) (6,276) (2,590)
Share of profit of associates 2,018 1,936 – –
Profit from ordinary activities 22,605 25,672 14,258 19,075
Taxation 27 (6,741) (9,178) (3,750) (5,837)
Profit from ordinary activities after taxation 15,864 16,494 10,508 13,238
Minority interests 1,464 754 – –
Net profit for the year 17,328 17,248 10,508 13,238
Earnings per share (cents) 28
Basic 11.25 11.23
Diluted 11.02 11.18
The accompanying notes form an integral part of these financial statements.
IProfit and Loss Accounts I
I072 I SCS Annual Report 2001
For the Year ended 31 December 2001
IConsolidated Statement of Changes in Equity I
I073 ISCS Annual Report 2001 Singapore Computer Systems Limited and its Subsidiaries
For the Year ended 31 December 2001
Currency Accu-
Share Share Translation mulated
Note Capital Premium Reserves Profits Total
$’000 $’000 $’000 $’000 $’000
GroupAt 1 January 2000, as previously reported 38,325 1,730 (2,136) 81,976 119,895
Effects of adopting: – SAS 10 29 – – – 3,403 3,403– SAS 17 29 – – – (2,771) (2,771)
At 1 January 2000, as restated 38,325 1,730 (2,136) 82,608 120,527
Issue of shares under Singapore Computer Systems Executives’ Share Option Scheme 130 487 – – 617
Exchange differences on consolidation of:– subsidiaries – – 368 – 368– associates – – (270) – (270)
Net profit for the year 29 – – – 17,248 17,248Goodwill written off on acquisition of subsidiaries – – – (1,609) (1,609)Gain on dilution of interests in a subsidiary – – – 142 142Dividends paid 30 – – – (3,435) (3,435)
At 31 December 2000, as restated 38,455 2,217 (2,038) 94,954 133,588
At 1 January 2001, as previously reported 38,455 2,217 (2,038) 93,671 132,305
Effects of adopting: – SAS 10 29 – – – 4,297 4,297– SAS 17 29 – – – (2,958) (2,958)– SAS 34 29 – – – (56) (56)
At 1 January 2001, as restated 38,455 2,217 (2,038) 94,954 133,588
Issue of shares under Singapore Computer Systems Executives’ Share Option Scheme 53 156 – – 209
Exchange differences on consolidation of:– subsidiaries – – 1,223 – 1,223– associates – – (500) – (500)
Loss on share buy-back by a subsidiary – – – (58) (58)Net profit for the year 29 – – – 17,328 17,328Dividends paid 30 – – – (4,360) (4,360)
At 31 December 2001 38,508 2,373 (1,315) 107,864 147,430
The accompanying notes form an integral part of these financial statements.
Singapore Computer Systems Limited and its Subsidiaries
Accu-
Share Share mulated
Note Capital Premium Profits Total
$’000 $’000 $’000 $’000
CompanyAt 1 January 2000, as previously reported 38,325 1,730 69,374 109,429
Effects of adopting: – SAS 10 29 – – 3,403 3,403– SAS 17 29 – – (2,162) (2,162)
At 1 January 2000, as restated 38,325 1,730 70,615 110,670
Issue of shares under the Singapore Computer Systems Executives’ Share Option Scheme 130 487 – 617
Net profit for the year 29 – – 13,238 13,238Dividends paid 30 – – (3,435) (3,435)
At 31 December 2000, as restated 38,455 2,217 80,418 121,090
At 1 January 2001, as previously reported 38,455 2,217 78,086 118,758
Effects of adopting:– SAS 10 29 – – 4,297 4,297– SAS 17 29 – – (1,965) (1,965)
At 1 January 2001, as restated 38,455 2,217 80,418 121,090
Issue of shares under the Singapore Computer SystemsExecutives’ Share Option Scheme 53 156 – 209
Net profit for the year 29 – – 10,508 10,508Dividends paid 30 – – (4,360) (4,360)
At 31 December 2001 38,508 2,373 86,566 127,447
The accompanying notes form an integral part of these financial statements.
IStatement of Changes in Equity I
I074 I SCS Annual Report 2001
For the Year ended 31 December 2001
IConsolidated Statement of Cash Flows I
I075 ISCS Annual Report 2001 Singapore Computer Systems Limited and its Subsidiaries
For the Year ended 31 December 2001
Note 2001 2000
$’000 $’000
Operating ActivitiesProfit from ordinary activities before taxation 22,605 25,672Adjustments for:–Allowance made for impairment of financial assets 2,301 1,465Allowance for loans to associates and investee companies 324 1,101Amortisation of intangible assets 2,454 1,168Depreciation of property, plant and equipment 13,350 11,344Finance costs 1,905 988Gain on disposal of business (307) –(Gain)/Loss on disposal of investments (1,736) 11Impairment loss on property, plant and equipment 71 –Interest income (935) (863)Loss on disposal of property, plant and equipment 62 222Property, plant and equipment written off – 21Share of results of associates (2,018) (1,936)
Operating profit before working capital changes 38,076 39,193Changes in working capital:–Employee benefits 393 272Finance lease receivables 215 416Inventories (334) (3,045)Other receivables, deposits and prepayments (4,340) 2,535Projects-in-progress 3,688 (17,322)Trade receivables 24,088 (66,353)Trade payables and accruals (33,622) 40,058
28,164 (4,246)Interest received 942 1,222Interest paid (1,954) (890)Income tax paid (7,757) (5,931)Staff loans repaid 93 299Short-term loans granted (1,384) (1,163)
Cash flows from/(used in) operating activities 18,104 (10,709)
The accompanying notes form an integral part of these financial statements.
IConsolidated Statement of Cash Flows I
I076 I SCS Annual Report 2001
For the Year ended 31 December 2001
Singapore Computer Systems Limited and its Subsidiaries
Note 2001 2000
$’000 $’000
Investing ActivitiesAcquisition of shares in associates (1,954) (2,542)Dividends received from associates 1,127 442Increase in intangible assets (6,725) (3,787)Liquidation of subsidiaries 31b – (17)Loans granted to associates and investee companies (100) (775)Net cash outflow on acquisition of subsidiaries 31a – (1,720)Proceeds from disposal of an associate 35 2Proceeds from disposal of business 522 – Proceeds from disposal of financial assets 2,230 68Proceeds from disposal of property, plant and equipment 161 272Proceeds from divestment of a subsidiary – 158Purchase of financial assets (2,827) (9,958)Purchase of property, plant and equipment (10,772) (16,139)Repayment received from short-term loan receivables 1,740 18,876
Cash flows used in investing activities (16,563) (15,120)
Financing ActivitiesDividends paid to shareholders of the Company (4,360) (3,435)Dividends paid to minority shareholders of a subsidiary (87) (218)Hire purchase obligations 344 – Payment to minority shareholders for share buy-back (106) (750)Proceeds from issue of shares to minority shareholders by subsidiaries 200 3,361Proceeds from issue of shares 209 617Proceeds from short-term bank loans 10,569 19,955
Cash flows from financing activities 6,769 19,530
Net increase/(decrease) in cash and cash equivalents 8,310 (6,299)Cash and cash equivalents at beginning of year 18,596 24,715Effect of exchange rate changes on balances held in foreign currencies 324 180
Cash and cash equivalents at end of year 31c 27,230 18,596
The accompanying notes form an integral part of these financial statements.
INotes to the Financial Statements I
I077 ISCS Annual Report 2001 Singapore Computer Systems Limited and its Subsidiaries
31 December 2001
These notes form an integral part of the financial statements.
The financial statements were authorised for issue by the Directors on 18 February 2002.
1. Domicile and ActivitiesSingapore Computer Systems Limited (the “Company”) is incorporated in the Republic of Singapore with its registered office at 7 Bedok South Road, Singapore 469272.
The principal activities of the Company are those relating to the supply and maintenance, system development, projectimplementation, facilities management, system support, the servicing and sale of computer equipment and provision of consultancyand software development services. The principal activities of the subsidiaries are set out in note 5 to the financial statements.
2. Summary of Significant Accounting Policies(a) Statement of Compliance
The financial statements have been prepared in accordance with Singapore Statements of Accounting Standard (“SAS”)(including Interpretations of Statements of Accounting Standard) issued by the Institute of Certified Public Accountants ofSingapore and the applicable requirements of the Singapore Companies Act, Chapter 50.
(b) Basis of Preparation
The financial statements, which are expressed in Singapore dollars, are prepared on the historical cost basis.
In 2001, the Group and the Company changed their accounting policies as a result of adopting nine new or revisedaccounting standards which have become effective for the financial statements for 2001. The benchmark treatment given inSAS 8 (revised 2000) – Net Profit or Loss for the Period, Fundamental Errors and Changes in Accounting Policies of applyingthe changes retrospectively by adjusting the opening balance of the retained earnings of the prior and current year has beenadopted, unless such treatment is prohibited or modified by the specific transitional provisions set out in the respectivestandards being adopted. Details of the effects of adopting the standards are given in note 29.
The consolidated financial statements for the year ended 31 December 2001 relate to the Company and its subsidiaries (referred to as the “Group”) and the Group’s interests in associates.
(c) Basis of Consolidation
(i) Subsidiaries
Subsidiaries are those companies controlled by the Company. Control exists when the Company has the power, directlyor indirectly, to govern the financial and operating policies of a company so as to obtain benefits from its activities.
The financial statements of subsidiaries are included in the consolidated financial statements from the date that controlcommences until the date that control ceases.
(ii) Associates
Associates are companies in which the Group has significant influence, but not control, over the financial and operating policies.
The consolidated financial statements include the Group’s share of the total recognised gains and losses of associates on an equity accounted basis, from the date that significant influence commences until the date that significant influenceceases. The Group’s investment in associates include goodwill (net of accumulated amortisation) on acquisition. When the Group’s share of losses exceeds the carrying amount of the associate, the carrying amount is reduced to nil andrecognition of further losses is discontinued except to the extent that the Group has incurred obligations in respect of the associate.
INotes to the Financial Statements I
I078 I SCS Annual Report 2001
31 December 2001
Singapore Computer Systems Limited and its Subsidiaries
2. Summary of Significant Accounting Policies (cont’d)(c) Basis of Consolidation (cont’d)
(iii) Transactions Eliminated on ConsolidationAll significant intra-group transactions, balances and unrealised gains are eliminated on consolidation. Unrealised gainsresulting from transactions with associates are eliminated to the extent of the Group’s interest in the enterprise. Unrealisedlosses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
(iv) Disposals
On disposal of a subsidiary or an associate, any attributable amount of purchased goodwill not previously amortisedthrough the profit and loss account or which has previously been dealt with as a movement in Group reserves is includedin the calculation of the profit or loss on disposal.
(v) Accounting Policies of Subsidiaries
Where necessary, accounting policies for subsidiaries (and material associates) have been changed to be consistent withthe policies adopted by the Group.
(d) Subsidiaries
Investments in subsidiaries in the Company's balance sheet are stated at cost less impairment losses.
(e) Associates
In the Company’s balance sheet, investments in associates are stated at cost less impairment losses.
The results of the associates are included in the Company’s profit and loss account to the extent of dividends received andreceivable, providing the Company’s right to receive the dividend is established before the balance sheet date.
(f) Foreign Currencies
(i) Translation of Foreign Currencies
Monetary assets and liabilities in foreign currencies are translated into Singapore dollars at rates of exchange approximateto those ruling at the balance sheet date. Transactions in foreign currencies are translated at rates ruling on transaction dates.
(ii) Financial Statements of Foreign Operations
The Group’s foreign operations are not considered an integral part of the Company’s operations. Accordingly, the assetsand liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated toSingapore dollars at the rates of exchange ruling at the balance sheet date. The results of foreign operations are translatedat the average exchange rates for the year. Exchange differences arising on translation are recognised directly in equity.
(g) Property, Plant and Equipment
(i) Owned Assets
Items of property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.
(ii) Disposal
Gains or losses arising from the retirement or disposal of property, plant and equipment are determined as the difference between the estimated net disposal proceeds and the carrying amount of the asset and are recognised in the profit andloss account on the date of retirement or disposal.
INotes to the Financial Statements I
I079 ISCS Annual Report 2001 Singapore Computer Systems Limited and its Subsidiaries
31 December 2001
2. Summary of Significant Accounting Policies (cont’d)(g) Property, Plant and Equipment (cont’d)
(iii) Depreciation
Depreciation is provided on a straight-line basis so as to write off items of property, plant and equipment over theirestimated useful lives as follows:–
Freehold property – 30 yearsLeasehold land – 30 yearsBuilding – 30 yearsLeasehold improvements – 3 to 9 yearsComputer equipment – 2 to 5 yearsOffice equipment – 3 to 5 yearsFurniture and fittings – 2 to 5 yearsMotor vehicles – 2 to 5 years
No depreciation is provided on construction-in-progress.
(h) Intangible Assets
(i) Goodwill
Goodwill arising on acquisition represents the excess of the cost of acquisition over the fair value of the Group’s share ofthe identifiable net assets acquired. Goodwill is stated at cost less accumulated amortisation and impairment losses. Inrespect of associates, the carrying amount of goodwill is included in the carrying amount of the investment in the associate.Goodwill is amortised from the date of initial recognition over its estimated useful life of not more than 20 years.
Before the adoption of SAS 22 (revised 2000), goodwill arising on acquisition is taken to capital reserves and where this results in a net debit balance in the capital reserve account, the net debit balance is taken to accumulated profits. TheGroup has adopted the transitional provision of not restating the goodwill that has previously been written off againstreserves, with a view of including the attributable goodwill in the determination of profit or loss when the business isdisposed of or discontinued.
(ii) Research and Development
Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge andunderstanding, is recognised in the profit and loss account as an expense as incurred.
Expenditure on development activities, whereby research findings are applied to a plan or design for the production ofnew or substantially improved products and processes, is capitalised if the product or process is technically andcommercially feasible and the Group has sufficient resources to complete development. The expenditure capitalisedincludes the cost of materials, direct labour and an appropriate proportion of overheads. Other development expenditure is recognised in the profit and loss account as an expense as incurred. Capitalised development expenditure is stated at cost less accumulated amortisation and impairment losses.
(iii) Other Intangible Assets
Other intangible assets, which comprise intellectual property rights, rights to distribute certain computer products andtechnology licenses are stated at cost less accumulated amortisation and impairment losses.
(iv) Subsequent Expenditure
Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefitsembodied in the specific asset to which it relates. All other expenditure is expensed as incurred.
(v) Amortisation
Amortisation is charged to the profit and loss account on a straight-line basis over the estimated useful lives of intangibleassets. Intangible assets are amortised from the date the asset is available for use. The estimated useful lives range from 3 to 5 years.
INotes to the Financial Statements I
I080 I SCS Annual Report 2001
31 December 2001
Singapore Computer Systems Limited and its Subsidiaries
2. Summary of Significant Accounting Policies (cont’d)(i) Financial Assets
Equity investments held for the long-term are stated at cost less impairment losses which, in the opinion of the directors, are other than temporary.
Profits or losses on disposal of financial assets are determined as the difference between the net disposal proceeds and the carrying amount of the financial assets and are accounted for in the profit and loss account as they arise.
(j) Derivative Financial Instruments
The Group uses derivative financial instruments, including forward foreign exchange contracts, to hedge its exposure to foreignexchange arising from operational, financing and investment activities. In accordance with its treasury policy, the Group doesnot hold or issue derivative financial instruments for trading purposes.
Derivative financial instruments used for hedging purposes are accounted for on an equivalent basis to the underlying assetsand liabilities or net positions. Any profit or loss arising is recognised on the same basis as that arising from the related assets,liabilities or positions.
A hedge of any future transaction is held off balance sheet.
(k) Inventories and Projects-In-Progress
(i) Inventories
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, attributable freight,handling and insurance charges.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completionand the estimated costs necessary to make the sale.
When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in which the related revenue is recognised. The amount of any allowance for write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of anyreversal of any allowance for write-down of inventories, arising from an increase in net realisable value, is recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.
(ii) Projects-in-Progress
Projects-in-progress are valued at cost. Cost includes direct materials, labour and an appropriate proportion of projectoverhead expenditure. Allowance is made where necessary to account for foreseeable losses so as to reduce the cost ofprojects-in-progress to their estimated net realisable value. Progress billings on projects-in-progress are reflected in thefinancial statements upon invoicing and are shown as a deduction from the value of the projects-in-progress.
(l) Trade and Other Receivables
Trade and other receivables are stated at cost less allowance for doubtful receivables.
(m) Cash and Cash Equivalents
Cash and cash equivalents comprise cash balances and bank deposits. For the purpose of the statement of cash flows, cashand cash equivalents are presented net of bank overdrafts which are repayable on demand and which form an integral part ofthe Group’s cash management.
INotes to the Financial Statements I
I081 ISCS Annual Report 2001 Singapore Computer Systems Limited and its Subsidiaries
31 December 2001
2. Summary of Significant Accounting Policies (cont’d)(n) Impairment
The carrying amounts of the Group’s assets, other than inventories, are reviewed at each balance sheet date to determinewhether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. Forintangible assets that are not yet available for use, the recoverable amount is estimated at each balance sheet date.
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverableamount. Impairment losses are recognised in the profit and loss account.
(i) Calculation of Recoverable Amount
The recoverable amount is the greater of the asset’s net selling price and value in use. In assessing value in use, theestimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current marketassessments of the time value of money and the risks specific to the asset. For an asset that does not generate cashinflows largely independent of those from other assets, the recoverable amount is determined for the cash-generating unit to which the asset belongs.
(ii) Reversal of Impairment Loss
An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. Animpairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount thatwould have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. All reversalsof impairment are recognised in the profit and loss account.
(o) Trade Payables and Accruals
Trade payables and accruals are stated at cost.
(p) Interest-Bearing Loans and Borrowings
Interest-bearing loans and borrowings are recognised at cost.
(q) Employee Benefits
(i) Defined Contribution Plans
Contributions to defined contribution pension plans are recognised as an expense in the profit and loss account as incurred.
(ii) Equity and Equity-Related Compensation Benefits
Singapore Computer Systems Executives’ Share Option Scheme (“SCS ESOS”) and the Singapore ComputerSystems Share Option Plan (“SCS SOP”)Pursuant to SCS ESOS and SCS SOP, certain directors and employees of the Group are granted non-transferable optionsto subscribe for ordinary shares of $0.25 each in the capital of the Company. No compensation cost or obligation isrecognised. When the options are exercised, equity is increased by the amount of the proceeds received.
Singapore Computer Systems Performance Share Plan (“SCS PSP”)Pursuant to SCS PSP, the Company’s shares can be awarded to certain directors and employees of the Group. An initialestimate is made for the cost of compensation under the Company’s performance share plan based on the number ofshares expected to be awarded at the end of the performance period, valued at market price at the date of the grant of theawards. The cost is charged to the profit and loss account on a basis that fairly reflects the manner in which the benefitswill accrue to the employee under the plan over the service period to which the performance criteria relate.
INotes to the Financial Statements I
I082 I SCS Annual Report 2001
31 December 2001
Singapore Computer Systems Limited and its Subsidiaries
2. Summary of Significant Accounting Policies (cont’d)(q) Employee Benefits (cont’d)
(ii) Equity and Equity-Related Compensation Benefits (cont’d)
Singapore Computer Systems Performance Share Plan (“SCS PSP”) (cont’d)At each reporting date, the compensation cost is remeasured based on the latest estimate of the number of shares that willbe awarded considering the performance criteria and the market price of the shares at the reporting date. Any increase ordecrease in compensation cost over the previous estimate is recorded in that reporting period.
The final measure of compensation cost is based on the number of shares ultimately awarded and the market price at thedate the performance criteria are met.
Singapore Computer Systems Share Ownership Scheme (“the Scheme”)The objective of the Scheme is to provide an opportunity for all eligible employees of the Company and its subsidiaries toparticipate in the equity of the Company under the Scheme with the aid of the Group’s contributions and by voluntarycontributions from the employees through deductions of their salaries. No accrual has been made in the accounts. Forevery one dollar contributed by the employees, the Group will contribute fifty cents and recognise the expense as such.
(iii) Accrual for Short Term Accumulating Compensated Absences
Accrual for short term accumulating compensated absences is made for the Group’s obligations to pay their employeestheir salaries in the event of annual leave being utilised in the subsequent year.
(r) Provisions
A provision is recognised in the balance sheet when the Group has a legal or constructive obligation as a result of a past event,and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisionsare determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of thetime value of money and, where appropriate, the risks specific to the liability.
(i) Warranties
A provision for warranties is recognised when the underlying products or services are sold. The provision is based onhistorical warranty data and a weighting of all possible outcomes against their associated probabilities.
(ii) Claims
Provision is made for claims by third party for constructive obligation arising from a past event where there is a highprobability of an outflow of economic benefits required to settle the obligation.
(iii) Liquidated Damages
Provision is made for liquidated damages in respect of imminent claims from customers on contracts of which deadlines areoverdue or not expected to be completed on time in accordance to contractual obligations.
(s) Deferred Taxation
Deferred taxation is provided using the liability method in respect of the taxation effect arising from all material timing differencesbetween the accounting and tax treatment of income and expenditure, which are expected with reasonable probability tocrystallise in the foreseeable future.
Deferred tax benefits are recognised in the financial statements only to the extent of any deferred tax liability or when suchbenefits are reasonably expected to be realisable in the near future.
(t) Dividends
Dividends on ordinary shares are recognised as a liability in the period in which they are declared.
INotes to the Financial Statements I
I083 ISCS Annual Report 2001 Singapore Computer Systems Limited and its Subsidiaries
31 December 2001
2. Summary of Significant Accounting Policies (cont’d)(u) Revenue Recognition
(i) Revenue from service contracts is recognised over the period of contract.
(ii) Revenue from the sale of computer hardware is recognised upon the delivery and customer’s acceptance of the equipment.
(iii) Revenue from projects is recognised at the time when the project is substantially completed. Losses on contracts areaccounted for when their existence is foreseeable.
(iv) License fee income is recognised in accordance with the substance of the agreement.
License fee income is recognised on installation and customer’s acceptance of the license, when it is an assignment ofrights for a fixed fee or non-refundable guarantee under a non-cancellable contract which permits the licensee to exploitthose 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 isprobable that the fee will be received.
(v) Interest from finance leases are recognised in the profit and loss account based on the “sum-of-digits” method.
(vi) Dividend income is recognised in the profit and loss account when the shareholder’s right to receive payment is established.
(vii) Interest income from bank deposits is accrued on a time-apportioned basis.
(v) Grants
Income-related grants received or receivable are credited to the profit and loss account over the periods necessary to matchthem with the related expenditure.
(w) Operating Leases
Where the Group has the use of assets under operating leases, payments made under the leases are recognised in the profitand loss account on a straight-line basis over the term of the lease. Lease incentives received are recognised in the profit andloss account as an integral part of the total lease payments made. Contingent rentals are charged to the profit and lossaccount in the accounting period in which they are incurred.
(x) Finance Costs
Interest expense and similar charges are expensed in the profit and loss account in the period in which they are incurred.
The interest component of hire purchase payments is recognised in the profit and loss account using the effective interest rate method.
(y) Segment Reporting
A segment is a distinguishable component of the Group that is engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment),which is subject to risks and rewards that are different from those of other segments.
3. Property, Plant and Equipment
Leasehold Furniture
Construction- Freehold Leasehold improve- Computer Office and Motor
in-progress property land Building ments equipment equipment fittings vehicles Total
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Group
Cost
At 1 January 2001 3,125 171 25,891 11,329 2,351 41,692 6,711 14,981 1,631 107,882Additions 2,132 – – – 515 6,582 616 921 6 10,772Disposals/Write-offs – – – – (393) (3,784) (216) (169) – (4,562)Transfers in/(out) (4,631) – – 551 – 81 45 3,954 – –Currency translation
adjustment – 9 – – 94 333 57 50 2 545
At 31 December 2001 626 180 25,891 11,880 2,567 44,904 7,213 19,737 1,639 114,637
Depreciation and impairment losses
At 1 January 2001 – 28 3,723 1,570 1,015 29,935 4,266 9,302 1,087 50,926Depreciation for the year – 6 888 369 343 7,944 728 2,907 165 13,350Impairment loss for the year – – – – – 71 – – – 71Disposals/Write-offs – – – – (275) (3,642) (198) (142) – (4,257)Transfers in/(out) – – – – – 18 (18) – – – Currency translation
adjustment – 2 – – 41 242 50 38 (1) 372
At 31 December 2001 – 36 4,611 1,939 1,124 34,568 4,828 12,105 1,251 60,462
Depreciation charge for 2000 – 5 870 369 318 6,881 655 2,104 142 11,344
Carrying Amount
31 December 2001 626 144 21,280 9,941 1,443 10,336 2,385 7,632 388 54,175
31 December 2000 3,125 143 22,168 9,759 1,336 11,757 2,445 5,679 544 56,956
INotes to the Financial Statements I
I084 I SCS Annual Report 2001
31 December 2001
Singapore Computer Systems Limited and its Subsidiaries I 084 ISCS Annual Report 2001
INotes to the Financial Statements I
I085 ISCS Annual Report 2001 Singapore Computer Systems Limited and its Subsidiaries
31 December 2001
3. Property, Plant and Equipment (cont’d)
Furniture
Construction- Leasehold Computer Office and Motor
in-progress land Building equipment equipment fittings vehicles Total
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Company
Cost
At 1 January 2001 3,125 25,891 11,329 28,563 5,116 13,044 1,276 88,344Additions 2,132 – – 5,343 530 766 – 8,771Disposals/Write-offs – – – (1,563) (64) (28) – (1,655)Transfers in/(out) (4,631) – 551 – 126 3,954 – –
At 31 December 2001 626 25,891 11,880 32,343 5,708 17,736 1,276 95,460
Depreciation
At 1 January 2001 – 3,723 1,570 20,953 3,165 8,198 768 38,377Depreciation for the year – 888 369 5,225 490 2,634 150 9,756Disposals/Write-offs – – – (1,534) (56) (22) – (1,612)
At 31 December 2001 – 4,611 1,939 24,644 3,599 10,810 918 46,521
Depreciation charge for 2000 – 870 369 4,359 434 1,904 113 8,049
Carrying Amount
31 December 2001 626 21,280 9,941 7,699 2,109 6,926 358 48,939
31 December 2000 3,125 22,168 9,759 7,610 1,951 4,846 508 49,967
INotes to the Financial Statements I
I086 I SCS Annual Report 2001
31 December 2001
Singapore Computer Systems Limited and its Subsidiaries
4. Intangible Assets
Intellectual Preliminary
Property and pre-
Development Rights and Technology operating
Cost Patents Licences Goodwill expenses Total
$’000 $’000 $’000 $’000 $’000 $’000
Group
Cost
At 1 January 2001, as previously reported 1,018 2,059 5,447 – 56 8,580Effect of adopting SAS 34 – – – – (56) (56)
At 1 January 2001, as restated 1,018 2,059 5,447 – – 8,524Acquisitions – 1,174 1,400 258 – 2,832Other acquisitions – internally developed 5,004 – – – – 5,004Currency translation adjustment 3 37 7 - – 47
At 31 December 2001 6,025 3,270 6,854 258 – 16,407
Amortisation
At 1 January 2001 351 53 2,804 – – 3,208Amortisation charge for the year 694 869 841 50 – 2,454Currency translation adjustment – 4 5 – – 9
At 31 December 2001 1,045 926 3,650 50 – 5,671
Amortisation charge for 2000 351 53 764 – – 1,168
Carrying amount
31 December 2001 4,980 2,344 3,204 208 – 10,736
31 December 2000, as restated 667 2,006 2,643 – – 5,316
INotes to the Financial Statements I
I087 ISCS Annual Report 2001 Singapore Computer Systems Limited and its Subsidiaries
31 December 2001
4. Intangible Assets (cont’d)
Intellectual
Property
Development Rights and
Cost Patents Goodwill Total
$’000 $’000 $’000 $’000
Company
Cost
At 1 January 2001 280 – – 280Acquisitions – 1,000 147 1,147Other acquisitions – internally developed 1,094 – – 1,094
At 31 December 2001 1,374 1,000 147 2,521
Amortisation
At 1 January 2001 280 – – 280Amortisation charge for the year – 333 16 349
At 31 December 2001 280 333 16 629
Amortisation charge for 2000 280 – – 280
Carrying amount
31 December 2001 1,094 667 131 1,892
31 December 2000 – – – –
INotes to the Financial Statements I
I088 I SCS Annual Report 2001
31 December 2001
Singapore Computer Systems Limited and its Subsidiaries
5. Investments in Subsidiaries
Company
Note 2001 2000
$’000 $’000
Unquoted shares, at cost 48,179 43,792Less:
Impairment lossesAt 1 January (6,814) (6,455)Write-back/(Allowance) made during the year (net) 26 222 (359)
At 31 December (6,592) (6,814)
41,587 36,978
Details of the subsidiaries are as follows:–
Place of Effective equity
incorporation held by the Group Cost of investment
Name of subsidiary Principal activities and business 2001 2000 2001 2000
% % $’000 $’000
SCS Enterprise Research, consultation and implementation Singapore 100 100 2,694 2,694Solutions Pte Ltd of schemes and projects including the
supply of related hardware for computerintegrated manufacturing and supercomputing
CSN Systems Pte Ltd Trading and maintenance of Singapore 100 100 3,156 3,156computer equipment
SCS Networks Pte Ltd Trading of local area network software and Singapore 100 100 8,373 8,373and its subsidiaries:– hardware, the provision of maintenance
and network-linking services and the distribution of computer products and hardware
CSN Systems Distribution of computer products and Malaysia 100 100 – – Sdn Bhd* software and the provision of
support services
SCS Channels Dormant Thailand 100 100 – – (Thailand) Ltd**
SCS Channels, Inc.* Dormant Philippines 100 100 – –
Balance carried forward 14,223 14,223
INotes to the Financial Statements I
I089 ISCS Annual Report 2001 Singapore Computer Systems Limited and its Subsidiaries
31 December 2001
5. Investments in Subsidiaries (cont’d)
Place of Effective equity
incorporation held by the Group Cost of investment
Name of subsidiary Principal activities and business 2001 2000 2001 2000
% % $’000 $’000
Balance brought forward 14,223 14,223
SCS Enterprise Direct retail and distribution of computer Singapore 100 100 1,525 1,525Systems Pte Ltd products and services(formerly known as
Peoplebuilder Pte Ltd)
SCS Computer Systems Sale of computer equipment and Malaysia 84 84 4,403 4,403Sdn. Bhd.* and its software solutionssubsidiaries:–
Computer Processing Providing outsourcing of IT related services Malaysia 84 84 – –Services (Malaysia)Sdn. Bhd.*
SCS Technologies Provision of an outsource contact centre Malaysia 43 43 – – Sdn. Bhd.* and related services
SCS Cable.NET System integration for cabling, information Malaysia 63 63 – – Sdn. Bhd.* and communication products and
professional IT related services
SCS iCT Sdn. Bhd.* Development and customisation of Malaysia 43 43 – – computer telephony (“CT”) solutions,distribution of CT software and hardwareproducts and services and the provision of professional services
SCS-Calendar.com Provision of online web-based Malaysia 50 50 – – Sdn. Bhd.* calendaring systems and hosting services
to manage events, facilities and resources
SCS Information Computer consultancy, sale of computer Brunei 70 70 350 350Technology Sdn. Bhd.* equipment and software and the provision
of marketing, maintenance and othercomputer related services
Balance carried forward 20,501 20,501
INotes to the Financial Statements I
I090 I SCS Annual Report 2001
31 December 2001
Singapore Computer Systems Limited and its Subsidiaries
5. Investments in Subsidiaries (cont’d)
Place of Effective equity
incorporation held by the Group Cost of investment
Name of subsidiary Principal activities and business 2001 2000 2001 2000
% % $’000 $’000
Balance carried forward 20,501 20,501
SCS Information Sale of computer equipment and software Hong Kong 100 100 5,727 5,727Technology and the provision of related services(HK) Limited**
Computer Processing Dormant Hong Kong 100 100 159 159Services Limited**
SCS Computer Systems Dormant United Kingdom 100 100 – @ – @(UK) Limited***
Ceritas New Zealand Total IT solutions provider New Zealand 88.4 86.4 1,664 1,664Limited*(formerly known as SCS
New Zealand Limited)
and its subsidiaries:–
Abot Investments Investment holding New Zealand 88.4 86.4 – – Limited* and itssubsidiaries:–
Ceritas Digital Provider of web development and New Zealand 88.4 86.4 – –Limited* consultancy (formerly known as
Turing Solutions Limited)
Ceritas Dormant New Zealand 88.4 86.4 – – InternationalLimited*
Featherston Centre Property rental New Zealand 88.4 86.4 – – Limited*
SCS Australia Pty Ltd* Dormant Australia 100 100 2,209 2,209and its subsidiary:–
Claustral Pty Ltd* Dormant Australia 100 100 – –
SCS Systems, Inc.*** Dormant United States 100 100 153 153of America
EC1 Pte Ltd Management of a regional electronic Singapore 81 81 4,825 4,825commerce centre, provision ofconsultancy services and distributionof e-commerce enabler technology
Balance carried forward 35,238 35,238
INotes to the Financial Statements I
I091 ISCS Annual Report 2001 Singapore Computer Systems Limited and its Subsidiaries
31 December 2001
5. Investments in Subsidiaries (cont’d)
Place of Effective equity
incorporation held by the Group Cost of investment
Name of subsidiary Principal activities and business 2001 2000 2001 2000
% % $’000 $’000
Balance brought forward 35,238 35,238
SCS China Co., Ltd** Investigation, development and The People’s 100 100 1,248 854production of computer software, Republiccomputer systems integration, technical of Chinaconsulting, services and selling ofself-produced products
Mach30 Pte Ltd Research and development of computer Singapore 100 100 4,000 – @software products and communicationsystems and the provision of consultancyand software development services,maintenance, project implementation,the licensing of software and theprovision of electronic commerceservices of all kinds and descriptions
SCS Foresight Pte Ltd Provision of professional services in Singapore 100 100 1,000 1,000strategy and process innovation
iGlobal Services Pte Ltd Carrying on of an employment agency Singapore 100 100 500 500for the sourcing and recruitmentof manpower
PeridotHealth Provision of healthcare IT systems and Singapore 99.7 100 1,993 2,000Systems Pte Ltd management, healthcare systems
integration, project management and a suite of healthcare IT solutions
TX123 Pte Ltd and Operation of an electronic Singapore 59 59 4,200 4,200its subsidiaries:– procurement hub
Viewers Choice Retail of general merchandise Singapore 59 59 – – Pte Ltd
ICX123 Pte Ltd Operation of electronic procurement hub Singapore 53.1 59 – – for construction industry
48,179 43,792
* Audited by associated firms of KPMG.
** Audited by firms other than KPMG.
*** Not required to be audited according to the laws of the country of incorporation.
@ Amount is less than $1,000.
INotes to the Financial Statements I
I092 I SCS Annual Report 2001
31 December 2001
Singapore Computer Systems Limited and its Subsidiaries
6. Investments in Associates
Group Company
Note 2001 2000 2001 2000
$’000 $’000 $’000 $’000
Unquoted shares, at cost 11,307 11,583 9,411 7,080Impairment losses:–
At 1 January – – (2,308) (3,353)Allowance (made)/written back during the year 26 – – (295) 359Allowance utilised – – – 686
At 31 December – – (2,603) (2,308)
11,307 11,583 6,808 4,772Less:
Goodwill included as part of accumulated profits 20 (337) (330) – –
10,970 11,253 6,808 4,772Amount receivable:–– loans 1,073 973 1,073 973
Allowance for doubtful receivables:–At 1 January (378) (678) (728) (1,028)Allowance made during the year 26 (324) – (324) –Allowance utilised – 300 – 300
At 31 December (702) (378) (1,052) (728)
371 595 21 245
Share of post-acquisition profits 20 1,603 1,321 – –
Currency translation adjustment (1,059) (962) – –
11,885 12,207 6,829 5,017
INotes to the Financial Statements I
I093 ISCS Annual Report 2001 Singapore Computer Systems Limited and its Subsidiaries
31 December 2001
6. Investments in Associates (cont’d)Details of the associates are as follows:–
Place of Effective equity
incorporation held by the Group
Name of associate Principal activities and business 2001 2000
% %
Held by the Company
SCS Computer Systems Software development and sale, lease or rental Thailand 49.0 49.0(Thailand) Co. Ltd. of computer equipment and software packages
Ayala Systems Provision of computer network products Philippines 30.0 30.0Technology Inc. and services
Telescience (Singapore) Provision of services relating to telecommunication, Singapore 50.0 50.0Pte Ltd data communication systems and the sale of network
and computer peripheral equipment
ST-Straco Pte Ltd Sale of computer equipment and related products Singapore 50.0 50.0and provision of computer related services
Shanghai Sunjoy In voluntary liquidation The People’s 49.0 49.0System Integration Ltd Republic of China
NTUC Link Pte Ltd Management of a smartcard business Singapore 36.4 30.0
SCS Consulting & In members’ voluntary liquidation Singapore 50.0 50.0Services Pte Ltd
ChemXlog Pte Ltd Provision of collaborative e-supply chain services Singapore 40.0 40.0for the chemical industry
Trade-Link E-Commerce Operation of an e-commerce hub Hong Kong 30.0 *(Holding) Company Limited
* The percentage of equity held by the Group and the Company in Trade-Link E-Commerce (Holding) Company Limited was 10% as at 31 December 2000.
INotes to the Financial Statements I
I094 I SCS Annual Report 2001
31 December 2001
Singapore Computer Systems Limited and its Subsidiaries
6. Investments in Associates (cont’d)
Place of Effective equity
incorporation held by the Group
Name of associate Principal activities and business 2001 2000
% %
Held by SCS Computer Systems Sdn. Bhd.
Sistem Kompakar Provision of IT services and solutions Malaysia – 25.2Sdn. Bhd.
Computer Recovery Provision of data centre services, computer back-up Malaysia 37.8 37.8Centre Sdn. Bhd. facilities and related operations support services
IT Integrator (M) Provision of systems integration solutions and Malaysia 25.2 25.2Sdn. Bhd. the distribution of products and systems involving
real-time solutions
DPBS-SCS Computer Provision of IT solutions and services and conducting Malaysia 41.2 41.2Systems Sdn. Bhd. systems integration projects
TX123 (M) Sdn. Bhd. Provision of electronic commerce and related internet Malaysia 25.2 @solutions and services.
Held by Abot Investments Limited
SQL Services Limited Provision of specialist SQL database New Zealand 37.6 36.7management services
AppServ Limited Provision of application server services New Zealand 44.2 43.2
Held by TX123 Pte Ltd
TX123 (M) Sdn. Bhd. Provision of electronic commerce and related internet Malaysia 11.8 @solutions and services
@ TX123 (M) Sdn. Bhd. was incorporated during the financial year.
INotes to the Financial Statements I
I095 ISCS Annual Report 2001 Singapore Computer Systems Limited and its Subsidiaries
31 December 2001
7. Financial Assets
Group Company
Note 2001 2000 2001 2000
$’000 $’000 $’000 $’000
Unquoted shares, at cost 23,038 18,242 20,148 18,242Impairment losses:–
At 1 January (1,557) (92) (1,557) (92)Allowance made during the year, net of write-back 26 (2,211) (1,465) (2,211) (1,465)
At 31 December (3,768) (1,557) (3,768) (1,557)
19,270 16,685 16,380 16,685
Quoted shares 225 735 20 537Impairment losses:–
At 1 January (33) (133) – – Allowance made during the year 26 (90) – – – Allowance utilised – 100 – –
At 31 December (123) (33) – –
102 702 20 537
19,372 17,387 16,400 17,222
Market value of quoted shares 160 1,261 30 1,083
8. Long Term Receivables
Group Company
Note 2001 2000 2001 2000
$’000 $’000 $’000 $’000
Loans receivable from:–– staff 8a 14 57 14 55– investee companies and others 8b – – – 25
14 57 14 80
(a) Loans Receivable – Staff
Amounts receivable– within 12 months 12 119 169 63 104– after 12 months 14 57 14 55
133 226 77 159
Included in the above balance of the Group are loans to directors of subsidiaries amounting to $54,000 (2000: $51,000). These loans have been approved by the shareholders of the subsidiaries.
8. Long Term Receivables (cont’d)
Group Company
Note 2001 2000 2001 2000
$’000 $’000 $’000 $’000
(b) Loans Receivable – Investee Companies and Others
Loans receivable– investee companies 586 586 586 611– others 171 171 171 171
757 757 757 782Less:
Allowance for loans to investee companies and others:–At 1 January (757) (171) (757) (171)Allowance made during the year 26 – (586) – (586)
At 31 December (757) (757) (757) (757)
– – – 25
Group
and Company
2001 2000
$’000 $’000
(c) Finance Lease Receivables
Finance lease receivables 314 547Unearned interest – (18)
314 529
Due within 12 months 314 529
9. Inventories and Projects-In-Progress
Group Company
Note 2001 2000 2001 2000
$’000 $’000 $’000 $’000
Inventories held for resale 18,700 17,310 7,449 10,860Allowance for inventory obsolescence 9a (8,504) (7,595) (2,490) (5,256)
10,196 9,715 4,959 5,604Cost of projects-in-progress in excess of progress
billings less allowance for foreseeable losses 9b 23,860 29,080 10,374 14,565
34,056 38,795 15,333 20,169
(a) Allowance for inventory obsolescence:–
At 1 January 7,595 8,316 5,256 6,385Allowance made during the year, net of write-back 24 1,178 695 646 161Allowance utilised (269) (1,416) (3,412) (1,290)
At 31 December 8,504 7,595 2,490 5,256
INotes to the Financial Statements I
I096 I SCS Annual Report 2001
31 December 2001
Singapore Computer Systems Limited and its Subsidiaries
INotes to the Financial Statements I
I097 ISCS Annual Report 2001 Singapore Computer Systems Limited and its Subsidiaries
31 December 2001
9. Inventories and Projects-In-Progress (cont’d)
Group Company
Note 2001 2000 2001 2000
$’000 $’000 $’000 $’000
(b) Projects-In-Progress
Projects-in-progress 56,530 34,451 11,850 16,776Allowance for foreseeable losses 9c (124) (789) (64) (650)
56,406 33,662 11,786 16,126Progress billings (32,546) (4,582) (1,412) (1,561)
Cost of projects-in-progress in excessof progress billings 23,860 29,080 10,374 14,565
(c) Allowance for foreseeable losses:–
At 1 January 789 982 650 848Allowance made during the year, net of write-back 24 3,680 650 3,756 650Allowance utilised (4,345) (843) (4,342) (848)
At 31 December 124 789 64 650
10. Trade Receivables
Group Company
Note 2001 2000 2001 2000
$’000 $’000 $’000 $’000
Trade receivables 143,483 162,409 73,056 85,890Less:
Allowance for doubtful receivables:–At 1 January (4,480) (5,986) (2,350) (3,425)Allowance (made)/written-back during the year 24 (2,706) 1,529 (3,633) 1,060Allowance utilised 227 – 133 15Currency translation adjustment (100) (23) – –
At 31 December (7,059) (4,480) (5,850) (2,350)
136,424 157,929 67,206 83,540
Included in trade receivables are the following:–Group Company
2001 2000 2001 2000
$’000 $’000 $’000 $’000
Amounts due from:–– immediate holding company – 53 – 8– subsidiaries – – 15,829 7,190– associates 4,217 21,091 2,457 1,565– related corporations 10,531 11,846 9,342 10,309
INotes to the Financial Statements I
I098 I SCS Annual Report 2001
31 December 2001
Singapore Computer Systems Limited and its Subsidiaries
11. Other Receivables, Deposits and Prepayments
Group Company
2001 2000 2001 2000
$’000 $’000 $’000 $’000
Dividend receivable – – 459 809Recoverables 5,944 4,032 145 1,812Refundable deposits 782 801 99 89Prepayments 6,313 4,105 2,611 2,977Interest receivable 247 253 244 219Insurance claim receivable – 200 – 200Tax recoverable 581 – 449 –
13,867 9,391 4,007 6,106
12. Short Term Loan Receivables
Group Company
Note 2001 2000 2001 2000
$’000 $’000 $’000 $’000
Amounts receivable from:–– staff 8a 119 169 63 104– subsidiaries – – 12,380 7,078– associates 363 – – – – related corporations 5,741 7,481 3,281 – – investee companies and others 2,718 1,697 2,718 1,523
8,941 9,347 18,442 8,705Less:Allowance for loans to investee companies and others:–
At 1 January (515) – (515) – Allowance made during the year 26 – (515) – (515)
At 31 December (515) (515) (515) (515)
8,426 8,832 17,927 8,190
13. Trade Payables and AccrualsIncluded in trade payables and accruals are the following:–
Group Company
2001 2000 2001 2000
$’000 $’000 $’000 $’000
Amounts due to:–– immediate holding company 1,988 1,707 1,988 1,707– subsidiaries – – 6,785 2,644– associates 937 179 5 12– related corporations 694 4,661 683 4,654
INotes to the Financial Statements I
I099 ISCS Annual Report 2001 Singapore Computer Systems Limited and its Subsidiaries
31 December 2001
14. Progress Billings in Excess of Cost of Projects-in-Progress
Group Company
2001 2000 2001 2000
$’000 $’000 $’000 $’000
Progress billings 1,926 5,247 1,926 5,247Projects-in-progress (1,025) (2,665) (1,025) (2,665)
Progress billings in excess of cost of projects-in-progress 901 2,582 901 2,582
15.Provisions
Liquidated
Note Claims Damages Warranty Total
$’000 $’000 $’000 $’000
Group
At 1 January 2001 594 – 1,015 1,609Provisions made during the year 24 – 1,851 744 2,595Provisions utilised during the year – (1,292) (470) (1,762)
At 31 December 2001 594 559 1,289 2,442
Company
At 1 January 2001 594 – 92 686Provisions made during the year 24 – 1,851 24 1,875Provisions utilised during the year – (1,292) – (1,292)
At 31 December 2001 594 559 116 1,269
Provision for claims relates to claims in respect of guarantees provided by the Company to certain bankers for banking facilitiesgranted to associates.
16. Employee BenefitsMovements in liability for short-term accumulating compensated absences:–
Group Company
Note 2001 2000 2001 2000
$’000 $’000 $’000 $’000
At 1 January 3,741 3,551 1,965 2,162Expense recognised/(written-back) during the year 24 1,100 949 356 (197)Utilisation during the year (707) (677) – – Arising from transfer of business – – (240) – Currency translation adjustment 18 (82) – –
At 31 December 4,152 3,741 2,081 1,965
INotes to the Financial Statements I
I100 I SCS Annual Report 2001
31 December 2001
Singapore Computer Systems Limited and its Subsidiaries
16. Employee Benefits (cont’d)Equity Compensation Benefits(a) Singapore Computer Systems Executives’ Share Option Scheme (“SCS ESOS”)
Holders of share options granted under SCS ESOS are entitled to subscribe for the number of ordinary shares of $0.25 each in the Company at an exercise price and during the exercise period applicable to the share options. The shares allottedpursuant 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 2001 to 31 December 2001 are as follows:–
Number Number Proceeds
Number of of Number Proceeds on
of ordinary unissued of on options
unissued shares ordinary unissued options exercised
ordinary allotted shares ordinary exercised credited
shares under under shares credited to share
under options options under to share premium
options exercised lapsed options capital account
Date of grant Exercise as at during during as at during during
of options price 1/1/2001 the year the year 31/12/2001 the year the year Exercise period
$ $
5 / 9 / 1996 $0.69 135,000 (75,000) (60,000) – 18,750 33,000 6 / 9 / 1998 to 4 / 9 / 200114 / 4 / 1997 $0.65 60,000 – – 60,000 – – 15 / 4 / 1999 to 13 / 4 / 200221 / 4 / 1998 $1.27 236,000 – – 236,000 – – 22 / 4 / 2000 to 20 / 4 / 200319 / 4 / 1999 $1.13 14,000 (14,000) – – 3,500 12,320 20 / 4 / 2001 to 18 / 4 / 200412 / 7 / 2000 $1.13 707,500 (125,500) – 582,000 31,375 110,440 20 / 4 / 2001 to 18 / 4 / 2009
1,152,500 (214,500) (60,000) 878,000 53,625 155,760
INotes to the Financial Statements I
I101 ISCS Annual Report 2001 Singapore Computer Systems Limited and its Subsidiaries
31 December 2001
16. Employee Benefits (cont’d)Equity Compensation Benefits (cont’d)(b) Singapore Computer Systems Share Option Plan (“SCS SOP”)
Holders of share options granted under SCS SOP are entitled to subscribe for the number of ordinary shares of $0.25 each in the Company at an exercise price and during the exercise period applicable to the share options. The shares allotted pursuant to the exercise of share options granted under SCS SOP will rank pari passu with the existing issued shares of the Company.
Movements of share options granted under SCS SOP during the period from 1 January 2001 to 31 December 2001 are as follows:–
Number Number
Number of of Number
of unissued unissued of
unissued ordinary ordinary unissued
ordinary shares shares ordinary
shares under under shares
under options options under
options granted lapsed options
Date of grant Exercise as at during during as at
of options price 1/1/2001 the year the year 31/12/2001 Exercise period
18 / 10 / 2000 $2.20 67,000 – (2,000) 65,000 19 / 10 / 2001 to 18 / 10 / 200518 / 10 / 2000 $2.20 22,000 – (2,000) 20,000 19 / 10 / 2002 to 18 / 10 / 200518 / 10 / 2000 $2.20 22,000 – (2,000) 20,000 19 / 10 / 2003 to 18 / 10 / 200518 / 10 / 2000 $2.20 22,000 – (2,000) 20,000 19 / 10 / 2004 to 18 / 10 / 200518 / 10 / 2000 $2.20 332,250 – (19,750) 312,500 19 / 10 / 2001 to 18 / 10 / 201018 / 10 / 2000 $2.20 332,250 – (19,750) 312,500 19 / 10 / 2002 to 18 / 10 / 201018 / 10 / 2000 $2.20 332,250 – (19,750) 312,500 19 / 10 / 2003 to 18 / 10 / 201018 / 10 / 2000 $2.20 332,250 – (19,750) 312,500 19 / 10 / 2004 to 18 / 10 / 201014 / 3 / 2001 $2.08 – 81,250 (2,250) 79,000 15 / 3 / 2002 to 14 / 3 / 200614 / 3 / 2001 $2.08 – 27,250 (2,250) 25,000 15 / 3 / 2003 to 14 / 3 / 200614 / 3 / 2001 $2.08 – 27,250 (2,250) 25,000 15 / 3 / 2004 to 14 / 3 / 200614 / 3 / 2001 $2.08 – 27,250 (2,250) 25,000 15 / 3 / 2005 to 14 / 3 / 200614 / 3 / 2001 $2.08 – 353,750 (12,750) 341,000 15 / 3 / 2002 to 14 / 3 / 201114 / 3 / 2001 $2.08 – 353,750 (12,750) 341,000 15 / 3 / 2003 to 14 / 3 / 201114 / 3 / 2001 $2.08 – 353,750 (12,750) 341,000 15 / 3 / 2004 to 14 / 3 / 201114 / 3 / 2001 $2.08 – 353,750 (12,750) 341,000 15 / 3 / 2005 to 14 / 3 / 2011
1,462,000 1,578,000 (147,000) 2,893,000
INotes to the Financial Statements I
I102 I SCS Annual Report 2001
31 December 2001
Singapore Computer Systems Limited and its Subsidiaries
16. Employee Benefits (cont’d)Equity Compensation Benefits (cont’d)(c) Singapore Computer Systems Performance Share Plan (“SCS PSP”)
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 2001 to 31 December 2001 are as follows:–
Minimum
and Expenses
maximum incurred on
number of the release
unreleased Number of of ordinary
Number of ordinary ordinary Number of shares
unreleased shares shares unreleased under
ordinary deliverable released ordinary Number of conditional
Number of shares under pursuant shares unreleased awards
unreleased under conditional to the under ordinary charged
ordinary conditional awards at vesting of conditional shares to profit
Date of shares under awards the end of conditional awards under and loss
grant of 3-year conditional awarded the 3-year awards lapsed conditional account
conditional performance awards as at during performance during the during the awards as at during
awards cycle 1/1/2001 the year cycle year year 31/12/2001 the year
2 / 4 / 2001 2001 to 2003 – 245,000 0 to 490,000 – – Up to 490,000 –
The final number of ordinary shares of $0.25 each in the Company that will be released to the participants of SCS PSP at theend of the 3-year performance cycle (“the Performance Cycle”) is based on the participants’ level of achievement of theperformance targets set for them over the Performance Cycle.
(d) Singapore Computer Systems Restricted Stock Plan (“SCS RSP”)
Since SCS RSP was approved by the Company’s Shareholders on 7 July 2000, no award has been granted under SCS RSP.
Other Employee BenefitsSingapore Computer Systems Share Ownership Scheme
The contribution made during the year is disclosed in note 24.
INotes to the Financial Statements I
I103 ISCS Annual Report 2001 Singapore Computer Systems Limited and its Subsidiaries
31 December 2001
17. Obligations under Hire PurchasesAt 31 December 2001, the Group had obligations under hire purchases that are repayable as follows:–
Payments Interest Principal Payments Interest Principal
2001 2001 2001 2000 2000 2000
Group $’000 $’000 $’000 $’000 $’000 $’000
Within 1 year 99 32 67 – – – After 1 year but within 5 years 321 44 277 – – –
420 76 344 – – –
18. Deferred Taxation
Group Company
Note 2001 2000 2001 2000
$’000 $’000 $’000 $’000
At 1 January 1,958 1,419 2,124 1,596Provision made during the year 27 721 507 – 528Currency translation adjustment (12) 32 – –
At 31 December 2,667 1,958 2,124 2,124
19. Share Capital
2001 2001 2000 2000
No. of shares (’000) $’000 No. of shares (’000) $’000
Authorised:
Ordinary shares of $0.25 each 400,000 100,000 400,000 100,000
Issued and fully paid:
Ordinary shares of $0.25 each 154,033 38,508 153,819 38,455
During the financial year, the Company issued 214,500 (2000: 517,000) shares of $0.25 each fully paid at a premium for cash underthe Singapore Computer Systems Executives’ Share Option Scheme.
At the end of the financial year, there were unexercised options for 3,771,000 (2000: 2,614,500) ordinary shares of $0.25 each andconditional awards for up to 490,000 (2000: Nil) unreleased ordinary shares of $0.25 each in the Company.
INotes to the Financial Statements I
I104 I SCS Annual Report 2001
31 December 2001
Singapore Computer Systems Limited and its Subsidiaries
20. Reserves
Group Company
2001 2000 2001 2000
$’000 $’000 $’000 $’000
Share premium 2,373 2,217 2,373 2,217Currency translation reserve (1,315) (2,038) – – Accumulated profits 107,864 94,954 86,566 80,418
108,922 95,133 88,939 82,635
The application of the share premium account is governed by Sections 69-69F of the Companies Act, Chapter 50.
The currency translation reserve comprises all foreign exchange differences arising from the translation of the financial statementsof foreign operations that are not integral to the operation of the Company.
Group
Note 2001 2000
$’000 $’000
Accumulated profits retained in:–
The Company 86,566 80,418Subsidiaries 10,487 4,073Associates– share of post-acquisition profits 6 1,603 1,321– goodwill 6 (337) (330)Consolidation adjustments:– impairment of investment in subsidiaries and associates 9,195 9,122– allowance for loans to an associate 350 350
107,864 94,954
INotes to the Financial Statements I
I105 ISCS Annual Report 2001 Singapore Computer Systems Limited and its Subsidiaries
31 December 2001
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 an arm’s length basis.
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on areasonable basis. Unallocated items mainly comprise income-earning assets and revenue, interest-bearing loans, borrowings andexpenses, and corporate assets and expenses.
Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be usedfor more than one period.
Geographical Segments
The computer and computer related services segments are managed on a worldwide basis but operate in six principal geographicalareas, comprising Singapore, New Zealand, Malaysia, Greater China, Brunei and Others. In presenting information on the basis ofgeographical segments, segment information is based on the geographical location of the assets.
Business Segments
The main business segments of the Group comprise Systems Integration, Outsourcing, E-business, Networking, Consultancy andEnterprise Systems.
(a) Geographical Segments
New Greater
Singapore Zealand Malaysia China Brunei Others Eliminations Total
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Revenue and Expenses(by location of assets)
2001
Total revenue fromexternal customers 351,384 79,289 76,327 30,978 2,734 – – 540,712
Inter-segment revenue 70,594 – 647 244 – – (71,485) –
Total revenue 421,978 79,289 76,974 31,222 2,734 – (71,485) 540,712
Segment results 21,871 (720) 5,525 261 (158) (157) – 26,622
Other income 1,853
Profit from operations 28,475Finance costs (1,905)Exceptional items (5,983)Share of profit of associates 1,100 (130) 1,117 (170) – 101 2,018Taxation (6,741)Minority interests 1,464
Net profit for the year 17,328
Total revenue from external customers (by location of customers)
2001 348,970 79,291 77,788 30,985 3,058 620 – 540,712
INotes to the Financial Statements I
I106 I SCS Annual Report 2001
31 December 2001
Singapore Computer Systems Limited and its Subsidiaries
21. Segment Reporting (cont’d)(a) Geographical Segments (cont’d)
New Greater
Singapore Zealand Malaysia China Brunei Others Eliminations Total
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Revenue and Expenses(by location of assets)
2000
Total revenue fromexternal customers 285,211 81,363 70,570 7,013 3,246 101 – 447,504
Inter-segment revenue 15,539 – 1 1,074 – – (16,614) –
Total revenue 300,750 81,363 70,571 8,087 3,246 101 (16,614) 447,504
Segment results 16,476 410 7,465 964 98 (249) – 25,164
Other income 2,137
Profit from operations 27,301Finance costs (988)Exceptional items (2,577)Share of profit of associates (353) (120) 1,603 – – 806 – 1,936Taxation (9,178)Minority interests 754
Net profit for the year 17,248
Total revenue from external customers(by location of customers)
2000 284,748 81,363 70,588 7,187 3,269 349 – 447,504
Assets and liabilities2001
Segment assets 222,187 16,965 55,407 6,996 2,016 1,043 – 304,614Investments in associates 7,276 (188) 4,797 – – – – 11,885
Total assets 229,463 16,777 60,204 6,996 2,016 1,043 – 316,499
Total liabilities 109,710 12,996 36,791 4,393 252 29 – 164,171
Assets and liabilities2000
Segment assets 229,985 16,358 59,524 4,840 2,283 2,459 – 315,449Investments in associates 5,569 (54) 6,692 – – – – 12,207
Total assets 235,554 16,304 66,216 4,840 2,283 2,459 – 327,656
Total liabilities 125,431 12,636 45,969 2,814 801 270 – 187,921
INotes to the Financial Statements I
I107 ISCS Annual Report 2001 Singapore Computer Systems Limited and its Subsidiaries
31 December 2001
21. Segment Reporting (cont’d)(a) Geographical Segments (cont’d)
New Greater
Singapore Zealand Malaysia China Brunei Others Eliminations Total
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Depreciation charge 2001 11,229 1,313 644 150 11 3 – 13,350
Depreciation charge 2000 8,920 1,736 531 120 27 10 – 11,344
Amortisation of intangible assets 2001 2,696 18 471 – – – (731) 2,454
Amortisation of intangible assets 2000 1,147 19 – 2 – – – 1,168
Capital expenditure 2001 9,461 830 409 63 9 – – 10,772
Capital expenditure 2000 13,785 1,401 701 374 2 – – 16,263
(b) Business Segments
Systems Enterprise
Integration Outsourcing E-business Networking Consultancy Systems Others Consolidated
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
2001Total revenue from
external customers 81,755 56,768 23,766 125,157 3,422 246,855 2,989 540,712
Segment assets 68,697 49,026 16,594 63,929 4,124 110,974 3,155 316,499
Capital expenditure 411 5,670 550 120 26 1,139 2,856 10,772
2000Total revenue from
external customers 69,711 44,968 14,193 89,245 3,877 223,705 1,805 447,504
Segment assets 63,473 45,532 7,615 44,196 5,732 159,695 1,413 327,656
Capital expenditure 1,458 8,176 1,867 921 167 772 2,902 16,263
INotes to the Financial Statements I
I108 I SCS Annual Report 2001
31 December 2001
Singapore Computer Systems Limited and its Subsidiaries
22. Revenue
Revenue of the Group and the Company represents the net invoiced value of goods sold and services rendered in the normalcourse of business. All intragroup transactions have been eliminated in arriving at the Group’s revenue.
Group Company
2001 2000 2001 2000
$’000 $’000 $’000 $’000
Revenue comprises:–Sale of computer equipment and software 350,661 300,669 150,685 142,370Software development, maintenance and other services 190,051 146,835 106,402 78,453
540,712 447,504 257,087 220,823
23. Other Income
Group Company
2001 2000 2001 2000
$’000 $’000 $’000 $’000
Dividend income from– subsidiaries – – 634 1,124– associates – – 1,059 – – others 74 7 1 1Interest income from– subsidiaries – – 569 170– related corporations 280 540 92 348– associates – 4 – 3– others 655 319 141 140(Loss)/Gain on disposal of property, plant and equipment (62) (222) 21 (5)Gain/(Loss) on foreign exchange 539 (505) 259 (172)Amount recoverable from subsidiaries – – 497 274Others 367 1,994 1,730 2,142
1,853 2,137 5,003 4,025
INotes to the Financial Statements I
I109 ISCS Annual Report 2001 Singapore Computer Systems Limited and its Subsidiaries
31 December 2001
24. Profit from OperationsProfit from operations includes the following:–
Group Company
Note 2001 2000 2001 2000
$’000 $’000 $’000 $’000
(a) Staff costs
Wages and salaries 106,445 94,336 52,153 52,971Contributions to defined contribution plans 9,493 7,151 5,610 5,375Increase in liability for short-term accumulating
compensated absences 16 1,100 949 356 (197)Share Ownership Scheme expenses 488 434 396 400Others (principally made up of staff welfare,
training and recruitment expenses) 4,503 4,593 1,961 2,194
122,029 107,463 60,476 60,743
Number of employees as at 31 December 2,075 2,000 773 943
(b) Other Expenses
Amortisation of intangible assets 4 2,454 1,168 349 280Auditors’ remuneration– auditors of the Company
– current year 224 222 120 99– (over)/under accrual in respect of prior year (12) 14 – 15
– other auditors 132 121 – – – fees for other professional services paid to:
– auditors of the Company 83 12 12 – – other auditors 8 11 – –
Bad debts written off (trade) 42 1 – – Depreciation of property, plant and equipment 3 13,350 11,344 9,756 8,049Property, plant and equipment written off – 21 – 21Impairment loss on property, plant and equipment 3 71 – – – Allowance for inventory obsolescence,
net of write-back 9a 1,178 695 646 161Allowance for doubtful trade receivables,
net of write-back 10 2,706 – 3,633 – Allowance for foreseeable losses, net of write-back 9c 3,680 650 3,756 650Provision for warranty 15 744 329 24 95Provision for liquidated damages 15 1,851 – 1,851 – Research and development expenditure – 24 – – Operating lease expenses 2,714 2,361 1,120 364Grant received (107) – (107) – Write-back of claims – (254) – (254)Write-back of allowance for doubtful
trade receivables, net of allowance made 10 – (1,529) – (1,060)
(c) Directors’ remuneration
Included in staff costs are:Directors’ remuneration and fees– directors of the Company 960 849 960 849– directors of subsidiaries 1,530 1,195 – –
INotes to the Financial Statements I
I110 I SCS Annual Report 2001
31 December 2001
Singapore Computer Systems Limited and its Subsidiaries
25. Finance Costs
Group Company
2001 2000 2001 2000
$’000 $’000 $’000 $’000
Interest expenses– subsidiaries – – – (1)– bank loans and overdraft (1,791) (897) (759) (98)– others (114) (91) (42) (5)
(1,905) (988) (801) (104)
26. Exceptional Items
Group Company
Note 2001 2000 2001 2000
$’000 $’000 $’000 $’000
Gain/(Loss) on disposal/liquidation of investments in:–– subsidiaries 361 (13) 326 104– associates (32) 2 – 2– quoted shares 1,190 – 1,190 – – unquoted shares 217 – 217 – Gain on disposal of business 307 – – – Allowance (made)/written-back for impairment of
investment in:–– subsidiaries 5 – – 222 (359)– associates 6 – – (295) 359– quoted shares 7 (90) – – – – unquoted shares 7 (2,211) (1,465) (2,211) (1,465)Allowance for loans to associates 6 (324) – (324) – Allowance for loans to investee companies and others– long-term 8b – (586) – (586)– short-term 12 – (515) – (515)Loan written off – – – (130)Provision for project losses (5,401) – (5,401) –
(5,983) (2,577) (6,276) (2,590)
INotes to the Financial Statements I
I111 ISCS Annual Report 2001 Singapore Computer Systems Limited and its Subsidiaries
31 December 2001
27. Taxation
Group Company
Note 2001 2000 2001 2000
$’000 $’000 $’000 $’000
Based on results for the year:–Current taxation (5,941) (7,733) (3,733) (5,163)Deferred taxation 18 (785) (507) – (528)
(6,726) (8,240) (3,733) (5,691)Over/(Under) provision in respect of prior years– current taxation 521 80 (17) (146)– deferred taxation 18 64 – – – Share of associates’ taxation (600) (1,018) – –
(6,741) (9,178) (3,750) (5,837)
The tax charge for the Company and the Group is higher than the statutory tax rate of 24.5% because certain expenses are notdeductible for tax purposes.
As at 31 December 2001, the Group has unutilised tax losses and unabsorbed wear and tear allowances amounting to approximately$14,134,000 (2000: $11,755,000) and $1,886,000 (2000: $2,396,000) respectively available for set off against future profits, subject toagreement by the tax authorities and compliance with tax regulations in the respective countries in which certain subsidiaries operate.
28.Earnings Per Share(a) Basic earnings per share
2000 2000
2001 Restated As previously reported
$’000 $’000 $’000
The basic earnings per share is based on:–(i) Net profit for the year 17,328 17,248 17,491
2000
2001 2000 As previously reported
No. of Shares No. of Shares No. of Shares
(’000) (’000) (’000)
(ii) Weighted average number of shares outstanding during the year 153,819 153,302 153,302Shares issued under Share Option Scheme 171 352 352
153,990 153,654 153,654
INotes to the Financial Statements I
I112 I SCS Annual Report 2001
31 December 2001
Singapore Computer Systems Limited and its Subsidiaries
28. Earnings Per Share (cont’d)(b) Diluted earnings per share
When calculating diluted earnings per share, the weighted average number of shares is adjusted for the effect of all dilutivepotential ordinary shares.
The unissued ordinary shares under the Singapore Computer Systems Executives’ Share Option Scheme, the SingaporeComputer Systems Share Option Plan and the Singapore Computer Systems Performance Share Plan are as follows:–
2001 2000
Unissued Exercise Unissued Exercise
Ordinary Shares Price Ordinary Shares Price
(’000) ($) (’000) ($)
– 0.69 135 0.6960 0.65 60 0.65
236 1.27 236 1.27582 1.13 721 1.13
1,375 2.20 1,462 2.201,518 2.08 – –
490 – – –
4,261 2,614
The average fair value of one ordinary share during 2001 has been $1.70 (2000: $3.26) per share. The weighted average numberof ordinary shares adjusted for the unissued ordinary shares under the Singapore Computer Systems Executives’ Share OptionScheme, the Singapore Computer Systems Share Option Plan and the Singapore Computer Systems Performance Share Plancan be specified as follows:–
The weighted average number of ordinary shares adjusted for the effect of all dilutive potential ordinary shares is determined as follows:–
2000
2001 2000 As previously reported
No. of Shares No. of Shares No. of Shares
(’000) (’000) (’000)
Weighted average number of shares used in the calculation of basic earnings per share 153,990 153,654 153,654
Weighted average number of unissued ordinary shares under 3,886 1,164 1,164share options and conditional awards
Number of shares that would have been issued at fair value (584) (507) (507)
Weighted average number of ordinary shares (diluted) 157,292 154,311 154,311
29. Changes in Accounting Policies(a) Adoption of new/revised accounting standards and their effects
In 2001, the Company adopted nine new/revised standards in the manner elaborated below:–
SAS 8 (revised 2000) – Net Profit or Loss for the Period, Fundamental Errors and Changes in Accounting Policies
The adoption of SAS 8 has resulted in the Group and the Company disclosing items previously reported as “extraordinary” to “exceptional”. The change has been applied retrospectively; comparatives have been restated.
INotes to the Financial Statements I
I113 ISCS Annual Report 2001 Singapore Computer Systems Limited and its Subsidiaries
31 December 2001
29. Changes in Accounting Policies (cont’d)(a) Adoption of new/revised accounting standards and their effects (cont’d)
SAS 10 (revised 2000) – Events after the Balance Sheet date
The adoption of SAS 10 has resulted in the Group and the Company reversing the liability for proposed final dividends. The newaccounting policy is to recognise proposed final dividends only after they have been formally declared payable by shareholders(refer to note 30). The change has been applied retrospectively by adjusting the opening balances of accumulated profits at 1 January 2000 and 2001; comparatives have been restated.
SAS 17 (2000) – Employee Benefits
The adoption of SAS 17 has resulted in the Group and the Company making provisions for the obligations in respect of short-term employee benefits in the form of accumulating compensated absences. These obligations are provided when theemployees render services that increase their entitlement to future compensated absences (refer to note 16). The newaccounting policy has been applied retrospectively by adjusting the opening balances of accumulated profits at 1 January2000 and 2001; comparatives have been restated.
SAS 22 (revised 2000) – Business Combinations
On adoption of SAS 22, the Group has changed the accounting policy on the treatment of goodwill and negative goodwill arisingon acquisition of businesses (refer to note 2(h)). The Group has adopted the transitional provision of not restating the goodwillthat has previously been included as part of accumulated profits, with the view of including the attributable goodwill in thedetermination of profit or loss when the businesses are disposed of or discontinued. The result of adopting this choice oftransitional provision is that the adoption of SAS 22 has no effect on the comparatives or the opening balances ofaccumulated profits.
SAS 34 (2000) – Intangible Assets
The adoption of SAS 34 has resulted in the Group recognising pre-operating expenses as a charge to the profit and loss accountas and when incurred. Previously, these expenses were capitalised and amortised on a straight-line basis over a period of 5to 10 years from the commencement of commercial operations. The new accounting policy has been applied retrospectivelyby adjusting the opening balances of accumulated profits at 1 January 2001; comparatives have been restated.
Other Standards
The adoption of SAS 31 (2000) – Provisions, Contingent Liabilities and Contingent Assets, SAS 32 (2000) – FinancialInstruments: Disclosure and Presentation, SAS 35 (2000) – Discontinuing Operations and SAS 36 (2000) – Impairment ofAssets, have not given rise to any adjustments to the opening balances of accumulated profits of the prior and currentperiods or to changes in comparatives.
(b) Effects of changes in accounting policies
The changes in accounting policies, to the extent that they are applied retrospectively, have the following impact (net of tax):–
Group Company
Note 2001 2000 2001 2000
$’000 $’000 $’000 $’000
Effect of changes in accounting policies on accumulated profits:
Opening accumulated profits, as previously reported 93,671 81,976 78,086 69,374
Effect of adopting SAS 10 (dividends proposed) 30 4,297 3,403 4,297 3,403Effect of adopting SAS 17 (employee benefits) (2,958) (2,771) (1,965) (2,162)Effect of adopting SAS 34 (intangible assets) 4 (56) – – –
1,283 632 2,332 1,241
Opening accumulated profits, as restated 94,954 82,608 80,418 70,615
INotes to the Financial Statements I
I114 I SCS Annual Report 2001
31 December 2001
Singapore Computer Systems Limited and its Subsidiaries
29. Changes in Accounting Policies (cont’d)(b) Effects of changes in accounting policies (cont’d)
Group Company
Note 2001 2000 2001 2000
$’000 $’000 $’000 $’000
Effect of changes in accounting policies on net profit for the year:
Net profit before changes in accounting policies 18,428 17,491 10,864 13,041
Effect of adopting SAS 17 (employee benefits) (1,100) (187) (356) 197Effect of adopting SAS 34 (intangible assets) 4 – (56) – –
Net profit for the year 17,328 17,248 10,508 13,238
30. DividendsGroup
and Company
Note 2001 2000
$’000 $’000
As previously reported:– Arising from change in tax rate subsequent
to 31 December 1999 from 26% to 25.5% – 23– Arising from share options exercised
before the books closure – 9– Proposed first and final dividend of
15% less tax at 25.5% – 4,297Effect of adopting SAS 10:– Reversal of first and final dividend
of 15% less tax at 25.5% in respect of year 2000 – (4,297)– First and final dividend paid of 12%
less tax at 26% in respect of year 1999 29 – 3,403
– 3,435
First and final dividend paid of 15% less taxat 24.5% in respect of year 2000 29 4,355 –
Arising from share options exercised before the books closure 5 –
4,360 3,435
After the balance sheet date, the Directors proposed the following dividends. The dividends have not been provided for.
2001 2000
$’000 $’000
Final dividend proposed of 12% (2000: 15%)per share less tax at 24.5% (2000: 25.5%) 3,489 4,297
INotes to the Financial Statements I
I115 ISCS Annual Report 2001 Singapore Computer Systems Limited and its Subsidiaries
31 December 2001
31. Consolidated Statement of Cash Flows
Group
2001 2000
$’000 $’000
(a) Acquisition of Subsidiaries
Non-current assets – 100Current assets – 521Current liabilities – (620)
– 1Goodwill paid – 1,764
– 1,765Less:
Net cash at bank of subsidiaries – (45)
Cash outflow on acquisition of subsidiaries – 1,720
(b) Liquidation of Subsidiaries
Minority interests – (17)
Cash outflow on liquidation of subsidiaries – (17)
(c) Composition of Cash and Cash Equivalents
Fixed deposits 6,081 2,605Cash at banks and in hand 21,149 17,652Bank overdrafts – (1,661)
Cash and Cash Equivalents at end of year 27,230 18,596
32. Holding CompaniesThe immediate and ultimate holding companies as at 31 December 2001 are Green Dot Capital Pte Ltd and Temasek Holdings(Private) Limited respectively, both incorporated in the Republic of Singapore.
33. Significant Related Party TransactionsIn addition to the related party information disclosed elsewhere in the financial statements, there were the following significanttransactions between the Group and related parties, at terms agreed between the parties, during the year:–
Group
2001 2000
$’000 $’000
Holding Company
Management fees paid/payable 1,900 1,653Related Corporations
Sales 36,214 12,371Purchases 24,702 512Rental income 197 798Management fees paid/payable – 836
Associates
Sales 4,358 22,972Purchases 964 –
INotes to the Financial Statements I
I116 I SCS Annual Report 2001
31 December 2001
Singapore Computer Systems Limited and its Subsidiaries
34. Contingent LiabilitiesAs at 31 December 2001, the Group and the Company provided guarantees to certain bankers for banking facilities granted to:–
Group Company
2001 2000 2001 2000
$’000 $’000 $’000 $’000
Subsidiary 4,818 – 4,818 – Investee Company 1,272 – – –
In addition, the Company provided a corporate guarantee for $9.2 million (2000: $12.3 million) in favour of a supplier of its subsidiary.
35. Commitments
Group Company
2001 2000 2001 2000
$’000 $’000 $’000 $’000
(a) Capital commitments
– approved and contracted for 7,010 1,894 245 1,894
(b) Operating lease commitments
Under non-cancellable operating leases with terms exceeding 1 year:–– payable within 1 year 1,118 1,146 – – – payable within 2 to 5 years 336 1,570 – –
The Group leases a number of office facilities 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.
Group Company
2001 2000 2001 2000
$’000 $’000 $’000 $’000
(c) Long term investments – 2,090 – 2,090
(d) Forward foreign currency exchange contracts 1,174 3,471 – 3,471
(e) Investments in an associate and a joint venture 1,017 – – –
36. Financial Instruments(a) 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’sobjectives, internal organisation and the environment in which it operates are continually evolving and, as a result, the risks itfaces are continually changing. A well-defined policy is hence necessary to help ensure that the Group is not unnecessarilyexposed to avoidable financial risks and that financial information used within the business and for publication is reliable. The Board is responsible for ensuring that the Group’s management establish appropriate policies in this regard and seekregular assurance that will enable the Board to satisfy itself that the system is functioning effectively.
The Group’s system of internal control has a key role in the identification and management of financial risks. The Group has asound system of internal control that contributes to safeguarding the shareholders’ investments and the Group’s assets. Inreviewing 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.
INotes to the Financial Statements I
I117 ISCS Annual Report 2001 Singapore Computer Systems Limited and its Subsidiaries
31 December 2001
36. Financial Instruments (cont’d)(a) Financial Risk Management Objectives and Policies (cont’d)
The Group has an established Management Committee with specific accountability for reviewing the system of risk managementand for reporting key risks and their associated mitigating factors to the Board through its on-going process of businessoperations review with unit managers. This process was in place throughout the year to which these statements apply and up to the date of their approval.
Derivative financial instruments are used to reduce exposure to fluctuations in foreign exchange rates and interest rates. Whilethese are subject to the risk of market rates changing subsequent to acquisition, such changes are generally offset by oppositeeffects on the items being hedged. The Group does not use complex derivative instruments with embedded or leveragefeatures to mitigate risks.
The Group has established processes to monitor and control the hedging of transactions on a timely and accurate manner.Instruments used to hedge the risks are monitored regularly.
The Group’s accounting policies in relation to the derivative financial instruments are set out in note 2 (j).
(b) Credit Risk
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluationsare performed on all customers requiring credit over a certain amount. The Group does not require collateral in respect offinancial assets.
Investments and transactions are allowed only with counterparties that are of high credit quality within established limit. Theexposure is monitored and managed regularly through the review of the counterparty’s past performance, financial standing,country risk and existence of collateral. As such, management does not expect any counterparty to fail to meet their obligations.
Short-term investments are limited only to bank certificates of deposits, cash deposits and commercial papers with maturity of one year or less. These investments are managed from regular review of the cashflow requirements and the length ofinvestment horizon. The Group's investment in external parties’ commercial papers does not exceed 20% of total surplusesinvested. As at balance sheet date, there were no investments made in commercial papers.
The Group’s exposure to changes in market value of its investments and financial assets are managed by performing on-goingevaluations. Any impairment loss will be provided in the accounts.
At balance sheet date, there were no significant concentrations of credit risk. The maximum exposure to credit risk isrepresented by the carrying amount of each financial asset in the balance sheets.
(c) Interest Rate Risk
The Group’s exposure to market risk for changes in interest rates relate primarily to the Group’s investment portfolio and debtobligations. The Group does not use derivative financial instruments to hedge its investment portfolio. The portfolio includesonly debt securities with active secondary or resale markets to ensure portfolio liquidity.
The Group has an interest rate risk profile structure to spread out its interest rate risk over time and thus to limit the potentialloss arising from interest rate exposure in any single period. Any interest exposures where the interest rate profile falls outside a prescribed acceptable band are hedged with interest rate swaps, purchased interest rate caps, purchased interest rate collarsand forward rate agreements. All hedging instruments are of generic variety with no embedded or leverage features. Complexilliquid instruments are not to be used.
Sensitivity and scenario analysis is done on a regular basis to determine the potential impact of a variety of interest ratemovements on future cash flows of the current debt portfolio. As a minimum, this takes the form of a sensitivity analysis basedon a parallel shift of 1% in the yield curve for short-term borrowings (< 1 year).
INotes to the Financial Statements I
I118 I SCS Annual Report 2001
31 December 2001
Singapore Computer Systems Limited and its Subsidiaries
36. Financial Instruments (cont’d)(d) Foreign Currency Risk
The Group incurs foreign currency risk on sales, purchases and borrowings that are denominated in a currency other thanSingapore dollars. The currency giving rise to this risk is primarily US dollars.
The Group uses natural hedging opportunities like denominating the liabilities or costs in the same currency as the assets orrevenue when there are currency exposures in the transactions whenever practicable.
Foreign exchange transactions are only arranged in respect of actual (committed) or forecasted (uncommitted) currencyexposures. Committed exposures such as trade receivables, trade payables and borrowings denominated in a foreigncurrency are hedged as soon as they are identified. The Group hedges at least 80% of its committed exposures. Unhedgedcommitted currency exposures are monitored regularly and any mark-to-market losses for such open positions are limited to5% of the forecasted net operating profit for the year. Scenario analysis is conducted on a regular basis to assess thereasonable worst-case scenario for the overall unhedged exposures.
Permitted foreign exchange hedging instruments include spot and forward contracts, currency swaps and currency options. Allhedging instruments are of generic variety with no embedded or leverage features. Complex, illiquid instruments are not used.At all times, the outstanding hedging contracts do not exceed the notional amount of the underlying exposures. The Grouponly enters into forward exchange contracts with maturities of less than a year. Where necessary, the forward exchangecontract is rolled over upon maturity at market rates.
(e) Liquidity RiskLiquidity must be maintained under normal circumstances and is critical in times of stress or crisis. The policy set is designed to achieve a balance of two requirements, namely greater certainties of cashflows and the attendant cost of obtaining thatfunding. The liquidity profile is reviewed in the context of money market and credit conditions and will be revised from time to time as necessary.
The Group monitors its forecasted operational cashflows and secures a range of short and long term funding alternatives on a regular basis to ensure that sufficient liquidity is available to meet its requirements. Short-term liquidity planning issupplemented with stand-by facilities maintained with highly rated banks, commercial papers and overdrafts.
For the year under review, the Group managed an approximate mix of short-term and long-term liquidity. The maturity ofdebts was spread out to balance the certainties of cashflows and attendant cost of funding.
Within the short-term maturity bands, borrowing profiles were also spread out to ensure sufficient liquidity to support theoperating cycle of the business.
(f) Sensitivity Analysis
In managing its interest rate and currency risks, the Group aims to reduce the impact of short-term fluctuations on theGroup’s earnings. Over the longer term, however, any prolonged adverse changes in foreign exchange and interest rateswould have an impact on consolidated earnings.
At 31 December 2001, it is estimated that a general increase of one percentage point in interest rates would decrease theGroup’s profit before tax by approximately S$184,000 (2000: S$98,000).
It is estimated that a general increase of one percentage point in value of the Singapore dollars against other foreigncurrencies would decrease the Group’s profit before tax by approximately S$179,000 (2000: S$81,000).
INotes to the Financial Statements I
I119 ISCS Annual Report 2001 Singapore Computer Systems Limited and its Subsidiaries
31 December 2001
36. Financial Instruments (cont’d)(g) Fair Values
Recognised Financial Instruments
The fair value of the financial assets and liabilities approximates to their carrying value except for that of quoted equityinvestments, 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 ofquoted market prices and the inability to estimate fair value without incurring excessive costs. However, management believesthat the carrying amounts recorded at balance sheet date reflect the corresponding fair value.
Unrecognised Financial Instruments
The valuation of financial instruments not recognised in the balance sheet reflects amounts which the Group expects to pay orreceive to terminate the contracts or replace the contracts at their current market rates as at the balance sheet date.
The notional amount and net fair value of financial instruments not recognised in the balance sheet as at 31 December are:
Group
2001 2000
$’000 $’000
Forward foreign exchange contracts– Notional amount 1,174 –– Fair value (net) 1 –
Comparative figures have not been compiled as the management is of the opinion that it is not practicable to do so.
37. Comparative InformationComparatives in the financial statements have been changed from the previous year due to the adoption of the requirements of the new and revised accounting standards stated in note 29.
Comparative figures have been adjusted to conform with current year’s presentation.
IAdditional Information I
I120 I SCS Annual Report 2001
For the Year ended 31 December 2001 (under SGX-ST Listing Manual requirements)
Singapore Computer Systems Limited
(A) Directors’ RemunerationCompany’s directors receiving remuneration from the Group
Company
2001 2000
No. of No. of
directors directors
Remuneration Bands
$500,000 and above 1 1$250,000 to $499,999 – – Below $250,000 8 7
Total 9 8
Summary compensation table for the year ended 31 December 2001 (Company)
Fair ^
value
of stock
Directors’ options
Name of director Salary * Bonus # fees Total granted
$ $ $ $ $
Tay Siew Choon – – 50,000@ 50,000 150,200Robert Chua Teck Chew – – 50,000 50,000 27,800Theresa Foo-Yo Mie Yoen – – 30,000 30,000 10,520Spencer Lee Tien Chye – – 10,000 10,000 6,200Garfield Vorhes Nelson – – 50,000 50,000 16,680William Liu Wei Hai – – 8,301@ 8,301 – Low Sin Leng – – 2,767@ 2,767 – Stephen Yeo Siew Chye 595,853 157,356 – 753,209 242,600Eaw Kok Hin, David** – – 5,233@ 5,233 –
595,853 157,356 206,301 959,510 454,000
* The salary amount shown is inclusive of allowances and CPF.
# The bonus amount shown is inclusive of CPF.
^ Relates to options granted during the year by the Company. The fair value of stock options granted is estimated using the Black-Scholes Option-pricing model.
@ Fees are payable to Directors’ employer.
** Ceased to be a Director on 10 July 2001.
IAdditional Information I
I121 ISCS Annual Report 2001 Singapore Computer Systems Limited
For the Year ended 31 December 2001 (under SGX-ST Listing Manual requirements)
(B) Interested Person Transactions Interested person transactions during the financial year pursuant to the Shareholders’ Mandate obtained under Chapter 9A of theListing Manual of the Singapore Exchange Securities Trading Limited are as follows:
Group
2001 2000
$’000 $’000
General Transactions
Contract value of sale agreements 17,882 15,836Contract value of purchase agreements 2,726 4,815
Management and Support Services
Management and support service fees payable to– immediate holding company 1,900 1,653– related corporation – 836
Joint Venture Investments
Joint venture investments with related corporations 2,670 1,760
Lease of Premises
Cost sharing for office space with related corporations 155 –
Treasury Transactions
Group
2001 2000
With related corporations
Placement of funds Amounts ranging from Amounts ranging from$386,442 to $6,000,000 $80,000 to $5,062,417
for period of between for period of between1 to 181 days 1 to 94 days
(C) Corporate Governance StatementBOARD OF DIRECTORS
The Board is chaired by Mr Tay Siew Choon and has eight directors of whom four are independent non-executive directors.
Mr William Liu Wei Hai and Ms Low Sin Leng were appointed to the Board on 20 September 2001.
A total of five Board meetings were held during the financial year ended 31 December 2001. There was an average of above80% attendance at three of the meetings and 70% and 60% at the other two meetings respectively.
AUDIT COMMITTEE
The Audit Committee has three members, of whom two are independent non-executive directors. It is chaired by Mr Robert Chua Teck Chew and the other two members are Mrs Theresa Foo-Yo Mie Yoen and Mr William Liu Wei Hai.
The key function of the Audit Committee is to monitor the Group’s financial policies and control procedures by reviewing andreporting to the Board the scope and results of regular internal and external audits performed on the Group’s operations.
IAdditional Information I
I122 I SCS Annual Report 2001
For the Year ended 31 December 2001 (under SGX-ST Listing Manual requirements)
Singapore Computer Systems Limited
(C) Corporate Governance Statement (cont’d)AUDIT COMMITTEE (con’td)
Specifically the Audit Committee reviews the Group’s quarterly results before submission to the Board for its approval. The AuditCommittee also reviews the Group’s interested party transactions with the Singapore Technologies Group and recommends theexternal auditors for appointment by the Board.
There were four Audit Committee meetings for the financial year ended 31 December 2001. There was full attendance at all four meetings.
EXECUTIVE COMMITTEE
The Executive Committee has three directors, Mr Stephen Yeo Siew Chye, Mr Garfield Vorhes Nelson who is an independentdirector, and Mr Tay Siew Choon who chairs the Executive Committee.
The role of the Executive Committee is to assist the Board in the appraisal and management of the Group’s investments byoverseeing the Group’s overall investment strategy through regular review and consultation with its management.
The Executive Committee is delegated the power by the Board to approve strategic investments by the Group within certainfinancial limits that exceeds the authority of the Group’s management.
The Executive Committee will also review, appraise and recommend investments for approval by the Board when the value of suchinvestments falls beyond the Executive Committee’s authority limits.
There were a total of five Executive Committee meetings for the financial year ended 31 December 2001. There was fullattendance for three of the meetings. The Executive Committee has targeted to meet monthly for year 2002.
EXECUTIVE RESOURCE AND COMPENSATION COMMITTEE (ERCC)
The ERCC oversees the Group’s strategy in recruitment, retention and development of its human resource including key talents forthe Group’s business.
Specifically, the ERCC establishes compensation policies for the Group and approves key appointments, succession plans for key positions, salary reviews, bonuses and incentives including the grant of share options and conditional awards.
The ERCC is chaired by Mr Tay Siew Choon and has five members including two independent directors and one non-board member who was co-opted to provide relevant industry perspectives and advice.
The ERCC has held three meetings. There was 80% attendance at the first meeting and full attendance at the other two meetings.
DEALINGS IN SECURITIES
The Company has adopted a Code of Compliance on Dealings in Securities, pursuant to which dealings in the Company’ssecurities by its officers during the period commencing one month prior to the announcement of the Company’s quarterly results isprohibited. Directors and executives are also cautioned to observe insider trading laws at all times even when dealing in securitieswithin the permitted trading period.
GOING CONCERN
The directors, having made appropriate enquiries, are satisfied that the Company and the Group have adequate resources tocontinue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis inpreparing the financial statements.
IAdditional Information I
I123 ISCS Annual Report 2001 Singapore Computer Systems Limited
For the Year ended 31 December 2001 (under SGX-ST Listing Manual requirements)
(C) Corporate Governance Statement (cont’d)BOARD COMPOSITION AND COMMITTEES
EXECUTIVE RESOURCE AND
AUDIT COMMITTEE EXECUTIVE COMMITTEE COMPENSATION COMMITTEE
BOARD MEMBERS
Tay Siew Choon (Chairman) C CRobert Chua Teck Chew C MTheresa Foo-Yo Mie Yoen MSpencer Lee Tien Chye
Garfield Vorhes Nelson M MWilliam Liu Wei Hai MLow Sin Leng
Stephen Yeo Siew Chye M M
NON-BOARD MEMBER
Cheo Hock Kuan MDenotes: C – Chairman M – Member
INTERNAL FINANCIAL CONTROL
The directors recognise their responsibility for the system of internal financial control.
Any such system can provide reasonable but not absolute assurance against material financial misstatement or loss. The purposes of the internal financial control are:
(i) To safeguard the Group’s assets against unauthorised use or disposal; and
(ii) To maintain proper accounting records and ensure the reliability of financial information used within the business and for publication.
The Board confirms that, through the Audit Committee, it has reviewed the effectiveness of the system of internal financial control. The major elements of the system are as follows:
(a) CONTROL ENVIRONMENT
The Board ensures that there is a proper business plan and appropriate internal controls are in place so as to meet the businessobjectives of the Group. This is achieved through an organisational structure which has clear levels of responsibility and authorityand appropriate reporting procedures. The Board approves the Financial Authority Limit which establishes the approval limits forthe Board and departmental managers for tenders, quotations, contracts, purchases and payments. Performance Reports areproduced and reviewed to ascertain the current performance and to gauge the future outlook of the Group.
(b) FINANCIAL REPORTING
There is a comprehensive budgetary control system with detailed budgets prepared at individual business divisions, scrutinisedin detail by the senior management team and then reviewed and approved by the Board. Monthly performance reports areproduced and reviewed against the budget. Each month, the forecast for the full year is reviewed by the senior management in the light of performance to-date and the outlook for the remainder of the year.
(c) OPERATING CONTROLS
There are well-defined control policies and procedures designed to ensure that proper internal controls are in place. Specificcontrols are designed to ensure that cash, inventories and equipment are safeguarded from physical loss, that credit risks areappropriately managed and that appropriate levels of insurance are in place.
(d) MONITORING OF CONTROLS
The system of internal financial control is also monitored through a programme of internal audits. The Audit Committee reviewsthe work of the internal audit function and approves the internal audit plan annually. The Audit Committee also reviews the resultsof the internal audit and ensures that proper follow-up corrective actions are taken to rectify any weaknesses.
IShareholding Statistics I
I124 I SCS Annual Report 2001
As at 1 April 2002
Singapore Computer Systems Limited
Authorised Share Capital : $100,000,000.00Issued and Paid-Up Capital : $38,508,250.25Class of Shares : Ordinary Shares of $0.25 eachVoting Rights : One Vote Per Share
ANALYSIS OF SHAREHOLDINGS
Range of Shareholdings No. of Shareholders % No. of Shares %
1 - 1,000 838 22.42 792,397 0.511,001 - 10,000 2,596 69.47 8,773,650 5.7010,001 - 1,000,000 291 7.79 12,471,148 8.101,000,001 and Above 12 0.32 131,995,806 85.69
Total 3,737 100.00 154,033,001 100.00
No. of Shares No. of Shares No. of Shares
Substantial Shareholders Direct Interest Deemed Interest Total Interest % of Shares
Temasek Holdings (Private) Limited – 93,144,501 93,144,501 60.47Singapore Technologies Holdings Pte Ltd – 62,477,601 62,477,601 40.56Singapore Technologies Pte Ltd – 93,144,501 93,144,501 60.47Green Dot Capital Pte Ltd 62,477,601 – 62,477,601 40.56SembCorp Industries Ltd – 30,666,900 30,666,900 19.91Singapore Technologies Industrial Corporation Ltd *30,666,900 – *30,666,900 19.91
TOP 20 SHAREHOLDERS
No. Name No. of Shares Held %
1 Green Dot Capital Pte Ltd 62,477,601 40.562 Singapore Technologies Industrial Corporation Ltd 28,952,400 18.803 Keppel Land Limited 7,500,000 4.874 DBS Nominees Pte Ltd 6,648,857 4.325 Citibank Nominees Singapore Pte Ltd 6,455,500 4.196 Raffles Nominees Pte Ltd 5,507,758 3.587 Oversea-Chinese Bank Nominees Pte Ltd 4,367,000 2.848 DB Nominees (S) Pte Ltd 3,363,690 2.189 United Overseas Bank Nominees Pte Ltd 2,484,500 1.61
10 STIC Investments Pte Ltd 1,714,500 1.1111 HSBC (Singapore) Nominees Pte Ltd 1,306,000 0.8512 Indosuez Singapore Nominees Pte Ltd 1,218,000 0.7913 Overseas Union Bank Nominees Pte Ltd 555,000 0.3614 OCBC Securities Private Ltd 399,000 0.2615 Waterworth Pte Ltd 300,000 0.1916 G K Goh Stockbrokers Pte Ltd 279,532 0.1817 Kim Eng Ong Asia Securities Pte Ltd 279,000 0.1818 Lim & Tan Securities Pte Ltd 267,000 0.1719 BNP Paribas Nominees Singapore Pte Ltd 250,000 0.1620 Ng Hian Chow 228,000 0.15
134,553,338 87.35
* Out of the 30,666,900 shares, 1,714,500 shares are held by STIC Investments Pte Ltd on trust for Singapore Technologies Industrial Corporation Ltd.
IGroup of Companies I
I125 ISCS Annual Report 2001 Singapore Computer Systems Limited
As at 1 April 2002
SUBSIDIARIES
Singapore
81% EC1 Pte Ltd100% iGlobal Services Pte Ltd100% Mach30 Pte Ltd99.67% PeridotHealth Systems Pte Ltd100% SCS Enterprise Solutions Pte Ltd100% SCS Enterprise Systems Pte Ltd
(formerly known as PeopleBuilder Pte Ltd)
– 100% CSN Systems Pte Ltd100% SCS Foresight Pte Ltd100% SCS Networks Pte Ltd58.99% TX123 Pte Ltd
– 90% ICX123 Pte Ltd– 100% Viewers Choice Pte Ltd
Australia
100% SCS Australia Pty. Ltd.– 100% Claustral Pty. Limited
Brunei
70% SCS Information Technology Sdn. Bhd.
Hong Kong
100% Computer Processing Services Limited100% SCS Information Technology (HK) Limited
Malaysia
84% SCS Computer Systems Sdn. Bhd.– 51% SCS iCT Sdn. Bhd.– 51% SCS Technologies Sdn. Bhd.– 60% SCS-Calendar.com Sdn. Bhd.– 75% SCS Cable.NET Sdn. Bhd.– 100% Computer Processing Services
(Malaysia) Sdn. Bhd.Held by Subsidiary, SCS Enterprise Systems Pte Ltd– 100% CSN Systems Sdn. Bhd.
New Zealand
90.48% Ceritas New Zealand Limited(formerly known as SCS New Zealand Limited)
– 100% Featherston Centre Limited– 100% Abot Investments Limited
– 100% Ceritas Digital Limited(formerly known as
Turing Solutions Limited)
– 100% Ceritas International Limited
The People’s Republic of China
100% SCS China Co., Ltd
Philippines
Held by Subsidiary, SCS Networks Pte Ltd– 100% SCS Channels, Inc.
Thailand
Held by Subsidiary, SCS Networks Pte Ltd– 100% SCS Channels (Thailand) Limited
United Kingdom
100% SCS Computer Systems (UK) Limited
United States of America
100% SCS Systems, Inc.
ASSOCIATES
Singapore
40% ChemXlog Pte Ltd36.39% NTUC Link Private Limited50% SCS Consulting & Services Pte Ltd
(In Members’ Voluntary Liquidation)
50% ST-Straco Pte Ltd50% Telescience (Singapore) Pte Ltd
Hong Kong
30% Trade-Link E-Commerce (Holding) Company Limited
Malaysia
Held by Subsidiary, SCS Computer Systems Sdn. Bhd.– 30% IT Integrator (M) Sdn. Bhd.– 30% TX123 (M) Sdn. Bhd.– 45% Computer Recovery Centre Sdn. Bhd.– 49% DPBS-SCS Computer Systems Sdn. Bhd.Held by Subsidiary, TX123 Pte Ltd– 20% TX123 (M) Sdn. Bhd.
New Zealand
Held by, Subsidiary, Abot Investments Limited– 42.50% SQL Services Limited– 50% AppServ Limited
Philippines
30% Ayala Systems Technology, Inc.
Thailand
49% SCS Computer Systems (Thailand) Co., Ltd
The People’s Republic of China
49% Shanghai Sunjoy System Integration Ltd (In Liquidation)
Closing Price and Closing Index for Last 10 Years
2.5
2.0
1.5
1.0
0.5
0
Closing Price ($)
2500
2000
1500
1000
500
0
Closing Index
1994 1996 19991992 1993 1995 1997 1998 2000 2001
Year Closing Price ($)
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
0.875 1.580 1.050 1.090 1.070 0.840 1.090 2.450 2.250 1.350
Year Closing Index
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
1240.340 2086.728 1853.980 1917.173 1991.682 1507.646 1392.730 2479.580 1926.830 1623.600
1623.61.350 ClosingPrice ($)
ClosingIndex
2.250
1926.830
1.350
1623.600
1.090
1392.730
2479.580
1.090 1.0701.050
1.580
0.875
1917.1731991.682
1853.980
2086.728
1240.340
0.840
2.450
1507.646
ISCS Share Prices and Monthly Volumes I
I126 I SCS Annual Report 2001 Singapore Computer Systems Limited
Mar May Aug Nov
Total Volume for 2001 (’000)
Jan
78129
493
9772
163
62
469
202
858
180
109
Feb Apr Jun Jul Sep Oct Dec
1400
1200
1000
800
600
400
200
0
ISCS Share Prices and Monthly Volumes I
I127 ISCS Annual Report 2001 Singapore Computer Systems Limited
Month Closing Price ($)
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2.180 2.270 1.970 1.930 1.610 1.790 1.800 1.510 1.200 1.200 1.160 1.350
Month Closing Index
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1991.290 1947.400 1674.190 1722.720 1657.050 1726.500 1666.030 1619.120 1319.530 1367.840 1478.540 1623.600
Closing Price and Closing Index for 2001
2.5
2.0
1.5
1.0
0.5
0
Closing Price ($)
2000
1600
1200
800
400
0
Closing Index
Mar May Aug NovJan Feb Apr June Jul Sep Oct Dec
1726.5001666.030 1619.120
1319.5301367.840
1722.7201657.0501674.190
1947.4001991.290
1478.540
1623.600
2.1802.270
1.970 1.930
1.200 1.160
1.350
1.200
1.510
1.8001.790
1.610
ClosingPrice ($)
ClosingIndex
ISCS Offices I
I128 I SCS Annual Report 2001
Singapore Headquarters
Singapore Computer Systems Limited
7 Bedok South Road
Singapore 469272
Telephone (65) 6827 8888
Facsimile (65) 6827 8899
Website www.scs.com.sg
Local Offices
Subsidiaries
SCS Networks Pte Ltd
7 Bedok South Road
Singapore 469272
Telephone (65) 6827 8888
Facsimile (65) 6827 8899
SCS Enterprise Systems Pte Ltd
7 Bedok South Road
Singapore 469272
Telephone (65) 6827 8888
Facsimile (65) 6827 3194
CSN Systems Pte Ltd
7 Bedok South Road
Singapore 469272
Telephone (65) 6827 8888
Facsimile (65) 6827 3939
iGlobal Services Pte Ltd
7 Bedok South Road
Singapore 469272
Telephone (65) 6827 3010
Facsimile (65) 6827 3192
Website www.iglobal.com.sg
SCS Enterprise Solutions Pte Ltd
7 Bedok South Road
Singapore 469272
Telephone (65) 6827 8888
Facsimile (65) 6827 3182
SCS Foresight Pte Ltd
7 Bedok South Road
Singapore 469272
Telephone (65) 6827 3927
Facsimile (65) 6827 3922
Website www.scs-foresight.com
PeridotHealth Systems Pte Ltd
3 Changi South Lane, Level 4
Singapore 486118
Telephone (65) 6214 0880
Facsimile (65) 6214 0863
Website www.peridothealth.com.sg
EC1 Pte Ltd
7 Bedok South Road
Singapore 469272
Telephone (65) 6441 9747
Facsimile (65) 6441 9721
Website www.ec1.com.sg
Mach30 Pte Ltd
7 Bedok South Road
Singapore 469272
Telephone (65) 6827 3857
Facsimile (65) 6827 3109
Website www.mach30.com
TX123 Pte Ltd
7 Bedok South Road
Singapore 469272
Telephone (65) 6827 3665
Facsimile (65) 6827 3113
Website www.tx123.com
ICX123 Pte Ltd
7 Bedok South Road
Singapore 469272
Telephone (65) 6827 3665
Facsimile (65) 6827 3113
Website www.icx123.com
SCS Offices
ISCS Offices I
I129 ISCS Annual Report 2001
Viewers Choice Pte Ltd
7 Bedok South Road
Singapore 469272
Telephone (65) 6827 3940
Facsimile (65) 6245 3091
Website www.viewerschoice.com.sg
Associates
ChemXlog Pte Ltd
5 Clementi Loop
Singapore 129816
Telephone (65) 6462 8822
Facsimile (65) 6462 8884
NTUC Link Pte Ltd
73 Bras Basah Road
#03-00 NTUC Trade Union House
Singapore 189556
Telephone (65) 6223 5225
Facsimile (65) 6339 3623
ST-Straco Pte Ltd
10 Anson Road #30-14
International Plaza
Singapore 079903
Telephone (65) 6221 5983
Facsimile (65) 6225 9238
Telescience (Singapore) Pte Ltd
61 Kaki Bukit Ave 1
#04-08 Shun Li Industrial Park
Singapore 417943
Telephone (65) 6749 4900
Facsimile (65) 6749 4700
Joint Ventures/Investee Companies
CarAuc International Pte Ltd
385 Sin Ming Drive
Singapore 575718
Telephone (65) 6451 1661
Facsimile (65) 6451 1326
Website www.carauc.com
OmixAsia.com Pte Ltd
9 International Business Park
#03-19 Texmaco Building
Singapore 609915
Telephone (65) 6564 8182
Facsimile (65) 6564 8568
Website www.omixasia.com
Green Dot Internet Services Pte Ltd
7 Bedok South Road
Singapore 469272
Telephone (65) 6233 6666
Facsimile (65) 6233 6669
Website www.gdis.com
Trusted Hub Pte Ltd
7 Bedok South Road
Singapore 469272
Telephone (65) 6827 3267
Facsimile (65) 6827 3939
Website www.trustedhub.com
ISCS Offices I
I130 I SCS Annual Report 2001
Overseas Offices
AUSTRALIA
Subsidiary
SCS Australia Pty. Ltd.
Registered Office
AMP Centre
50 Bridge Street
Sydney NSW 2000
Australia
Telephone (61) (2) 9225 0200
Facsimile (61) (2) 9223 7711
Investee Company
Pulse Logistics Systems Pty. Ltd.
Suite 5, 2-4 Henley Beach Road
Mile End, Adelaide
South Australia 5031
Telephone (61) (8) 8416 7600
Facsimile (61) (8) 8354 1201
BRUNEI
Subsidiary
SCS Information Technology Sdn. Bhd.
Lot 5233, SPG 79
Jalan Maulana Kuala Belait KA 1931
Negara Brunei Darussalam
Telephone (673) (3) 342 812/342 778
Facsimile (673) (3) 332 011
Office
Unit No. D7, Blk D, Lot 42876
Shakirin Complex, Spg 88
Kiulap, Bandar Seri Begawan BE 1518
Negara Brunei Darussalam
Telephone (673) (2) 237 615
Facsimile (673) (2) 237 633
GREATER CHINA
Subsidiaries
SCS China Co., Ltd
Room 1051 Office Tower New Century Hotel
No.6 Southern Road, Capital
Gymnasium
Beijing 100044
People’s Republic of China
Telephone (86) (10) 6849 2618
Facsimile (86) (10) 6849 2619
Shanghai Branch
Room 1508B Pidemco Tower
318 Fu Zhou Road
Shanghai 200001
People’s Republic of China
Telephone (86) (21) 6385 6500
Facsimile (86) (21) 6384 2388
SCS Information Technology (HK) Limited
12/F Grand Centre
8 Humphreys Avenue
Tsim Sha Tsui, Kowloon, Hong Kong
Telephone (852) (2) 609 1338
Facsimile (852) (2) 607 3042
Investee Company
Trade-Link E-Commerce (Holding)
Company Limited
Room 903-904 Wing On Plaza
62 Mody Road
TST East, Kowloon, Hong Kong
Telephone (852) (2) 2366 2782
Facsimile (852) (2) 2369 9811
MALAYSIA
Subsidiaries
SCS Computer Systems Sdn. Bhd.
No.12 Jalan Bersatu (13/4)
46200 Petaling Jaya
Selangor Darul Ehsan, Malaysia
Telephone (60) (3) 7956 5800
Facsimile (60) (3) 7956 8692
Website www.scs.com.my
CSN Systems Sdn. Bhd.
No.12 Jalan Bersatu (13/4)
46200 Petaling Jaya
Selangor Darul Ehsan, Malaysia
Telephone (60) (3) 7956 1822
Facsimile (60) (3) 7956 1117
Computer Processing Services
(M) Sdn. Bhd.
No.12 Jalan Bersatu (13/4)
46200 Petaling Jaya
Selangor Darul Ehsan, Malaysia
Telephone (60) (3) 7956 7722
Facsimile (60) (3) 7956 2570
SCS Cable.NET Sdn. Bhd.
No.12 Jalan Bersatu (13/4)
46200 Petaling Jaya
Selangor Darul Ehsan, Malaysia
Telephone (60) (3) 7956 0023
Facsimile (60) (3) 7955 0928
SCS iCT Sdn. Bhd.
No.12 Jalan Bersatu (13/4)
46200 Petaling Jaya
Selangor Darul Ehsan, Malaysia
Telephone (60) (3) 7955 3550
Facsimile (60) (3) 7955 2995
SCS Technologies Sdn. Bhd.
No.12 Jalan Bersatu (13/4)
46200 Petaling Jaya
Selangor Darul Ehsan, Malaysia
Telephone (60) (3) 7956 5800
Facsimile (60) (3) 7957 7900
SCS Offices
ISCS Offices I
I131 ISCS Annual Report 2001
Associates
Computer Recovery Centre Sdn. Bhd.
No.12 Jalan Bersatu (13/4)
46200 Petaling Jaya
Selangor Darul Ehsan, Malaysia
Telephone (60) (3) 7955 5933
Facsimile (60) (3) 7957 3323
IT Integrator (Malaysia) Sdn. Bhd.
No.12 Jalan Bersatu (13/4)
46200 Petaling Jaya
Selangor Darul Ehsan, Malaysia
Telephone (60) (3) 7957 3560
Facsimile (60) (3) 7957 7900
TX123 (M) Sdn. Bhd.
No.12 Jalan Bersatu (13/4)
46200 Petaling Jaya
Selangor Darul Ehsan, Malaysia
Telephone (60) (3) 7954 7311
Facsimile (60) (3) 7954 7322
NEW ZEALAND
Subsidiary
Ceritas New Zealand Limited
Level 6, 154 Featherston Street
P.O. Box 3351
Wellington, New Zealand
Telephone (64) (4) 460 6000
Facsimile (64) (4) 460 6009
Website www.ceritas.co.nz
Offices
Computerland Auckland
14-16 College Hill
P.O. Box 3631
Auckland, New Zealand
Telephone (64) (9) 360 5800
Facsimile (64) (9) 360 3898
Computerland Christchurch
52 Oxford Terrace
P.O. Box 3775
Christchurch, New Zealand
Telephone (64) (3) 379 1371
Facsimile (64) (3) 365 1683
Computerland Hamilton
195 Collingwood Street
P.O. Box 9160
Hamilton, New Zealand
Telephone (64) (7) 839 2416
Facsimile (64) (7) 839 3645
Computerland Wellington
154 Featherston Street
P.O. Box 3351
Wellington, New Zealand
Telephone (64) (4) 460 6000
Facsimile (64) (4) 460 6001
Ceritas Digital Limited
Scales House
254 Montreal St
P.O. Box 2017
Christchurch, New Zealand
Telephone (64) (3) 365 9904
Facsimile (64) (3) 365 9942
PHILIPPINES
Associate
Ayala Systems Technology, Inc.
3/F, Ayala Life Building
6786 Ayala Avenue
Makati City
1226 Philippines
Telephone (63) (2) 813 2494, Ext 301
Facsimile (63) (2) 813 2493
THAILAND
Associate
SCS Computer Systems (Thailand)
Co., Ltd
719 KPN Tower
21st Floor Rama 9 Road,
Bangkapi, Huay Kwang
Bangkok 10320
Telephone (66) (2) 717 0717
Facsimile (66) (2) 717 0726
UNITED STATES OF AMERICA
Subsidiary
SCS Systems, Inc.
960 Saratoga Ave
Suite 212
San Jose
CA 95129
United States of America
Telephone (1) (408) 554 1000
Facsimile (1) (408) 554 1035
Investee Company
D2K Inc.
1920 Zanker Road
San Jose
CA 95112
United States of America
Telephone (1) (408) 451 2010
Facsimile (1) (408) 451 2015
Singapore Computer Systems Limited (Incorporated in the Republic of Singapore)
I132 I
NOTICE IS HEREBY GIVEN THAT the Twenty-second Annual General Meeting of the Company will be held at Auditorium, 7 Bedok South Road, Singapore 469272 on Thursday, 23 May 2002 at 11.00 a.m. to transact the following business:–
ORDINARY BUSINESS1. To receive and adopt the Directors’ Report and Audited Accounts of the Company for the year ended 31 December 2001
together with the Auditors’ Report thereon. (RESOLUTION 1)
2. To approve the payment of a first and final dividend of 12% less income tax of 24.5% for the year ended 31 December 2001.(RESOLUTION 2)
3. To re-elect the following Directors retiring pursuant to(a) Article 93 of the Articles of Association of the Company and who, being eligible, will offer themselves for re-election:–
(i) Mr Robert Chua Teck Chew(ii) Mrs Theresa Foo-Yo Mie Yoen; and
(b) Article 99 of the Articles of Association of the Company and who, being eligible, will offer themselves for re-election:–(i) Mr William Liu Wei Hai(ii) Ms Low Sin Leng.
(RESOLUTION 3)
4. To approve Directors’ Fees for the year ended 31 December 2001. (RESOLUTION 4)
5. To re-appoint Messrs KPMG as Auditors of the Company and to authorise the Directors to fix their remuneration. (RESOLUTION 5)
SPECIAL BUSINESS6. To consider and, if thought fit, to pass the following resolutions as Ordinary Resolutions, with or without any modifications:–
ORDINARY RESOLUTIONS(a) THAT pursuant to Section 161 of the Companies Act, Chapter 50 and the listing rules of the Singapore Exchange Securities
Trading Limited, authority be and is hereby given to the Directors to issue shares in the capital of the Company (whether byway of rights, bonus or otherwise) at any time and upon such terms and conditions and for such purposes and to such personsas the Directors may, in their absolute discretion, deem fit, provided that the aggregate number of shares to be issued pursuantto this Resolution does not exceed 50 per cent of the issued share capital of the Company for the time being, of which theaggregate number of shares to be issued other than on a pro rata basis to shareholders of the Company does not exceed 20 per cent of the issued share capital of the Company for the time being, and, unless revoked or varied by the Company ingeneral meeting, such authority shall continue in force until the conclusion of the next Annual General Meeting of the Companyor the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is the earlier. (RESOLUTION 6)
(b) THAT authority be and is hereby given to the Directors to allot and issue from time to time such number of ordinary shares of $0.25 each in the capital of the Company as may be required to be issued pursuant to the exercise of options under theSingapore Computer Systems Executives’ Share Option Scheme. (RESOLUTION 7)
INotice of Twenty-Second Annual General Meeting I
I133 I
(c) THAT authority be and is hereby given to the Directors:–(i) to 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 SystemsPerformance 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
(ii) to allot and issue from time to time such number of ordinary shares of $0.25 each in the capital of the Company as maybe required to be issued pursuant to the exercise of options under the Share Option Plan and/or such number of fullypaid-up ordinary shares in the capital of the Company as may be required to be issued pursuant to the vesting of awardsunder the Performance Share Plan and/or the Restricted Stock Plan,
provided that the aggregate number of ordinary shares to be allotted and issued pursuant to the Share Plans shall not exceed15 per cent of the total issued share capital of the Company from time to time. (RESOLUTION 8)
(d) THAT(i) approval be and is hereby given for the purposes of Chapter 9A of the Listing Manual of the Singapore Exchange
Securities Trading Limited, for the Company, its subsidiaries and target associated companies (the “Group”) or any ofthem to enter into any of the transactions falling within the types of Interested Person Transactions, particulars of whichare set out in the Company’s Circular to Members dated 2 October 2001 (the “Circular”) with any party who is of theclass of Interested Persons described in the Circular provided that such transactions are made on an arm’s length basisand on normal commercial terms;
(ii) such approval (the “Mandate”) shall, unless revoked or varied by the Company in General Meeting, continue in force untilthe next Annual General Meeting of the Company; and
(iii) the Directors of the Company be and are hereby authorised to complete and do all such acts and things (includingexecuting 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 Mandate and/or this Resolution.
(RESOLUTION 9)
7. To transact such other ordinary business as can be transacted at the Annual General Meeting of the Company.
By Order of the Board
Irene Low (Ms)Company Secretary
29 April 2002Singapore
Singapore Computer Systems Limited (Incorporated in the Republic of Singapore)
INotice of Twenty-Second Annual General Meeting I
I134 I
STATEMENT PURSUANT TO ARTICLE 55 OF THE ARTICLES OF ASSOCIATION OF THE COMPANY(1) Resolution 3(b)(i) is to re-appoint Mr William Liu Wei Hai who is a non-independent Director and a Member of the Audit Committee.
(2) Resolution 6 is to empower the Directors to issue shares in the capital of the Company up to an aggregate amount of notexceeding 50 per cent of the issued share capital of the Company for the time being, of which the aggregate number of shares tobe issued other than on a pro rata basis to shareholders of the Company does not exceed 20 per cent of the issued share capitalof the Company for the time being.
(3) Resolution 7 is to empower the Directors to allot and issue ordinary shares in the capital of the Company pursuant to theSingapore Computer Systems Executives’ Share Option Scheme.
(4) Resolution 8 is to empower the Directors to offer and grant options and/or awards, and to allot and issue ordinary shares in thecapital of the Company pursuant to the Singapore Computer Systems Share Option Plan, the Singapore Computer SystemsPerformance Share Plan and/or the Singapore Computer Systems Restricted Stock Plan (collectively the “Share Plans”) providedthat the aggregate number of ordinary shares issued pursuant to the Share Plans shall not exceed 15 per cent of the issuedshare capital of the Company for the time being.
(5) Resolution 9 is to renew the Mandate to allow the Company, its subsidiaries and target associated companies or any of them toenter into certain interested person transactions with persons who are considered “interested persons” (as defined in Chapter 9Aof the Listing Manual of the Singapore Exchange Securities Trading Limited). Please refer to the attached Letter to Shareholdersdated 29 April 2002 for details.
NOTES:A Member may appoint not more than two proxies to attend at the same meeting. Where a Member appoints more than oneproxy, he shall specify the proportion of his shareholdings to be represented by each proxy. A proxy need not be a Member of theCompany. The instrument appointing a proxy 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 holding the meeting.
NOTICE OF BOOKS CLOSURE AND DIVIDEND PAYMENT DATENotice is hereby given that the Register of Members and Share Transfer Books will be closed on 4 and 5 June 2002 for the purposeof determining Members’ entitlements to the dividend to be proposed at the Twenty-second Annual General Meeting of the Companyto be held on 23 May 2002.
Duly completed and stamped transfer in respect of Shares together with all relevant documents of title received up to the close ofbusiness at 5.00 p.m. on 3 June 2002 (the “Books Closure Date”) by the Company’s Share Registrar, M & C Services Private Limited,138 Robinson Road, #17-00 The Corporate Office, Singapore 068906 will be registered to determine Members’ entitlements to suchdividend. Subject as aforesaid, Members whose Securities Accounts with The Central Depository (Pte) Limited are credited withShares as at 5.00 p.m. on the Books Closure Date will be entitled to such dividend.
The proposed dividend, if approved at the Twenty-second Annual General Meeting, will be paid on 14 June 2002.
Singapore Computer Systems Limited (Incorporated in the Republic of Singapore)
INotice of Twenty-Second Annual General Meeting I
IMPORTANT1. For investors who have used their CPF monies to buy shares of Singapore Computer Systems Limited, the Letter and the Notice to Shareholders,
both dated 29 April 2002 are forwarded to them on the request of their CPF Approved Nominees and are meant solely FOR INFORMATION ONLY.
2. This Proxy Form is not valid for use by CPF Investors and shall be ineffective for all intents and purposes if used or purported to be used by them.
3. CPF investors who wish to vote should contact their CPF Approved Nominees.
I/We
of being a member/members of SINGAPORE COMPUTER SYSTEMS LIMITED hereby appoint
NRIC/Passport Proportion of
Name Address Number 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-second Annual General Meeting of the
Company to be held at Auditorium, 7 Bedok South Road, Singapore 469272 on Thursday, 23 May 2002 at 11.00 a.m. and at any adjournments thereof.
(Please indicate with an “X” in the spaces provided whether you wish your vote(s) to be cast for or against the Resolutions as set out in the Notice of Annual General
Meeting.) In the absence of specific directions, the proxy/proxies will vote or abstain as he/they may think fit, as he/they will on any other matter arising at the Annual
General Meeting.)
No. Ordinary Resolutions For Against
Ordinary Business1 Adoption of Accounts and Auditors’ Report2 Declaration of a First and Final Dividend3 Re-election of Directors:
(a) (i) Mr Robert Chua Teck Chew(ii) Mrs Theresa Foo-Yo Mie Yoen
(b) (i) Mr William Liu Wei Hai(ii) Ms Low Sin Leng
4 Approval of Directors’ Fees5 Re-appointment of KPMG as Auditors
Special Business6 Authority for Directors to issue shares in the Company pursuant to Section 161
of the Companies Act, Cap. 507 Authority for Directors to allot and issue ordinary shares in the Company pursuant to the
Singapore Computer Systems Executives’ Share Option Scheme8 Authority for Directors to offer and grant options and/or grant awards and allot and 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.
9 Approval for Renewal of Shareholders Mandate10 Any other ordinary business
Dated this day of 2002Total Number of Shares Held
Signature(s) of member(s) or Common Seal IMPORTANT: PLEASE READ NOTES OVERLEAF
Singapore Computer Systems Limited (Incorporated in the Republic of Singapore)
IPROXY FORM I
Notes:
1. Please insert the total number of shares held by you. If you have shares entered against your name in the Depository Register (as defined in Section 130A of
the Companies Act, Chapter 50 of Singapore), you should insert that number of shares. If you have shares registered in your name in the Register of Members,
you should insert that number of shares. If you have shares entered against your name in the Depository Register and shares registered in your name in the
Register of Members, you should insert the aggregate number of shares entered against your name in the Depository Register and registered in your name
in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the shares held by you.
2. A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxies to attend and vote instead of
him. Such proxy need not be a member of the Company.
3. Where a member appoints two proxies, the appointments shall be invalid unless he specifies the proportion of his shareholding (expressed as a percentage
of the whole) to be represented by each proxy.
4. The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 7 Bedok South Road, Singapore 469272 not less
than 48 hours before the time appointed for the Annual General Meeting.
5. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing. Where the instrument
appointing a proxy or proxies is executed by a corporation, it must be executed under its seal or under the hand of an officer of 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.
The Company SecretarySingapore Computer Systems Limited
7 Bedok South RoadSingapore 469272
Fold Here
Please Affix Postage Stamp Here
ISingapore Computer Systems Limited I(Incorporated in the Republic of Singapore)
Board of Directors: Registered Office:Tay Siew Choon (Chairman) 7 Bedok South RoadRobert Chua Teck Chew Singapore 469272Theresa Foo-Yo Mie Yoen
Spencer Lee Tien Chye
Garfield Vorhes Nelson
William Liu Wei Hai
Low Sin Leng
Stephen Yeo Siew Chye
To: The Members of 29 April 2002Singapore Computer Systems Limited
Dear Sir/Madam,
RENEWAL OF SHAREHOLDERS MANDATE
1. Background
We refer to the Notice of Annual General Meeting of the Members of Singapore Computer Systems Limited (the “Company”)dated 29 April 2002 (the “Notice”), accompanying the Annual Report 2001 of the Company, convening the Twenty-second AnnualGeneral Meeting (“AGM”) to be held on 23 May 2002 and the Ordinary Resolution No. 9 under the heading “Special Business” set out in the Notice.
Members would recall that at the Extraordinary General Meeting of the Company held on 24 October 2001, Members had granteda mandate (the “Shareholders Mandate”) for the purposes of Chapter 9A of the Listing Manual of the Singapore ExchangeSecurities Trading Limited, for the Company, its subsidiaries and target associated companies (the “Group”) or any of them toenter into certain interested person transactions (the “Interested Person Transactions”), particulars of which were set out in theCompany’s Circular to Members dated 2 October 2001 (the “Circular”).
The Shareholders Mandate was expressed to take effect on 24 October 2001 and remain in effect until the date of theforthcoming AGM, being 23 May 2002. Accordingly, the Directors propose that the Shareholders Mandate be renewed at the forthcoming AGM and continue in force until the Twenty-third AGM of the Company.
The particulars of the Interested Person Transactions in respect of which the Shareholders Mandate is sought to be renewedremain unchanged and were set out in the Circular.
2. Directors’ and Substantial Shareholders' Interests
As at 1 April 2002, being the latest practicable date prior to the printing of this Letter, the interests of Directors and substantialshareholders in the ordinary shares (the “Shares”) in the capital of the Company are as follows:
Number of Shares Number of Shares Number of Shares
Directors Direct Interest Deemed Interest Deemed Interest
Tay Siew Choon 371,000 *255,000 –Robert Chua Teck Chew – *65,000 –Theresa Foo-Yo Mie Yoen – *25,000 –Spencer Lee Tien Chye – *15,000 –Garfield Vorhes Nelson – *42,000 –William Liu Wei Hai 3,000 *8,000 –Low Sin Leng – *5,000 –Stephen Yeo Siew Chye 10,000 *403,000 #Up to 200,000
* Unissued shares under options granted by the Company.
# Maximum number of issued shares to be delivered after 2003 under conditional awards granted by the Company subject to achievement of performance targets.
Number of Shares Number of Shares
Substantial Shareholders Direct Interest Deemed Interest
Temasek Holdings (Private) Limited – 93,144,501Singapore Technologies Holdings Pte Ltd – 62,477,601Singapore Technologies Pte Ltd – 93,144,501Green Dot Capital Pte Ltd 62,477,601 –SembCorp Industries Ltd – 30,666,900Singapore Technologies Industrial Corporation Ltd (“STIC”) **30,666,900 –
** Out of the 30,666,900 shares, 1,714,500 shares are held by STIC Investments Pte Ltd on trust for STIC.
Green Dot Capital Pte Ltd, STIC, STIC Investments Pte Ltd, Tay Siew Choon, William Liu Wei Hai and Low Sin Leng will abstainfrom voting at the AGM in respect of the shares held by each of them in relation to the Ordinary Resolution No. 9 to be proposedat the AGM.
3. Directors’ Recommendation
The Directors (save for Tay Siew Choon, William Liu Wei Hai, Low Sin Leng and Stephen Yeo Siew Chye who hold executivepositions in the ST Group of companies and abstain from making a recommendation) are of the opinion that the renewal of theShareholders Mandate is in the best interests of the Company and accordingly recommend that Members vote in favour of theOrdinary Resolution No. 9 to be proposed at the AGM.
4. Document Available for Inspection
A copy of the Circular is available for inspection at the registered office of the Company at 7 Bedok South Road, Singapore 469272during normal business hours from the date of this Letter up to the date of the AGM.
Yours faithfullyBy Order of the Board
Irene Low (Ms)Company Secretary
Singapore Computer Systems Limited 7 Bedok South RoadSingapore 469272
Telephone (65) 6827 8888Facsimile (65) 6827 8899
www.scs.com.sg
“One of our strategies is to buy up partners andchannels that offer synergies for SCS. In particular,we are looking at companies that will help usaccelerate our expansion into North Asia and Europe.”
Tay Siew ChoonChairman
“Our people are our greatest asset. They have expertise, the right service mentality andentrepreneurial spirit. We are optimistic aboutSCS’ future because our people are able to riseto any challenge and win.”
Lim Liat (Left)Deputy CEO
“Our closeness to the market and responsivenessto new demands helps us seize new opportunitiesas soon as they arise. They have been and willcontinue to be the key to our success.”
Stephen Yeo Siew Chye (Right)President & CEO
“We have sharpened our competitive edge in ourbread and butter business of providing e-enablingsolutions and services. At the same time, we havewidened our scope by venturing into the portalbusiness with the help of our strategic partners.”
Fong Khai Yin (Left)Executive Vice-President E-Business
“In the past year, we have established ourselves as a major player in voice communicationsinfrastructure and applications in Singapore. Weare now able to offer unified voice, data and videosolutions to our customers.”
Tan Goh Beng (Right)Chief Executive OfficerSCS Networks Pte Ltd
“We work with the best vendors to offer ourcustomers a wide choice of systems software. We ensure the solutions fit best in their businessand business environment.”
Neo Eng Hoe (Left)General Manager Systems Services Unit
“Our customers can have peace of mind whenthey entrust their systems integration projects to us as we have more than 20 years of proventrack record in handling complex SI projects.”
Choo Beng Huah (Right)General Manager Systems Integration Unit
“The trend to outsource continues as moreorganisations realise that by farming out their IT operations, they can concentrate on their core competencies.”
Goh Kiat SoonGeneral ManagerOutsourcing Unit
“We are meeting the challenge of decreasingmargins and increased competition by expandingregionally and introducing innovative services.”
Pang Yang OonChief Executive Officer SCS Enterprise Systems Pte Ltd
“We are working actively to expand SCS’ presencein the international arena, especially in North Asia.”
Robert Koh Executive Vice-PresidentInternational