TRANSFORMATION EMBRACING CHANGE FOR STRATEGIC GROWTH

Transcription

1 Teledata (Singapore) Limited TRANSFORMATION EMBRACING CHANGE FOR STRATEGIC GROWTH

2 CONTENTS Corporate Profile 2 Chairman s Statement 4 Board of Directors 6 Corporate Information 8 Financial Calendar 9 Group Financial Highlights 10 Corporate Governance Report 11 Directors Report 23 Statement by Directors 26 Independent Auditors Report 27 Financial Statements and Notes 29 Shareholding Statistics 79 Notice of Annual General Meeting 81

3 Corporate Profile TELEDATA (SINGAPORE) LIMITED 1

4 Corporate Profile Leading Communications and Network Solutions Provider in Asia Pacific Listed on the Main Board of the Singapore Exchange in 1994, Teledata is a leading IT systems integrator and communications services company, unique for the depth of our capabilities and the dedication of our people. Our people are experts in communications technology and excel at delivering customised communications services and solutions to our customers. Founded in May 1976, Teledata has since grown to become a regional company with offices in 8 countries and customers throughout the Asia Pacific region. Our clientele range from large enterprises and telecommunication carriers to small enterprises in varied industries, some of which have been the Group s customers for over 30 years. Teledata specialises in IP-based communications network, large-scale security and surveillance systems. To deliver best-of breed, advanced and flexible solutions, we partner world-class technology providers from around the world. CHINA KOREA VIETNAM THAILAND MALAYSIA SINGAPORE PHILIPPINES INDONESIA 2

5 Our Regional Presence TELEDATA (SINGAPORE) LIMITED CORPORATE HQ Teledata (Singapore) Ltd 391A Orchard Road Ngee Ann City Tower A #24-04/06 Singapore Tel : (65) Fax : (65) OPERATIONAL HQ 31 Ubi Road 1 #04-01 Aztech Building Singapore Tel : (65) Fax : (65) ASIA-PACIFIC ASSOCIATES & REPRESENTATIVES THAILAND Teledata (Thailand) Co., Ltd RASA Tower II 18th Floor 555 Phaholyothin Road, Chatuchak, Chatuchak, Bangkok 10900, Thailand Tel: (66) Fax: (66) TDMarketing@teledata.com.sg INDONESIA PT. Teledata Indonesia Bellezza Office Tower, 16th Floor unit 1-2 Jl. Letjen Supeno No. 34. Arteri Permata Hijau Jakarta 12210, Indonesia Tel : (62) Fax : (62) TDMarketing@teledata.com.sg VIETNAM Teledata Vintedge Vietnam Co., Ltd 427/5 Nguyen An Ninh Street Ward 9, Vung Tau City Ba Ria-Vung Tau Province, Vietnam TDMarketing@teledata.com.sg PHILIPPINES Teledatacom Philippines, Inc. 3/F Hanston Square, 17 San Miguel Avenue Ortigas Center, Pasig City 1605 Philippines Tel : (63) Fax : (63) TDMarketing@teledata.com.sg CHINA Teledata (Shanghai) Information Technology Co., Ltd Room 215, 58 Taicang Road Shanghai, People s Republic of China Tel : (86) TDMarketing@teledata.com.sg KOREA Teledata (Korea) Co., Ltd #107, Shinsoo Building, 12-2, Jeongja-dong, Seongnam Si Bundang-gu, Gyeonggi-Do, Korea TDMarketing@teledata.com.sg MALAYSIA Teleapps Communications (M) Sdn. Bhd Block E, Zenith 1 Corporate Park, Jalan SS7/26, Kelana Jaya, Petaling Jaya, Selangor, Malaysia. Tel : (60) / Fax : (60) TDMarketing@teledata.com.sg 3

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7 TELEDATA (SINGAPORE) LIMITED With the objective of exiting the Watch List a top priority, we will continue to focus on the following initiatives to enhance the Group s performance for 2012 and beyond: 1. Building on and transforming our core businesses for sustainable growth and profitability; 2. Establishing and strengthening strategic alliances with key technology partners to improve our competitiveness and bottom line; 3. Strengthening the Group s corporate governance by enhancing our business processes and control mechanisms; 4. Tightening our operating expenses to better manage our cash flow; and The telecommunications services industry remains challenging and competitive. Nevertheless, the Group looks forward to the year ahead with confidence as it seeks to capitalise on opportunities arising from the ongoing evolution of Unified Communications, Cloud Computing and Mobile Wireless Networks in the region. By making aggressive efforts to find opportunities in challenging times, by embracing innovation and new market trends, the Group will create products and services that will provide strong growth and high margins. On behalf of the Board, I would like to express my sincere appreciation to our management and employees for their dedication and hard work that has resulted in the Group achieving profitability and growth for the first time in five years. I would also like to thank all our board members for their contributions and our customers, business partners and shareholders for their support! 5. Seeking viable investments with attractive yields to organically grow and diversify our businesses in the region. OUTLOOK FOR THE COMING YEAR The Group will continue to expand its presence in other countries. The new subsidiary in Malaysia has commenced operations in the first quarter of In addition, steps are being taken to revive the Group s Shanghai and Vietnam operations, which have been inactive in 2010 and much of Irene Valencia Goutama Executive Chairman and Chief Executive Officer Annual nu Report

8 Board of Directors IRENE VALENCIA GOUTAMA Executive Chairman and Chief Executive Officer Ms Irene Goutama was appointed to the board and appointed Executive Chairman in September As Executive Chairman, Ms Irene Goutama is responsible for setting the strategic direction of the Company. She is using her extensive experience and her network to explore every potential opportunity that presents itself and is confident that the Group can achieve some measure of success if it works hard relentlessly to grow its existing business while studying, at all times, other opportunities. Irene graduated in Chemical Engineering from University Gadjah Mada Yogyakarta, a leading university in Indonesia. She graduated top of her year. She has had great success in the chemical and natural resources sectors. She has held various management positions in various such companies. Her passion and drive as well as her keen sense of entrepreneurship have brought great success to those companies that she had led in the past, especially in China and Indonesia. She has since taken a passive role in these companies to concentrate on her new responsibilities as the Executive Chairman of the Company. Irene is the Managing Director of Meritus Resources Limited ( Meritus ) and manages its investment portfolio. Meritus investment portfolio includes investments in real estate, in the equity markets and as a private venture capital fund investing in private companies with growth potential. Meritus has been enjoying consistent profits and steady growth under her leadership. Her vast experience in management and investments has brought huge success to the various companies that she has led. BASIL CHAN Independent Director Mr Basil Chan was appointed to the Board on 16 February He is the Chairman of the Audit Committee and a member of the Remuneration Committee. Mr Chan is the Founder and Managing Director of MBE Corporate Advisory Pte Ltd. He currently sits on the boards of several listed companies in Singapore and is a Council Member and Board Director of the Singapore Institute of Directors where he is currently its Treasurer. He was a member of the Corporate Governance Committee in 2001 that developed the Singapore Code and was previously a member of the Accounting Standards Committee of the Institute of Certified Public Accountants in Singapore (ICPAS). He is currently a member of the Auditing and Assurance Standards Committee of ICPAS. Mr Chan has more than 30 years of audit, financial and general management experience having held senior financial positions in private and public companies. He holds a Bachelor of Science (Economics) Honours degree majoring in Business Administration from the University of Wales Institute of Science and Technology, United Kingdom and is a member of the Institute of Chartered Accountants in England and Wales as well as a member of the ICPAS. 6

9 TELEDATA (SINGAPORE) LIMITED HUSNI HERON Independent Director Mr Husni Heron was appointed to the Board in September Mr Heron is the current Executive Director and Chief Executive Officer of Seroja Investments Limited, listed on the Main Board of the Singapore Stock Exchange. Mr Heron started his career in PT Astra International Tbk in 1988 in the finance and budget department where he remained till 1992 and last held the position of coordinator of international finance division. He was involved in the initial public offering of PT Astra International Tbk on the Indonesia Stock Exchange in February 1990, the largest initial public offering in Indonesia at the time. From 1993 to 1996, Mr Heron was the general manager of finance & accounting of PT Surya Raya Idaman. From 1996 to 2001, Mr Heron was the Finance Director of PT Bhuwanatala Indah Permai Tbk. He was involved in various fund raising, project finance and merger and acquisition activities. Since 2001, he has been the Managing Director of PT Saratoga Investama Sedaya overseeing the activities of the company s subsidiaries. Mr Heron graduated from the Accounting Department of Gadjah Mada University in 1988 with a Bachelor degree in Accountancy. He is a certified public accountant in Indonesia. He is also a member of the Indonesian Institute of Audit Committee. SIMON ENG Independent Director Mr Simon Eng was appointed to the Board on 16 May 2011 and is the Chairman of the Remuneration and Nominating Committee and a member of the Audit Committee. Mr Eng is the Executive Chairman of mainboard-listed Advance SCT Limited as well as Centillion Environment & Recycling Limited. He had served as a senior officer in an elite service of the Singapore government till 2004, after which he joined Singapore-listed United Engineers Ltd as its China CEO up to In 2008, Mr Eng set up a wastes and wastewater treatment company and had invested in several treatment facilities in China. In 2009, Mr Eng took over control of Advance SCT Ltd and in 2011, he became the controlling shareholder of Centillion. Mr Eng is a trained Naval Architect from the University of Hamburg, Germany under a Singapore Public Service Commission scholarship in Post graduation, he attended the Harvard Business School. 7

10 Corporate Information BOARD OF DIRECTORS Irene Valencia Goutama (Executive Chairman and Chief Executive Officer) Husni Heron (Independent Director) Simon Eng (Independent Director) Basil Chan (Independent Director) AUDIT COMMITTEE Basil Chan (Chairman) Simon Eng (Member) Husni Heron (Member) REMUNERATION COMMITTEE Simon Eng (Chairman) Husni Heron (Member) Basil Chan (Member) NOMINATING COMMITTEE Simon Eng (Chairman) Husni Heron (Member) Irene Valencia Goutama (Member) COMPANY SECRETARY Adrian Chan Pengee AUDITOR KPMG LLP 16 Raffles Quay #22-00 Hong Leong Building Singapore Audit Partner-in-Charge: Mr Simon Lambert (since 2010) PRINCIPAL BANKERS ANZ Banking Group Limited United Overseas Bank Limited DBS Bank Ltd SOLICITORS Lee & Lee 50 Raffles Place #06-00 Singapore Land Tower Singapore SHARE REGISTRAR Tricor Barbinder Share Registration Services (A division of Tricor Singapore Pte. Ltd.) 80 Robinson Road, #02-00 Singapore REGISTERED OFFICE 391A Orchard Road #24-04/06 Tower A Ngee Ann City Singapore Tel : (65) Fax : (65)

11 Financial Calendar TELEDATA (SINGAPORE) LIMITED FINANCIAL YEAR END 31 December 2011 ANNOUNCEMENT OF FIRST QUARTER RESULTS April 2011 ANNOUNCEMENT OF SECOND QUARTER RESULTS August 2011 ANNOUNCEMENT OF THIRD QUARTER RESULTS November 2011 ANNOUNCEMENT OF FULL-YEAR RESULTS February 2012 ANNUAL GENERAL MEETING 30 April 2012 ANNOUNCEMENT OF QUARTERLY RESULTS 2012 May, August and November 2012 ANNOUNCEMENT OF FULL-YEAR RESULTS 2012 February

12 Group Financial Highlights $ Turnover 24,295 17,494 17,897 25,404 36,838 34,393 Profit/(Loss) before tax 1,050 (8,598) (7,858) (2,415) Profit/(Loss) after tax and non-controlling interests 809 (8,590) (7,900) (2,401) (914) 101 Group Financial Positions Property, plant and equipment Intangible asset Club membership Investments including associated companies ,718 1,718 Deferred tax assets Non-current trade and other receivables 486 Net current assets 2,945 2,305 4,666 13,130 12,786 5,870 Non-current liabilities (456) (460) (314) (259) (267) (23) Assets employed 5,941 4,877 7,976 15,846 16,309 9,366 Share capital 19,690 19,690 18,290 18,290 15,460 7,825 Reserves (13,745) (14,839) (10,345) (2,471) 819 1,541 Shareholders funds 5,945 4,851 7,945 15,819 16,279 9,366 Non-controlling interests (4) Total funds invested 5,941 4,877 7,976 15,846 16,309 9,366 Per Share Data Earnings/(Loss) before tax (cents) 0.09 (0.71) (0.66) (0.21) Earnings/(Loss) after tax and non-controlling interests (cents) * 0.07 (0.71) (0.67) (0.21) (0.10) 0.01 Net tangible assets (cents) * Financial Ratios Return on shareholders funds: (a) Before tax (%) 17.7 (177.2) (98.9) (15.3) (b) After tax (%) 13.6 (177.1) (99.4) (15.2) (5.6) 1.1 * Note Prior to FY2007, the earnings per share and net tangible assets per share were restated to take into account the effects of 506,030,000 rights issued during FY2007. The earnings per share and net tangible assets per share were computed using the following: Weighted average number of shares used for earnings per share computations 1,219,610,000 1,208,103,000 1,184,610,000 1,151,347, ,453, ,004,000 Number of shares used in the net tangible assets per share computations 1,219,610,000 1,219,610,000 1,184,610,000 1,184,610,000 1,012,060,000 1,011,354,000 10

13 Corporate Governance Report TELEDATA (SINGAPORE) LIMITED The Board of Directors of Teledata (Singapore) Limited ( the Company ) is committed to high standards of corporate governance and has adopted the corporate governance practices contained in the Code of Corporate Governance 2005 ( Code ), so as to ensure greater transparency and protection of shareholders interests. This report outlines the Company s main corporate governance processes with specific reference to the Code, pursuant to the listing rules as stated in the Listing Manual of Singapore Exchange Securities Trading Limited ( SGX-ST ). This Report is meant to be read as a whole, instead of being compartmentalised under the different principles of the Code. Board of Directors Board s Conduct of its Affairs Principle 1: Every company should be headed by an effective Board to lead and control the company. The Board is collectively responsible for the success of the company. The Board works with Management to achieve this and the Management remains accountable to the Board. The Board s primary role is to protect and enhance long-term shareholder value. Apart from its statutory duties and responsibilities, the principal functions of the Board are: 1. approving the board policies, strategies and financial objectives of the Company and monitoring the performance of management of the Company ( Management ); 2. overseeing the processes for risk management, financial reporting and compliance and evaluating the adequacy of internal controls; 3. approving the nominations to the Board of Directors and appointment of key personnel; 4. approving annual budgets, major funding proposals, investment and divestment proposals; 5. reviewing and endorsing the recommended framework of remuneration for the Board and key executives by the Remuneration Committee; and 6. assuming responsibility for corporate governance. Matters which are specifically reserved for the Board s decisions are those involving interested person transactions (including, inter alia, conflict of interest issues relating to substantial shareholders of the Company and/or Directors), material acquisitions and disposal of assets, corporate or financial restructuring, share issuances, dividends and other returns to shareholders. The Board conducts regular scheduled meetings on a quarterly basis. Ad-hoc meetings are convened when circumstances require. The attendances of the Directors at meetings of the Board and Board Committees, as well as the frequency of such meetings, are disclosed in this Report. The Company has adopted a policy which welcomes Directors to request for further explanations, briefings or informal discussions on any aspect of the Company s operations or business from the Management. The Chairman will make the necessary arrangements for the briefings, informal discussions or explanations as and when required by any Director. 11

14 Corporate Governance Report Board Composition and Balance Principle 2: There should be a strong and independent element on the Board, which is able to exercise objective judgement on corporate affairs independently, in particular, from Management. No individual or small group of individuals should be allowed to dominate the Board s decision making. Presently, the Board comprises three non-executive independent Directors and one Executive Director. The three independent Directors are Husni Heron, Simon Eng and Basil Chan. The appointment of each independent Director ( Independent Director ) of the Company will be reviewed annually by the Nominating Committee ( NC ). The NC is adopting the Code s definition of what constitutes an independent Director. The NC is of the view that the current Board comprises persons who, as a group, provide core competencies necessary to meet the Company s objectives. The NC is of the view that the current board size of four Directors out of which three are Independent Directors (that is, more than half of the board size) is appropriate, taking into account the nature, size and scope of the Company s operations. Role of Chairman and Chief Executive Officer Principle 3: There should be a clear division of responsibilities at the top of the company the working of the Board and the executive responsibility of the company s business which will ensure a balance of power and authority, such that no one individual represents a considerable concentration of power. Ms Irene Valencia Goutama holds the positions of Chairman of the Board and Chief Executive Officer of the Company. The scale of the business does not warrant a meaningful split of these positions. Ms Goutama discharges her duty as Chairman of the Board objectively with the help of the other Board members. As the Board comprises three Independent Directors and one executive Director, this composition serves as a check that the Board as a whole is independent in substance, and that the power and authority of the Board does not vest in only one individual. The Chairman ensures that Board meetings are held as and when it is necessary and sets the Board meeting agenda in consultation with key Management. The Chairman reviews most Board meeting papers before they are presented to the Board and ensures that Board members are provided with complete, adequate and timely information. Key Management who have prepared the papers, or who can provide additional insight into the matters to be discussed, are invited to present the papers or attend at the relevant time during the Board meeting. The Chairman ensures that procedures are introduced to comply with the Code. Principle 4: There should be a formal and transparent process for the appointment of new Directors to the Board. 12

15 TELEDATA (SINGAPORE) LIMITED Nominating Committee The Company has established a Nominating Committee ( NC ) comprising two non-executive independent Directors and one executive Director. As at the date of this Report, our Nominating Committee members are: Mr. Simon Eng Mr. Husni Heron Ms. Irene Valencia Goutama Chairman Member Member The principle functions of the NC are: 1. to make recommendations to the Board on all Board and Board committee appointments or re-appointments, including recommending the Chairman for the Board and for each Board committee and assess the effectiveness of the Board as a whole and the contribution by each individual Director to the effectiveness of the Board; 2. to determine annually whether or not a Director is independent; 3. to make recommendations to the Board on the appointment of representatives from the Company to directorships on the Boards of subsidiaries and associated companies of the Company; and 4. to review and recommend to the Board the appointment of key executives. The NC has a key role in carrying out the formal and transparent processes established for the appointment of new Directors to the Board. The NC may engage external search consultants to source for potential candidates. Proposals for the appointment of new Directors are reviewed by the NC. The NC meets with the short-listed candidates to assess their suitability and commitment. Competent individuals are nominated for Board approval after the NC has assessed their suitability taking into consideration their professional qualifications, integrity, financial and commercial business experience and field of expertise relevant to the Group, potential to contribute to the effectiveness of the Board and to complement the skills, knowledge and expertise of the Board. Following the approval by the NC, new Directors are appointed by way of Board resolutions. Article 104 of the Company s Articles of Association requires such new Directors to submit themselves for re-election at the following Annual General Meeting ( AGM ) of the Company. Article 100 of the Articles requires one third of the incumbent Board members to retire by rotation at every AGM. Board Performance Principle 5: There should be a formal assessment of the effectiveness of the Board as a whole and the contribution by each Director to the effectiveness of the Board. The NC assesses the performance of the Board as a whole and, in respect of each individual Director, the NC takes into account certain relevant factors in considering the re-nomination of the Director for the current year. The factors taken into consideration are, inter alia, attendance at meetings and the contribution made by the Director at such meetings, maintenance of independence and disclosure of interested person transactions. 13

16 Corporate Governance Report The Board s performance criteria have not and are unlikely to change from year to year unless the Board deems it necessary. In the event that the Board s performance criteria changes, the onus would be on the Board to justify the decision on such change. Access to Information Principle 6: In order to fulfill their responsibilities, Board members should be provided with complete, adequate and timely information prior to board meetings and on an on-going basis. In order to ensure that the Board is able to fulfill its responsibilities, Management provides the Board members with quarterly management accounts and other financial statements. The Directors have also been provided with the telephone numbers and particulars of the Company s Management and Company Secretary to facilitate access. The corporate secretarial agent attends the Board meetings. The management staff of the Company generally ensures that the Company is in compliance with the rules and regulations that are applicable to the Company. Please refer to the Board of Directors section of the annual report for the composition of the Company s Board of Directors and the Board Committees. Remuneration Committee Procedures for Developing Remuneration Policies Principle 7: There should be a formal and transparent procedure for developing policy on executive remuneration and fixing the remuneration packages of individual Directors. No Director should be involved in deciding his own remuneration. The Company has established a Remuneration Committee ( RC ) comprising three Independent Directors. The principal responsibilities of the RC are set out under Principle 9. Level and Mix of Remuneration Principle 8: The level of remuneration should be appropriate to attract, retain and motivate the Directors needed to run the company successfully but companies should avoid paying more for this purpose. A significant proportion of the executive Directors remuneration should be structured so as to link rewards to corporate and individual performance. Information on the factors the RC takes into account in recommending remuneration packages is set out under Principle 9. 14

17 TELEDATA (SINGAPORE) LIMITED Disclosure on Remuneration Principle 9: Each company should provide clear disclosure of its remuneration policy, level and mix of remuneration, and the procedure for setting remuneration, in the company s annual report. It should provide disclosure in relation to its remuneration policies to enable investors to understand the link between remuneration paid to Directors and key executives, and performance. The Company has established a Remuneration Committee ( RC ) comprising three non-executive independent Directors. As at the date of this Report, our Remuneration Committee members are: Mr. Simon Eng Mr. Husni Heron Mr. Basil Chan Chairman Member Member The RC s principal responsibilities are to: 1. recommend to the Board base salary levels, benefits and incentive opportunities, and identify components of salary which can best be used to focus all senior management staff of the Group that have a monthly salary at or above $10,000 ( Senior Management ) on achieving corporate objectives, including identifying equity based incentives such as share options; 2. approve the structure of the compensation programme for Directors and Senior Management to ensure that the programme is competitive and sufficient to attract, retain and motivate senior management of the required quality to run the Company successfully; 3. review the compensation of Directors and Senior Management annually and determine appropriate adjustments, and review and recommend Senior Management s salary adjustments; and 4. administer the Teledata (Singapore) Limited Share Option Scheme (the Scheme ). The RC is responsible for approving and administering according to the Rules of the Scheme. As the Scheme had expired in 2009, no further options are issuable under the Scheme; however there are outstanding options issued in previous years that have not been exercised. 5. review the performance of staff that have a monthly salary of $10,000 and above; and 6. review the employment of any persons employed by the Group who is a relative of Senior Management, a director or chief executive officer or substantial shareholder (as defined in Section 81 of the Companies Act, Chapter 50 of Singapore) of the Company. The RC approves the specific remuneration package for an Executive Director or Senior Management staff upon recruitment. Thereafter, the RC reviews subsequent increments and variable bonuses where these payments are discretionary. 15

18 Corporate Governance Report Non-executive Directors are only paid Directors fees. The RC recommends to the Board non-executive Directors fees that are appropriate to the level of contribution, taking into account factors such as effort and time spent, responsibilities of Directors and comparison of nonexecutive Directors fees of companies with similar scale of operation and industry. Non-executive Directors are not over-compensated to the extent that their independence may be compromised. Directors fees are recommended by the Directors for approval at the AGM. The remuneration of Directors for Financial Year Ended 31 December 2011 ( FY2011 ) are set out below: Allowances Fee % Salary % Bonus % and Benefits % Total % a) $250,000 to $499,999 Irene Valencia Goutama a) Below $250,000 i. Directors who are in office at the date of this report: Husni Heron Simon Eng (appointed on 16 May 2011) Basil Chan (appointed on 16 February 2012) Lim Poh Chen (Alternate Director to Husni Heron) ii. Directors who resigned during the year and up to the date of this report Lim Soon Hock (resigned on 7 March 2011) Tan Swee Ling (appointed on 20 September 2011 and resigned on 16 February 2012) Lim Jit Siew (retired on 29 April 2011) Nicholas Narayanan (retired on 29 April 2011) * Allowances and benefits do not include share options. 16

19 TELEDATA (SINGAPORE) LIMITED Key Executive Officers (Top 5) The Code recommends that this report sets out the names of the top 5 executive officers who are not directors with remuneration that falls within bands of $250,000. Given the highly competitive industry conditions, the Company believes that it is not in its best interest to disclose details of its top 5 executive officers. The remuneration of each of the Company s top 5 executive officers is below $250,000. The remuneration policy for staff adopted by the Company comprises a fixed component and a variable component. The fixed component is in the form of a base salary. The variable component is in the form of a variable bonus that is linked to the Company and the individual s performance. During FY2011, there were no employees of the Company or of the Group who are immediate family members of a director or the chief executive officer. Accountability Principle 10: The Board should present a balanced and understandable assessment of the company s performance, position and prospects. The Board is responsible for providing a balanced and understandable assessment of the Company s performance, position and prospects. This responsibility extends to interim and other price sensitive public reports. The Management s role is to provide the Board with management accounts which present a balanced and understandable assessment of the Company s performance, position and prospects on a regular basis. Audit Committee Terms of Reference Principle 11: The Board should establish an Audit Committee ( AC ) with written terms of reference which clearly set out its authority and duties. The Company has established an Audit Committee ( AC ) comprising three Independent Directors. As at the date of this Report, our Audit Committee members are: Mr. Basil Chan Mr. Husni Heron Mr. Simon Eng Chairman Member Member The AC has instituted written terms of reference which clearly set out its authority and duties. The functions of the AC are set out under Principle

20 Corporate Governance Report Principle 12: The Board should ensure that the Management maintains a sound system of internal controls to safeguard the shareholders investments and the company s assets. The AC presently comprises three Independent Directors. The NC is of the view that the members of the AC have sufficient financial management expertise and experience to discharge the AC s functions. The functions performed by the AC include the following: 1. reviews with the external auditors, their audit plan, evaluation of the accounting controls, audit reports and any matters which the external auditors wish to discuss; 2. reviews with the Internal Auditor ( IA ), the scope and the results of internal audit procedures and their evaluation of the overall internal control systems; 3. reviews the quarterly and annual financial statements, including announcements to shareholders and the SGX-ST prior to the submission to the Board; 4. reviews any significant findings of internal investigations; 5. makes recommendations to the Board on the appointment of external auditors, the audit fee and any questions of their resignation or dismissal; 6. reviews and approves the appointment, replacement, reassignment or the dismissal of the IA; 7. reviews the assistance given by the Company s officers to the external auditors and IA; 8. reviews interested person transactions to ensure that internal control procedures approved by the shareholders are adhered to; 9. reports actions and minutes of the AC meetings to the Board of Directors with such recommendations as the AC considers appropriate; and 10. reviews the nature and extent of non-audit services performed by the external auditors. The AC has the express power to conduct or authorise investigations into any matters within its terms of reference. During FY2011, the Company engaged external consultants from a reputable international accounting firm to conduct a review of the Company s internal control environment and management processes. Resulting from the review, financial, operational and compliance risk areas and control weaknesses were highlighted to Management and the AC. Management has since taken measures to address the key concerns and rectify the weaknesses that were reported. 18

21 TELEDATA (SINGAPORE) LIMITED The AC is of the opinion that risk management is a continuing process and, together with the Board and Management, will continue to enhance and improve the existing internal control framework to identify and mitigate risks. Based on the reviews undertaken by the external consultants, actions taken by Management and the existing control framework, the AC and the Board are of the opinion that there are adequate internal controls in place within the Group addressing the significant risks relating to financial, operational and compliance matters. The AC has nominated KPMG LLP for re-appointment as auditors of the Company at the forthcoming AGM. The AC has conducted an annual review of non-audit services to satisfy itself that the nature and extent of such services will not prejudice the independence and objectivity of the external auditors before confirming their re-nomination. The AC is satisfied that KPMG LLP and the audit engagement partner assigned to the audit have adequate resources and experience to meet its audit obligations. In this connection, the Company has complied with Rules 712 and 715 of the Listing Manual. Internal Audit Principle 13: The company should establish an internal audit function that is independent of the activities it audits. The Board recognizes the importance of sound internal controls and risk management practices to a good corporate governance framework. The Board affirms its overall responsibility for the Group s systems of internal controls and risk management, and for reviewing the adequacy and integrity of those systems on an annual basis. The Company had, in February 2012, appointed an internal auditor ( IA ) whose role is to plan and execute appropriate audit procedures on a continuous basis, so as to evaluate the effectiveness and adequacy of the Group s internal controls systems. The IA is a qualified accountant with five years working experience in a reputable international accounting firm. To protect the independence of the IA, the IA s primary line of reporting is to the Chairman of AC. The AC also reviews and approves the annual internal audit plans and resources to ensure that the IA has the capabilities to adequately perform its functions. Communication with Shareholders Principle 14: Companies should engage in regular, effective and fair communication with shareholders. The Company engages in regular, effective and fair communication with its shareholders. Further details are set out under Principle

22 Corporate Governance Report Promoting Greater Participation by Shareholders Principle 15: Companies should encourage greater shareholder participation at AGMs, and allow shareholders the opportunity to communicate their views on various matters affecting the company. The Company does not practise selective disclosure. Price sensitive information is first publicly released, either before the Company meets with any group of investors or analysts or simultaneously with such meetings. Results and annual reports are announced or issued within the mandatory period. All shareholders of the Company receive a copy of the annual report and notice of AGM. At AGMs, shareholders are given the opportunity to air their views and ask Directors or Management questions regarding the Company. The Articles allow a shareholder of the Company to appoint one or two proxies to attend and vote at all general meetings on his/her behalf. Dealing in Securities The Group has adopted the rules of SGX-ST s Listing Manual applicable in relation to dealings in the Company s securities by its officers. The Company has informed its officers not to deal in the Company s shares whilst they are in possession of unpublished material price sensitive information and during the period commencing two weeks before the announcement of the Company s quarterly financial results or one month before the announcement of the Company s full-year financial results, and ending on the date of announcement of such financial results. In addition, the officers of the Company are advised not to deal in the Company s securities for short term considerations and are expected to observe the insider trading laws at all times even when dealing in securities within the permitted trading periods. Interested Person Transaction There were no interested person transactions for FY2011. Material Contracts Except as disclosed in the financial statements, no material contracts involving the interests of any Director or controlling shareholder of the Company has been entered into by the Company or any of its subsidiaries since the end of the previous financial year and no such contract subsisted at the end of the financial year. 20

23 TELEDATA (SINGAPORE) LIMITED Directors Attendance at Board and Committee Meetings The number of Directors and other committees meetings and the record of attendance of each Director during the financial year ended 31 December 2011 is set out below: Name Board Audit Committee No. of No. of No. of No. of Mtgs Mtgs Mtgs Mtgs Held Attended Held Attended Directors who are in office at the date of this report: Remuneration Committee No. of No. of Mtgs Mtgs Held Attended Nominating Committee No. of No. of Mtgs Mtgs Held Attended Irene Valencia Goutama Husni Heron Simon Eng (1) (appointed on 16 May 2011) Basil Chan (2) (appointed on 16 February 2012) Directors who resigned during the year and up to the date of this report: Lim Jit Siew (retired on 29/4/2011) (3) 4 1 Nicholas Jeyaraj s/o Narayanan (retired on 29/4/2011) (4) Lim Soon Hock (appointed on 13 September 2010, resigned on 7 March 2011) (5) Tan Swee Ling (Appointed on 20/09/2011 & resigned on 16/02/2012) (6)

24 Corporate Governance Report (1) Mr Simon Eng was appointed as an Independent Director on 16 May 2011 and appointed as Chairman of the Nominating Committee and Remuneration Committee and member of the Audit Committee with effect from 4 August (2) Mr Basil Chan was appointed as an Independent Director, Chairman of Audit Committee and a member of the Remuneration Committee on 16 February (3) Mr Lim Jit Siew retired by rotation pursuant to Article 104 of the Articles of Association of the Company, did not seek for re-election, and ceased to be the Executive Director of the Company upon the conclusion of the Annual General Meeting held on 29 April (4) Mr Nicholas Jeyaraj s/o Narayanan retired by rotation pursuant to Articles 100 and 101 of the Articles of Association of the Company, did not seek for re-election and ceased to be the Independent Director, Chairman of the Remuneration Committee and member of the Audit Committee and Nominating Committee upon the conclusion of the Annual General Meeting held on 29 April (5) Mr Lim Soon Hock resigned as an Independent Director and Chairman of the Nominating Committee and member of the Audit Committee and the Remuneration Committee with effect from 7 March (6) Ms Tan Swee Ling resigned as an Independent Director and Chairman of the Audit Committee and member of the Remuneration Committee with effect from 16 February

25 Directors Report TELEDATA (SINGAPORE) LIMITED Directors Report We are pleased to submit this annual report to the members of the Company together with the audited financial statements for the financial year ended 31 December Directors The directors in office at the date of this report are as follows: Irene Valencia Goutama Husni Heron Simon Eng (Appointed on 16 May 2011) Basil Chan (Appointed on 16 February 2012) Directors interests According to the register kept by the Company for the purposes of Section 164 of the Companies Act, Chapter 50 (the Act), no director who held office at the end of the financial year had interests in shares, debentures, warrants and share options in the Company (other than wholly-owned subsidiaries), including those held by their spouses and infant children, either at the beginning of the year/date of appointment or at end of the financial year. Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares, debentures, warrants or share options of the Company, or of related corporations, either at the beginning of the financial year, or date of appointment if later, or at the end of the financial year. There were no changes in any of the above mentioned interest in the Company between the end of the financial year and 21 January Neither at the end of nor at any time during the financial year, was the Company a party to any arrangement whose objects are, or one of whose objects is, to enable the directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. Except as disclosed in Notes 22 and 26 to the financial statements, since the end of the last financial year, no director has received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporation with the director, or with a firm of which he is a member, or with a company in which he has a substantial financial interest. Share options In 1999, the Company implemented the Teledata Share Option Scheme (the Scheme) to allow the issuance of options to take up unissued ordinary shares of the Company. These options, when added to the number of shares issued and issuable in respect of all options granted under the Scheme, shall not exceed 15% of the issued share capital of the Company on the date immediately preceding the offer date of the option (Offer Date). The life of the Scheme was ten years and options shall only be exercisable after the first anniversary of the Offer Date or such longer period (in the case of an option for exercise price at no discount) or after the second anniversary or such longer period (in the case of an option for exercise price at a discount), provided always that the options shall be exercised before the tenth anniversary of the relevant Offer Date or such other shorter period as determined by a committee of directors of the Company duly authorised to administer the Scheme. 23

26 Directors Report As the Scheme had expired in 2009, the Scheme is no longer available to employees of the Group and no further options are issuable under the Scheme. However there are outstanding options issued in previous years that have not been exercised. As at the financial year end, details of options for unissued ordinary shares granted under the Scheme were as follows: Options Date of Options Options outstanding at Exercise grant of outstanding at Options cancelled/ 31 December price per options 1 January 2011 exercised lapsed 2011 share Exercise period $ 11/11/ ,000 36, /11/2003 to 10/11/ /11/ ,000 72, /11/2004 to 10/11/ /05/ ,000 72, , /05/2004 to 30/05/ /05/ ,000 72, , /05/2005 to 30/05/ /05/ ,000 72, , /05/2006 to 30/05/2013 Total 2,136, ,000 1,920,000 Except as disclosed above, there were no unissued shares of the Company or its subsidiaries under options granted by the Company or its subsidiaries as at the end of the financial year. (a) The members of the committee administering the Scheme are: Simon Eng (Chairman) Husni Heron Basil Chan (b) No option has been granted to controlling shareholders or their associates and no employee has received 5% or more of the total options available under the Scheme. Audit Committee The members of the Audit Committee at the date of this report are as follows: Basil Chan (Chairman) Simon Eng Husni Heron The Audit Committee performs the functions specified in Section 201B of the Companies Act, the Listing Manual and the Best Practices Guide of the Singapore Exchange. The Audit Committee has held three meetings since the last directors report. 24

27 TELEDATA (SINGAPORE) LIMITED In carrying out its functions, the Audit Committee: (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) reviews with the external auditors, their audit plan, evaluation of the accounting controls, audit reports and any matters which the external auditors wish to discuss; reviews with the internal auditors the scope and the results of internal audit procedures and their evaluation of the overall internal control systems; reviews the quarterly and annual financial statements, including announcements to shareholders and the Singapore Exchange Securities Trading Limited (SGX-ST) prior to the submission to the Board; reviews any significant findings of internal investigations; makes recommendations to the Board on the appointment and resignation of external auditors and the audit fee; reviews and approves the appointment, replacement, reassignment or the dismissal of the internal auditors; reviews the assistance given by the Company s officers to the external and internal auditors; reviews interested person transactions to ensure that internal control procedures approved by the shareholders are adhered to; reports actions and minutes of the Audit Committee meetings to the Board of Directors with such recommendations as the Audit Committee considers appropriate; and reviews the nature and extent of non-audit services performed by external auditors. The Audit Committee has full access to management and is given the resources required for it to discharge its functions. It has full authority and discretion to invite any director or executive officer to attend its meetings. The Audit Committee has recommended to the Board of Directors that the auditors, KPMG LLP, be nominated for re-appointment as auditors at the forthcoming Annual General Meeting of the Company. Auditors The auditors, KPMG LLP, have indicated their willingness to accept re-appointment. On behalf of the Board of Directors Irene Valencia Goutama Director Basil Chan Director 31 March

28 Statement by Directors In our opinion: (a) the financial statements set out on pages 29 to 78 are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2011 and the results, changes in equity and cash flows of the Group for the year ended on that date in accordance with the provisions of the Singapore Companies Act, Chapter 50 and Singapore Financial Reporting Standards; and (b) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due. The Board of Directors has, on the date of this statement, authorised these financial statements for issue. On behalf of the Board of Directors Irene Valencia Goutama Director Basil Chan Director 31 March

29 Independent Auditors Report Members of the Company Teledata (Singapore) Limited TELEDATA (SINGAPORE) LIMITED Report on the financial statements We have audited the accompanying financial statements of Teledata (Singapore) Limited (the Company) and its subsidiaries (the Group), which comprise the statement of financial position of the Group and the Company as at 31 December 2011, the income statement, statement of comprehensive income, statement of changes in equity and statement of cash flows of the Group for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 29 to 78. Management s responsibility for the financial statements Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act, Chapter 50 (the Act) and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheet and to maintain accountability of assets. Auditors responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 27