SILVERLAKE AXIS. Powering Banking Transformation Through Information, Operations and Technology Innovations CONTENTS

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2 SILVERLAKE AXIS Powering Banking Transformation Through Information, Operations and Technology Innovations CONTENTS 2 Mission 3 Corporate Information 4 Chairman s Statement 7 Board of Directors Profile 10 Management Team s Profile 12 Corporate Governance Statement 20 Other Information 22 Financial Statements 75 Statistics of Shareholdings 77 Notice of Annual General Meeting Enclosed Form of proxy The Silverlake name is synonymous with core banking solution excellence while the Axis name is well established as a leading delivery channels banking solution. The new name, Silverlake Axis Ltd, highlights the Group s position as a one-stop banking solution provider and a leader in innovative banking solutions. 1

3 OUR SOLUTION Built on a Solid Foundation for High Performance Banking and an Adaptive Platform for Innovative Banking SIBS modules are implemented by financial institutions who are leaders in the markets they serve and known for their products & services innovation and operational excellence 1

4 Mission To be the leading banking solutions provider highly valued by our customers and partners Silverlake Axis is a leading end-to-end integrated banking solution provider with a combined installed base of over 60 customers including some of the premier regional financial institutions. Our proven cost-effective, innovative and value-based solutions have delivered successful core banking transformations of several regional financial services institutions. We will replicate our track record of success to enable our growing customer base to realise excellence in efficiency, effectiveness and overall competitiveness. Through active collaboration and partnership with our customers and technology leaders, we will continuously enhance and improve our comprehensive solution suite to deliver next-generation banking innovations. 2

5 CORPORATE INFOATION BOARD OF DIRECTORS GOH PENG OOI Executive Chairman YBHG. DATUK SULAIMAN BIN DAUD Independent Non-Executive Director DR. KWONG YONG SIN Managing Director YBHG. TAN SRI DATO DR. LIN SEE-YAN Independent Non-Executive Director ONG KIAN MIN Independent Non-Executive Director LIM KOK MIN Independent Non-Executive Director REGISTERED OFFICE Clarendon House 2 Church Street Hamilton HM 11 Bermuda Tel : Fax : MALAYSIA OFFICE Lot 5.04, 5th Floor Menara 1, Faber Towers Jalan Desa Bahagia Taman Desa Kuala Lumpur Tel : Fax : BEIJING OFFICE Room 618, 6th Floor C & W Plaza No. 14, Jiuxianqiao Road Beijing JOINT COMPANY SECRETARIES Tan Min-Li Hoong Lai Ling SHARE REGISTRAR BEUDA Codan Services Limited Clarendon House 2 Church Street Hamilton HM 11 Bermuda SINGAPORE Lim Associates Pte Ltd 10 Collyer Quay #19-08 Ocean Building Singapore Tel : Fax : AUDITORS PricewaterhouseCoopers Kuala Lumpur, Malaysia Chartered Accountants Audit Partner : Eric Ooi Lip Aun Appointed on : 30 June 2003 STOCK EXCHANGE LISTING Singapore Exchange Securities Trading Limited Dealing in Automated Quotation System (SGX-SESDAQ) 3

6 CHAIAN S STATEMENT On behalf of the Board of Directors, I am pleased to present the Group s Annual Report for the financial year ended 30 June. Dear Shareholders Financial year marked another significant milestone in the positioning of the Group as a key player in the Banking Software Industry. We took major steps to expand the range of our product and service offerings and enter new markets in order to enhance and diversify the revenue and earnings base of the Group. In May, we added Silverlake Integrated Banking System (SIBS), an award winning, scalable, high-performance Core Banking Solution with an established customer base, to our portfolio of banking solutions. The strategic acquisition of Silverlake s Banking Software Business has enhanced our position as one of the leading end-to-end integrated banking solution provider with a combined installed base of over 60 customers, including some of the leading regional financial institutions. We are pleased to report our strategic entry into Japan in June. Through a joint venture with SBI Holdings, Inc, we are providing the technology and software solutions for credit and debit card payment processing. This new initiative will play a key role in gaining further market penetration for the Group into North Asia. 4

7 CHAIAN S STATEMENT (cont d) FINANCIAL HIGHLIGHTS Arising from the acquisition of Silverlake s Banking Software Business, the Group achieved consolidated revenues of million in FY, which is 21% higher than million in the previous financial year. Our profit after tax in FY amounted to 79.6 million, which is up 15% from the previous financial year. Earnings per share was 7 Malaysian sen. The Group declared two interim dividends during the financial year, totalling Singapore cents 1.25 per share. OUTLOOK AND PROSPECT As a Group, we have strengthened our ability to provide higher value-added solutions to our customers. We now have a complete end-to-end integrated universal banking solution with a suite of modules for retail, wholesale, trade, branch, card, payment, Internet, and electronic banking services, catering to Consumer, Business, Corporate, Microfinance and Islamic banking requirements and supporting global processing capability. In September, we secured a contract with Commercial Bank International P.S.C ( CBI ) of United Arab Emirates for the supply of a comprehensive suite of integrated core banking software solutions. This first contract in the Middle East would serve as a springboard and showcase to future opportunities with other financial services institutions in this region. Leading industry analysts have highlighted core banking transformation as the top strategic initiative for banks in the Asia Pacific region. The Group is well positioned to take advantage of this opportunity. We will continue to step-up our efforts to dominate and enhance our established market position in South-East Asia and achieve success and growth in our newer markets in China, Japan, South Asia and Middle East. The Group has embarked on the next stage of transformation and this is signified by our name change to Silverlake Axis Ltd to reflect the Group s position as a World-Class One- Stop Banking Solution Provider. 5

8 CHAIAN S STATEMENT (cont d) ACKNOWLEDGEMENT I want to specially acknowledge the past contribution of Mr Wong Chew Ming who played a key role in the formation of the Group. Mr Wong founded the original Axis company and served as Managing Director until he resigned on 31 October. I wish to take this opportunity to welcome Mr Lim Kok Min to the Board and pleased to note that Dr Kwong Yong Sin was appointed Managing Director from 1 November. On behalf of the Board of Directors, I wish to express my appreciation and thanks for the commendable contribution and dedicated teamwork of our Group s employees during the year. My sincere thanks to all our shareholders, customers and business associates for their valuable and enduring partnership with the Group. Goh Peng Ooi Chairman 27 September 6

9 BOARD OF DIRECTORS PROFILE GOH PENG OOI Executive Chairman Mr. Goh Peng Ooi was appointed the Executive Chairman on 23 May. Prior to that, he was the Non-Executive Chairman of the company since Goh Peng Ooi founded the Silverlake Group in 1989 and has since built the Group to become an established provider of an advanced, state of the art integrated banking system. The Silverlake Group has grown by leaps and bounds and at present, its offices and customers are located in 13 countries across Asia Pacific. Among the many industry recognitions which Silverlake Group has earned are the IBM Star Stream Award in 1997, the IBM iseries Director s Award for the Best Global On-Demand Banking Implementation in 2003, IBM PartnerWorld Beacon Awards in and, IBM s Asia Pacific Excellence Award for Regional System Integrators (SIs) and Independent Software Vendors (ISVs) in and IBM iseries General Manager s Award in and. He was declared winner of the Technology Entrepreneur Award Malaysia. This Entrepreneur Award Program, organised by Ernst & Young, serves to recognise world-class entrepreneurs and provides a benchmark for entrepreneurial excellence. Prior to Silverlake Group s formation, Mr. Goh had worked with IBM Malaysia. He held several senior positions over his 9 year career at IBM, his last being Sales Manager for Banking and Finance Industry. Mr. Goh obtained his Bachelor of Engineering (Major in Electronics) at the University of Tokyo, Japan where he graduated in DR. KWONG YONG SIN Managing Director Dr. Kwong Yong Sin was appointed as the Managing Director on 1 November. He was previously a Non-Executive Director of the Company and the Managing Director of Silverlake Corporation from 2003 to and Connectif Commerce Sdn Bhd from 2001 to. Prior to joining Silverlake Corporation, he was a Partner/Vice President of Ernst & Young Global Consulting and Cap Gemini Ernst & Young for 11 years from 1989 to He was the Senior Manager and Head of IT Consulting for Coopers & Lybrand (South East Asia) from 1984 to Prior to that, he was Senior Systems Analyst for Pacific Power (Australia) from 1979 to He has more than 25 years of experience in Information Technology and Management Consulting. He has a Bachelor of Commerce (Honours) from the University of New South Wales (Australia) and PhD in Information Systems. He is a Certified Practicing Accountant Australia. 7

10 BOARD OF DIRECTORS PROFILE (cont d) YBHG. DATUK SULAIMAN BIN DAUD Independent Non-Executive Director Datuk Sulaiman bin Daud was appointed a Director in Datuk began his career with Malaysian Tobacco Company Berhad, where he started as a trainee executive in 1968 and progressed to become the Deputy Chief Executive / Executive Director until He has also served as Chairman of the Confederation of Malaysian Tobacco Manufacturers. He is currently the Chairman of Bank Pertanian Malaysia. He also sits on the Boards of Ho Hup Construction Company Berhad, Park May Berhad, Pharmaniaga Berhad and Malaysia Packaging Bhd. He was also Chairman of Ranhill Power Berhad and a Board Member of University Putra Malaysia. He has a Diploma in Agriculture from Kolej Pertanian Malaya (now University Putra Malaysia) and a Masters of Business Administration from IMC, Buckingham. He has also attended the Stanford-INSEAD Advanced Management Programme at Fontainbleau, France. YBHG. TAN SRI DATO DR. LIN SEE-YAN Independent Non-Executive Director Tan Sri Dato Dr. Lin See-Yan was appointed a Director in Tan Sri is currently an independent strategic and financial consultant. Prior to 1998, he was Chairman and Chief Executive Officer of the Pacific Bank Group and for 14 years previously, he was the Deputy Governor of Bank Negara Malaysia (Central Bank of Malaysia). Tan Sri is currently a member of : the National Economic Action Council (NEAC) Working Group, Prime Minister s Private Sector Panel, and National Steering Committee to Transform Higher Education, Pro-Chancellor of Universiti Sains Malaysia and Governor of the Asian Institute of Management in Manila as well as Trustee, Malaysia University for Science & Technology and Monash University (Sunway Campus). Tan Sri sits on the Boards of a number of publicly listed and private companies in Malaysia, Singapore and Indonesia, and is also Chairman Emeritus of Harvard University s Graduate School Alumni Association Council in Cambridge (USA), Regional Director for Asia, Harvard Alumni Association and Member, Visiting Committee on Asian Studies at the University. He is President of the Harvard Club of Malaysia and Professor of Economics (Adjunct) at Universiti Utara Malaysia. Tan Sri is a London qualified chartered statistician. He graduated in Economics from the then University of Malaya in Singapore and holds 3 post-graduate degrees from Harvard University (including a Ph.D in Economics) where he was a Mason Fellow and Ford Scholar. Tan Sri is an Eisenhower Fellow and Fellow of the IMF Institute in Washington D.C., the Royal Statistical Society in London, the Institute of Bankers Malaysia, the Malaysia Insurance Institute, the Malaysian Institute of Management, and the Malaysia Economic Association. He is also a Distinguished Fellow of the Institute of Strategic and International Studies in Malaysia. 8

11 BOARD OF DIRECTORS PROFILE (cont d) ONG KIAN MIN Independent Non-Executive Director Mr. Ong Kian Min was appointed a Director in Mr. Ong is currently a consultant with Drew & Napier LLC, a Singapore law firm. He was called to the Bar of England and Wales in 1988, and to the Singapore Bar the following year. He has been a practicing advocate and solicitor of the Supreme Court of Singapore since He is also an Independent Director and Chairman of the Audit Committee of a number of public companies listed on the SGX-ST. He was awarded the President s Scholarship and Singapore Police Force Scholarship in 1979, and holds a Bachelor of Laws (Honours) external degree from the University of London and a Bachelor of Science (Honours) degree from the Imperial College of Science & Technology in England. Mr. Ong has been an elected Member of Parliament since January LIM KOK MIN Independent Non-Executive Director Mr. Lim Kok Min was appointed a Director on 15 June. He is currently the Chairman of Building & Construction Authority and of Senoko Power Ltd. He is also the Group President of LMA International NV and a member of the Governing Council of the Singapore Institute of Management. He was the former Group Managing Director of Pan-United Corporation Ltd and was previously Chief Executive Officer of Cold Storage Holdings Ltd and Group Managing Director of MPH Ltd. He also sits on the Boards and audit committees of several listed and private companies including being Audit Committee Chairman of NTUC Fairprice Co-operative Ltd, Pan-United Marine Ltd and Boustead Singapore Ltd. He is the President of the Singapore Institute of Directors, a member of the Securities Industry Council, Senate Member of the Marketing Institute of Singapore, and a former director/ Council Member of both the Singapore International Chamber of Commerce and the Singapore Confederation of Industries. An Economics honours graduate from the University of Malaya, Mr. Lim has more than 40 years of extensive senior management experience in the Asia-Pacific region. 9

12 MANAGEMENT TEAM S PROFILE SIEW KEN HUN Head of Sales, Marketing and Services Operations Mr Siew is responsible for the Group s marketing and sales activities, and Services Operations. Prior to joining the Group in 2002, he was with Silverlake System Sdn Bhd as a key technical consultant in electronic banking and mobile banking and has led several key implementations of these modules. Mr Siew holds a Bachelor of Science from Campbell University, North Carolina, USA. HOONG LAI LING Head of Administration and Finance Ms Hoong joined the Group in 2002 and is responsible for overseeing the Group s financial, accounting and administrative functions. She is a qualified accountant from the Malaysian Institute of Certified Public Accountants and a member of the Malaysian Institute of Accountants. She was previously an accountant with Silverlake System Sdn Bhd and trained in PricewaterhouseCoopers Malaysia. THANG BOON CHENG Head of Solution Management and Channel Development 10 Mr Thang is responsible for the overall architecture roadmap of the Silverlake Axis Integrated Banking Solution (SIBS) and leads the delivery channels development. He joined the Group in and brings with him over 26 years of Banking and Banking Technology experience. Mr Thang has successfully led and managed several large-scale implementations of SIBS around the region during his time with Silverlake System Sdn Bhd. He started his career with Maybank and has held key positions as Associate Director for Banking and Finance Consultancy with KPMG Consulting and Director for Research and Development of a regional banking software company. He has a Bachelor of Commerce in Accounting from University of Otago, New Zealand and is an Associate Chartered Accountants (ACA) with the New Zealand Society of Accountants.

13 MANAGEMENT TEAM S PROFILE (cont d) WONG YOK KOON Head of Core Banking Integration Development Ms Wong is responsible for the integration development of SIBS. Prior to joining the Group in, she was a Senior Executive Vice President with Silverlake System Sdn Bhd with responsibilities in the design and development of new products and solutions for Silverlake s banking software. She has also led and managed several key implementations around the region. Ms Wong has over 16 years experience in the banking software industry and her portfolio of clients include large regional banks. She is one of the pioneer developers of the Silverlake Integrated Banking System. YAU SIEW MOI Head of Core Banking Product Development Ms Yau joined the Group in and is responsible for the product development of SIBS. She was previously a Senior Executive Vice President with Silverlake System Sdn Bhd and was responsible for the continuous development and enhancement of the Loans and Customer Information File modules. During her 16 years in the banking software industry, Ms Yau has developed a universal loan product which has been successfully implemented at over 20 financial institutions in Asia Pacific. She is one of the pioneer developers of the Silverlake Integrated Banking System. 11

14 CORPORATE GOVERNANCE STATEMENT The Board of Directors of Silverlake Axis Ltd recognises the importance of corporate governance in ensuring greater transparency, protecting the interests of its shareholders as well as strengthening investors confidence in its management and financial reporting and is committed to maintaining a high standard of corporate governance within the Group. The main corporate governance practices that were in place throughout the financial year are set out below. BOARD MATTERS Principle 1 of the Code: Board s Conduct of its Affairs The Board of Directors (the Board ) holds meetings on a regular basis to approve the Group s key strategic plans as well as major investments, disposals and funding decisions. The Board is also responsible for the overall corporate governance of the Group. The Board conducts regular scheduled meetings and 6 meetings were held in the last financial year. When circumstances require, ad-hoc meetings are arranged. Board meetings are conducted in Malaysia and Singapore and attendance by directors are regular. The attendance of the directors at meetings of the Board and Board committees, as well as the frequency of such meetings, is as follows:- Attendance at Meetings Name 12 No. of meetings held Axis Board Audit Committee Nominating Committee No. of meetings attended No. of meetings held No. of meetings attended No. of meetings held Goh Peng Ooi Wong Chew Ming (1) Ong Kian Min YBhg. Datuk Sulaiman Bin Daud YBhg. Tan Sri Dato Dr Lin See-Yan Kwong Yong Sin Lim Kok Min (2) No. of meetings attended

15 CORPORATE GOVERNANCE STATEMENT (cont d) Remuneration Committee Employee Share Option Scheme Committee Name No. of meetings held No. of meetings attended No. of meetings held No. of meetings attended Goh Peng Ooi Wong Chew Ming (1) Ong Kian Min YBhg. Datuk Sulaiman Bin Daud YBhg. Tan Sri Dato Dr Lin See-Yan Kwong Yong Sin Lim Kok Min (2) Note: (1) Mr Wong Chew Ming resigned as Managing Director and Director with effect from 31 October. (2) Mr Lim Kok Min was appointed Director and an Audit Committee member with effect from 15 June. Mr Lim Kok Min was also appointed a Remuneration Committee member replacing Mr Goh Peng Ooi with effect from 25 August. All directors are updated regularly on changes in company policies. Principle 2: Board Composition and Balance The Board comprises two Executive Directors and four Independent Non-Executive Directors. Key information regarding the Directors can be found under the Board of Directors Profile section of this annual report. The independence of each Director is reviewed annually by the nominating committee ( NC ). The NC is of the view that the current Board, with Independent Directors making up at least one-third of the Board, has an independent element ensuring objectivity in the exercise of judgment on corporate affairs independently from the management. The NC is also of the view that no individual or small group of individual dominates the Board s decision making process. The Board is of the view that the current board size of six Directors is appropriate, taking into account the nature and scope of the Company s operations. 13

16 CORPORATE GOVERNANCE STATEMENT (cont d) The Board considers that its composition of independent Directors provide the Board with a mix of knowledge, business network and extensive business and commercial experience. This balance is important in ensuring that the strategies proposed by the executive management are fully discussed and examined, taking into account the long term interests of the Group. Principle 3: Role of Chairman and Managing Director Mr Goh Peng Ooi was appointed as the Company s Executive Chairman on 23 May. Dr Kwong Yong Sin was appointed as Managing Director, who is responsible for the day-to-day management of the Company on 1 November. The Board believes that the division of responsibility between the Chairman and CEO is necessary for the Company. The Chairman assumes responsibility for the management of the Board, and the Managing Director is the most senior executive in the Company and bears executive responsibility for the Group s business. In respect of the Board meetings, the Chairman ensures that Board meetings are held regularly. The agenda is set by the Managing Director and approved by the Chairman. The Chairman and the Managing Director review most Board papers before they are presented to the Board and ensure that the Board members are provided with complete, adequate and timely information. The Board is of the view that having separated the role of the Chairman of the Board and Managing Director, as well as having the various committees chaired by Independent Directors, there is sufficient balance of power and authority on the Board. Principle 4: Board Membership We believe that Board renewal must be an ongoing process, to ensure good governance and to maintain relevance to the business and changing needs of the Company. The Company s Bye-Laws require one-third of Directors (excluding the Managing Director) to retire and subject themselves to re-election by shareholders at every Annual General Meeting ( AGM ). In other words, no Director stays in office for more than three years without being re-elected by shareholders. The Managing Director is not required to submit himself for retirement and re-election. The NC comprises Mr Ong Kian Min, Mr Goh Peng Ooi, YBhg. Tan Sri Dato Dr Lin See-Yan and YBhg. Datuk Sulaiman bin Daud, with Mr Ong Kian Min who is an Independent Director, as the Chairman. The responsibilities of the NC are (i) re-nomination of the Directors having regard to the Directors contribution and performance, (ii) determining annually whether or not a Director is independent and (iii) deciding on whether or not a Director is able to and has been adequately carrying out his duties as a director. The NC decides how the Board s performance is to be evaluated and proposes objective performance criteria, subject to the approval of the Board. Principle 5: Board Performance The NC will use its best efforts to ensure that directors appointed to the Board possess the relevant background, experience and knowledge to enable balanced and well-considered decisions to be made. 14

17 CORPORATE GOVERNANCE STATEMENT (cont d) A formal review of the Board s performance will be undertaken collectively and individually by the Board annually. The Board s performance will also be reviewed informally by the NC with inputs from the other Board members and the Managing Director. Principle 6: Access to Information In order to ensure that the Board is able to fulfill its responsibilities, the management is required to provide adequate and timely information to the Board on affairs and issues that require the Board s decision as well as ongoing reports relating to the operational and financial performance of the Company and the Group. The Board has separate and independent access to the senior management and the Company Secretary at all times. Should Directors, whether as a group or individually, need independent professional advice, a professional advisor will be appointed upon direction by the Board and approved by the Managing Director, to render the advice. The cost of such professional advice will be borne by the Company. The Company Secretary attends all board meetings and is responsible for the compliance of the board procedures. It is the Company Secretary s responsibility to ensure that the Company complies with all rules and regulations that are applicable to the Company. REMUNERATION MATTERS Principle 7: Procedures for Developing Remuneration Policies Principle 8: Level and Mix of Remuneration Principle 9: Disclosure on Remuneration The Remuneration Committee ( RC ) was established to review the remuneration of the Executive Directors of the Company and to provide a greater degree of objectivity and transparency in determining the remuneration of the Executive Directors. The RC comprises of Mr Ong Kian Min, Mr Lim Kok Min, YBhg. Datuk Sulaiman bin Daud and YBhg. Tan Sri Dato Dr Lin See-Yan. YBhg. Datuk Sulaiman bin Daud chairs the RC. The RC will review and recommend to the Board a framework of remuneration for the Directors and key executives, and determine specific remuneration packages for the Chairman and the Managing Director. The recommendations of the RC should be submitted for endorsement by the entire Board. All aspects of remuneration, including but not limited to directors fees, salaries, allowances, bonuses, options and benefits in kind are covered by the RC. The RC has access to expert professional advice on human resource matters whenever there is a need to consult externally. In its deliberations, the RC will take into consideration industry practices and norms in compensation in addition to the Company s relative performance to the industry and the performance of the individual directors. No Director will be involved in deciding his own remuneration. 15

18 CORPORATE GOVERNANCE STATEMENT (cont d) The Executive Directors have entered into service agreements with the Company. The service agreement covers the terms of employment, specifically salary and other benefits. The remuneration of Non-Executive Directors is determined by his contribution to the Company, taking into account factors such as effort and time spent as well as his responsibilities on the Board. The Board will recommend the remuneration of the Non-Executive Directors for approval at the AGM. Directors Remuneration The Executive Directors remuneration consists of their salary, allowances, bonuses and benefits in kind. The details of their remuneration package are given below. Directors fees for independent Non-Executive Directors are subject to the approval of shareholders at the AGM. The basis of allocation of the number of share options to the Directors takes into account the Director s contributions and his additional responsibilities at board committees. During the financial year, no share options were granted to any of the Directors. The band of remuneration of each individual Director for the financial year under review is as follows:- S$250,000 Name S$500,000 and above to below S$500,000 Below S$250,000 Goh Peng Ooi X* Wong Chew Ming X* Ong Kian Min X* YBhg. Datuk Sulaiman Bin Daud X* YBhg. Tan Sri Dato Dr Lin See-Yan X* Kwong Yong Sin X* Lim Kok Min X* * The remunerations in the form of Directors fees are subject to the approval by the shareholders at the forthcoming Annual General Meeting. Remuneration of Key Employees Details of remuneration paid to the top five executives (who are not Directors of the Company) of the Group for the financial year are set out below. For competitive reasons, the Company is only disclosing the band of remuneration of each executive for the financial year under review as follows:- 16

19 CORPORATE GOVERNANCE STATEMENT (cont d) Name S$500,000 and above S$250,000 to below S$500,000 Below S$250,000 Siew Ken Hun X Hoong Lai Ling X Thang Boon Cheng X Wong Yok Koon X Yau Siew Moi X There are no employees in the Group who are immediate family members of a Director or the CEO. ACCOUNTABILITY AND AUDIT Principle 10: Accountability The Board believes that it should promote best practices in order to build an excellent business for the shareholders as they are accountable to shareholders for the Company s and the Group s performance. The Board is mindful of its obligations to provide timely and full disclosure of material information in compliance with statutory reporting requirements. Price sensitive information is first publicly released, after the review by the board, either before the Company meets with any group of investors or analysts or simultaneously with such meetings. From FY2004 onwards we have adopted quarterly reporting as required by the Code. Financial results and annual reports will be announced or issued within legally prescribed periods. Principle 11: Audit Committee The Audit Committee ( AC ) is made up of four Independent Non-Executive Directors, all of whom have the appropriate accounting experience or related financial management expertise. Mr Ong Kian Min chairs the AC. The other members are YBhg. Datuk Sulaiman bin Daud, YBhg. Tan Sri Dato Dr. Lin See-Yan and Mr Lim Kok Min. The AC holds periodic meetings and reviews primarily the following, where relevant, with the Executive Directors and external auditors:- (a) (b) (c) (d) review issues of accounting policies and presentation for external financial reporting; review the audit plans of the Company s external auditors; review the external auditors reports; review the co-operation given by the Company s Officers to the external auditors; 17

20 CORPORATE GOVERNANCE STATEMENT (cont d) (e) (f) (g) (h) (i) (j) review the scope and results of the internal audit function; review the financial statements of the Company and the Group before their submission to the Board of Directors; nominate external auditors for appointment; review the Group s compliance with such functions and duties as may be required under the relevant statutes or the Listing Manual, and by such amendments made thereto from time to time; review interested person transaction; and reviewing the remuneration packages of employees who are related to the Directors and/or substantial shareholders. In addition to the above, the AC will meet with the external auditors, in the absence of the management, at least once a year. The AC has the power to conduct or authorise investigations into any matters within its terms of reference. The AC also has full access to and the co-operation of the management. The external auditors have unrestricted access to the AC. Minutes of the AC meetings are regularly submitted to the Board for its review. The aggregate amount of non-audit fees paid to the external auditors for the financial period under review was approximately 2.1 million in connection with the acquisition of Silverlake Adaptive Applications & Continuous Improvement Services Ltd. The AC has reviewed the external auditor s non-audit services and is satisfied that the nature and extent of such services has not prejudiced the independence and objectivity of the external auditors. The AC recognises the need to maintain a balance between the independence and objectivity of the external auditors and the work carried out by the external auditors based on value for money consideration. The AC has recommended to the Board the nomination of PricewaterhouseCoopers, for reappointment as auditors of the Company at the forthcoming AGM. Principle 12: Internal Controls Although the Board acknowledges that it is responsible for the overall internal control framework, it also recognises that no cost effective internal control system will preclude all errors and irregularities. A system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can provide only reasonable and not absolute assurance against material misstatement or loss. The AC, on behalf of the Board, has reviewed the effectiveness of the internal control system put in place by the management and is satisfied that there are adequate internal controls in the Company. Principle 13: Internal Audits The Group s internal and if function is outsourced to a professional firm. The internal auditors report directly to the AC. The AC reviews the internal audit procedures and ensures that the internal audit function has appropriate standing within the Group. 18

21 CORPORATE GOVERNANCE STATEMENT (cont d) The AC recognises the importance of the internal audit function and will continue to assess and procure and allocate resources for the discharge and performance of this role. Risk Management The Company regularly reviews and improves its business and operational activities to take into account the risk management perspective. The Company seeks to identify areas of significant business risks as well as appropriate measures to control and mitigate these risks. The Company reviews all significant control policies and procedures and highlights all significant matters to the AC. COMMUNICATION WITH SHAREHOLDERS Principle 14: Communication with Shareholders Principle 15: Greater Shareholder Participation We recognise the importance of regular and timely communication with the shareholders. The Company does not practice selective disclosure. In line with continuous obligations of the Company pursuant to the SGX-ST s Listing Manual, it is the Board s policy that all shareholders should be equally informed, on a timely basis, of all major developments that will or expect to have impact on the Company or the Group. Shareholders are encouraged to attend the AGM to stay informed of the Company s goals and strategies and to ensure a high level of accountability. Notice of AGM will be dispatched to shareholders, together with explanatory notes or a circular on items of special business, on a timely basis in accordance with the legal requirements. The Board welcomes questions from shareholders who have an opportunity to raise issues either informally or formally before or at the AGM. The Chairmen of the Audit, Remuneration and Nominating Committees will be available at the meeting to answer those questions relating to the work of these committees. Dealings in Securities The Company has adopted practices in relation to dealings in the Company s securities pursuant to the SGX-ST Best Practices Guide that are applicable to all its officers. Its officers are not allowed to deal in the Company s shares during the period commencing two weeks before the announcement of the Group s quarterly results and one month before the announcement of the Group s full year results and ending on the date of the announcement of the results. Directors and executives are also expected to observe insider trading laws at all times even when dealing with securities within the permitted trading period. Best Practices Guide The Company has complied materially with the Best Practices Guide issued by SGX-ST. 19

22 OTHER INFOATION 1. Recurrent Interested Persons Transactions of a Revenue or Trading Nature In compliance with Rule 920 of the SGX-ST Listing Manual, the aggregate value of recurrent interested persons transactions of revenue or trading nature conducted during the financial year ended 30 June by the Group in accordance with the shareholders mandate were as follows:- Name of interested person Aggregate value of all interested person transactions during the financial year under review (excluding transactions less than SGD100,000 and transactions conducted under shareholders mandate pursuant to Rule 920) ( ) Aggregate value of all interested person transactions conduct under shareholders mandate pursuant to Rule 920 (excluding transaction less than SGD100,000) ( ) Silverlake System Sdn. Bhd. and its related companies 2. Material Contracts 20 95,381,755 There were no material contracts including contracts relating to a loan entered into by the Company and its subsidiaries involving Directors and major shareholders interest except as disclosed in the financial statements. 3. Disclosure in relation to the Company s undertakings to the SGX-ST in relation to the acquisition of the Silverlake Adaptive Applications & Continuous Improvement Services Ltd as disclosed in the Company s circular dated 31 March. In accordance with its terms of reference and undertakings given to the SGX-ST, the Audit Committee has reviewed all interested person transactions between the Company and Silverlake System Sdn Bhd and its related companies, as defined in the Company s Circular dated 31 March (hereinafter referred to as Silverlake Entities ) and is satisfied that the interested person transactions comply with the shareholders mandates granted by the shareholders at the Special General Meeting of the Company held on 18 April.

23 OTHER INFOATION (cont d) The ageing of amounts owing from the Silverlake Entities to Silverlake Adaptive Applications and Continuous Improvement Services Ltd as at 30 June were as follows: Name of related parties Total Due 0-30 days days >180 days Silverlake Entities 3,186,436 3,186,436 - The Company confirms that collections from the Silverlake Entities were within the credit terms extended. 21

24 FINANCIAL STATEMENTS Directors Report Statement By Directors Auditors Report Consolidated Income Statement Balance Sheets Consolidated Statement of Changes in Equity Consolidated Cash Flow Statement Notes to the Financial Statements

25 DIRECTORS REPORT The Directors present their report to the members together with the audited financial statements of the Group for the financial year ended 30 June and the balance sheet of the Company at 30 June. CHANGE OF COMPANY NAME The name of the Company was changed from Axis Systems Holdings Limited to Silverlake Axis Ltd on 6 September. DIRECTORS The Directors of the Company in office at the date of this report are: Goh Peng Ooi Kwong Yong Sin Ong Kian Min Datuk Sulaiman bin Daud Tan Sri Dato Dr. Lin See-Yan Lim Kok Min (Appointed on 15 June ) Wong Chew Ming (Resigned on 31 October ) ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE SHARES AND DEBENTURES Save for the acquisition by the Company of the entire issued share capital of Silverlake Adaptive Applications & Continuous Improvement Services Ltd ( SAACIS ) and its subsidiary, Silverlake Holdings Sdn Bhd ( SHSB ) as disclosed in Note 1 to the financial statements, neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose object 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. DIRECTORS CONTRACTUAL BENEFITS Since the end of the previous 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, except as disclosed in Notes 10 and 25 to the financial statements. DIRECTORS INTERESTS IN SHARES OR DEBENTURES (a) According to the register of Directors shareholdings, none of the Directors holding office at the end of the financial year had any interest in the share capital or debentures of the Company and related corporations, except as follows: 23

26 DIRECTORS REPORT (cont d) DIRECTORS INTERESTS IN SHARES OR DEBENTURES (cont d) Holdings registered in name of director or nominee At At Holdings in which a director is deemed to have an interest At At The Company (Ordinary shares of USD0.02 each) Goh Peng Ooi ,314, ,717,666 Intelligentsia Holding Ltd. (Ordinary shares of USD1.00 each) Goh Peng Ooi - - 3,882,254 3,882,254 There was no change in the above mentioned interest between the end of the financial year and 21 July. (b) No options were granted to the Directors and controlling shareholders of the Company or their associates, or to the Directors and employees of the ultimate holding company and its subsidiaries since the commencement of the Axis Employee Share Option Scheme 2003 (the ESOS Scheme ). None of the participants have been granted 5% or more of the total number of options under the ESOS Scheme. SIGNIFICANT EVENT DURING THE FINANCIAL YEAR On 22 May, the Company completed its acquisition of 100% of the issued share capital of SAACIS and its subsidiary, SHSB, hereinafter collectively referred to as the SAACIS Group from Intelligentsia Holding Ltd. Prior to the acquisition of SAACIS Group, Silverlake (BVI) Pte Ltd ( SBVI ) and Silverlake System Sdn Bhd ( SSSB ), hereinafter collectively referred to as the Silverlake Group undertook the restructuring exercise ( Restructuring Exercise ) whereby SAACIS Group acquired the Silverlake Integrated Banking System ( SIBS ) business from Silverlake Group. Please refer to Note 1 to the financial statements for further details. SHARE OPTION SCHEME The Axis Employee Share Option Scheme 2003 (the ESOS Scheme ) in respect of unissued ordinary shares of USD0.02 each in the Company was approved by the shareholders on 9 January 2003 in conjunction with the Company s listing on the Singapore Exchange Securities Trading Limited Dealing in Automated Quotation System. The principal features of the ESOS Scheme are as follows: (a) (b) Eligible persons are confirmed full-time employees of the Company, its subsidiaries and associated companies and the ultimate holding company and its subsidiaries, who have attained the age of 21 years, independent non-executive Directors of the Company and executive Directors of the Company, its subsidiaries and associated companies and the ultimate holding company and its subsidiaries. The ESOS Scheme is administered by the ESOS Committee comprising three independent Directors of the Company, namely Ong Kian Min, Datuk Sulaiman bin Daud and Tan Sri Dato Dr. Lin See-Yan. 24

27 DIRECTORS REPORT (cont d) SHARE OPTION SCHEME (cont d) (c) (d) (e) (f) (g) The maximum number of new shares to be offered shall not exceed 15% of the issued and paid-up share capital of the Company on the date preceding the grant of an option. The maximum number of shares available to the ultimate holding company and its subsidiaries is 20% of the shares available under the ESOS Scheme. The option price shall be the price equal to ( Market Price Option ) or not more than 20% discount ( Incentive Option ) to the average of the prices for the last five consecutive days immediately preceding the grant of the option. Each option shall be exercisable, in the case of a Market Price Option, from the first anniversary to the 10th anniversary of the offering date. In the case of Incentive Option, the option shall be exercisable from the 2nd anniversary to the 10th anniversary of the offering date. In the case of persons not holding a salaried office, the option shall expire on the 5th anniversary for both the Market Price and Incentive Option. Shares arising from the exercise of options pursuant to the ESOS Scheme are subject to the Memorandum and Bye-Laws of the Company and rank pari passu in all respect with the then existing issued shares. The ESOS Scheme shall continue in operation for a maximum of 10 years commencing on the date on which the ESOS Scheme is adopted by the Company in general meeting, subject to any extension as may be approved by the shareholders in general meeting and the relevant authorities. At the end of the financial year, details of options for unissued ordinary shares of USD0.02 each granted under the Axis ESOS Scheme are as follows: Options relating to Axis ESOS Scheme Exercise period Exercise price Number of ordinary shares outstanding at 30 June 2003 options to SGD0.71 2,020,000 There were no options granted at a discount during the financial year. During the financial year, no shares of the Company were allotted and issued by virtue of the exercise of options to take up unissued shares of the Company. No options were granted to the Directors and controlling shareholders of the Company or their associates, or to the Directors and employees of the ultimate holding company and its subsidiaries since the commencement of the ESOS scheme. None of the participants have been granted 5% or more of the total number of options under the ESOS scheme. AUDITORS The auditors, PricewaterhouseCoopers, have expressed their willingness to accept re-appointment. On behalf of the Directors GOH PENG OOI DIRECTOR 27 September KWONG YONG SIN DIRECTOR 25

28 STATEMENT BY DIRECTORS In the opinion of the Directors, (a) (b) the balance sheet of the Company and the consolidated financial statements of the Group as set out on pages 28 to 74 are drawn up so as to give a true and fair view of the state of affairs of the Company and of the Group at 30 June, and of the results of the business, changes in equity and cash flows of the Group for the financial year then ended; and 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. On behalf of the Directors GOH PENG OOI DIRECTOR KWONG YONG SIN DIRECTOR 27 September 26

29 AUDITORS REPORT to the Members of Silverlake Axis Ltd We have audited the accompanying financial statements of Silverlake Axis Ltd set out on pages 28 to 74 for the financial year ended 30 June, comprising the balance sheet of the Company and the consolidated financial statements of the Group. 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. As set out in Note 1 to the financial statements, the consolidated financial statements of the Group for the financial year ended 30 June and its comparative figures have been prepared and presented as if the Group had been in existence since 1 July 2004 using the pooling-of-interest method. These comparative figure have not been audited. We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we plan and perform our audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Directors, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the accompanying balance sheet of the Company and the consolidated financial statements of the Group are properly drawn up in accordance with the Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Company and of the Group as at 30 June, and the results, changes in equity and cash flows of the Group for the financial year ended on that date. PRICEWATERHOUSECOOPERS (No. AF: 1146) Chartered Accountants Malaysia 27 September 27

30 CONSOLIDATED INCOME STATEMENT for the fi nancial year ended 30 June Notes Group Revenue 6 124,493, ,808,976 Cost of sales (23,472,000) (20,405,793) Gross profit 101,021,374 82,403,183 Other income 6 1,551,948 1,317,219 Expenses: - Selling and distribution (1,625,600) (1,357,384) - Administrative (2,850,475) (2,374,830) - Other operating (14,515,583) (7,236,049) - Finance 9 (42,058) (31,527) Profit before income tax 83,539,606 72,720,612 Income tax expense 11 (3,914,811) (3,710,643) Net profit 79,624,795 69,009,969 Earnings per share attributable to the equity holders of the Company - Basic (sen) The accompanying notes form an integral part of these financial statements. Auditors report - page 27.

31 BALANCE SHEETS as at 30 June Notes Group Company ASSETS Current Assets Cash and bank balances 12 6,181,078 4,284, , ,371 Deposits with licensed banks 12 41,851,145 45,207,625 19,596,960 23,494,263 Trade and other receivables 13 2,514,494 11,081,663 19,184 5,791,499 Amounts due from customers on contracts 14 3,053,873 10,739, Amounts due from related parties 15 14,704,478 84,854, ,305, ,167,960 20,120,425 30,017,133 Non-Current Assets Investments in subsidiaries ,859,481 19,018,736 Other investments 17 31,500 65, Property, plant and equipment 18 1,426,661 1,538,467 2,096 3,406 Software development expenditure 19 17,478,344 21,122, ,936,505 22,726, ,861,577 19,022,142 Total assets 87,241, ,894, ,982,002 49,039,275 LIABILITIES Current Liabilities Trade and other payables 20 5,747,775 5,098,257 1,841, ,284 Current income tax liabilities 432, ,477 47,703 60,783 Hire-purchase liabilities ,434 94, Amounts due to customers on contracts 14 2,277,809 5,230, Amount due to a subsidiary ,018 8,930 Amounts due to related parties 15-36,453-36,453 8,593,880 11,077,793 1,946, ,450 29

32 BALANCE SHEETS as at 30 June (cont d) Notes Group Company Non-Current Liabilities Hire-purchase liabilities , , Deferred tax liability 22 1,266,000 1,116, ,590,180 1,324, Total liabilities 10,184,060 12,401,825 1,946, ,450 NET ASSETS 77,057, ,493, ,035,756 48,241,825 SHAREHOLDERS EQUITY Share capital 23 81,893,510 81,893,510 81,893,510 21,701,105 Share premium 23 21,659,716 21,659, ,769,533 21,659,716 Foreign currency translation reserve 100, Merger deficit (59,771,338) (59,771,338) - - Retained earnings 26 33,175, ,711, ,713 4,881,004 77,057, ,493, ,035,756 48,241, The accompanying notes form an integral part of these financial statements. Auditors report - page 27.