Symmetry at Work for Powerful Innovations & Solutions

Transcription

1 Silverlake Axis Ltd Annual Report 2007

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3 Symmetry at Work for Powerful Innovations & Solutions The diagram above outlines the E 8 root system. E 8, (pronounced "E eight") is an example of a Lie (pronounced "Lee") group. Lie groups were invented by the 19th century Norwegian mathematician Sophus Lie to study symmetry. Underlying any symmetrical object, is a Lie group. The American Institute of Mathematics (AIM), after four years of intensive collaboration, have successfully mapped E 8, one of the largest and most complicated structures in mathematics in March Source: American Institute of Mathematics (AIM) E 8 SILVERLAKE AXIS LTD ANNUAL REPORT

4 Silverlake Axis Group Theoretic Architecture CORE LOGISTICS REPRESENTATION Modern mathematics have proven that complex systems such as core banking systems cannot be effectively built using the traditional approach. Silverlake Axis adopts the Symmetry & Group Theory approach. Traditional approach's main focus is on programming and development methodology. Symmetry & Group Theoretic approach is unified, and all mathematicians think alike in terms of deconstruction, while allowing different approaches to construction. In this way, Symmetry & Group Theory is able to place the highest emphasis on an organization's strategy and effectiveness, and at the same time exploiting the efficiency of traditional automation whenever, and only whenever applicable. In mathematical terms, software programs are 'Mappings'. We can map requirements. Direct mappings are tedious because there are trillions of requirements. Since mappings are groups, Group Theory can be appliced to address the problem mathematically to extreme accuracy. 02 SILVERLAKE AXIS LTD ANNUAL REPORT 2007

5 SILVERLAKE AXIS INTEGRATED BANKING SOLUTION (SIBS) Sales and Service Delivery Channels Branch Delivery System Self Service Loan Origination Customer Service Call Centre Customer Relationship Management Collection Corporate Desktop Mobile Banking Point-of-Sale (POS) Internet Banking Money Changer Automated Teller Machine (ATM) Portable Banker Silverlake Axis Integrated Banking Solution (SIBS) is a complete banking solution that enables banking transformation through information, operations and technology innovations. Customer Value Delivery Customer Info Customer Liability Customer Loyalty Rule-Based Process Automation Workflow eforms/ Doc Imaging Integration via Delivery Service Processor (DSP) Loan Deposit Corp & Mgmt Reporting Regulatory Reporting MIS/EIS Performance Mgmt System Core Product Processing Systems Trade Finance Business Analytics Remittance & Payment Credit Card Enterprise Data Warehouse Business Intelligence Enterprise Knowledge Content & Delivery Market Risk Credit Risk Ops Risk Legal Risk Debit Card Risk Management Electronic Banking Financials General Ledger Payment Delivery Bulk Transactions Electronic Fund Transfer SWIFT, RTGS, WU, etc Information Delivery 3rd Party Data Feed SIBS is designed on the Silverlake Axis Group Theoretic Architecture comprising the Core, Logistics and Representation Layers. This architecture allows organisation to respond rapidly and innovatively to customer needs and market demands in a cost effective manner. CORE LOGISTICS REPRESENTATION CONTENTS 5 Corporate Information 7 Chairman's Statement 11 Board of Directors' Profile 14 Management Team's Profile 16 Corporate Governance Statement 23 Other Information 24 Financial Statements 78 Statistics of Shareholdings 80 Notice of Annual General Meeting Enclosed Form of proxy SILVERLAKE AXIS LTD ANNUAL REPORT

6 Silverlake Axis Integrated Banking Solution (SIBS) is a complete banking solution that enables banking Silverlake Axis Group Theoretic Architecture technology innovations. operations and information, through transformation REPRESENTATION LOGISTICS CORE customer needs and market demands in a cost effective manner. and Representation Layers. This architecture allows organisation to respond rapidly and innovatively to SIBS is designed on the Silverlake Axis Group Theoretic Architecture comprising the Core, Logistics CORE LOGISTICS REPRESENTATION Modern mathematics have proven that complex systems such as core banking systems cannot be effectively built using the traditional approach. Silverlake Axis adopts the Symmetry & Group Theory approach. Traditional approach's main focus is on programming and development methodology. Symmetry & Group Theoretic approach is unified, and all mathematicians think alike in terms of deconstruction, while allowing different approaches to construction. In this way, Symmetry & Group Theory is able to place the highest emphasis on an organization's strategy and effectiveness, and at the same time exploiting the efficiency of traditional automation whenever, and only whenever applicable. In mathematical terms, software programs are 'Mappings'. We can map requirements. Direct mappings are tedious because there are trillions of requirements. Since mappings are groups, Group Theory can be appliced to address the problem mathematically to extreme accuracy. 02 SILVERLAKE AXIS LTD ANNUAL REPORT 2007

7 Branch Delivery System Self Service SILVERLAKE AXIS INTEGRATED BANKING SOLUTION (SIBS) Loan Origination Customer Service Sales and Service Delivery Channels Call Centre Customer Relationship Management Collection Corporate Desktop Mobile Banking Point-of-Sale (POS) Internet Banking Money Changer Automated Teller Machine (ATM) Portable Banker Integration via Delivery Service Processor (DSP) Customer Value Delivery Customer Info Customer Liability Customer Loyalty Rule-Based Process Automation Workflow eforms/ Doc Imaging Loan Deposit Corp & Mgmt Reporting Regulatory Reporting MIS/EIS Performance Mgmt System Core Product Processing Systems Trade Finance Business Analytics Enterprise Knowledge Content & Delivery Remittance & Payment Business Intelligence Credit Card Enterprise Data Warehouse Market Risk Credit Risk Ops Risk Legal Risk Debit Card Risk Management Electronic Banking Financials General Ledger Payment Delivery Bulk Transactions Electronic Fund Transfer SWIFT, RTGS, WU, etc Information Delivery 3rd Party Data Feed CONTENTS 5 Corporate Information 7 Chairman's Statement 11 Board of Directors' Profile 14 Management Team's Profile 16 Corporate Governance Statement 23 Other Information 24 Financial Statements 78 Statistics of Shareholdings 80 Notice of Annual General Meeting Enclosed Form of proxy SILVERLAKE AXIS LTD ANNUAL REPORT

8 (Pure Group Theory) CORE The arrangement of events is purely based on whether it can or cannot be arranged. If the answer is yes, how that arrangement looks like is reflective of how the 'programs' and 'data' look like. 04 SILVERLAKE AXIS LTD ANNUAL REPORT 2007

9 GOH PENG OOI Executive Chairman DR. KWONG YONG SIN Managing Director ONG KIAN MIN Independent Non-Executive Director YBHG. DATUK SULAIMAN BIN DAUD Independent Non-Executive Director YBHG. TAN SRI DATO' DR. LIN SEE-YAN Independent Non-Executive Director LIM KOK MIN Independent Non-Executive Director CORPORATE INFOATION 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 Chaoyang, 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 3 Church Street #08-01 Samsung Hub Singapore Tel : Fax : AUDITORS PricewaterhouseCoopers Kuala Lumpur, Malaysia Chartered Accountants Audit Partner : Amrit Kaur Appointed on : 30 June 2003 STOCK EXCHANGE LISTING Singapore Exchange Securities Trading Limited Dealing in Automated Quotation System (SGX-SESDAQ) SILVERLAKE AXIS LTD ANNUAL REPORT

10 (Transposition) LOGISTICS The introduction of 'space' and 'time' through Transposition. Combines with CORE, it aims to emulate as much of the meaning of 'human actions' as possible so that as little is left to final programming. 06 SILVERLAKE AXIS LTD ANNUAL REPORT 2007

11 CHAIAN'S STATEMENT Dear Shareholders, On behalf of the Board of Directors, I am pleased to present to you the Group's Annual Report for the financial year ended 30 June THE YEAR IN REVIEW Financial year 2007 was a significant year for Silverlake Axis in our journey towards becoming a World-Class One-Stop Core Banking and High Performance Software Solutions Provider. We strengthened our market position in Southeast Asia to over 75 customers, while continuing to grow new markets in China, the Middle East and Japan. During the year, the Group secured 14 new contracts in existing and new markets. Robust customer demand was recorded for our core banking solutions as banks continue to upgrade their core banking systems. In the Middle East, we expanded our presence by securing a contract with a Saudi Arabian real estate finance company to supply a suite of Integrated Islamic Banking solution modules. This is our second contract from the region. In Japan, our joint venture with SBI Holdings Inc. has commenced operations in credit and debit card payment processing and is on track to expand the business in that country. In 2007, we supplemented our growth potential through acquisition. The Group was presented with an opportunity to accelerate our penetration into the China market and we took a 30% equity stake in Unifisoft Holdings Limited (Unifisoft), an established information technology solutions and services company focusing on the financial services sector in China. Unifisoft has a network of nine sales and service offices covering the major financial regions in China. This investment enables us to expand our marketing network with Unifisoft, and together with their systems integration capabilities, will allow the Group to capitalise on business opportunities presented by China's rapidly growing demand for high performance banking and financial services solutions. SILVERLAKE AXIS LTD ANNUAL REPORT

12 (Gauge) REPRESENTATION The programming effort is reduced to the minimum through local and global transformations. Combines with CORE and LOGISTICS, it aims to reduce 'human actions', irrespective of industries to mere 'scripts'. 08 SILVERLAKE AXIS LTD ANNUAL REPORT 2007

13 CHAIAN'S STATEMENT (cont'd) FINANCIAL HIGHLIGHTS FY2007 marks the first full financial year of the combined Silverlake Axis business covering both front-end and back-end core banking and high performance software solutions to our customers. The Group achieved consolidated revenues of million in FY2007, a growth of 10.3% over the million recorded in the previous financial year. Group profit after tax in FY2007 amounted to 80.0 million, which is up 0.5% from the previous financial year. Earnings per share was Ringgit Malaysia 7.13 sen. The Directors are pleased to declare a final tax exempt dividend of Singapore cent 0.75 per share. Together with the interim dividend of Singapore cent 0.75 per share, total dividend payout for FY2007 is Singapore cent 1.50 per share. CONTINUOUS INNOVATION Continuous innovation is the key for us to extend our solution capabilities and technological edge in our portfolio of software-based Intellectual Property (IP). To-date, Silverlake Axis has an IP portfolio of over 90 modules and components. During the financial year, we completed the IP integration of existing modules and enriched our IP through the Silverlake Axis Group Theoretic Architecture (SAGTA). SAGTA adopts the Symmetry and Group Theory approach which unifies the underlying software structure while providing construction flexibility in allowing solutions to be formulated to meet high performance customer requirements. This flexibility has allowed us to adapt our software solutions to penetrate new customer markets, as exemplified in our recent wins with a payment switching operator and an innovative financial services provider. Internally, we are improving our business model and operations through the adoption of the Silverlake Axis Epistemological Model (SAEM). SAEM is anchored on the concepts of Regularity, Prediction, Causality, Binary Operation and Purpose. We believe that through the adoption of SAEM in all areas of our business, Silverlake Axis will be able to further strengthen our position as a World-Class One-Stop Core Banking and High Performance Software Solutions Provider. OUTLOOK AND PROSPECT We see good opportunities and strong growth potential for Silverlake Axis in FY2008. Leading industry analysts have highlighted that strong and resilient Asian economic growth will support a significant increase in spending on banking and financial services Information Technology and Software Solutions. The key strategic areas of spending focus in FY2008 include Core Banking Transformation, Delivery Channels Modernisation, Regulatory Compliance, Risk Management and Performance Management. Silverlake Axis is well positioned to take advantage of business opportunities in both existing and new markets. We have a strong business pipeline of contracts and proposals going into FY2008. The Group is focused on growing the business by building on the solid foundation laid in FY2007 through our geographical expansion, broadening of IP offerings and acquisition to supplement organic growth. We are confident that buoyant market conditions, strong business pipeline and the continued expansion of our core banking and high performance software solutions platform will deliver higher group net profit in FY2008 as compared to FY2007. ACKNOWLEDGEMENT The contributions of the entire Silverlake Axis team have been critical to our success so far and will continue to be so in the future. On behalf of the Board of Directors, I would like to thank all our management and staff for the commitment exemplified during FY2007. As we progress into FY2008, I look forward to the continuous and steadfast commitment to deliver 100% customer success and satisfaction. To all our shareholders, customers and business associates, my sincere thanks for your ongoing support and valuable partnership with the Group. Goh Peng Ooi Executive Chairman 28 September 2007 SILVERLAKE AXIS LTD ANNUAL REPORT

14 INVESTMENT IN COLLABORATIVE PARTNERSHIP SBI Card Processing Co. Ltd., Japan SBI is the flagship of Japan's most comprehensive internet-centric financial services businesses. SBI Group's far-reaching interests range from Asset Management and Brokerage to full service Investment Banking, Real Estate and Non-Bank Financial Services. Through this joint venture with SBI Holdings Inc., Silverlake Axis is providing the technology and software solutions for credit and debit card payment processing. This new initiative also plays a key role in gaining further market penetration for the Group into North Asia. Silverlake Axis has a 25% interest in SBI Card Processing Co. Ltd. Unifisoft/ Global InfoTech, China Unifisoft is an established information technology (IT) solutions and services company focusing on the financial services sector in China. In a recent International Data Corporation (IDC) report, Unifisoft was ranked 5th in China's banking solutions and services sector. Through the collaborative partnership with Unifisoft, Silverlake Axis will combine Unifisoft's in-depth local market expertise and proven systems integration capability with the Group's comprehensive range of core banking solutions to form a solid foundation for joint business development of the vibrant China market. Silverlake Axis has a 30% interest in Unifisoft Holdings Limited. 10 SILVERLAKE AXIS LTD ANNUAL REPORT 2007

15 BOARD OF DIRECTORS' PROFILE GOH PENG OOI Executive Chairman Mr. Goh Peng Ooi was appointed as the Executive Chairman of Silverlake Axis Ltd ("the Company") on 23 May Prior to that, he was the Non-Executive Chairman of the Company since He founded Silverlake Group in 1989 and has built it to become an established provider of an advanced, state of the art universal integrated banking solution. Silverlake Group has grown by leaps and bounds and at present, its offices and customers are located in over 13 countries across Asia Pacific. Silverlake Group has earned many industry recognitions including the 'IBM Star Stream Award' in 1997, the 'IBM iseries Director's Award for the Best Global On-Demand Banking Implementation' in 2003, 'IBM's Asia Pacific Excellence Award for Regional System Integrators (SIs) and Independent Software Vendors (ISVs)' in 2005, 'IBM iseries General Manager's Award' in 2005 and 'IBM Partner World Beacon Awards' in 2005 and Mr. Goh was bestowed 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 years career at IBM, his last being Sales Manager for Banking and Finance Industry. Mr. Goh has a keen interest in Science and Mathematics and obtained his Bachelor of Engineering (Major in Electronics) at the University of Tokyo on a Mombusho Scholarship 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 2005 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 28 years of experience in Information Technology, Business Transformation and Solution Implementation in Financial Services, Utilities and Technology Industries. 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. SILVERLAKE AXIS LTD ANNUAL REPORT

16 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 (now British American 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 has been Director and Chairman of Bank Pertanian Malaysia for 10 years. He sits on the Boards of Ho Hup Construction Company Berhad, Konsortium Transnasional Berhad, Pharmaniaga Berhad and Malaysia Packaging Industry Berhad. He was also Chairman of Ranhill Power Berhad and a board member of University Putra Malaysia. He is currently the Chairman of the Malaysia Syria Business Council. He has a diploma in Agriculture from the College of Agriculture Malaya (now University Putra Malaysia), graduating as the Most Outstanding Student. He has Masters in Business Administration from IMC Buckingham and he graduated from the Stanford-Insead Advanced Management Programme in 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 Department Private Sector Panel, and National Steering Committee to Transform Higher Education; Pro-Chancellor of Universiti Sains Malaysia; Member, Malaysia-Japan University Centre Advisory Board, 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) and Regional Director for Asia, Harvard Alumni Association. 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. 12 SILVERLAKE AXIS LTD ANNUAL REPORT 2007

17 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 Executive Deputy Chairman of LMA International NV and Chairman of Senoko Power Limited. He is a member of the Governing Council of the Singapore Institute of Management and immediate past Chairman of Building & Construction Authority. He was the former Group Managing Director of Pan- United Corporation Limited, MPH Ltd and Chief Executive Officer of Cold Storage Holdings Ltd. He now 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 Economic honours graduate from the University of Malaya, Mr. Lim has more than 40 years of extensive senior management experience in the Asia Pacific region. SILVERLAKE AXIS LTD ANNUAL REPORT

18 MANAGEMENT TEAM'S PROFILE WONG YOK KOON Head of Core Banking Integration Development Ms. Wong is responsible for the integration development of Silverlake Axis Integrated Banking Solution (SIBS). Prior to joining the Group in 2006, she was a Senior Executive Vice President with Silverlake System Sdn Bhd with responsibilities in the design and development of new products and solutions. She has also led and managed several key SIBS 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 SIBS. DR. KWONG YONG SIN Managing Director 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. 14 SILVERLAKE AXIS LTD ANNUAL REPORT 2007

19 MANAGEMENT TEAM'S PROFILE (cont'd) YAU SIEW MOI Head of Core Banking Product Development Ms. Yau joined the Group in 2006 and is responsible for the product development of Silverlake Axis Integrated Banking Solution (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 SIBS. SIEW KEN HUN Head of Sales, Marketing and Services Operations GOH PENG OOI Executive Chairman 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. THANG BOON CHENG Head of Solution Management and Channel Development Mr. Thang is responsible for the overall roadmap of the Silverlake Axis Integrated Banking Solution (SIBS) and leads the delivery channels development. He joined the Group in 2005 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. SILVERLAKE AXIS LTD ANNUAL REPORT

20 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 8 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 Axis Board Audit Committee Nominating Committee No. of No. of No. of No. of No. of No. of Name meetings meetings meetings meetings meetings meetings held attended held attended held attended Goh Peng Ooi Ong Kian Min YBhg. Datuk Sulaiman Bin Daud YBhg. Tan Sri Dato Dr. Lin See-Yan Kwong Yong Sin Lim Kok Min SILVERLAKE AXIS LTD ANNUAL REPORT 2007

21 CORPORATE GOVERNANCE STATEMENT (cont'd) Remuneration Committee Employee Share Option Scheme Committee Name No. of No. of No. of No. of meetings held meetings attended meetings held meetings attended Goh Peng Ooi Ong Kian Min YBhg. Datuk Sulaiman Bin Daud YBhg. Tan Sri Dato' Dr. Lin See-Yan Kwong Yong Sin Lim Kok Min 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 taking into account the nature and scope of the Company's operations, the current board size of six Directors is appropriate. 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 is the Company s Executive Chairman and Dr. Kwong Yong Sin is the Managing Director, who is responsible for the day-to-day management of the Company. 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. SILVERLAKE AXIS LTD ANNUAL REPORT

22 CORPORATE GOVERNANCE STATEMENT (cont'd) 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. The Board is also of the view that it is not necessary to appoint a lead independent director as its majority comprises independent directors, who ensure objectivity in Board deliberations and decisions. 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 wellconsidered decisions to be made. 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 Nominating Committee 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. 18 SILVERLAKE AXIS LTD ANNUAL REPORT 2007

23 CORPORATE GOVERNANCE STATEMENT (cont'd) 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 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. 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 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* 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. SILVERLAKE AXIS LTD ANNUAL REPORT

24 CORPORATE GOVERNANCE STATEMENT (cont'd) 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:- S$250,000 Name S$500,000 and above to below S$500,000 Below S$250,000 Hoong Lai Ling X Siew Ken Hun Thang Boon Cheng X 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; 20 SILVERLAKE AXIS LTD ANNUAL REPORT 2007

25 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. There were no non-audit services provided by external auditors to the Group during the financial year. 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 Company s external auditors carry out, in the course of their annual statutory audit, a review of the effectiveness of the Company s internal audit controls, which will include financial, operational and compliance controls, to the extent of the scope of audit as laid out in the audit plan. Material non-compliance and internal control weaknesses noted during the audit and the auditors recommendations to address such non-compliance and weaknesses are reported to the AC. Thereafter these recommendations of the external auditors are followed up by Management. 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 audit 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. 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. SILVERLAKE AXIS LTD ANNUAL REPORT

26 CORPORATE GOVERNANCE STATEMENT (cont'd) 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 Listing Manual 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. 22 SILVERLAKE AXIS LTD ANNUAL REPORT 2007

27 OTHER INFOATION 1. Recurrent Interested Persons Transactions of a Revenue or Trading Nature In compliance with Rule 920 of the Listing Manual, the aggregate value of recurrent interested persons transactions of revenue or trading nature conducted during the financial year ended 30 June 2007 by the Group in accordance with the shareholders mandate were as follows:- Name of interested person Aggregate value of all interested person transactions during Aggregate value of all interested the financial year under review (excluding transactions less person transactions, conducted under than S$100,000 and transactions conducted under shareholders mandate pursuant to Rule 920 shareholders mandate pursuant to Rule 920) (excluding transactions less than S$100,000) ( ) ( ) Silverlake System Sdn. Bhd. and its related companies - 93,575, Material Contracts 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. Disclosures 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 ("SAACIS") Group as disclosed in the Company s circular dated 31 March 2006 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 2006 (hereinafter referred to as "Silverlake Entities") and is satisfied that the interested person transactions comply with the shareholders mandates approved by the shareholders at the last Annual General Meeting of the Company that was held on 27 October The ageing of amounts owing from the Silverlake Entities as at 30 June 2007 was as follows: Name of related parties Total Due 0 30 days days days >180 days Transactions conducted under the Master Licence Reseller Agreement ( MLRA ) & Master Service Agreement ( MSA ) Mandates (1 ) :- Silverlake System Sdn Bhd and its related companies ( Silverlake Entities (2) ) 7,419,915 7,419, Transactions conducted under the Master Reseller Agreement ( MRA ) Mandate (1) :- Silverlake System Sdn Bhd and its related companies ( Silverlake Entities (3) ) 3,886,027 3,886, ,305,942 11,305, (1) Pursuant to MLRA, MSA & MRA Shareholders Mandates for Interested Persons Transactions approved by the shareholders on 27 October (2) The Audit Committee confirms that collections from the Silverlake Entities were within the credit terms extended. (3) The Audit Committee confirms that collections from the Silverlake Entities were within the payment terms extended. SILVERLAKE AXIS LTD ANNUAL REPORT

28 FINANCIAL STATEMENTS pg.25 pg.28 pg.29 pg.30 pg.31 pg.33 pg.35 pg.37 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 24 SILVERLAKE AXIS LTD ANNUAL REPORT 2007

29 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 2007 and the balance sheet of the Company at 30 June 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 ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE SHARES AND DEBENTURES 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 9 and 26 to the financial statements. SILVERLAKE AXIS LTD ANNUAL REPORT

30 DIRECTORS REPORT (cont'd) 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 or its related corporations, except as follows: Holdings registered in name Holdings in which a director of director or nominee is deemed to have an interest At At At At The Company (Ordinary shares of USD0.02 each) Goh Peng Ooi ,514, ,314,292 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. 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 ESOS Scheme became effective on 9 January 2003 for a duration of 10 years, terminating on 9 January The principal features of the ESOS Scheme are as follows: (a) (b) (c) (d) Eligible persons are confirmed full-time employees of the Company, its subsidiaries and associates 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 associates 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. 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. 26 SILVERLAKE AXIS LTD ANNUAL REPORT 2007