CONTENTS. Financial Contents 9 Notice Of Annual General Meeting 57 Proxy Form 59

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2 CONTENTS Corporate Profile 1 Fastest Growing 50 2 Corporate Information 3 Group Structure 4 Regional Network 5 Chairman s Statement 6 Background of Directors 8 Background of Key Executives 8 Financial Contents 9 Notice Of Annual General Meeting 57 Proxy Form 59

3 CORPORATE PROFILE Lantrovision is recognised as a leading and key player in the structured cabling installation industry. We specialise in providing installation, maintenance and support services for structured cabling systems as well as the distribution of cabling systems and related components for seamless transmission of information and connection of applications, business processes, people and organisations. Lantrovision remains focused on establishing ourselves as a leading Information Communication Technology ( ICT ) service provider in the Asia Pacific region by providing a range of ICT infrastructural services which are integral to an organisation s local and global information and telecommunication infrastructures. 1

4 FASTEST GROWING 50 Undaunted by the gloom of recession and the SARS epidemic outbreak, Lantrovision has been hailed as one of the fastest growing 50 companies in Singapore in an annual ranking complied by DP Information Networks. This year s Fastest Growing list of Companies have weathered the Asian financial crisis, the bursting of the e-bubble and Sept 11 - proving that Singapore companies can thrive in tough times. These are the companies to watch because they will help Singapore stay in course when it hits the next big storm. BUSINESS TIMES JULY 23,

5 CORPORATE INFORMATION REGISTERED OFFICE 102F Pasir Panjang Road #03-03 Citilink Warehouse Complex, Singapore Tel Fax BOARD OF DIRECTORS Executive Lum Chue Tat Managing Director Chan Thye Yuan Non Executive Chew Chin Hua Independent Ho Swee Seng Independent AUDIT COMMITTEE Chew Chin Hua Chairman Ho Swee Seng REMUNERATION COMMITTEE Ho Swee Seng Chairman Chew Chin Hua NOMINATING COMMITTEE Chew Chin Hua Chairman Ho Swee Seng Chan Thye Yuan COMPANY SECRETARY Lim Lee Choo SHARE REGISTRAR Lim Associates (Pte) Ltd 10 Collyer Quay #19-08 Ocean Building Singapore AUDITORS Ernst & Young 10 Collyer Quay #21-01 Ocean Building Singapore AUDIT PARTNER Max Loh Khum Whai Appointed with effect from financial year 30 June

6 GROUP STRUCTURE 49% Lantro (Malaysia) Sdn Bhd (Malaysia) BCH (Thailand) Co. Ltd (Thailand) 49% 51% Lantro (Thailand) Co. Ltd (Thailand) 100% Citech Systems Pte Ltd (Singapore) Lantro Co. Ltd (Hangzhou) (People s Republic of China) 70% Citech Systems (M) Sdn Bhd (Malaysia) 100% 51% VRnet (S) Pte Ltd (Singapore) VRnet (Thailand) Co. Ltd (Thailand) Lantro (HK) Limited (Hong Kong) 75% 49% 100% Lantro Korea Co. Ltd (Korea) VRnet (M) Sdn Bhd (Malaysia) Lantrovision (S) Ltd Lantro (Japan) Co., Ltd (Japan) 100% Lantro Phils. Inc. (Philippines) 70% Spectrum Infocom International Pte Ltd (Singapore) 62.86% 90% Spectrum Infocom (HK) Limited (Hong Kong) 80% 40% Lantro (Taiwan) Ltd (Taiwan) Go! Distribution Network Pte Ltd (Singapore) Lantro (Penang) Sdn Bhd (Malaysia) 100% 80% BCH (HK) Limited (Hong Kong) 51% 100% I-Contact Solutions Pte Ltd (Singapore) 51% D AI Automation Ltd (People s Republic of China) 40% IP-Contact Solutions Phils Inc (Philippines) IBMS Technology Pte Ltd (Singapore) 40% 90% 4

7 REGIONAL NETWORK People s Republic of China Korea Japan Taiwan Hong Kong Thailand Philippines Malaysia Singapore The Lantrovision Group has established business presence in 12 cities throughout the Asia Pacific region. These include Beijing, Shanghai, Hangzhou, Hongkong, Kuala Lumpur, Penang, Bangkok, Manila, Seoul, Tokyo, Taipei and Singapore. With these regional offices, the Group is well positioned to support its regional customers and tap into the demand for its products and services in each respective local market. 5

8 CHAIRMAN S STATEMENT The Group will continue to remain focused on efficient cost management measures, maintain its market share in its core businesses and provide quality services to our business associates. On behalf of the Board of Directors, I would like to present the Annual Report and Financial Statements for the year ended 30 June FINANCIAL PERFORMANCE Turnover for the Group was S$67.4M for the financial year ended 30 June 2003, an 8.8% increase compared to that of the previous year. This performance was achieved as a result of higher trading sales, and in spite of the sluggish business environment as well as declining consumer confidence. Group operating profits after tax and minority interests has fallen by 54.7% to S$3.2M. The margin has been eroded due to more competitive pressure and generally lower margins for trading sales. REVIEW BY ACTIVITIES Turnover and profit margin for installation and maintenance activities have declined in the midst of persistent negative concerns over the global economy, and were also affected by cut backs, delays and lower spending in network infrastructure and services as well as the downward pressure on selling prices to compete for higher market share. Trading sales has increased as a result of:- intensive marketing efforts for the sale and distribution of voice and data telecommunication services which resulted in an increase in turnover of approximately S$3.5M increased sales of broadband equipment and services of approximately S$6.3M increased trading sales by newly acquired subsidiaries of approximately S$1.7M REVIEW BY GEOGRAPHY Higher turnover in Singapore was due to higher trading sales by the Singapore subsidiaries. The margin, however, has been eroded as a result of a generally more competitive environment and lower margin in trading sales compared to the rest of the activities. Turnover in Malaysia has fallen as a result of lower spending in view of the uncertainty in the global economy. The margin in Malaysia has increased as a result of more efficient project management. Turnover and margin in Hong Kong have increased due to new installation projects from financial institutions. Margins in the rest of the region have decreased as a result of high fixed costs in country such as Japan. COMMENTARY ON CONSOLIDATED PROFIT AND LOSS STATEMENT Cost of sales for the year has increased as a result of higher purchases related to higher trading sales. Financial income has reduced as a result of lower interest earned from fixed deposits. Taxation and provision for tax has also reduced as a result of lower taxable profits earned for the year. Increased minority interest in the current year is mainly due to increased share of profits in 2 subsidiaries in the current year. 6

9 CHAIRMAN S STATEMENT COMMENTARY ON CONSOLIDATED BALANCE SHEET The increase in work in progress of S$9.5M is due mainly to the costs incurred for the supply and installation of wireless broadband premise equipment for a project in Malaysia of S$9.2M. Other debtors, deposits and prepayments has increased by S$1.6M mainly due to the downpayment placed with a supplier for equipment delivered after year end. Trade creditors has increased by about S$4.9M mainly due to an amount of S$2.8M owing to supplier in respect of a project in Malaysia. FUTURE OUTLOOK Market conditions are expected to continue to be challenging in the coming year. With the SARS outbreak and its expected negative impact on the economy, planning and decision making for the Group and its customers continue to be uncertain. Business visibility therefore remains poor. The Group will continue to remain focused on efficient cost management measures, maintain its market share in its core businesses and provide quality services to our business associates. Barring any unforeseen circumstances, the Group expects to remain profitable. OPERATIONAL HIGHLIGHTS Responding to the market difficulties and unpredictability, the Group has intensified its marketing efforts. One of the significant milestones in the current year is the award of a contract by AtlasOne Sdn Bhd for the supply and installation of Wireless Broadband Premise Equipment, as announced by the Company in January AtlasOne s full deployment will begin in the Klang Valley area of Kuala Lumpur, which is home to 60% of the country s economy, and will offer full telecommunication services on IP-based solutions such as always-on Internet services. The outbreak of SARS in Singapore has raised growing concerns about business continuity management. The Company has spared no effort to put in place contingency plans ahead of any SARS-related quarantine measures imposed by the authorities and ensure minimal disruption to the business operations of all our valued business associates. ACKNOWLEDGEMENT The Board will like to express its sincere appreciation to all customers, suppliers, business associates, shareholders, bankers and the relevant statutory and governmental bodies for their continuous support and contributions. The Board would also like to pay tribute to our late director, Ng Gek Ng Swee Han ( Han ), who passed away peacefully on 2 September Han who had served as the Group Executive Director and a member of the Audit and Remuneration Committee, was also one of the founding partners of the Company. In the years that Han was here, many of us have grown very close to Han. Han was everyone s friend and will be sorely missed. Lum Chue Tat Chairman 7

10 BACKGROUND OF DIRECTORS Lum Chue Tat, aged 37, is an Executive Director of the Company and is responsible for overseeing day-to-day operations and the Group s overall management. He holds a Diploma in Electronics and Communication from Singapore Polytechnic and has over 10 years of experience in structured cabling design and marketing. Chan Thye Yuan, aged 43, is an Executive Director of the Company and is responsible for our Malaysian operations and overall Group business development. He holds a Bachelor of Business in Business Administration and has over 20 years of experience in structured cabling design and related telecommunications expertise. Chew Chin Hua, aged 48, is a non-executive and independent director of the Company and has been a member of the Board since August He is the Chairman of the Audit and Nominating Committees and also a member of the Remuneration Committee. Mr Chew is currently a practicing certified public accountant and also sits on the board of several listed companies. Mr Chew will be seeking re-election to the Board at the forthcoming AGM. Ho Swee Seng, aged 37, is a non-executive and independent director of the Company. He joined the Board in February Mr Ho is the Chairman of the Remuneration Committee and also a member of the Audit and Nominating Committees. Mr Ho holds a Graduate Diploma in Technology Management and is currently with Andas Network Inc., USA, a telecom equipment provider as Vice President of International Operations and Worldwide Program Management, responsible for its international engineering operations. Mr Ho was last reelected to the Board in BACKGROUND OF KEY EXECUTIVES Chan Sow Har, age 33, is our Administrative Manager and has been with the Company since Her main responsibilities are the management and supervision of administrative staff and she oversees the administrative functions of our Company such as payroll and personnel matters. She has a Certificate of Business Studies from the National Institute of Commerce in Lim Lee Choo, age 32, is the Group Financial Controller, responsible for our overall financial accounting and corporate finance matters. She holds a Bachelor of Accountancy degree from Nanyang Technological University and is a Certified Public Accountant (CPA) with the Institute of Certified Public Accountants of Singapore (ICPAS). Chia Kit Tuck, age 34, is our Business Development Manager and has been with the Company since He is involved in the sales, marketing and business development aspects of our business. He also manages our Group s major accounts and is strategically involved in many local and regional projects. He graduated from the National University of Singapore with a Bachelor of Science degree in Lim Bee Suat, age 43, is our General Manager and has been with the Company since She is responsible for overseeing our day-to-day and sales operations in Singapore. Ms Lim graduated in 1984 with a Full Technological Certificate from City and Guilds of London Institute. Ms Lim also holds a Diploma in Electronics and Communications Engineering from Singapore Polytechnic in 1985 and a Diploma in Marketing from Ngee Ann Polytechnic in Tan Chin Lim, age 42, is our Senior Project Manager and has been with the Company for more than 9 years. He is responsible for local and regional installation projects, project management and supervises a team of project engineers in system implementation. He oversees IT support for the Group as well. He obtained his GCE O levels in Tan Kim Hin, age 40, is our Senior Project Manager and is responsible for site supervision and the deployment of manpower and technical resources such as testing equipment. He is also responsible for sales and project management, and has been involved in several significant projects for our Company. He completed his GCE O levels in Tang Kam Choy, age 50, is our Senior Project Manager and is responsible for IT support for the Group. He has more than 17 years experience in the IT service industry which provides solutions on network infrastructure, enterprise messaging systems, LAN/WAN networking and IT outsourcing. He completed his GCE O levels in

11 FINANCIAL CONTENTS Report of the Directors 10 Statement by Directors 16 Auditors Report 17 Balance Sheets 18 Profit and Loss Accounts 20 Statements of Changes in Equity 21 Consolidated Statement of Cash Flows 22 Notes to the Financial Statements 25 Report on Corporate Governance 50 Group Properties 55 Statistics of Shareholdings 56 Notice of Annual General Meeting 57 Proxy Form 59 9

12 REPORT OF THE DIRECTORS for the financial year ended 30 June 2003 (Amounts expressed in Singapore dollars unless otherwise stated) The Directors present their report together with the audited financial statements of the Company and of the Group for the financial year ended 30 June DIRECTORS The Directors of the Company in office at the date of this report are: Chan Thye Yuan Lum Chue Tat Chew Chin Hua Ho Swee Seng PRINCIPAL ACTIVITIES The principal activities of the Company are those of supplying, designing, installation and provision of consultancy services on network integration and structured cabling and those of electrical contractors and suppliers of electrical hardware and fittings. The principal activities of the subsidiaries are as shown in Note 6 to the financial statements. There have been no significant changes in the nature of these activities during the financial year. RESULTS FOR THE FINANCIAL YEAR Group Company $ $ Profit after taxation 3,812, ,253 Minority interests (567,667) Net profit attributable to shareholders 3,245, ,253 Accumulated profits brought forward 17,178,765 9,870,566 20,423,785 10,686,819 Dividend paid Accumulated profits carried forward 20,423,785 10,686,819 MATERIAL MOVEMENTS IN RESERVES AND PROVISIONS Except as shown in the financial statements, there were no material transfers to or from reserves and provisions during the financial year. 10

13 REPORT OF THE DIRECTORS for the financial year ended 30 June 2003 (Amounts expressed in Singapore dollars unless otherwise stated) ACQUISITION AND DISPOSAL OF SUBSIDIARIES (a) The following subsidiaries were incorporated during the financial year: Name of subsidiary Interest Paid-up capital % Held by the Company BCH (HK) Limited 100 HK$10,000 ($2,260) Held by a subsidiary Citech Systems (M) Sdn Bhd 51 RM4 ($2) (b) The following subsidiaries were acquired during the financial year: Attributable net Effective tangible assets equity held (liabilities) on Held by subsidiary by the Group Consideration acquisition % $ Spectrum Infocom (HK) Limited 80 HK$8,000 1,814 ($1,814) Go! Distribution Network Pte Ltd 80 $40,000 (7,139) (c) During the financial year, the Company increased its shareholdings in the following subsidiary: Additional interest Interest after Consideration Name of subsidiary acquired acquisition paid % % $ Spectrum Infocom International Pte Ltd ,000 No subsidiaries were disposed of during the financial year. ISSUE OF SHARES AND DEBENTURES During the financial year, the following subsidiaries issued shares: Name of subsidiary Description of shares issued Purpose of issue Spectrum Infocom International Pte Ltd 200,000 ordinary shares of To provide additional $1 each at par for cash working capital BCH (HK) Limited 10,000 ordinary shares of For incorporation HK$1 each at par for cash Lantro Co. Ltd (Hangzhou) 50,000 ordinary shares of To provide additional USD1 each at par for cash working capital Citech Systems (M) Sdn Bhd 4 ordinary shares of For incorporation RM1 each at par for cash Except as disclosed above, no other shares or debentures were issued by the Company or its subsidiaries during the financial year. 11

14 REPORT OF THE DIRECTORS for the financial year ended 30 June 2003 (Amounts expressed in Singapore dollars unless otherwise stated) ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE SHARES OR DEBENTURE Except for the Lantrovision Share Option Scheme, 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 Directors of the Company to acquire benefits by means of the acquisition of shares or debentures of the Company or any other body corporate. DIRECTORS INTERESTS IN SHARES OR DEBENTURES The interests of the Directors who held office at the end of the financial year in the shares or debentures of the Company and related corporations, according to the register kept by the Company for the purposes of Section 164 of the Companies Act, were as follows: Other shareholdings in which the director Held by directors is deemed to have an interest At 1 July At 30 June At 21 July At 1 July At 30 June At 21 July Name of Director The Company Ordinary shares of $0.02 each Chan Thye Yuan 32,845,000 32,845,000 32,845,000 Lum Chue Tat 32,845,000 32,845,000 32,845,000 Ng Gek Ng Swee Han 35,525,000 35,525,000 35,525,000 (deceased on 2 September 2003) Chew Chin Hua 80,000 80,000 80,000 Ho Swee Seng 50,000 50,000 50,000 10,000 10,000 10,000 Options to subscribe for ordinary shares of $0.02 each Chan Thye Yuan 330, , , ,000 Lum Chue Tat 330, ,000 Ng Gek Ng Swee Han (deceased on 2 September 2003) 330, ,000 Chew Chin Hua 30,000 30,000 Ho Swee Seng 30,000 30,000 DIVIDENDS No dividend has been paid or declared by the Company since the end of the previous financial year. The Directors do not recommend the payment of a final dividend in respect of the current financial year. BAD AND DOUBTFUL DEBTS Before the profit and loss account and balance sheet of the Company were made out, the Directors took reasonable steps to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts, and have satisfied themselves that no debts of the Company need to be written off as bad and that adequate provision has been made for doubtful debts. At the date of this report, the Directors are not aware of any circumstances which would render any amount written off or provided for bad and doubtful debts in the Group inadequate to any substantial extent. 12

15 REPORT OF THE DIRECTORS for the financial year ended 30 June 2003 (Amounts expressed in Singapore dollars unless otherwise stated) CURRENT ASSETS Before the profit and loss account and balance sheet of the Company were made out, the Directors took reasonable steps to ascertain that any current assets which were unlikely to realise their book values in the ordinary course of business have been written down to their estimated realisable values or adequate provision had been made for the diminution in value of such current assets. At the date of this report, the Directors are not aware of any circumstances which would render the values attributed to current assets in the consolidated financial statements misleading. CHARGES ON ASSETS AND CONTINGENT LIABILITIES Since the end of the financial year, and up to the date of this report, no charge on the assets of the Company or any corporation in the group has arisen which secures the liabilities of any other person and no contingent liability has arisen, except as disclosed in Note 34 to the financial statements. ABILITY TO MEET OBLIGATIONS No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the ability of the Company or of the Group to meet their obligations as and when they fall due. OTHER CIRCUMSTANCES AFFECTING THE FINANCIAL STATEMENTS At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or in the consolidated financial statements which would render any amount stated in the financial statements of the Company and consolidated financial statements misleading. UNUSUAL ITEMS In the opinion of the Directors, the results of the operations of the Company and of the Group during the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature. UNUSUAL ITEMS AFTER THE FINANCIAL YEAR In the opinion of the Directors, no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which would affect substantially the results of the operations of the Company and of the Group for the financial year in which this report is made. DIRECTORS CONTRACTUAL BENEFITS Except as disclosed in the financial statements, since the end of the previous financial year, no Director of the Company 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 the Director is a member, or with a company in which the Director has a substantial financial interest. 13

16 REPORT OF THE DIRECTORS for the financial year ended 30 June 2003 (Amounts expressed in Singapore dollars unless otherwise stated) SHARE OPTIONS The Lantrovision Share Option Scheme ( the Scheme ) was approved by the members of the Company at a shareholders meeting held on 31 August The scheme is administered by the remuneration committee comprising the following members: Chew Chin Hua Ho Swee Seng All options issued under the Scheme to employees, including executive directors, will have a term no longer than 10 years and options issued to non-executive Directors will have a term no longer than 5 years. During the financial year, pursuant to the Scheme, the Company granted 5,180,000 share options, which are exercisable based on a subscription price equal to the average of the last dealt prices for the last five consecutive trading days immediately preceding the date of grant, without any discount to the directors, officers and senior managers of the Group, none of whom are controlling shareholders and their associates. Details of the options to subscribe for ordinary shares of $0.02 each are as follows: Options outstanding Exercise Options Options Options as at Exercise Date of grant period granted lapsed exercised 30 June 2003 price 10 January January ,000 60,000 $0.26 to 9 January January January ,120,000 5,120,000 $0.26 to 9 January 2013 Other than the 3 executive directors namely Lum Chue Tat, Chan Thye Yuan and Ng Gek Ng Swee Han who were each granted 6.37% of the total options granted, there are no other participants who received 5% or more of the options granted. These options do not entitle the holder to participate, by virtue of the options, in any share issue of any other company. The aggregate number of options granted to directors and employees of its subsidiaries during the financial year, since the commencement of the Scheme, is 590,000. Except for the above, no other options to take up unissued shares of the Company or its subsidiaries were granted during the year and no shares were issued by virtue of the exercise of options to take up unissued shares of the Company or its subsidiaries. Save as disclosed, there were no unissued shares of the Company or its subsidiaries under option at the end of the financial year. 14

17 REPORT OF THE DIRECTORS for the financial year ended 30 June 2003 (Amounts expressed in Singapore dollars unless otherwise stated) AUDIT COMMITTEE The members of the Audit Committee are: Chew Chin Hua Chairman, independent director Ho Swee Seng Independent director Ng Gek Ng Swee Han Executive director (deceased on 2 September 2003) The Audit Committee held two meetings during the year and performed the following functions: (a) (b) (c) (d) (e) (f) (g) reviewed with the external auditors the audit plan, their evaluation of the system of internal controls and the external auditors reports; reviewed the half-year and annual results announcements before submission to the Board of Directors for approval; discussed problems and concerns, if any, arising from the final audit, and any matters which the auditors may wish to discuss; reviewed the assistance given by the Company s officers to the external auditors; considered the re-appointment of the external auditors; reviewed Interested Person Transactions; and reviewed the remuneration packages of employees who are related to the Directors and/or substantial shareholders. The Committee recommends to the Board of Directors the nomination of Ernst & Young as external auditors at the forthcoming Annual General Meeting of the Company. OTHER INFORMATION REQUIRED BY THE SINGAPORE EXCHANGE SECURITIES TRADING LIMITED No material contracts to which the Company or any subsidiary is a party and which involve directors interests subsisted at, or have been entered into since the end of the previous financial year. AUDITORS Ernst & Young have expressed their willingness to accept re-appointment as auditors. On behalf of the Board, Lum Chue Tat Director Chan Thye Yuan Director Singapore 22 September

18 STATEMENT BY DIRECTORS pursuant to Section 201(15) We, Lum Chue Tat and Chan Thye Yuan, being two of the Directors of Lantrovision (S) Ltd, do hereby state that, in the opinion of the Directors, (i) (ii) the accompanying balance sheets, profit and loss accounts, statements of changes in equity and consolidated cash flow statement together with notes thereto, set out on pages 18 to 49 are drawn up 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 2003 and of the results and changes in equity of the business of the Company and of the Group and cash flows of the Group for the 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. The Board of Directors authorised these financial statements for issue on 22 September On behalf of the Board, Lum Chue Tat Director Chan Thye Yuan Director Singapore 22 September

19 AUDITORS REPORT to the members of Lantrovision (S) Ltd and Subsidiaries We have audited the financial statements of Lantrovision (S) Ltd and subsidiaries set out on pages 18 to 49. The financial statements comprise the balance sheets of the Company and of the Group as at 30 June 2003, the profit and loss accounts and the statements of changes in equity of the Company and of the Group and cash flow statement of the Group for the year ended 30 June 2003, and notes thereto. These financial statements are the responsibility of the Company s Directors. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit 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, (a) the financial statements are properly drawn up in accordance with the provisions of the Companies Act (Act) and Singapore Statements of Accounting Standard and so as to give a true and fair view of:- (i) (ii) the state of affairs of the Company and of the Group as at 30 June 2003 and of the results and changes in equity of the Company and of the Group and cash flows of the Group for the year ended on that date; and the other matters required by section 201 of the Act to be dealt with in the financial statements; (b) the accounting and other records, and the registers required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act. We have considered the financial statements of the subsidiaries of which we have not acted as auditors, being financial statements included in the consolidated financial statements, and the auditors reports on those financial statements. The names of these subsidiaries are stated in Note 6 to the financial statements. We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations as required by us for those purposes. The auditors reports on the financial statements of the subsidiaries were not subject to any qualification and in respect of subsidiaries incorporated in Singapore did not include any comment made under section 207(3) of the Act. ERNST & YOUNG Certified Public Accountants Singapore 22 September

20 BALANCE SHEETS as at 30 June 2003 (Amounts expressed in Singapore dollars) Note Group Company $ $ $ $ Share capital and reserves Share capital 3 5,180,000 5,180,000 5,180,000 5,180,000 Share premium 4 5,918,647 5,918,647 5,918,647 5,918,647 Accumulated profits 20,423,785 17,178,765 10,686,819 9,870,566 Translation reserve (15,054) 4,185 31,507,378 28,281,597 21,785,466 20,969,213 Minority interests 1,083, ,896 32,590,392 28,790,493 21,785,466 20,969,213 Fixed assets 5 5,660,993 5,347,889 3,443,809 3,474,923 Subsidiaries 6 1,356,548 1,152,618 Associated companies 7 1,637,381 1,282,590 1,469,482 1,048,016 Quoted investments 8 7,505 7,505 7,505 7,505 Deferred tax asset ,794 25,507 Negative goodwill 9 (585,609) (864,225) Other debtor , ,117 Current assets Stocks 10 2,997,508 3,096, , ,503 Work-in-progress 11 12,828,285 3,295,367 1,860,423 2,784,278 Trade debtors 12 20,044,472 16,777,982 4,515,474 6,216,224 Other debtors, deposits and prepayments 13 3,097,235 1,477,889 2,390,941 1,013,548 Due from subsidiaries (trade) 12,276,100 1,153,906 Due from subsidiaries (non-trade) 14 4,950,916 4,830,000 Due from affiliated companies (trade) 287, , , ,371 Due from associated companies (trade) 1,015, , , ,052 Due from associated companies (non-trade) , , ,250 Fixed deposits ,404 3,796,610 13,805 3,551,536 Cash and bank balances 5,066,709 4,319,855 1,587,819 1,565,366 46,584,209 33,771,365 29,805,496 22,549,784 The accounting policies and explanatory notes on pages 25 to 49 form an integral part of the financial statements. 18

21 BALANCE SHEETS as at 30 June 2003 (Amounts expressed in Singapore dollars) Note Group Company $ $ $ $ Current liabilities Trade creditors 9,710,170 4,805,722 2,655,403 2,843,507 Bills payable to banks (unsecured) 16 4,253,274 4,253,274 Other creditors and accruals 17 2,000,913 2,109, , ,953 Due to a subsidiary (trade) 309,863 Due to a subsidiary (non-trade) 14 2,887, ,000 Due to affiliated companies (non-trade) 14 1,430 Due to directors (non-trade) 14 2,950 Due to minority shareholder of a subsidiary (non-trade) 14 78,934 Provision for taxation 1,182,212 2,664, ,102 1,898,170 Lease obligations, current portion , , , ,637 Short term bank loans (unsecured) 19 2,500,000 2,500,000 Bank term loans (secured), current portion 20 8,545 20,153,374 9,843,054 13,989,581 6,766,267 Net current assets 26,430,835 23,928,311 15,815,915 15,783,517 Non-current liabilities Lease obligations, non-current portion , , , ,082 Bank term loans (secured), non-current portion ,360 Deferred tax liability 27 84,696 26,284 26,284 Net assets 32,590,392 28,790,493 21,785,466 20,969,213 The accounting policies and explanatory notes on pages 25 to 49 form an integral part of the financial statements. 19

22 PROFIT AND LOSS ACCOUNTS for the year ended 30 June 2003 (Amounts expressed in Singapore dollars) Note Group Company $ $ $ $ Turnover 21 67,412,921 61,986,095 34,080,439 31,810,966 Cost of sales (45,151,970) (36,168,759) (25,058,481) (15,767,737) 22,260,951 25,817,336 9,021,958 16,043,229 Distribution and selling expenses (1,851,508) (1,773,521) (742,888) (581,424) General and administrative expenses (1,938,411) (1,800,755) (491,743) (557,907) Other operating expenses (13,309,805) (12,871,014) (6,642,479) (6,882,249) Other operating income 22 2,403 95, Profit from operations 23 5,161,227 9,374,449 1,240,116 8,021,920 Financial expenses 26 (156,960) (135,023) (61,752) (69,990) Financial income 26 39, ,055 35, ,823 Profit before taxation 5,044,072 9,355,481 1,214,284 8,064,753 Share of profit of associated companies 109, ,256 5,153,851 9,603,737 1,214,284 8,064,753 Taxation 27 (1,341,164) (2,366,937) (398,031) (1,857,519) Profit after taxation 3,812,687 7,236, ,253 6,207,234 Minority interests (567,667) (78,990) Net profit attributable to shareholders 3,245,020 7,157, ,253 6,207,234 Earnings per share (cents) basic and diluted The accounting policies and explanatory notes on pages 25 to 49 form an integral part of the financial statements. 20

23 STATEMENTS OF CHANGES IN EQUITY for the year ended 30 June 2003 (Amounts expressed in Singapore dollars) Group Company $ $ $ $ Issued capital Balance at beginning of year 5,180, ,000 5,180, ,000 Issue of bonus shares by way of capitalisation of $Nil (2002: $102,000) and $Nil (2002: $3,536,400) from the Company s share premium and accumulated profits respectively 3,638,400 3,638,400 Issue of Nil (2002: 39,180,000) new ordinary shares of $Nil (2002: $0.02) each pursuant to the Company s initial public offering at a premium of $Nil (2002: $0.18) per share 783, ,600 Balance at end of year 5,180,000 5,180,000 5,180,000 5,180,000 Share premium Balance at beginning of year 5,918, ,000 5,918, ,000 Issue of bonus shares by way of capitalisation of $Nil (2002: $102,000) and $Nil (2002: $3,536,400) from the Company s share premium and accumulated profits respectively (102,000) (102,000) Issue of Nil (2002: 39,180,000) new ordinary shares of $Nil (2002: $0.02) each pursuant to the Company s initial public offering at a premium of $Nil (2002: $0.18) per share 7,052,400 7,052,400 Expenses incurred in relation to the Company s initial public offering (1,133,753) (1,133,753) Balance at end of year 5,918,647 5,918,647 5,918,647 5,918,647 Translation reserve Balance at beginning of year 4, ,140 Foreign currency translation adjustment, net of tax (19,239) (274,955) Balance at end of year (15,054) 4,185 Accumulated profits Balance at beginning of year 17,178,765 15,577,555 9,870,566 9,219,932 Profit for the year 3,245,020 7,157, ,253 6,207,234 20,423,785 22,735,365 10,686,819 15,427,166 Issue of bonus shares by way of capitalisation of $Nil (2002: $102,000) and $Nil (2002:$3,536,400) from the Company s share premium and accumulated profits respectively (3,536,400) (3,536,400) Dividends paid (Note 29) (2,020,200) (2,020,200) Balance at end of year 20,423,785 17,178,765 10,686,819 9,870,566 Total equity 31,507,378 28,281,597 21,785,466 20,969,213 The accounting policies and explanatory notes on pages 25 to 49 form an integral part of the financial statements. 21

24 CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 30 June 2003 (Amounts expressed in Singapore dollars) $ $ Cash flows from operating activities Profit before taxation 5,044,072 9,355,481 Adjustments: Depreciation of fixed assets 1,073,074 1,047,609 Loss (gain) on disposal of fixed assets 2,524 (43,575) Amortisation of negative goodwill (104,360) (126,791) Provision (write-back of) for stock obsolescence 58,592 (5,063) Provision for doubtful trade debts written back (259,909) (3,216) Bad trade debts written off 35, ,160 Interest expense 72,084 97,705 Interest income (39,805) (112,917) Translation adjustment 2,302 (31,505) Operating profit before working capital changes 5,884,083 10,277,888 Stocks 285,071 (1,249,881) Trade debtors (3,042,070) (3,022,586) Other debtors, deposits and prepayments (1,830,727) (637,966) Due to directors 2,950 (2,167) Due to minority shareholder of a subsidiary 78,934 (148,702) Work-in-progress (9,532,918) (2,393,788) Trade creditors 4,903,758 (3,234,177) Other creditors and accruals (234,357) 584,166 Bills payable 4,253,274 Intercompany balances, net (1,209,937) (2,319,306) Cash used in operations (441,939) (2,146,519) Interest paid (72,084) (97,705) Income tax paid (2,788,298) (2,785,449) Net cash used in operating activities (3,302,321) (5,029,673) Cash flows from investing activities Interest received 39, ,917 Investment in associated companies (423,215) (895,360) Acquisition of subsidiaries, net of cash and cash equivalents acquired (Note B) (213,574) (94,020) Acquisition of fixed assets (Note C) (782,173) (896,374) Proceeds from sale of fixed assets 30, ,857 Net cash flows used in investing activities (1,349,152) (1,643,980) The accounting policies and explanatory notes on pages 25 to 49 form an integral part of the financial statements. 22

25 CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 30 June 2003 (Amounts expressed in Singapore dollars) Note $ $ Cash flows from financing activities Repayment of term loans (210,905) (1,160,072) Cash contributed by minority shareholders for incorporation of a subsidiary 86,430 24,500 Dividend to minority shareholders (68,005) (117,501) Dividends paid (2,020,200) Net proceeds from issue of shares 6,702,247 Repayment of lease obligations (371,399) (278,782) Proceeds from short term bank loan 2,500,000 Net cash generated from financing activities 1,936,121 3,150,192 Net decrease in cash and cash equivalents (2,715,352) (3,523,461) Cash and cash equivalents at beginning of year A 8,116,465 11,639,926 Cash and cash equivalents at end of year A 5,401,113 8,116,465 A. Cash and cash equivalents $ $ Fixed deposits 334,404 3,796,610 Cash and bank balances 5,066,709 4,319,855 Cash and cash equivalents at end of year 5,401,113 8,116,465 The accounting policies and explanatory notes on pages 25 to 49 form an integral part of the financial statements. 23

26 CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 30 June 2003 (Amounts expressed in Singapore dollars) B. Cash flow on acquisition of subsidiaries $ $ Fixed assets 29,554 50,869 Goodwill on consolidation 47, ,330 Cash and bank balances 206,670 88,590 Fixed deposits 2,734 Trade debtors 18, ,239 Other debtors, deposits and prepayments ,194 Stocks 244,652 50,379 Work-in-progress 7,056 Intercompany balances, net (381,164) Trade creditors (690) (147,531) Other creditors and accruals (126,032) (62,996) Advances from directors (89,520) Non-trade amount due to holding company (100,000) Minority interests (454) Net assets acquired 41,814 82,610 Purchase consideration satisfied via cash (41,814) (82,610) Add: Cash and cash equivalents acquired 209,404 88,590 Less: Intercompany balances, net (381,164) (100,000) Acquisition of subsidiaries, net of cash and cash equivalents acquired (213,574) (94,020) C. Fixed assets During the financial year, the Group acquired fixed assets with an aggregate cost of $1,391,680 (2002: $1,218,167) of which $609,507 (2002: $321,793) was acquired by means of hire purchase. Cash payments of $782,173 (2002: $896,374) were made to purchase fixed assets. The accounting policies and explanatory notes on pages 25 to 49 form an integral part of the financial statements. 24

27 NOTES TO THE FINANCIAL STATEMENTS 30 June 2003 (Amounts expressed in Singapore dollars unless otherwise stated) 1. CORPORATE INFORMATION The financial statements of Lantrovision (S) Ltd and subsidiaries for the year ended 30 June 2003 were authorised for issue in accordance with a resolution of the Directors on 22 September Lantrovision (S) Ltd is a limited liability company which is incorporated in Singapore. The registered office and principal place of business of Lantrovision (S) Ltd is located at 102F Pasir Panjang Road, #03-03, Citilink Warehouse Complex, Singapore The Company s principal activities are those of supplying, designing, installation and provision of consultancy services on network integration and structured cabling and those of electrical contractors and suppliers of electrical hardware and fittings. The principal activities of the subsidiaries are as shown in Note 6. There have been no significant changes in the nature of these activities during the financial year. The Group operates in 9 countries and the Group and Company employed 383 and 166 (2002: 337 and 140) employees as of 30 June 2003, respectively. 2. SIGNIFICANT ACCOUNTING POLICIES (a) Basis of preparation The financial statements have been prepared under the historical cost convention in accordance with Singapore Statements of Accounting Standard (SAS) and applicable provisions of the Singapore Companies Act. The accounting policies have been consistently applied by the Group and the Company and are consistent with those used in previous year. (b) Principles of consolidation The consolidated financial statements comprise the accounts of Lantrovision (S) Ltd and its subsidiaries, after the elimination of all material intercompany transactions. Subsidiaries are consolidated from the date the parent obtains control until such time as control ceases. Acquisitions of subsidiaries are accounted for using the purchase method of accounting. The results of foreign subsidiaries are translated into Singapore dollars at the average exchange rates for the year and balance sheet items are translated at exchange rates ruling at the balance sheet date except for share capital and reserves which are translated at historical rates of exchange. Foreign currency translation differences arising on consolidation are taken directly to translation reserve until the disposal of the subsidiaries. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. Adjustments are made to conform any dissimilar material accounting policies that may exist. (c) Subsidiaries A subsidiary is defined as a company, in which the Group has a long-term interest of more than 50% of the equity or in whose financial and operating policy decisions the Group controls. Investments in subsidiaries are stated in the Company s balance sheet at cost. Provision is made where there is decline in value that is other than temporary. 25

28 NOTES TO THE FINANCIAL STATEMENTS 30 June 2003 (Amounts expressed in Singapore dollars unless otherwise stated) 2. SIGNIFICANT ACCOUNTING POLICIES (continued) (d) Associated companies An associated company is defined as a company, not being a subsidiary in which the Group has a long-term equity interest of not less than 20% and in whose financial and operating policy decisions the Group exercises significant influence. The Group s investments in associated companies are recorded at cost and adjusted to recognise the Group s share of the net assets of the associated companies at the date of acquisition. The Group s share of the results of associated companies is included in the consolidated profit and loss account. The Group s share of the post-acquisition reserves of associated companies is included in investments in the consolidated balance sheet. Where the audited financial statements are not co-terminous with those of the Group, the share of profits is arrived at from the last audited financial statements available and unaudited management financial statements to the end of the accounting period. Investment in associated companies is stated in the Company s balance sheet at cost. Provision is made where there is decline in value that is other than temporary. (e) (f) (g) (h) Affiliated company An affiliated company is a company, not being a subsidiary or an associated company, in which one or more of the directors or shareholders of the Company and the subsidiaries, have a significant equity interest or exercise significant influence. Foreign currencies Foreign currency transactions are converted into Singapore dollars at exchange rates closely approximating those ruling at the transaction dates. Foreign currency monetary assets and liabilities outstanding at the balance sheet date are converted into Singapore dollars at the rates of exchange approximating those ruling at that date. All exchange difference arising on conversion are included in the profit and loss account. Goodwill Goodwill represents the excess of the cost of the acquisition over the fair value of identifiable net assets of a subsidiary and an associated company at the date of acquisition. Goodwill is amortised using the straight-line method over an average 10 year period that benefits are expected to be received. Negative goodwill Negative goodwill arising on acquisition represents the excess of the fair value of the identifiable net assets acquired over the cost of acquisition. To the extent that negative goodwill relates to an expectation of future losses and expenses that are identified in the plan of acquisition and can be measured reliably, but would not yet been recognised, it is recognised in the profit and loss account when the future losses and expenses are recognised. Any remaining negative goodwill, not exceeding the fair values of the non-monetary assets acquired, is recognised in the profit and loss account over 10 years, the weighted average useful life of those assets that are depreciable or amortisable. Negative goodwill in excess of fair values of the non-monetary assets acquired is recognised immediately in the profit and loss account. Negative goodwill is presented in the same balance sheet classification as goodwill. 26

29 NOTES TO THE FINANCIAL STATEMENTS 30 June 2003 (Amounts expressed in Singapore dollars unless otherwise stated) 2. SIGNIFICANT ACCOUNTING POLICIES (continued) (i) (j) Fixed assets Fixed assets are stated at cost less accumulated depreciation. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to working condition for its intended use. Expenditure for additions, improvements and renewals are capitalised and expenditure for maintenance and repairs are charged to the profit and loss account. When assets are sold or retired, their cost and accumulated depreciation are removed from the financial statements and any gain or loss resulting from their disposal is included in the profit and loss account. Depreciation Depreciation is calculated on the straight-line method to write off the cost of fixed assets over their estimated useful lives. The estimated useful lives of fixed assets are as follows: Freehold properties Leasehold land and building Renovations Office equipment Tools and equipment Furniture and fittings Motor vehicles Computers 30 years 30 years (lease term) 5-8 years 10 years 10 years 10 years 5 years 3 years Fully depreciated fixed assets are retained in the financial statements until they are no longer in use and no further charge for depreciation is made in respect of these assets. (k) Cash and cash equivalents Cash and cash equivalents are defined as cash on hand, cash at bank, fixed deposits and short-term, highly liquid investments readily convertible to known amounts of cash and subject to insignificant risk of changes in values. Cash on hand and in banks and short-term deposits which are held to maturity are carried at cost. (l) Trade and other debtors Trade debtors, which generally have day terms, are recognised and carried at original invoice amount less an allowance for any uncollectible amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off when identified. Receivables from related companies are recognised and carried at cost less an allowance for any uncollectible amounts. (m) (n) Stocks Stocks are stated at the lower of cost (determined on a first-in, first-out basis) and net realisable value. Provision is made for deteriorated, damaged, obsolete and slow-moving stocks. Work-in-progress Work-in-progress is valued at cost plus attributable profits net of progress billings and provision for foreseeable losses. Cost includes cost of materials, direct labour, direct and indirect overheads incurred in connection with the contracts. 27

30 NOTES TO THE FINANCIAL STATEMENTS 30 June 2003 (Amounts expressed in Singapore dollars unless otherwise stated) 2. SIGNIFICANT ACCOUNTING POLICIES (continued) (o) Impairment of assets Fixed assets and long-term investments are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recognised in income for items of fixed assets and long-term investments carried at cost. The recoverable amount is the higher of an asset s net selling price and value in use. The net selling price is the amount obtainable from the sale of an asset in an arm s length transaction. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Recoverable amounts are estimated for individual assets or, if it is not possible, for the cash-generating unit to which the asset belongs. Reversal of an impairment loss recognised in prior years is recorded when there is an indication that the impairment loss recognised for an asset no longer exists or has decreased. The reversal is recorded in the profit and loss account. (p) Trade and other creditors Liabilities for trade and other creditors which are normally settled on day terms, are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the Group. Payables to related parties are carried at cost. (q) Provisions Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Unutilised leave Unutilised leave is provided based on the amount of annual leave earned and not utilised as at the end of the financial year based on the last drawn salaries of the employees. (r) Loans and borrowings All loans and borrowings are initially recognised at cost, being the fair value of the consideration received and including acquisition charges associated with the loans and borrowings. After initial recognition, all interest-bearing loans and borrowings, other than liabilities held for trading, are subsequently measured at amortised cost. Amortised cost is calculated by taking into account any discount or premium on settlement. 28

31 NOTES TO THE FINANCIAL STATEMENTS 30 June 2003 (Amounts expressed in Singapore dollars unless otherwise stated) 2. SIGNIFICANT ACCOUNTING POLICIES (continued) (s) Leases Finance leases, which effectively transfer to the Group substantially all the risks and benefits incidental to ownership of the lease item, are capitalised at the present value of the minimum lease payments at the inception of the lease term and disclosed as leased fixed assets. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against the profit and loss account. Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term. Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases. Operating lease payments are recognised as an expense in the profit and loss account on a straight-line basis over the lease term. (t) Borrowing costs Borrowing costs are recognised as expenses in the period in which they are incurred. (u) Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. (i) (ii) (iii) (iv) (v) Sale of products Revenue from sale of products is recognised upon delivery of products and acceptance by customers. Installation works Revenue from installation works is recognised by reference to the stage of completion when this can be measured reliably. The stage of completion is determined based on the progress of the contract work as determined by certification or acceptance of work done. Maintenance Maintenance income is recognised on a periodic basis over the term of the maintenance contract. Ad-hoc maintenance income is recognised upon the performance of the maintenance services and acceptance by customers. Interest Interest income is recognised on an accrual basis. Dividends Dividend income is recognised when the right to receive the payment is established. (v) Segments For management purposes, the Group is organised on a world-wide basis into three major operating businesses. The businesses are the basis on which the Group reports its primary segment information. Segment revenue, expenses and results excludes transfers between business segments and between geographical segments. Such transfers are accounted for on an arm s length basis. 29

32 NOTES TO THE FINANCIAL STATEMENTS 30 June 2003 (Amounts expressed in Singapore dollars unless otherwise stated) 2. SIGNIFICANT ACCOUNTING POLICIES (continued) (w) (x) Employee benefits As required by law, the Group makes contribution to the state pension scheme. These contributions are recognised as compensation expense in the same period as the employment that gives rise to the contribution. Income taxes Deferred income tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax assets and liabilities are measured using the tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled based on tax rates enacted or substantively enacted at the balance sheet date. Deferred tax liabilities are recognised for all taxable temporary differences associated with investments in subsidiaries and associated companies, except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. At each balance sheet date, the Group reassesses unrecognised deferred tax assets and the carrying amount of deferred tax assets. The Group recognises a previously unrecognised deferred tax asset to the extent that it has become probable that future taxable profit will be available to allow the benefit of part or all of the deferred tax asset to be utilised. Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, carry-forward of unused tax assets and unused tax losses can be utilised. Current tax and deferred tax are charged or credited directly to equity if the tax relates to items that are credited or charged, in the same or different period, directly to equity. 3. SHARE CAPITAL Group and Company $ $ Authorised 2,500,000,000 (2002: 2,500,000,000) ordinary shares of $0.02 each 50,000,000 50,000,000 Issued and fully paid At the beginning of year 259,000,000 (2002: 758,000) ordinary shares of $0.02 (2002: $1) each 5,180, ,000 Issued during the financial year Issue of Nil (2002: 181,920,000) bonus shares by way of capitalisation of $Nil (2002: $102,000) and $Nil (2002: $3,536,400) from the Company s share premium and accumulated profits respectively 3,638,400 Issue of Nil (2002: 39,180,000) ordinary shares of $0.02 each pursuant to the Company s initial public offering at a premium of $0.18 per share 783,600 At end of year 259,000,000 (2002: 259,000,000) ordinary shares of $0.02 5,180,000 5,180,000 30

33 NOTES TO THE FINANCIAL STATEMENTS 30 June 2003 (Amounts expressed in Singapore dollars unless otherwise stated) 4. SHARE PREMIUM The share premium account may be applied only for the purposes specified in the Companies Act. The balance is not available for distribution of dividends except in the form of shares. 5. FIXED ASSETS Leasehold Freehold land and Office Tools and Furniture Motor Group properties building Renovations equipment equipment and fittings vehicles Computers Total $ $ $ $ $ $ $ $ $ Cost At beginning of year 2,756, , , , , ,145 2,282,721 1,046,770 8,355,159 Attributable to acquisition of subsidiaries 12,925 11,829 4,800 29,554 Additions 44, ,075 44,512 40, , ,639 1,391,680 Disposals (1,464) (7,709) (75,451) (198) (84,822) Reclassifications 1, (1,265) Translation difference (1,356) (866) (203) 34 (277) (417) (113) (3,198) At end of year 2,756, , ,005 1,140, , ,308 2,662,710 1,303,098 9,688,373 Accumulated depreciation At beginning of year 506,715 70, , , , ,928 1,054, ,150 3,007,270 Charge for the year 91,785 20,851 87, ,190 18,183 50, , ,203 1,073,074 Disposals (466) (2,113) (49,516) (198) (52,293) Reclassifications 68 (20) (48) Translation difference (98) 39 (71) 7 7 (534) (21) (671) At end of year 598,500 91, , , , ,247 1,421, ,134 4,027,380 Charge for ,786 27,880 53,854 91,659 28,427 40, , ,056 1,047,609 Net book value At end of year 2,157, , , ,887 84, ,061 1,241, ,964 5,660,993 At beginning of year 2,249, , , ,233 64, ,217 1,228, ,620 5,347,889 31

34 NOTES TO THE FINANCIAL STATEMENTS 30 June 2003 (Amounts expressed in Singapore dollars unless otherwise stated) 5. FIXED ASSETS (continued) Freehold Office Tools and Furniture Motor Company properties Renovations equipment equipment and fittings vehicles Computers Total $ $ $ $ $ $ $ $ Cost At beginning of year 2,756, ,878 86, ,445 72,238 1,298, ,311 5,297,000 Additions 35,378 15,798 7, , , ,173 Disposals (1,798) (20,500) (22,298) At end of year 2,756, , , ,647 79,788 1,620, ,027 5,816,875 Accumulated depreciation At beginning of year 506, ,936 37, ,585 30, , ,249 1,822,077 Charge for the year 91,786 30,431 10,901 4,592 7, , , ,829 Disposals (340) (20,500) (20,840) At end of year 598, ,367 48, ,837 38, , ,234 2,373,066 Charge for ,786 25,587 8,736 18,322 5, , , ,338 Net book value At end of year 2,157, ,889 53,475 28,810 41, , ,793 3,443,809 At beginning of year 2,249, ,942 48,578 34,860 41, , ,062 3,474,923 Group As at 30 June 2003, the Group had fixed assets under finance leases with a net book value of approximately $1,443,000 (2002: $1,213,000). The leasehold land and building with a net book value of RM1,158,370 (2002: RM1,203,521) is charged as security for banking facilities granted to a subsidiary. Company As at 30 June 2003, the Company had fixed assets under finance leases with a net book value of approximately $785,000 (2002: $757,000). 32

35 NOTES TO THE FINANCIAL STATEMENTS 30 June 2003 (Amounts expressed in Singapore dollars unless otherwise stated) 6. SUBSIDIARIES (a) Investment in subsidiaries comprises: Company $ $ Unquoted equity shares, at cost 1,466,550 1,262,620 Less provision for diminution in value of a subsidiary (110,002) (110,002) Movement in provision for diminution in investment is as follows: 1,356,548 1,152,618 At beginning of year 110, ,000 Provision for the year 2 At end of year 110, ,002 (b) The Company had the following subsidiaries as at 30 June 2003: Country of incorporation Percentage of and place of equity held by Name of Company Principal activities business the Group Cost of investment % % $ $ Held by the Company Lantro (Japan) Co. Structure, design, installation Japan , ,764 Ltd.## and consultation of network system with computer communication technology Lantro (Malaysia) Design and installation of Malaysia ,000 22,000 Sdn Bhd* computer cabling and trading of related accessories and peripherals Lantro (Penang) Provision of cabling Malaysia ,220 11,220 Sdn Bhd* infrastructure services and selling cabling accessories Lantro (HK) Provision of system Hong Kong , ,351 Limited** integration and network infrastructures services Spectrum Infocom Telecommunications Singapore , ,000 International Pte Ltd operator Lantro Korea Co. Planning and installation of Korea ,299 99,299 Ltd## cables for information and communication networks Lantro Co. Ltd Manufacture and sale of People s , ,410 (Hangzhou)+ structuralised cable laying Republic system and multimedia of China technology VRnet (S) Pte Ltd Trading in computers, Singapore , ,002 computer peripherals, all kinds of electronic components and products for various applications, planners, consultants, advisers and managers in relation to computer services 33

36 NOTES TO THE FINANCIAL STATEMENTS 30 June SUBSIDIARIES (continued) (Amounts expressed in Singapore dollars unless otherwise stated) Country of incorporation Percentage of and place of equity held by Name of Company Principal activities business the Group Cost of investment % % $ $ Held by the Company (cont d) Lantro (Taiwan) Supply, design, installation Taiwan ,464 26,464 Ltd## and provision of consultancy services on network integration and structured cabling Citech Systems Provision of consultancy and Singapore ,500 25,500 Pte. Ltd. advisory business in connection with intelligent building systems, network and systems integration and implementation, information technology, design, project management and related services I-Contact Solutions System integration for voice Singapore ,610 82,610 Pte Ltd infrastructure and call centre applications BCH (HK) Limited# Supply, design, installation Hong Kong 100 2,260 and provision of consultancy services on network integration and structured cabling Held by subsidiaries VRnet (M) Provider of integrated Malaysia Sdn Bhd^ IT infrastructure services IBMS Technology Provision of installation and Singapore Pte Ltd^^ dealing in security alarm control and automation systems access control, security protection and detection systems, products, components and supplies Spectrum Infocom Telecommunications Hong Kong (HK) Limited# operator (acquired on 13 December 2002) 34

37 6. SUBSIDIARIES (continued) NOTES TO THE FINANCIAL STATEMENTS 30 June 2003 (Amounts expressed in Singapore dollars unless otherwise stated) Country of incorporation Percentage of and place of equity held by Name of Company Principal activities business the Group Cost of investment % % $ $ Held by subsidiaries (cont d) Go! Distribution Distribution of pagers, Singapore Network Pte Ltd^^^ handphones and other (acquired on telecommunication apparatus 10 January 2003) and general wholesale trade Citech Systems Carry on the business as Malaysia 51 (M) Sdn Bhd# advisors and consultants to business 1,466,550 1,262,620 * Audited by Ernst & Young, Malaysia ** Audited by Ernst & Young, Hong Kong + Audited by Zhejiang Zhongxi Certified Public Accountants Co. Ltd, Hangzhou, People s Republic of China ^ Audited by Folks DFK & Co., Malaysia ^^ Audited by Y C Tan & Co., Singapore ^^^ Audited by KH Tay & Co., Singapore # Not required to be audited as the company is newly incorporated ## Not required to be audited under the laws of the country of incorporation Acquisition of subsidiaries During the financial year, a subsidiary, Spectrum Infocom International Pte Ltd acquired 80% of the issued share capital of Go! Distribution Networks Pte Ltd for a cash consideration of $40,000. The loss after tax of Go! Distribution Networks Pte Ltd was $48,257 for the period ended 30 June 2003 (relating to the period from 10 January 2003 to 30 June 2003). During the financial year, a subsidiary, Spectrum Infocom International Pte Ltd acquired 80% of the issued share capital of Spectrum Infocom (HK) Ltd for a cash consideration of HK$8,000. The loss after tax of Spectrum Inforcom (HK) Ltd was HK$22,261 for the period ended 30 June 2003 (relating to the period from 13 December 2002 to 30 June 2003). 35

38 NOTES TO THE FINANCIAL STATEMENTS 30 June 2003 (Amounts expressed in Singapore dollars unless otherwise stated) 7. ASSOCIATED COMPANIES (a) Investment in associated companies comprises: Group Company $ $ $ $ Unquoted equity shares, at cost 1,490,901 1,067,686 1,469,482 1,048,016 Group s share of post-acquisition reserves 337, ,775 Less goodwill on acquisition (190,995) (50,871) 1,637,381 1,282,590 1,469,482 1,048,016 (b) Details of associated companies are as follows: Country of incorporation Percentage of and place of equity held by Name of Company Principal activities business the Group Cost of investment % % $ $ Held by the Company Lantro (Thailand) Design and installation of Thailand , ,769 Co., Ltd.* computer cabling, and trading of related accessories and peripherals Lantro Phils. Inc.* Provision of contracting Philippines ,612 44,612 services for voice, data and telecommunication BCH (Thailand) Investment holding Thailand , ,635 Co., Ltd# D Al Automation Provision of design ad People s ,465 Ltd* development of automation Republic of system; integrated structured China infrastructure and cabling systems Held by a subsidiary VRnet (Thailand) Trading of computers and Thailand ,670 19,670 Co., Ltd* computer peripherals and provision of computer consulting services IP-Contact Solutions System integration for voice Philippines ,750 Phils., Inc.* infrastructure and call centre applications 1,490,901 1,067,686 * Audited by other auditors. # BCH (Thailand) Co., Ltd holds a 51% equity interest in Lantro (Thailand) Co., Ltd. 36

39 NOTES TO THE FINANCIAL STATEMENTS 30 June 2003 (Amounts expressed in Singapore dollars unless otherwise stated) 8. OTHER INVESTMENTS Group and Company $ $ Quoted equity shares at cost 7,505 7,505 Market value as at year end 2,700 2, NEGATIVE GOODWILL Group $ $ Negative goodwill arising from acquisition of subsidiaries 1,468,371 1,455,389 Goodwill on consolidation arising from acquisition of subsidiaries (269,531) (222,392) acquisition of associated companies (190,967) (50,868) 1,007,873 1,182,129 Less accumulated amortisation (422,264) (317,904) Movement in accumulated amortisation during the year is as follows: 585, ,225 At beginning of year 317, ,113 Amortisation for the year 104, ,791 At end of year 422, , STOCKS Group Company $ $ $ $ Finished goods, at cost 2,997,508 3,096, , ,503 Finished goods, at net realisable value 2,997,508 3,096, , ,503 Finished goods at net realisable value for the Group and the Company are stated net of provision for stock obsolescence of $218,446 and $177,972 (2002: $162,471 and $142,056) respectively. Movements in provision for stock obsolescence during the year are as follows: Group Company $ $ $ $ At beginning of year 162, , , ,449 Provision (write-back of) for the year 58,592 (5,063) 35,916 (16,393) Write off against provision (2,671) Translation difference 54 (17,870) At end of year 218, , , ,056 37

40 NOTES TO THE FINANCIAL STATEMENTS 30 June 2003 (Amounts expressed in Singapore dollars unless otherwise stated) 11. WORK-IN-PROGRESS Group Company $ $ $ $ Cost plus attributable profits 19,122,102 3,340,093 2,885,496 2,811,878 Less progress billings (6,293,817) (44,726) (1,025,073) (27,600) 12,828,285 3,295,367 1,860,423 2,784, TRADE DEBTORS Group Company $ $ $ $ Trade debtors 20,697,759 17,699,808 4,921,294 6,472,521 Less provision for doubtful trade debts (653,287) (921,826) (405,820) (256,297) 20,044,472 16,777,982 4,515,474 6,216,224 Included in trade debtors of the Group and Company are retention monies receivable from customers of approximately $358,983 and $272,958 (2002: $136,079 and $125,186) respectively. Movements in provision for doubtful trade debts during the year are as follows: Group Company $ $ $ $ At beginning of year 921,826 1,032, , ,503 (Write-back of) provision for the year (259,909) (3,216) 155,971 (265,922) Provision utilised (6,449) (89,637) (6,448) (78,284) Translation difference (2,181) (17,885) At end of year 653, , , , OTHER DEBTORS, DEPOSITS AND PREPAYMENTS Group Company $ $ $ $ Other debtors current* 1,031, , , ,143 Deposits 1,901, ,417 1,558,528 29,599 Prepayments 163, ,019 71,728 99,883 Interest receivable 2,923 2,923 3,097,235 1,477,889 2,390,941 1,013,548 Other debtor non-current* 212, ,117 3,309,352 1,477,889 2,603,058 1,013,548 * Included in other debtors is an amount receivable from a third party of $382,500 (2002: $475,000). This amount bears interest ranging from 0.63% to 1.44% (2002: 0.75% to 1%) per annum. The loan is receivable in monthly instalment over a period of 4 years commencing June

41 NOTES TO THE FINANCIAL STATEMENTS 30 June 2003 (Amounts expressed in Singapore dollars unless otherwise stated) 14. DUE FROM (TO) SUBSIDIARIES/ASSOCIATED COMPANIES/RELATED COMPANIES/ AFFILIATED COMPANIES (NON-TRADE) DUE TO DIRECTORS/DUE TO MINORITY SHAREHOLDER OF A SUBSIDIARY (NON-TRADE) These balances are unsecured and interest-free except for an amount due from a subsidiary of $800,000 (2002: $2,000,000) which bears interest at 0.7% to 2.2% (2002: 0.8% to 4.3%) per annum. All amounts are repayable on demand. 15. FIXED DEPOSITS Fixed deposits amounting to $100,000 (2002: $Nil) are pledged to certain banks as security for banking facilities granted to one of the subsidiaries. 16. BILLS PAYABLE TO BANKS (UNSECURED) The effective interest rates of the bills payable range from 2.63% to 2.71% per annum. 17. OTHER CREDITORS AND ACCRUALS Group Company $ $ $ $ Other creditors 600, , , ,595 Accrued operating expenses 1,108,218 1,431, , ,676 Advance from customers 160,682 32, ,682 Deferred revenue 291,862 21,878 2,000,913 2,109, , , LEASE OBLIGATIONS Minimum Present lease value of Group payments Interest payments $ $ $ 2003 Between 2 to 5 years 873,463 (128,493) 744,970 Later than 5 years 66,323 (10,365) 55, ,786 (138,858) 800,928 Not later than 1 year 488,278 (63,357) 424,921 1,428,064 (202,215) 1,225, Between 2 to 5 years 788,313 (121,219) 667,094 Later than 5 years 80,208 (12,578) 67, ,521 (133,797) 734,724 Not later than 1 year 300,090 (46,804) 253,286 1,168,611 (180,601) 988,010 39

42 NOTES TO THE FINANCIAL STATEMENTS 30 June LEASE OBLIGATIONS (continued) (Amounts expressed in Singapore dollars unless otherwise stated) Minimum Present lease value of Company payments Interest payments $ $ $ 2003 Between 2 to 5 years 534,953 (84,319) 450,634 Later than 5 years 50,957 (7,965) 42, ,910 (92,284) 493,626 Not later than 1 year 209,173 (33,279) 175, ,083 (125,563) 669, Between 2 to 5 years 516,042 (81,816) 434,226 Later than 5 years 43,703 (6,847) 36, ,745 (88,663) 471,082 Not later than 1 year 183,320 (29,683) 153, ,065 (118,346) 624,719 Lease terms range from 2 years to 6 years. Lease terms do not contain restrictions concerning dividends, additional debt or further leasing. The effective interest rate of these leases range from 2.6% to 5.75% (2002: 2.7% to 8%) per annum. 19. SHORT TERM BANK LOANS (UNSECURED) These loans are unsecured, bear interest ranging from 2.22% to 2.27% per annum and are repayable within 12 months. 20. BANK TERM LOANS (SECURED) Group $ $ Due within 12 months 8,545 Due after 12 months 202, ,905 A bank loan of RM454,537 is secured by way of a fixed charge over the leasehold land and building of the subsidiary with a net book value of approximately RM1,200,000 and a joint and several guarantee by the directors of the subsidiary. The loan bears interest ranging from 8.15% to 8.55% per annum and is repayable in 180 equal monthly instalments commencing October This loan was fully paid during the financial year. 40

43 NOTES TO THE FINANCIAL STATEMENTS 30 June 2003 (Amounts expressed in Singapore dollars unless otherwise stated) 21. TURNOVER Turnover represents revenue from installation projects, maintenance services income and sale of goods and services in the normal course of business. Intra-group transactions have been excluded from Group turnover. Group Company $ $ $ $ Sale of products 25,939,237 14,122,105 17,330,814 6,099,680 Installation works 31,628,672 36,780,859 8,948,464 17,920,495 Maintenance services 9,845,012 11,083,131 7,801,161 7,790,791 67,412,921 61,986,095 34,080,439 31,810, OTHER OPERATING INCOME Group Company $ $ $ $ Dividend income from quoted investment 14 unquoted subsidiary 95,268 Others 2, ,403 95, PROFIT FROM OPERATIONS This is determined after charging (crediting) the following: Group Company $ $ $ $ Auditors remuneration auditors of the Company 74,000 69,000 36,000 42,000 other auditors 58,000 50,023 Non-audit fees paid to auditors 21,930 9,700 7,600 Amortisation of negative goodwill (104,360) (126,791) Bad trade debts written off 35, ,160 81,155 Depreciation of fixed assets 1,073,074 1,047, , ,338 Directors remuneration directors of the Company 803,218 1,062, ,435 1,062,300 directors of subsidiaries 947, ,600 Directors fees directors of the Company 35,000 50,000 35,000 50,000 Foreign exchange loss (gain), net 122, ,947 65, ,529 Loss (gain) on disposal of fixed assets 2,524 (43,575) 1,458 Preliminary expenses written off 15,048 Staff costs (Note 24) 11,878,911 10,622,026 5,521,494 5,655,073 (Write-back of) of provision for doubtful trade debts (259,909) (3,216) 155,971 (265,922) Provision (write-back of) of provision for stock obsolescence 58,592 (5,063) 35,916 (16,393) Provision for diminution in value of investment in a subsidiary 2 Operating lease expenses 650, ,131 91, ,320 41

44 NOTES TO THE FINANCIAL STATEMENTS 30 June 2003 (Amounts expressed in Singapore dollars unless otherwise stated) 24. STAFF COSTS Group Company $ $ $ $ Wages, salaries and bonuses 10,482,211 9,379,306 4,830,465 5,050,081 CPF contributions and foreign workers levy 1,034, , , ,202 Other personnel expenses 361, , ,740 66,790 11,878,911 10,622,026 5,521,494 5,655,073 Staff costs include directors remuneration of $1,750,619 (2002: $1,807,900). 25. DIRECTORS REMUNERATION Number of directors of the Company in the various remuneration bands are as follows: $500,000 and above $250,000 to $499, Below $250, FINANCIAL EXPENSES (INCOME) Group Company $ $ $ $ Bank charges 84,875 37,318 18,497 24,350 Interest expense hire purchase 61,064 46,110 35,938 30,782 term loans 9,064 51,595 6,751 14,858 bank overdrafts 1,669 trade bills 566 Others , ,023 61,752 69,990 Interest income bank 7,877 13, ,839 fixed deposit 25,765 99,648 12,275 78,447 loans to subsidiaries 19,307 25,399 Others 6,163 3,138 3,771 3,138 39, ,055 35, ,823 42

45 NOTES TO THE FINANCIAL STATEMENTS 30 June 2003 (Amounts expressed in Singapore dollars unless otherwise stated) 27. TAXATION Group Company $ $ $ $ Current taxation current year 1,305,676 2,536, ,031 1,831,235 over provision in respect of prior year (175,612) Deferred taxation current year (6,308) (79,267) 26,284 under (over) provision in respect of prior year 3,717 (19,807) 1,303,085 2,262, ,031 1,857,519 Share of associates tax 38, ,899 1,341,164 2,366, ,031 1,857,519 A reconciliation of the statutory tax rate to the Company s effective tax rate applicable to income from continuing operations for the year ended 30 June is as follows: Group Company $ $ $ $ Accounting profit 5,044,072 9,355,481 1,214,284 8,064,753 Tax at 22% 1,109,696 2,058, ,142 1,774,246 Tax effect of expenses that are not deductible in determining taxable profit 195, , ,439 99,989 Tax effect of different tax rate (foreign) 51,893 94,562 Unrecognised deferred tax assets, net 89, ,301 Reduction in deferred tax resulting from reduction in tax rate (5,166) (5,166) Tax savings from tax exempt income (23,100) (23,100) (11,550) (11,550) Under (over) provision in respect of prior year 3,717 (195,419) Utilisation of unabsorbed tax losses (66,650) Others (57,376) (20,207) 1,303,085 2,262, ,031 1,857,519 43

46 NOTES TO THE FINANCIAL STATEMENTS 30 June 2003 (Amounts expressed in Singapore dollars unless otherwise stated) 27. TAXATION (continued) Deferred taxes at 30 June relate to the following: Group Company $ $ $ $ Deferred tax liabilities Tax over book depreciation 174, ,583 85,899 80,980 Deferred tax assets Other temporary differences (89,613) (70,684) (59,615) (54,696) Deferred tax asset recognised (112,794) (87,406) (202,407) (158,090) (59,615) (54,696) Deferred tax liabilities (assets) (28,098) (25,507) 26,284 26,284 The Company The Company s current year tax charge is higher than the amount obtained by applying the statutory income tax rate on profit before taxation mainly due to certain non-deductible items added back for tax purposes. The Group The Group has unutilised tax losses and unabsorbed capital allowances of approximately $1,719,000 and $228,000 (2002: $1,569,000 and $276,000) respectively available for offset against future taxable profits, subject to compliance with certain provisions of the Income Tax Act and agreement with the tax authorities. The potential deferred tax asset arising from these unutilised tax losses and unabsorbed capital allowances has not been recognised in the financial statements in accordance with the accounting policy stated in Note 2 to the financial statements. 28. EARNINGS PER SHARE Earnings per share is calculated by dividing the Group s net profit attributable to shareholders for the year of $3,245,050 (2002: $7,157,810) by the weighted average number of shares in issue during the year of 259,000,000 shares (2002: 245,940,000). Diluted earnings per share is the same as basic earnings per share as the effects of anti-dilutive potential ordinary shares are ignored in calculating diluted earnings per share. 29. DIVIDENDS An interim dividend of 1 cent per ordinary share less tax at 22%, amounting to $2,020,200 was paid in respect of the previous financial year. 44

47 NOTES TO THE FINANCIAL STATEMENTS 30 June 2003 (Amounts expressed in Singapore dollars unless otherwise stated) 30. RELATED PARTY INFORMATION In addition to the related party information disclosed elsewhere in the financial statements, significant transactions with related parties, on terms agreed between the parties, were as follows: Group $ $ Income Sales to associated companies 851, ,910 Sales to affiliated companies 334, ,659 Expenses Purchases from associated companies 261, ,425 Purchases from affiliated companies 136, ,451 Management fee paid to affiliated company 92,311 Rental expenses paid to a director of the Company 27,708 19, CONTINGENT LIABILITIES AND COMMITMENTS (a) Contingent liabilities Group and Company $ $ Contingent liabilities not provided for in the financial statements: Bankers guarantee 206, ,067 (b) Commitment - investment agreement The Company entered into an investment agreement (the Agreement ) with Beijing Automation Engineering Institute ( BAEI ) and an individual, whereby the Company will acquire another 50% interest in the issued share capital of D Al Automation Ltd ( D AL ), a company registered in the People s Republic of China ( PRC ), for a consideration of RMB2,500,000 (approx. $530,000). This acquisition is subject to the approval of the relevant PRC government/regulatory authorities. (c) Corporate guarantee Corporate guarantees of RM5 million and RM1 million to a financial institution were given by the Company and a customer on behalf of its subsidiary, Lantro (Malaysia) Sdn Bhd. A corporate guarantee of RMB8,682,754 was issued by the Company to two customers of its subsidiary, Lantro Co Ltd (Hangzhou). (d) Non-cancellable operating lease commitments The Group has operating lease agreements for the rental of office premises. These leases contain renewable options, and do not contain escalation clauses nor provide for contingent rentals based on a percentage of sales derived from assets held under operating leases. Lease terms do not contain restrictions on the Group s activities concerning dividends, additional debt or further leasing. Group Company $ $ $ $ Future minimum lease payments not later than 1 year 376, , , ,171 1 year to 5 years 80, ,500 14,154 34, , , , ,671 45

48 NOTES TO THE FINANCIAL STATEMENTS 30 June 2003 (Amounts expressed in Singapore dollars unless otherwise stated) 32. SEGMENT INFORMATION (a) Business segments The Group is organised on a worldwide basis into three main operating divisions, namely: Sale of products Maintenance Installation works Inter-segment pricing is on an arm s length basis. Sale of Installation 30 June 2003 products works Maintenance Total $ $ $ $ Turnover 25,939,237 31,628,672 9,845,012 67,412,921 Profit from operations 1,400,928 2,610,677 1,149,622 5,161,227 Financial expenses (156,960) Financial income 39,805 Share of results of associated companies 109,779 Taxation (1,341,164) Minority interest (567,667) Net profit for the year 3,245,020 Assets 12,026,055 29,905,587 5,425,181 47,356,823 Investment in associated companies 1,637,381 Unallocated assets 4,635,186 Total assets 53,629,390 Liabilities 4,666,299 5,526,082 1,444,054 11,636,435 Unallocated liabilities 9,402,563 Total liabilities 21,038,998 Capital expenditure 716, , ,200 1,391,680 Depreciation and amortisation 386, , , ,714 46

49 NOTES TO THE FINANCIAL STATEMENTS 30 June 2003 (Amounts expressed in Singapore dollars unless otherwise stated) 32. SEGMENT INFORMATION (continued) (a) Business segments (cont d) Sale of Installation 30 June 2002 products works Maintenance Total $ $ $ $ Turnover 14,122,105 36,780,859 11,083,131 61,986,095 Profit (loss) from operations (248,378) 7,492,690 2,130,137 9,374,449 Financial expenses (135,023) Financial income 116,055 Share of results of associated companies 248,256 Taxation (2,366,937) Minority interest (78,990) Net profit for the year 7,157,810 Assets 6,053,843 18,708,660 5,402,781 30,165,284 Investment in associated companies 1,282,590 Unallocated assets 8,122,757 Total assets 39,570,631 Liabilities 1,952,841 3,763,578 1,030,458 6,746,877 Unallocated liabilities 4,033,261 Total liabilities 10,780,138 Capital expenditure 275, , ,201 1,218,167 Depreciation and amortisation 211, , , ,818 (b) Geographical segments Turnover is based on the location of customers regardless of where the goods are produced. Assets and additions to property, plant and equipment are based on the location of those assets. Turnover Assets Capital expenditure $ $ $ $ $ $ Singapore 39,166,947 36,185,574 22,051,358 27,552,097 1,158, ,355 Malaysia 13,691,774 16,496,431 22,183,822 8,768, , ,442 Hong Kong 7,405,518 2,838,478 2,283,895 2,041,881 76,016 47,876 Others 7,148,682 6,465,612 7,110,315 1,208,529 38, ,494 67,412,921 61,986,095 53,629,390 39,570,631 1,391,680 1,218,167 47

50 NOTES TO THE FINANCIAL STATEMENTS 30 June FINANCIAL INSTRUMENTS Financial risk management objectives and policies The Group is exposed to risks from changes in market interest rates, currency exchange rates and credit risks. Interest rate risks The Group s exposure to interest rate risk relates primarily to the interest bearing fixed deposit, loans and interest on finance leases. Information relating to the Group s interest rate exposure is disclosed in the notes on the Group s borrowings, including lease obligations. Foreign currency risks The Group operates in nine countries and, as a result, is exposed to foreign exchange risks arising from various currency exposures. In addition to transactional exposures, the Group is also exposed to foreign exchange movements on its net investment in the foreign subsidiaries. It is not the Group s policy to enter into derivative forward foreign exchange contracts for hedging and speculative purposes. Credit risks Financial instruments which potentially expose the Group to concentration of credit risk consist primarily of cash and cash equivalents and trade and other debtors. The cash and cash equivalents are placed with various high quality financial institutions. The Group s major customer base consists primarily of major financial institutions and multi national corporations in Singapore, Malaysia and Hong Kong. The Group performs ongoing credit evaluations of its customers and generally does not require collateral on trade debtors. The maximum exposure to credit risk is represented by the carrying amount of the financial assets as stated in the balance sheet. Geographical concentrations of the Group s significant financial assets as at 30 June 2003 are as follows: Singapore Malaysia Hong Kong Others Group $ $ $ $ $ 2003 Trade debtors 8,051,676 7,778,733 1,278,599 2,935,464 20,044,472 Fixed deposits 275,851 58, ,404 Cash and bank balances 2,375, , ,798 1,103,900 5,066,709 Other debtors 1,075,037 6, ,121 1,243, Trade debtors 8,584,914 6,424,123 1,166, ,913 16,777,982 Fixed deposits 3,730,941 65,669 3,796,610 Cash and bank balances 2,543, , , ,955 4,319,855 Other debtors 881,142 13,688 23, ,530 48

51 NOTES TO THE FINANCIAL STATEMENTS 30 June FINANCIAL INSTRUMENTS (continued) Liquidity risks In the management of liquidity risks, the Group monitors and maintains a level of cash and bank balances deemed sufficient to finance the Group s operations and mitigate the effects of fluctuations in cash flows. Fair value The carrying value of the financial instruments, primarily cash and cash equivalents, receivables from affiliated companies, trade and other debtors and creditors approximate their fair value because of the short maturity of these instruments. The aggregate net fair values of financial assets and financial liabilities which are not carried at fair value in the balance sheet are presented in the following table as of 30 June The fair values of receivables and loans and borrowings are estimated using discounted cash flow analysis, based on current incremental lending rates for similar types of lending and borrowing arrangements. Group Company Carrying Fair Carrying Fair amount value amount value $ $ $ $ 2003 Financial asset Other investment 7,505 2,700 7,505 2,700 Financial liabilities Lease obligations 1,225,849 1,357, , , Financial asset Other investment 7,505 2,700 7,505 2,700 Financial liabilities Lease obligations 988,010 1,042, , ,553 Bank term loans 220, , SUBSEQUENT EVENT Subsequent to the financial year, a USD13,000,000 term loan facility was granted to the Company under a syndicated loan agreement. The loan is for a period of 60 months commencing from the First Advance Date and is secured by the following: 1) a fixed charge over a bank account of the Company; 2) floating charges over, inter alia, the trade receivables, inventories and other movable property representing the work-in-progress of the Company and certain subsidiaries; 3) subordination of all proceeds from loans due or which may become due from a subsidiary to the Company; 4) corporate guarantees given by certain subsidiaries; and 5) an assignment by a subsidiary of (i) a supply and installation agreement dated 18 November 2002 entered into between that subsidiary and AtlasOne Malaysia Sdn Bhd, and (ii) all agreements, letters, documents and other instruments which are supplemental or related thereto. 49

52 REPORT ON CORPORATE GOVERNANCE The directors and management of Lantrovision (S) Ltd are committed to high standards of corporate governance and has adopted the relevant recommendations of the Code of Corporate Governance in order to protect the interest of our employees, customers and shareholders. 1. BOARD OF DIRECTORS (THE BOARD ) The Board comprises four directors, two of whom are executive directors and two of whom are independent non-executive directors. None of the independent non-executive directors has any relationship with the Company or its subsidiaries. The Board s principal functions include, among others, supervising the overall management of the business and affairs of the Group, approving the Group s corporate and strategic policies and directions and approving any material acquisition and disposal of assets and major undertakings and matters which require the Board approval. Certain functions have been delegated to various board committees, namely, the Audit Committee ( AC ), the Nominating Committee ( NC ) and the Remuneration Committee ( RC ). In FY2003, the Board conducted 2 scheduled meetings. The number of Board, AC, NC and RC meetings held in FY2003 and the attendance of each member at each of these meetings were as follows:- Board Audit Nominating Remuneration Committee Committee Committee No. of No. of No. of No. of No. of No. of No. of No. of meetings meetings meetings meetings meetings meetings meetings meetings held attended held attended held attended held attended Lum Chue Tat 2 2 Chan Thye Yuan Ng Gek Ng Swee Han (deceased) Chew Chin Hua Ho Swee Seng Mr Lum Chue Tat is currently the Chairman of the Board and the Managing Director of the Company. The Board has not adopted the recommendation of the Code to have separate directors appointed as the Chairman and the Managing Director. This is because the Board is of the view that there is already a good balance of power and authority and sufficiently strong independent element on the Board to enable independent exercise of objective judgment on corporate affairs of the Group by members of the Board, taking into account factors such as the number of non-executive and independent directors on the Board, as well as the size and scope of the affairs and operations of the Group. The Chairman is responsible for, among others, exercising control over quality, quantity and timeliness of the flow of information between the Management of the Company and the Board, and assisting in ensuring compliance with the Company s guidelines on corporate governance. In order to assist the Board in carrying out its responsibilities, training is provided when the need arises and any Board Member can seek independent professional advice, if necessary, at the Company s expense with the Chairman s approval. 50

53 REPORT ON CORPORATE GOVERNANCE 2. NOMINATING COMMITTEE ( NC ) The NC was set up on 10 September 2002 and comprises three members, two of whom are independent and non-executive directors. It held one meeting in FY2003 chaired by Mr Chew Chin Hua. The NC has adopted specific written terms of reference. Accordingly, the members of the NC are responsible for, among others, the review and recommendation of appointment and re-appointment of directors. In accordance with the Company s Articles of Association, each director is required to retire at least once every three years by rotation and all newly appointed directors will have to retire at the AGM following their appointment. The retiring directors are eligible to offer themselves for re-election. The NC has recommended the re-appointment of 2 directors namely Mr Chan Thye Yuan and Mr Chew Chin Hua at the forthcoming AGM. The Board has accepted the NC s recommendation and these 2 directors will be offering themselves for re-election. In view of Ng Gek Ng Swee Han s demise, the Nominating Committee is currently in the process of identifying and nominating candidates to be appointed to the Board as well as the Audit and Remuneration Committees. Other duties of the NC include the determination of directors independence, ability of directors to handle multiple board representations and effectiveness of the Board including the board size and composition. The NC has deemed the current board size and composition to be appropriate after taking into consideration the nature and scope of the Group s operations. The review parameters for evaluating each director include: (a) attendance at board /committee meetings; (b) intensity of participation at meetings;(c) quality of involvement in management; (d) special contribution; and (e) availability for consultation and advice, when required. 3. AUDIT COMMITTEE ( AC ) The Chairman of the AC is Mr Chew Chin Hua and the other independent and non-executive member is Mr Ho Swee Seng. The AC met twice during the year. Details of the members attendance at AC meetings in FY2003 are provided in Section 1 of this Report. The AC s key functions include, pursuant to its terms of reference, (a) the review of the effectiveness of the Company s material internal controls, (b) scope and results of the external audit and its cost effectiveness, (c) independence and objectivity of the external auditors and (d) the provision of non-audit services. The AC has explicit authority to investigate any matters within its terms of reference and possess reasonable resources to discharge its functions properly. The external auditors have unrestricted access to the AC. The AC had undertaken a review of all non-audit services provided by the auditors and was of the opinion that the provision of such services would not affect the independence of the auditors. The AC has recommended the re-appointment of the external auditors at the forthcoming AGM. Upon review of the interested party transactions ( IPT ), the AC is satisfied that these IPT were carried out on an arm s length basis. 51

54 REPORT ON CORPORATE GOVERNANCE 4. REMUNERATION COMMITTEE ( RC ) The Chairman of the RC is Mr Ho Swee Seng and the other independent and non-executive member is Mr Chew Chin Hua. The main functions and responsibilities as set out in its written terms of reference include (a) the setting up and implementation of formal and transparent processes by which the remuneration packages of all the executive directors (in the form of service agreement) and the top management executives are formulated and approved, (b) the approval of the directors remuneration and service agreement which will be reviewed every two years and (c) the administration of the Lantrovision Share Option Scheme. The RC will also have access to expert advice in remuneration matters when the need arises. A breakdown of the level and mix of remuneration paid to each director in remuneration bands are as follows: Remuneration Directors Other allowances band and name Salaries Bonus fees and benefits Total of director % % % % % Between S$250,000 and S$499,999 Chan Thye Yuan Below S$250,000 Lum Chue Tat Ng Gek Ng Swee Han (deceased) Chew Chin Hua Ho Swee Seng Remuneration of top 5 key executives FY2003 FY2002 Below $250, Although there are employees occupying managerial positions in the Group who are related to certain executive directors of the Company, none of their remuneration exceeds S$150,000 for FY2003. The RC and the Board are of the opinion that the remuneration of the Directors are adequate but not excessive in order to attract, retain and motivate them to run the Company successfully. 5. THE LANTROVISION SHARE OPTION SCHEME The Lantrovision Share Option Scheme ( the Scheme ) is administered by Remuneration Committee with its members as disclosed in Section 4 above. All options issued under the Scheme to employees, including executive directors, will have a term no longer than 10 years and options issued to non-executive Directors will have a term no longer than 5 years. The total grant of 5,180,000 options during the financial year was the first grant since the commencement of the Scheme. The options are exercisable based on a subscription price which is fixed at S$0.26 per share, as determined as the average price of the five (5) consecutive trading days immediately preceding the Date of Grant of Option. No options were granted at a discount to the market price of shares during the financial year. The Options may only be exercised after the first anniversary from the Date of Grant of that Option. No options were granted to any controlling shareholders and their associates. Other than the 3 executive directors who each hold 6.37% of the total options granted, there is no other participants who received 5% or more of total options under the Scheme. 52

55 REPORT ON CORPORATE GOVERNANCE 5. THE LANTROVISION SHARE OPTION SCHEME (continued) Aggregate options Aggregate options granted since exercised since Options granted commencement of commencement of Aggregate options during financial year Scheme to end of Scheme to end of outstanding as at end under review financial year financial year of financial year Name of participants (including terms) under review under review under review Lum Chue Tat 330, ,000 Nil 330,000 Chan Thye Yuan 330, ,000 Nil 330,000 Ng Gek Ng Swee Han 330, ,000 Nil 330,000 (Deceased) Chew Chin Hua 30,000 30,000 Nil 30,000 Ho Swee Seng 30,000 30,000 Nil 30,000 The aggregate number of options granted to directors and employees of its subsidiaries during the financial year, since the commencement of the Scheme, is 590, COMMUNICATIONS WITH THE SHAREHOLDERS The Board is mindful of its obligation to provide timely and fair disclosure of material information in accordance with the Corporate Disclosure Policy of the SGX-ST. Results and other material information are released via MASNET on a timely basis for dissemination to shareholders and the public. All shareholders receive a copy of the annual report and the notice of AGM ( the AGM Notice ). The AGM Notice is also advertised in the newspapers and released via MASNET. The Board welcomes the view of the shareholders on matters affecting the Company at shareholders meetings, At AGMs, shareholders are given the opportunity to air their view and to ask the directors and Management questions regarding the Group. 7. DEALINGS IN SECURITIES The Company has adopted the SGX-ST Best Practice Guide to provide guidance to its directors and officers on their dealings in its securities. 8. CONTROL ENVIRONMENT AND INTERNAL AUDIT PROCESS The Board is aware of its responsibility to ensure that the Company has a sound system of internal controls. It has directed Management and Audit Committee to continually identify and evaluate the Company s critical systems and controls so that adequate measures are in place to protect the Company s assets and the interests of the Shareholders and Customers. The Company has established a reasonable control environment where delegation of authority and approval for major business transactions and expenditure are properly documented and observed, and that all financial and material information have been accurately and timely reported to the board and other relevant authorities. The Board is exploring the outsourcing of internal audit review to a reputable accounting firm. There is also regular communication between executive directors and operational management with presentation being made by the management of each principal operations on a regular basis. 53

56 REPORT ON CORPORATE GOVERNANCE 9. INTERESTED PARTY TRANSACTIONS POLICY The Company has adopted an internal policy in respect of any transactions with interested person and has set out the procedures for review and approval of the Company s interested persons transactions by the Audit Committee. The aggregate value of interested party transactions entered into during the financial year under review is as follows: Aggregate value of all interested person transactions during the financial year under review (excluding transactions less than S$100,000 and transactions conducted under shareholders Name of Interested Person mandate pursuant to Rule 920) Deltametrix (S) Pte Ltd Sales S$111,026 Strike Engineering Limited Sales S$182,575 There is no interested person transactions conducted during the financial year under shareholders mandate pursuant to Rule RISK MANAGEMENT POLICIES AND PROCESSES The management of all forms of business risk continues to be an important part of ensuring that the Group creates and protects values for its shareholders. The main risk faced by the Group is credit risk which is primarily attributable to its trade receivables. Accordingly, stringent credit control policies and processes have been set up and closely monitored to ensure adequate prevention, early detection and resolution of potential bad debts. For further details on the risks faced by the Group, please refer to page 48 of the Annual Report. 54

57 GROUP PROPERTIES Details of freehold and leasehold properties held by the Group are as follows: Description and Gross Area Location existing use Tenure (sq m) Net Book Value Held by the Company 102F Pasir Panjang Road, Office unit within Freehold 131 S$970,222 S$1,010,431 #03-09 a Warehouse Citilink Warehouse Complex for Complex office use Singapore F Pasir Panjang Road, Office unit within Freehold 175 S$1,187,600 S$1,239,177 #03-03 a Warehouse Citilink Warehouse Complex for Complex office use Singapore Held by Subsidiary No 69 Jalan 3/23A A 2-storey shop Leasehold 164 RM573,168 RM597,254 Taman Danau Kota, house for office (99 years from off Jalan Genting and warehouse 2 November Kelang use 1990) Setapak Kuala Lumpur, Malaysia No 71 Jalan 3/23A A 2-storey shop Leasehold 164 RM585,202 RM606,268 Taman Danau Kota, house for office (99 years from off Jalan Genting and warehouse 2 November Kelang use 1990) Setapak Kuala Lumpur, Malaysia 55

58 STATISTICS OF SHAREHOLDINGS as at 22 September 2003 Authorised share capital : S$50,000, Issued and fully paid-up capital : S$5,180, Class of shares : Ordinary shares of S$0.02 each Voting rights : 1 vote per ordinary share Size of Shareholdings No. of shareholders % No. of shares % ,000 10, ,409, ,001 1,000, ,554, ,000,001 and above ,037, Total ,000, SUBSTANTIAL SHAREHOLDERS (as recorded in the Register of Substantial Shareholders) Direct Interest Deemed Interest No. of shares % No. of shares % Strike Engineering Limited 69,000, Lum Chue Tat 31,845, ,000,000 (1) 0.39 Chan Thye Yuan 29,845, ,000,000 (2) 1.16 Ng Gek Ng Swee Han (deceased) 35,525, Notes: (1) All held in the name of Citibank Consumer Nominees Pte Ltd as a custodian (2) 1,000,000 held in the name of Citibank Consumer Nominees Pte Ltd as custodian 2,000,000 held in the name of DBS Vickers Securities (S) Pte Ltd as custodian 3,000,000 TWENTY LARGEST SHAREHOLDERS No. of shares % 1 Strike Engineering Limited 69,000, Ng Gek Noi (deceased) 35,525, Lum Chue Tat 31,845, Chan Thye Yuan 29,845, Kim Eng Securities Pte Ltd 10,165, Friendship Bridge Holding Company Pte Ltd 9,674, Phillip Securities Pte Ltd 9,026, UOB Kay Hian Pte Ltd 7,257, United Overseas Bank Nominees Pte Ltd 6,471, Hong Leong Finance Nominees Pte Ltd 4,015, HL Bank Nominees (S) Pte Ltd 3,115, Chan Bee Fong 2,623, Citibank Consumer Nominees Pte Ltd 2,460, Lim & Tan Securities Pte Ltd 2,353, DBS Vickers Securities (S) Pte Ltd 2,065, Oh Kian Seng 1,742, OCBC Securities Private Ltd 1,425, Hew Kin Wah 1,340, Loh Chung Ming 1,340, Toh Khai Cheng 1,300, Total 232,586, Public Float Rule 723 of the Listing Manual of the Singapore Exchange Securities Trading Limited requires that at least 10% of the equity securities (excluding preference shares and convertible equity securities) of a listed company in a class that is listed is at all times held by the public. The Company confirms that it has complied with this requirement. 56

59 NOTICE OF ANNUAL GENERAL MEETING LANTROVISION (S) LTD (Incorporated in the Republic of Singapore) NOTICE IS HEREBY GIVEN that the 2 nd Annual General Meeting of LANTROVISION (S) LTD ( the Company ) will be held at 102F Pasir Panjang Road, #03-08 Citilink Warehouse Complex, Singapore on Friday, 7 November 2003, at a.m. for the following purposes: AS ORDINARY BUSINESS 1. To receive and adopt the Directors Report and Audited Accounts of the Company for the year ended 30 June 2003 together with the Auditors Report thereon. (Resolution 1) 2. To re-elect the following Directors retiring pursuant to the Company s Articles of Association:- Mr Chan Thye Yuan (Resolution 2) Mr Chew Chin Hua (Resolution 3) Mr Chew Chin Hua will, upon re-election as Director of the Company, remain as Chairman of the Audit Committee and will be considered independent for the purposes of Rule 704(8) of the Listing Manual of the Singapore Exchange Securities Trading Limited. 3. To re-appoint Messrs Ernst & Young as the Company s Auditors and to authorise the Directors to fix their remuneration. (Resolution 4) 4. To approve the payment of Directors fees of S$50,000 for the year ended 30 June 2003 (previous year: S$50,000). (Resolution 5) AS SPECIAL BUSINESS To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions, with or without any modifications: 5. Authority to allot and issue shares up to 50 per centum (50%) of issued capital That pursuant to Section 161 of the Companies Act, Cap. 50 and Rule 806(2) of the Listing Manual of the Singapore Exchange Securities Trading Limited, the Directors be empowered to allot and issue shares in the capital of the Company at any time and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit provided that the aggregate number of shares to be allotted and issued pursuant to this Resolution shall not exceed 50 per centum (50%) of the issued share capital of the Company at the time of the passing of this resolution, of which the aggregate number of shares to be issued other than on a pro rata basis to all shareholders of the Company shall not exceed 20 per centum (20%) of the issued share capital of the Company and that such authority shall unless revoked or varied by the Company in general meeting, continue in force until the conclusion of the Company s next Annual General Meeting or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier. [See Explanatory Note (i)] (Resolution 6) 6. Authority to allot and issue shares under the Lantrovision Share Option Scheme That pursuant to Section 161 of the Companies Act, Cap. 50, the Directors be authorised and empowered to allot and issue shares in the capital of the Company to all the holders of options granted by the Company, whether granted during the subsistence of this authority or otherwise, under the Lantrovision Share Option Scheme ( the Scheme ) upon the exercise of such options and in accordance with the terms and conditions of the Scheme, provided always that the aggregate number of additional ordinary shares to be allotted and issued pursuant to the Scheme shall not exceed five per centum (5%) of the issued share capital of the Company for the time being. [See Explanatory Note (ii)] (Resolution 7) 57

60 NOTICE OF ANNUAL GENERAL MEETING LANTROVISION (S) LTD (Incorporated in the Republic of Singapore) 7. To transact any other ordinary business which may properly be transacted at an Annual General Meeting. By Order of the Board Lim Lee Choo Company Secretary Singapore, 15 October 2003 EXPLANATORY NOTES: (i) The Ordinary Resolution 6 proposed in item 5 above, if passed, will empower the Directors from the date of the above Meeting until the date of the next Annual General Meeting, to allot and issue shares in the Company. The number of shares that the Directors may allot and issue under this Resolution would not exceed fifty per centum (50%) of the issued share capital of the Company at the time of the passing of this resolution. For issue of shares other than on a pro rata basis to all shareholders, the aggregate number of shares to be issued shall not exceed twenty per centum (20%) of the issued share capital of the Company at the time of the passing of this resolution. The percentage of issued share capital is based on the Company s issued capital after adjusting for new shares arising from the exercise of employee share options in issue at the time the proposed Ordinary Resolution is passed and any subsequent consolidation or subdivision of the shares. (ii) The Ordinary Resolution 7 proposed in item 6 above, if passed, will empower the Directors of the Company, from the date of the above Meeting until the next Annual General Meeting, to allot and issue shares in the Company of up to a number not exceeding in total five per centum (5%) of the issued share capital of the Company for the time being pursuant to the exercise of the options under the Scheme. NOTES: 1. A Member entitled to attend and vote at the Annual General Meeting (the Meeting ) is entitled to appoint a proxy to attend and vote instead of him/her. A proxy need not be a Member of the Company. 2. If the appointor is a corporation, the instrument appointing a proxy must be executed under seal or the hand of its duly authorised officer or attorney. 3. The instrument appointing a proxy must be deposited at the Registered Office of the Company at 102F Pasir Panjang Road, #03-03, Citilink Warehouse Complex, Singapore not less than 48 hours before the time for holding the Meeting. 58

61 PROXY FORM (Please see notes overleaf before completing this Form) LANTROVISION (S) LTD (Incorporated in the Republic of Singapore) IMPORTANT: 1. For investors who have used their CPF monies to buy ordinary shares of Lantrovision (S) Ltd, this Notice of Annual General Meeting is forwarded to them at the request of their CPF Approved Nominees and is sent solely FOR INFORMATION ONLY. 2. This Proxy Form is not valid for use by CPF Investors and shall be ineffective for all intents and purposes if used or purported to be used by them. 3. CPF investors who wish to vote should contact their CPF Approved Nominees. I/We, of being a member/members of Lantrovision (S) Ltd (the Company ), hereby appoint of or, failing him/her, of or failing him/her, the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the Annual General Meeting (the Meeting ) of the Company to be held on Friday, 07 November 2003, at a.m. and at any adjournment thereof. The proxy is to vote on the business before the meeting as indicated below. If no specific direction as to voting is given, the proxy will vote or abstain from voting at his/her discretion, as he/she will on any other matter arising at the Meeting: No. Resolutions relating to: For Against 1 Directors Report and Accounts for the year ended 30 June Re-election of Mr Chan Thye Yuan as a Director 3 Re-election of Mr Chew Chin Hua as a Director 4 Re-appointment of Messrs Ernst & Young as Auditors 5 Approval of Directors fees amounting to S$50,000/- 6 Authority to allot and issue new shares 7 Authority to allot and issue shares under the Lantrovision Share Option Scheme (Please indicate with a cross [X] in the space provided whether you wish your vote to be cast for or against the Resolutions as set out in the Notice of the Meeting.) Dated this day of 2003 Total number of Shares in: (a) CDP Register No. of Shares Signature of Shareholder(s) or, Common Seal of Corporate Shareholder (b) Register of Members 59