CSE 4 pdf - CSE Global

Transcription

“Growing new businesses in the light of new challenges.”
Annual Report 2001
CONTENTS
Our Vision 01
Corporate Profile 02
Significant Events 03
Message To Our Stakeholders 04
Board of Directors 07
Industrial Business Unit 08
IT Consulting Business Unit 10
Our Solutions 12
Financial Highlights 14
Operating Entities 16
Corporate Information 18
Financial Statements 20
Our Vision 01
Casting new seeds in the winds of change.
Our Vision
To Be A Leading Global Systems Integrator Providing Cost-Effective Total
Integration Solutions To The Satisfaction Of Our Customers.
Customer Satisfaction, Everytime
02 Corporate Profile
T H E S E E D T H AT
GROWS
I N A D V E R S I TY THR IVE S ON CHAN GE
A N D B EA R S T H E M O S T P RE C I O U S F R U I T
turnkey capability through the
CSE Systems & Engineering
Industrial Business Unit and the
Limited (CSE) is a public-listed
Consulting Business Unit. The
company specialising in systems
Company has been ISO 9001
integration and engineering
- certified by the Singap ore
solutions. With a staff strength
Productivity & Standards
of approximately
Board and the National
582, CSE provides
CSE Systems & Engineering Ltd
Computer Board since
Information Tech1998. In about eighteen
nology (IT) and
years, CSE has risen
In d u s t r i a l A u t o from being the engineering projects division
mation (IA) solutions to clients globally in
of an electronics company to becoming
the energy (Oil & Gas/Power), chemical/
a public-listed, internationally recognised
petrochemical, transportation and public
systems integration and engineering company.
sectors. CSE offers its customers a total
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Significant Events 03
We harvest opportunities with
each season.
We turn each day towards
greater achievements.
20 April 2001, the Company was transferred from the SGX-SESDAQ to the SGX-ST Main Board; On 3 separate occasions
on 17 September 2001, 16 October 2001 and 26 December 2001, the Company progressively increased its equity stake
in eBworx to 100.00% from 70.33%; 9 October 2001, the Members of the Company approved the CSE (U.S. Subsidiaries)
Incentive Stock Option Plan and the amendments to the existing rules of the CSE Systems & Engineering Executives' Share
Option Scheme; 17 October 2001, the Company was awarded a S$9.8 million contract from the Housing & Development
Board; 26 November 2001, the Company was awarded a S$6.5 million contract from the Jurong Town Corporation;
4 January 2002, the Company was awarded a US$3.6 million contract from the ABB Lummus; 25 January 2002, the
Company placed out 40,000,000 new ordinary shares at S$0.467 each for cash; and 4 February 2002, the management
of the Group's Taiwan Branch embarked on a management buy-out of the Group's semiconductor practice in Taiwan.
04 Message To Our Stakeholders
Message To Our Stakeholders 05
borrowing of S$46.3 million. On 1 February 2002, the
Overview : It was a difficult year in review for the Group,
Group completed a share placement of 40 million new
as we were faced with a weak global economy as well
shares, raising net proceeds of approximately S$18.2
as the need to refocus our businesses and control
million. Taking into account the effects of the share
operating costs. During the year, the Group made
placement at the end of FY2001, the Group's
several strategic decisions, including:
pro-forma debt to Shareholder's Fund ratio is 1.0 time.
i. exiting the networking and infrastructure business
in Singapore
Operational Highlights - Industrial Business Unit
ii. divesting the operations of providing information
For FY2001, the Industrial business unit achieved
technology (IT) services to the hi-tech industry in
revenue growth of 35% to S$95.3 million as compared
Singapore and in Taiwan through management buy-out
to S$70.4 million in FY2000. Profit before tax, oneiii. reorganizing our IT Consulting team to focus on
time charges & minority interest increased by 4% to
government agencies and the finance services sector
S$12.8 million in FY2001 from S$12.3 million in FY2000.
iv. reorganizing the management team in Singapore
After a slow Q1FY2001 for the Americas, demand
and the United Kingdom (UK) and
from customers started to pick up for the rest of the
v. reducing the workforce in Singapore, UK and the
year. The demand from our customers in UK, Middle
Philippines.
East, Africa and Asia also started to pick up in the
The reorganization of the Group gave rise to
second half of FY2001. The business unit carried
one-time charges of S$3.1 million for FY2001.
S$47.3 million of backlog orders into FY2002.
With the restructuring and repositioning efforts,
The business unit's profit
the Group improved its
margins had been affected by
performance in the fourth
With a clear and
higher operating costs in its
quarter over its third quarter.
operations for the first half
The Group also provided
focused strategy,
of FY2001, which were
S$1.9 million for doubtful
We can now face
subsequently reduced in the
debts following a United
second half of the year, as
States (US) customer's filing
challenges ahead.
well as the completion of low
for Chapter 11-bankruptcy
gross margin projects for a
protection and S$0.2 million for
semiconductor customer by its Asia operations.
the provision of doubtful debts for a local company.
The business unit also incurred significant onetime charges of S$1.9 million for provision of doubtful
Financial Highlights : Revenue for the full FY2001 was
debts by its US operations and S$0.9 million for
S$113.9 million, an increase of 8% over revenues of
restructuring costs incurred by its UK operations.
S$105.6 million in FY2000. For the year under review,
the Group reported a net profit of S$4.0 million
IT Consulting Business Unit : The Group had merged
compared to a net profit of S$13.7 million in FY2000.
and restructured its IT Consulting division and eBworx
However, excluding one-time charges, net profit
into a single business unit for better management
for FY2001 would have been S$9.2 million.
control and business focus. The revitalized business
The order book registered by the Group at the end of
unit will focus on the provision of IT services to two
FY2001 was valued at S$80.7 million, compared to
areas; namely, government agencies and the financial
S$59.7 million registered at the end of FY2000.
services sector in Southeast Asia.
While the Group staged a recovery in the second half
For FY2001, the IT Consulting business unit's revenue
of FY2001, the financial parameters for the performance
decreased 47% to S$18.6 million from S$35.2 million
of the Group for the full year have all deteriorated. For
in FY2000. Profit before tax, one-time charges &
FY2001, the Economic Value Added (EVA) recorded
minority interest decreased 143% to a loss of S$2.3
a negative S$8.2 million as compared to S$6.1 million
million as compared to earnings of S$5.4 million in
in FY2000. Earnings Per Share (EPS) decreased 71%
FY2000.
to 1.52 cents in FY2001 as against 5.29 cents
The continuous effort to exit the network and
in FY2000. The operating margin (before tax)
infrastructure business and the progressive recognition
decreased to 4.7% as compared to 16.8% in FY2000.
of revenue for milestones achieved for the
Net tangible assets per share decreased 30% to
e-Government orders received were not enough to
1.39 cents in FY2001 from 1.99 cents in FY2000.
offset the decline in revenue and profits for the unit's
The Group ended the year with a Shareholder's Fund
government division.
before minority interest of S$9.2 million and a bank
CUSTOMER SATISFACTION, EVERYTIME
06 Message To Our Stakeholders
The Group had merged and restructured its IT
Consulting division and eBworx into a single business
unit for better management control and business focus.
The revitalized division will focus on two areas. The
first is to provide IT services to government agencies.
The other focus is the provision of IT services to the
financial services sector in Southeast Asia.
The IT Consulting business unit has backlog orders of
S$33.4 million as at 31 December 2001. These backlog
orders comprise of projects and maintenance contracts
that have delivery periods extending beyond FY2002.
Following the Group's revenue recognition policy, the
IT Consulting business unit expects to recognize
approximately 60% of the backlog orders in FY2002.
To further enhance and broaden its products and
capabilities, the Group will continue to invest in the
development and marketing of credit management
and cash management systems for the finance services
Quality : During the year, CSE embarked on a global
sector, hospital management system for the healthcare
ISO9000 certification strategy for the CSE group of
market and security management
companies with Lloyd's Register
system for prisons and other
Quality Assurance (LRQA).
With full confidence
military or secured installations.
The benefits from this global
Barring unforeseen circumstances,
certification are that the quality
and your support,
the Directors expect the Group's
management systems will be
We establish businesses
profit before income tax, oneimplemented consistently
time charges and minority interest
throughout our companies,
built to last
for FY2002 to be as good as, if
giving further confidence
not better than FY2001.
to our customers worldwide.
In eBworx, the weak semiconductor industry resulted
in project delays for our Taiwan operations.
Furthermore, the political and economic uncertainties
in the Philippines also resulted in project delays for
our operations there. eBworx's profit margins were
affected by the reduction in revenue and higher
operating costs for the first half of FY2001, which
were further reduced in the second half of FY2001.
eBworx also reported S$0.52 million loss from its US
associated company, InfiniteInfo, Inc. Amidst the
gloom, its Malaysian operation focusing on the
financial services sector remained profitable.
The division also suffered significant one-time charges
of S$0.2 million for provision of doubtful debts for a
Singapore company and S$2.2 million for restructuring
costs incurred by its eBworx's operations.
2002 Outlook : The world economic outlook remains
uncertain. The Group is mindful of the challenges
ahead and the need to be vigilant.
Its Industrial business unit will continue to service
existing customers in the Americas, UK and Southeast
Asia. It will explore new opportunities in the Middle
East, Africa and China. It will also cross-sell its US
capabilities in wellhead control systems and chemical
injection systems as well as its UK expertise in telemetry
in Asia.
The Industrial business unit has secured backlog
orders of S$47.3 million as at 31 December 2001.
The backlog orders comprise of projects and
maintenance contracts that have delivery periods
extending beyond FY2002. The Group recognizes
revenue on a progressive billing basis, matching the
cost of the project to the milestones achieved. For
FY2002, the Industrial business unit expects to
recognize about 80% of the backlog orders. In addition,
the Industrial business unit expects to continue to
report approximately 50% of its revenue from recurring
short-term orders, defined as orders received and
delivered within 3 months.
Acknowledgement : FY2001 was a difficult year. In
spite of being faced with the twin challenges of a
weak economy and the need for re-focus and cost
control, the Group remained profitable. With a clear
and focused strategy and a team of dedicated and
professional staff, the Group has been able to
restructure its operations and to reduce its operating
costs. The Group can now face challenges ahead
with a clean slate.
On behalf of our board and management team, we
wish to take this opportunity to thank our staff for
their contributions and hard work to overcome
the challenges of restructuring and refocusing on our
core business areas in a difficult year. In particular,
we wish to place on record our deep appreciation to
their family members for their patience, understanding,
co-operation and support as the management made
the strategic decisions to reposition the group for
sustainable success in the coming years.
Finally, we wish to acknowledge the role of our
shareholders, customers and business associates for
their confidence and support of our goal to establish
businesses that we will "Build to Last".
Board of Directors 07
Un i fi ed,
To C u l ti v ate
A B etter
T om or r ow.
Top Row, Left to Right
Middle Row, Left to Right
Bottom Row, Left to Right
:
:
:
Lim Ming Seong, Goh Boon Seong, Tan Mok Koon
Low Sek Fun, Phillip Lee Soo Hoon
Dr Lim Boh Soon, Chris Chi Keh Fei, Robert Paul Collins
08 Industrial Business Unit
Through precision planning and experienced foresight,
we will propel CSE towards greater growth.
Revenue increased 35% during FY2001 to S$95.3 million from S$70.4 million in FY2000. Profit before tax, onetime charges & minority interest was S$12.8 million in FY2001, as compared to S$12.3 million in FY2000. A
significant one-time charge of S$1.9 million for doubtful debt provision was incurred following the filing for
Chapter 11 bankruptcy protection by the US client, Friede Goldman Halter, Inc. An additional S$0.9 million
charge was incurred due to the restructuring of its UK operations. During the period under review, the Industrial
business unit was affected by a slow first quarter for its US operations, high operating costs in its UK operations
and lower gross margin for its Asian operations. Early in the year, several initiatives were implemented to control
cost and refine the business model. These measures have yielded positive results as the business unit recorded
a recovery in the second half of FY2001. While the FY2001 performance of the Industrial business unit did not
meet expectations, there are many positive indications that the major pieces needed for the unit to stage a
recovery are in place. In the period under review, the Industrial business unit was able to realise some of the
synergies envisioned when CSE acquired W-Industries, Inc. and Servelec Group Limited as part of its strategy
to internationalise its operations. These benefits include: • The capability to provide one-stop services for clients
such as ABB Lummus, which was awarded a US$3.6 million contract to provide wellhead control, hydraulic
power units and chemical injection systems for a field development project for ExxonMobil.
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Industrial Business Unit 09
Fueled by dynamism, our carefully implemented
changes will yield lush results
• The expertise to engineer IT solutions, such as a security control & management system called Panoptes, for
the British prison service (HMPS) and a clinical information system, called RIO, designed for the healthcare
market. Servelec was awarded a S$2.6 million contract to install Panoptes at the HMP Frankland High Security
Prison in Northern England. This is the first system to be installed into an operational prison. Upon successful
implementation, Servelec will deploy Panoptes in other high security establishments under an existing framework
agreement with HMPS. In addition, Servelec was also awarded a S$2.6 million contract by Somerset Partnership
NHS and Social Care Trust to deploy RIO to enhance its operational efficiency and effectiveness by integrating
existing legacy systems with a web-based integrated clinical and care management systems. • The ability to
cross-sell products and services between geographical markets was demonstrated when Philips Petroleum
awarded CSE a S$1.82 million contract to deploy control system in Bohai Bay. CSE leveraged on the wellhead
control technology of its subsidiary W-Industries to enter China's offshore oil and gas market. Later in the year,
CSE leveraged on a proprietary supervisory control and data acquisition suite of software developed by Servelec,
called SCOPE-X, to secure a S$6.5 million contract from JTC Corporation to implement a supervisor control
system in Singapore to monitor 89 blocks of offices and factories located islandwide. The Group recently
expanded its operations in Abu Dhabi and Beijing. Going forward, it expects that greater collaboration between
the various units will see the Group in a good position to exploit new business opportunities in the Middle East
and China.
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10 IT Consulting Business Unit
Revenue contribution from the IT Consulting business unit
declined 47% during the period under review to S$18.6 million
from S$35.2 million in FY2000. Profit before tax, one time
charges & minority interest totalled a loss of S$2.3 million, as
compared to a profit of S$5.4 million in FY2000. The unit
incurred one-time charges of S$0.2 million for provision of
doubtful debts for a Singapore company as well as another
S$2.2 million related to the restructuring for eBworx.
The lacklustre performance can be attributed to two major
factors: an earlier decision to exit the capital-intensive, yet
low-margin networking and infrastructure business; and a
severe deterioration in the business climate for eBworx, which
was adversely affected by the weak semiconductor industry,
political and economic uncertainties in the Philippines and the
melt-down in the dot com business in the US.
During the year, several initiatives were implemented to
reposition the business unit for recovery. These included the
merger of IT Consulting and eBworx into a single business
unit, divestiture of the operations that serviced the
semiconductor industry in Singapore and Taiwan through
management buy-out, reorganization of the eBworx
management team, reduction in the eBworx workforce in
Singapore and the Philippines and the realignment of
eBworx towards the more profitable business of providing
IT solutions to the financial services industry. These changes
provide for better management control, a sharper business
focus and have resulted in a narrower loss for eBworx in
the fourth quarter.
IT Consulting Business Unit 11
Tenacity and fortitude prevail in an ever-changing landscape.
Despite a challenging FY2001, the IT Consulting business unit
continued to secure several large contracts which included:
• S$9.8 million contract from the Housing & Development
Board in Singapore to upgrade its front counter financial
receipting system
• S$3 million contract from the Singapore Civil Defence Force
to implement a Fire Safety On-Line Processing System
• Several high value contracts totalling S$4 million secured
by eBworx to implement its flagship Digital Credit Management
and Digital Cash Management products for major banks in
South-East Asia
eBworx was recognized by IDC as a software hero in Asia
specialising in the financial services. Credit was accorded to
eBworx for providing solutions that demonstrated in-depth
banking industry knowledge.
In addition, eBworx received recognition for its efforts in
developing the first wireless application in Malaysia for OCBC
Bank when it was awarded the "E-commerce solution for the
year" award from Microsoft.
Going forward, the revitalized IT Consulting business unit
will focus on two key areas. The first is to continue to provide
IT services to government agencies, especially in the
area of electronic document workflow. The second is the
provision of IT services to the financial services industry in
South-East Asia.
12 Our Solutions
“Enriching businesses
through the provision of our
total integrated solutions.”
Our Solutions 13
INDUSTRIAL AUTOMATION
In the area of industrial automation, we offer a comprehensive
range of products and solutions in the Energy (Oil & Gas/Power),
Chemical / Petrochemical, and Water & Telemetry sectors.
Our core strength lies in our industry-specific domain knowledge
and our engineering capabilities.
We offer:
• Programmable Control Systems
• Supervisory Control And Data Acquisition Systems (SCADA)
• Telemetry Systems
• Safety & Shutdown Systems
• Facility Management and Control Systems (FMCS)
• Pneumatic & Hydraulic Control Systems
• Subsea Production Control Systems
• Instrumentation and Electrical (I&E) Field Construction Services
• Plant Information Systems
• Laboratory Information Systems
• Asset Integrity Management Systems
• Data Reconciliation Systems
INFORMATION TECHNOLOGY
Through our IT Consulting Business Unit (ITC), we have a dedicated
team of IT professionals with the proven track record in handling
large-scale projects for both public and private sector clients.
ITC combines the expertise of two former divisions IT Consulting and eBworx. ITC offers a wide range of industryspecific applications, turnkey project implementation and systems
integration services. ITC's strength lies in its business domain
knowledge and in-depth knowledge in the key areas of
e-government, enterprise resource planning, financial services,
security and healthcare.
We offer:
• Electronic Document Workflow and Management Systems
• Electronic Registry & eFiling
• Enterprise Resource Planning (ERP) Systems (Peoplesoft, SAP)
• Integrated Clinical Information Systems
• Integrated Control Room Systems for Prison Services
• Online Internet Banking Services
• Mobile / Wireless Banking Solution
• Digital Sales Force Automation Solution
• Security Control System
14 Financial Highlights
“Seizing opportunities from new challenges.”
RETURN ON EQUITY (%)
PAT PER EMPLOYEE (S$’000)
2001
2001
2000
2000
1999
1999
1998
1998
1997
1997
0
20
40
60
80
100
120
0
5
10
15
20
25
30
35
PROFIT AFTER TAX (S$’000)
EVA (S$’000)
2001
2001
2000
2000
1999
1999
1998
1998
1997
1997
0
2
4
6
8
10
12
14
16
-10
-8
-6
-4
-2
0
SHAREHOLDERS’ FUND (S$’000)
2001
2000
2000
1999
1999
1998
1998
1997
1997
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20
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6
8
NTA PER SHARE (CENTS)
2001
0
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16
Financial Highlights 15
“Achievement through improvements and vigilance .”
Turnover by activities for 2001
Turnover by activities for 2000
Industrial Business Unit 67%
Industrial Business Unit 84%
IT Consulting Business Unit 33%
IT Consulting Business Unit 16%
Turnover by geographical locations
for 2001
Turnover by geographical locations
for 2000
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Europe / Middle East 10%
Europe / Middle East 17%
The Americas 49%
The Americas 56%
Asia 11%
Asia 10%
Singapore 30%
Singapore 17%
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16 Operating Entities
100%
W-Industries Inc
(America)
100%
CSE Technology
(Beijing) Co Ltd
(China)
100%
CSE Systems
& Engineering
(Tianjin) Co Ltd
(China)
100%
eBworx Limited
(Singapore)
100%
Integrated Control
Systems Inc
(America)
49%
eBworx Philippines Inc
(formerly known as
Solutions Exchange Inc)
(The Philippines)
100%
eBworx
(Malaysia) Sdn Bhd
(Malaysia)
80%
Digital Nervous
System Sdn Bhd
(Malaysia)
Operating Entities 17
70%
PI- CSE Systems
& Engineering
(Malaysia) Sdn Bhd
(Malaysia)
100%
CSE Systems
& Engineering
(Thailand) Ltd
(Thailand)
100%
CSE Systems
& Engineering
(India) Private Limited
(India)
100%
Servelec Group Ltd
(United Kingdom)
100%
Servelec Ltd
(United Kingdom)
100%
Seprol Ltd
(United Kingdom)
18 Corporate Information
Board of Directors
Lim Ming Seong (Chairman)
Goh Boon Seong
Tan Mok Koon (Managing Director)
Low Sek Fun
Lee Soo Hoon, Phillip
Dr Lim Boh Soon
Chi Keh Fei, Chris
Robert Paul Collins
Executive Committee
Lim Ming Seong (Chairman)
Goh Boon Seong
Tan Mok Koon
Audit Committee
Lee Soo Hoon, Phillip (Chairman)
Dr Lim Boh Soon
Low Sek Fun
Secretaries
Yvonne Choo
Tan San-Ju
Registered Office
10 Collyer Quay #19-08
Ocean Building
Singapore 049315
Tel : 65-6536 5355
Share Registrars
Lim Associates (Pte) Ltd
Ocean Building
Singapore 049315
Tel : 65-6536 5355
Auditors
Ernst & Young
Ocean Building
Singapore 049315
Tel : 65-6535 7777
Audit Partner-in-charge :
Mr Tan Chian Khong
Headquarters
19A Serangoon North Ave 5
3rd Floor Avi-Tech Building
Singapore 554859
Tel : 65-6484 1622
Fax : 65-6482 5003
Asia
(India) Private Limited
No. 44/3, 1st Floor, Fairfield Layout,
Race Course Road
Bangalore - 560 001, India
Tel : 91-80-226 4113/7
Fax : 91-80-226 4118
CSE Systems & Engineering (Thailand) Limited
283/83 Homeplace Office Building
16th Floor, Soi Sukhumvit 55 (Thonglor 13)
Sukhumvit Road, Klongton Nur, Wattana,
Bangkok 10110, Thailand
Tel : 66-2-712 7331/2/3
Fax : 66-2-712 7334
CSE Systems & Engineering (Tianjin) Co., Ltd
Beijing Huiyuan Apartment
No. 8 North Star East Road,
Andingmen Wai
Room 428, Building R
Beijing 100101, China
Tel : 86-10-6499 2990
Fax : 86-10-6492 3501
CSE Technology (Beijing) Co., Ltd
Suite B409 Great Wall Computer Building
No. 38 Xue Yuan Lu,
Beijing 100083, China
Tel : 86-10-8201 4593/4
Fax : 86-10-8201 4600
Chaumont Pte Ltd
Singapore 554859
Tel : 65-6484 1622
Fax : 65-6482 5003
Nanterre Pte Ltd
Singapore 554859
Tel : 65-6484 1622
Fax : 65-6482 5003
ITServ Pte Ltd
Singapore 554859
Tel : 65-6484 1622
Fax : 65-6482 5003
Corporate Information 19
eBworx Limited
Singapore 554859
Tel : 65-6484 1622
Fax : 65-6482 5003
CIM Infotech Pte Ltd
Singapore 554859
Tel : 65-6484 1622
Fax : 65-6482 5003
Myers Systems Pte Ltd
Singapore 554859
Tel : 65-6484 1622
Fax : 65-6482 5003
Digital Nervous System Sdn Bhd
Suite 12.02, 12th Floor,
Menara Merais, No. 1,
Jalan 19/3, 46300 Petaling Jaya,
Selangor Darul Ehsan
Malaysia
Tel : 603-7956 9822
Fax : 603-7957 2661
PI-CSE Systems & Engineering
(Malaysia) Sdn Bhd
Suite 3.02, 3rd Floor, Wisma Bka,
Lot 10, Jalan Astaka U8/84
Bukit Jelutong Business & Technology Centre
40150 Shah Alam,
Malaysia
Tel : 03-7846 8580
Fax : 03-7846 9580
eBworx Philippines, Inc.
Unit 2601, 26th Floor,
88 Corporate Centre, Sedeno Street,
Corner Valero, Salcedo Village,
Makati City, Philippines
Tel : 63-2-889 6312
Fax : 63-2-889 6319
eBworx Malaysia Sdn Bhd
Suite 12.02, 12th Floor,
Menara Merais, No. 1,
Jalan 19/3, 46300 Petaling Jaya,
Malaysia
Tel : 603-7956 9822
Fax : 603-7957 2661
Europe
Servelec Limited
Rotherside Road, EcKington
Sheffield S21 4HL
United Kingdom
Tel : 44-1246-433 981
Fax : 44-1246-435 018 / 432 365
United States
CSE Systems & Engineering (America) Inc.
11500 Charles Street
Houston, Texas 77041
USA
Tel : 1-713-466 9463
Fax : 1-713-466 7205
W-Industries, Inc.
11500 Charles Street
Houston, Texas 77041
USA
Tel : 1-713-466 9463
Fax : 1-713-466 7205
Integrated Control System, Inc.
* Lafayette
100 Asma Blvd.
Suite 300
Lafayette, LA 70508
Tel : 1-337-233 4537
Fax : 1-337-233 6452
* New Orleans
524 Elmwood Boulevard,
Suite 120
New Orleans, LA 70123
Tel : 1-504-733 9888
Fax : 1-504-733 0502
* Lake Charles
2304 East Burton St.
Sulphur, LA 70663
Tel : 1-337-625 4537
Fax : 1-337-625 6452
Sales & Marketing Offices
Brazil Office (Agent)
c/o : Rem Industria E ComErcio
AV Almirante Barroso, 52-340
Andar-CEP20031-000
Rio de Janeiro-RJ, Brazil
Tel : 55-21-262 5055
Fax : 55-21-262 8749 / 220 4581
Qatar Office (Agent)
c/o : Almana Trading Company
Oil & Gas Division
P.O. Box 491
Doha, Qatar
Tel : 974-4621 222
Fax : 974-4622 420
20 Financial Statements
CONTENTS
Report Of The Directors And Audited Financial Statements 21
Report Of The Directors 22
Statement By Directors 35
Report On Corporate Governance 36
Auditors’ Report 39
Balance Sheets 40
Profit And Loss Accounts 41
Statements Of Changes In Equity 42
Consolidated Statement Of Cash Flows 43
Notes To The Financial Statements 45
Statistics Of Shareholdings 83
REPORT OF THE DIRECTORS AND AUDITED FINANCIAL STATEMENTS
Directors
Lim Ming Seong
Goh Boon Seong
Tan Mok Koon
Low Sek Fun
Lee Soo Hoon Phillip
Dr. Lim Boh Soon
Chi Keh Fei Chris
Robert Paul Collins
Company Secretaries
Yvonne Choo
Tan San-Ju
Registered Office
10 Collyer Quay
#19-08 Ocean Building
Singapore 049315
Auditors
Ernst & Young
Engagement Partner - Tan Chian Khong
Bankers
Citibank N.A.
Development Bank of Singapore Ltd
Malayan Banking Berhad
RHB Bank Berhad
Standard Chartered Bank
The Hongkong and Shanghai Bank Corporation Limited
United Overseas Bank Group
Share Registrar
Lim Associates (Pte) Ltd
10 Collyer Quay
#19-08 Ocean Building
Singapore 049315
Tel: 6536 5355
REPORT OF THE DIRECTORS
The Directors are pleased to present their report to the members together with the audited financial statements of the Company and
of the Group for the financial year ended 31 December 2001.
Directors
The Directors in office at the date of this report are :Lim Ming Seong
Goh Boon Seong
Tan Mok Koon
Low Sek Fun
Dr. Lim Boh Soon
Chi Keh Fei Chris
Robert Paul Collins
Principal activities
The principal activities of the Company are those relating to systems integration solution and the sales and provision of computer
network systems. The principal activities of the subsidiary companies are those of sales, provision of computer network systems and
investment holding.
There have been no significant changes in the nature of these activities during the financial year.
Results for the financial year
Group
$’000
Company
$’000
4,046
1,153
(Accumulated loss) / revenue reserve at beginning of year
Cumulative effect of change in accounting policy
(54,016)
(399)
14,490
(399)
(Accumulated loss) / revenue reserve brought forward,
after cumulative effect of change in accounting policy
(54,415)
14,091
(Accumulated loss) / revenue reserve at end of year
(50,369)
15,244
Net profit for the year
Material movements in reserves and provisions
The following amounts have been credited/(debited) to :-
Group
$’000
(Accumulated loss) / revenue reserve Change in accounting policy [Note 2(b)]
Share premium account Premium on issue of ordinary shares
Foreign exchange translation reserve Exchange differences arising on consolidation
Company
$’000
(399)
(399)
131
131
1,020
–
There were no material transfers to or from provisions during the financial year except for normal amounts recognised as an expense
for such items as depreciation and amortisation of intangible assets and provision for doubtful debts, inventory obsolescence and
income tax as shown in the financial statements.
Acquisition and disposal of subsidiary companies
During the year, the Group disposed part of its equity interest in the following subsidiary companies:Group’s effective
interest after disposal
%
Consideration
$’000
Attributable
net assets on
date of disposal
$’000
(formerly known as Solutions Exchange, Inc.)
(The Philippines)
49
1,090
156
Digital Nervous System Sdn Bhd
(Malaysia)
80
276
265
Name of company
(Country of incorporation)
In June 2001, eBworx Limited, a subsidiary company of the Company, issued 2,826,949 and 4,434,526 fully paid-up ordinary shares of
$0.04 each in the share capital of eBworx Limited to the former equity owners and founding members of its subsidiary companies,
eBworx Philippines, Inc. (formerly known as Solutions Exchange, Inc.) and Digital Nervous System Sdn Bhd respectively. These shares
were issued in accordance with the terms and conditions as stipulated in the Sale and Purchase Agreements that were entered into
between eBworx Limited and the respective former equity owners and founding members for the acquisition of the entire issued share
capitals of eBworx Philippines, Inc. and Digital Nervous System Sdn Bhd during the previous financial period.
The issuance of the 7,261,475 fully paid-up ordinary shares of $0.04 each in the share capital of eBworx Limited resulted in the dilution
of the Company’s equity interest in eBworx Limited from 76.7% to 70.3%. These shares rank pari passu in all respects with the existing
issued ordinary shares in eBworx Limited.
Acquisition and disposal of subsidiary companies (cont’d)
In September 2001, as part of the restructuring exercise of the Group, the Company acquired the following ordinary shares of $0.04
each in the share capital of eBworx Limited, both fully paid-up and partly paid-up to 5% of the subscription price, from an ex-director,
executive officers and employees of eBworx Limited for a total cash consideration of $524,897, which was the original price of their
subscription :-
Shares
Vendors
No. of
No. of
Fully Paid Partly Paid
Shares
Shares
Price per Share
Total
No. of
Shares
Cash Consideration
Price per Price per
Cash
Cash
Total
Fully Paid Partly Paid Consideration Consideration
Cash
Share
Share
for Fully Paid for Partly Paid Consideration
Share
Shares
$/Share
$/Share
$
$
$
Executive officers
and employees of
eBworx Limited
337,375
6,072,625
6,410,000
0.52
0.026
175,435
157,888
333,323
Ex-director of
eBworx Limited
933,600
4,979,100
5,912,700
0.162
0.0081
151,243
40,331
191,574
326,678
198,219
524,897
Total
1,270,975
11,051,725 12,322,700
This resulted in the increase in the Company’s equity interest in eBworx Limited from 70.3% to 84.5%.
In October 2001, the Company acquired 8,129,964 ordinary shares of $0.04 each in the capital of eBworx Limited from the former
equity owners and founding members of a subsidiary company of eBworx Limited, Digital Nervous System Sdn Bhd, for a total
consideration of $1,716,243. This resulted in the increase in the Company’s equity interest in eBworx Limited from 84.5% to 93.8%.
In December 2001, the Company acquired 5,448,949 ordinary shares of $0.04 each in the capital of eBworx Limited from the former
equity owners and founding members of a subsidiary company of eBworx Limited, eBworx Philippines, Inc. for a total consideration of
$1,089,790. This resulted in the increase in the Company’s equity interest in eBworx Limited from 93.8% to 100%.
In summary, the equity interest in eBworx Limited acquired by the Company, the consideration and the attributable net tangible
assets of eBworx Limited on the date of acquisition during the year are as follows :-
Month of acquisition
September 2001
October 2001
December 2001
Interest acquired
by the Company
%
Consideration
$’000
Attributable
net assets on
date of acquisition
$’000
14.2
9.3
6.2
4,291
1,716
1,090
419
279
171
Acquisition and disposal of subsidiary companies (cont’d)
During the year, the Company incorporated the following subsidiary company :Immediate subsidiary
company
CSE Technology (Beijing) Co., Ltd
Group’s effective
interest
%
Cost of
investment
$’000
100
275
During the financial year, eBworx America, Inc., a wholly-owned subsidiary company of the Group, whose issued and fully paid-up
share capital was 15,000 ordinary shares of US$0.10 each, was liquidated.
During the financial year, CIM Infotech America, Inc., a wholly-owned subsidiary company of the Group, whose issued and fully paidup share capital was 50,000 ordinary shares of US$1.00 each, was liquidated.
Issue of shares and debentures
During the financial year, the Company issued 4,375,000 ordinary shares of $0.05 each in the share capital of the Company to Low Sek
Fun, a Director of the Company, pursuant to his exercise of all his outstanding share options at the exercise price of $0.08 per share
pursuant to the service agreement that was entered into between Low Sek Fun and the Company. The 4,375,000 ordinary shares of
$0.05 each ranked pari passu in all respects with the existing issued ordinary shares in the Company.
The Company and its subsidiary companies did not issue any debentures during the financial year.
Arrangements to enable Directors to acquire shares and debentures
Except as described in the subsequent paragraph, neither at the end of nor at any time during the financial year, was the Company a
party to any arrangement whose object is to enable the Directors of the Company to acquire benefits by means of the acquisition of
shares or debentures of the Company or any other body corporate.
Directors’ interests in shares and debentures
The following Directors of the Company who held office at the end of the financial year had, according to the register of director’s
shareholdings required to be kept under Section 164 of the Companies Act, Cap. 50, an interest in the shares of the Company, as stated
below :-
Name of Director
Tan Mok Koon
Low Sek Fun
Goh Boon Seong
At
1.1.2001
At
31.12.2001
Ordinary shares of $0.05 each fully paid
35,652,500
5,710,000
250,000
33,652,500
9,685,000
250,000
Directors’ interests in shares and debentures (cont’d)
Name of Director
Low Sek Fun
At
1.1.2001
At
31.12.2001
Share options @ not less than $0.080 and not more
than $0.168 each in ordinary shares of $0.05
exercisable from 28.2.2001 to 28.2.2004
4,375,000
–
Goh Boon Seong
Dr. Lim Boh Soon
Chi Keh Fei Chris
Robert Paul Collins
120,000
120,000
120,000
120,000
120,000
120,000
120,000
120,000
120,000
120,000
Goh Boon Seong
Low Sek Fun
Dr. Lim Boh Soon
Chi Keh Fei Chris
Robert Paul Collins
–
–
–
–
–
–
60,000
100,000
60,000
60,000
60,000
90,000
The number of shares represents both those shares registered in the Director’s name and those shares in which the Director has a
beneficial interest.
There was no change in any of the above mentioned interests between the end of the financial year and 21 January 2002.
Subsequent events
In January 2002, the Company issued 40,000,000 new ordinary shares of $0.05 each in the share capital of the Company for cash at the
issue price of $0.467 per ordinary share fully paid-up, pursuant to the private placement agreement dated 25 January 2002 entered into
between the Company and The Development Bank Of Singapore. The ordinary shares that were issued by the Company as a result of
the above private placement rank pari passu in all respects with the existing issued ordinary shares in the Company.
In February 2002, eBworx Limited, a subsidiary company of the Company, issued a notice to the Company that :a)
a call of 15.39 cents per ordinary share of $0.04 each in the share capital of eBworx Limited was made in respect of the
4,979,100 ordinary shares of $0.04 each in the share capital of eBworx Limited registered in the name of the Company; and
b)
a call of 49.40 cents per ordinary share of $0.04 each in the share capital of eBworx Limited was also made in respect of the
6,072,625 ordinary shares of $0.04 each in the share capital of eBworx Limited registered in the name of the Company.
In respect of the above mentioned calls, the Company paid to eBworx Limited a total amount of $3,766,160, being the total outstanding
amount callable for the remaining 95% of unpaid portion of the 11,051,725 ordinary shares of $0.04 each in the share capital of eBworx
Limited, partly paid-up to 5%.
In March 2002, eBworx Limited sold and transferred 2 issued and fully paid up ordinary shares of RM1.00 each in the capital of eBworx
Malaysia Sdn Bhd, a wholly-owned subsidiary company of eBworx Limited, to Digital Nervous System Sdn Bhd, a subsidiary company
of the Group, for a consideration of RM2.00.
In March 2002, eBworx Limited sold and transferred 2 issued and fully paid up ordinary shares of HK$1.00 each in the capital of eBworx
Hong Kong Limited, a wholly-owned subsidiary company of eBworx Limited, to the Company for a consideration of HK$2.00.
Dividends
Since the end of the last financial year, no dividend has been paid in respect of the previous financial year. No dividend has been paid,
proposed to be paid, declared or recommended in respect of the financial year under review.
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 all known bad debts, if any, have been written off and that where necessary, 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.
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 the 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.
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 and 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
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, except for those that are described in the following.
Share options
The Company
The Company grants share options to Directors and full time employees of the Company and of the Group pursuant to the following
share option schemes :(i)
(ii)
(iii)
(iv)
Share options granted pursuant to a service agreement;
CSE Systems & Engineering Executives’ Share Option Scheme (“CSE ESOS”) prior to 9 October 2001;
CSE Systems & Engineering Executives’ Share Option Scheme (“CSE ESOS”) subsequent to 9 October 2001; and
CSE (U.S. Subsidiaries) Incentive Stock Option Plan (“US Plan”)
Directors’ contractual benefits (cont’d)
Share options (cont’d)
Details of the share option schemes and the respective share options that are granted as at 31 December 2001 are disclosed in the
following :-
(i)
Share options granted pursuant to a service agreement
Pursuant to a service agreement that was entered into between a Director of the Company and the Company, the share options that
are granted as at 31 December 2001 are as follows :-
Date of grant
Balance
as at
1.1.2001
Addition
Cancelled
Exercised
Balance
as at
31.12.2001
2 March 1998
4,375,000
–
–
(4,375,000)
–
Price
Not less than
$0.0800 and
not more than
$0.1680
Expiry
Date
28 February 2004
The option entitles the Director to subscribe for the pre-determined number of new ordinary shares of $0.05 each in the Company at
the date of grant. The shares under option may be exercised in full or in blocks of 1,000 shares or a multiple thereof on the payment
of the exercise price. The Director to whom the options have been granted do not have the right to participate by virtue of the options
in a share issue of any other company. Options granted are cancelled when the Director ceases to be a full-time employee of the
Company or any corporation in the Group subject to certain exceptions at the discretion of the Company. The exercise of the options
is also subjected to the satisfactory performance of the Director’s duties.
The option that is granted under the service agreement that was entered into between the Director of the Company and the Company
may be exercised within a period commencing after the third anniversary of the date of grant and expiring on the sixth anniversary of
the date of grant.
During the financial year, the Director exercised the option that is granted under the above mentioned service agreement to subscribe
for 4,375,000 ordinary shares of $0.05 each in the share capital of the Company at the exercise price of $0.08 per share. The 4,375,000
ordinary shares of $0.05 each ranked pari passu in all respects with the existing issued ordinary shares in the Company.
(ii)
CSE Systems & Engineering Executives’ Share Option Scheme (“CSE ESOS”) prior to 9 October 2001
Under the Company’s CSE ESOS prior to 9 October 2001, the share options that are granted as at 31 December 2001 are as follows :-
Date of grant
Balance
as at
1.1.2001
Addition
Cancelled
Exercised
Balance
as at
31.12.2001
1 October 1999
1,845,000
–
(595,000)
–
1,250,000
Not less than
$0.7918 and
not more than
$1.3280
1 October 2004
30 October 2000
8,350,000
–
(735,000)
–
7,615,000
Not less than
$0.5046 and
not more than
$0.8410
30 October 2005
1 February 2001
–
500,000
(500,000)
–
–
Not less than
$0.4422 and
not more than
$0.7370
1 February 2006
30 April 2001
–
200,000
–
–
200,000
Not less than
$0.2964 and
not more than
$0.4940
30 April 2006
10,195,000
700,000
(1,830,000)
–
9,065,000
Price
Expiry
Date
Only Directors and full time employees of the Group who have attained the age of twenty one (21) years are eligible to participate in
the CSE ESOS prior to 9 October 2001. Each option entitles the participant to subscribe for a number of new ordinary shares of $0.05
each in the Company pre-determined at the date of grant. The options are granted in consideration of $1.00 per option for all the
shares in respect of which the option is granted. The shares under option may be exercised in full or in blocks of 1,000 shares or a
multiple thereof on the payment of the exercise price. The participant to whom the options have been granted do not have the right
to participate by virtue of the options in a share issue of any other company. Options granted are cancelled when the participant
ceases to be a full-time employee of the Company or any corporation in the Group subject to certain exceptions at the discretion of the
Company. The exercise of the options is also subjected to the satisfactory performance of the participant’s duties.
For all the options that are granted under CSE ESOS prior to 9 October 2001, the options may be exercised within a period commencing
after the third anniversary of the date of grant and expiring on the fifth anniversary of the date of grant.
For all the options that are granted under CSE ESOS prior to 9 October 2001, the subscription price at which a participant subscribes
for new ordinary shares of $0.05 each of the Company upon the exercise of the option granted shall be at a discount of between zero
(0) percent and forty (40) per cent (as determined in accordance with the Formula as set out below) of the average of the last dealt
prices for an ordinary share of $0.05 each of the Company, as determined by reference to the daily Official List published by the
Singapore Exchange Securities Trading Limited, for the five (5) consecutive trading days immediately preceding the date of grant of
the option, or the nominal value of the ordinary shares of $0.05 each of the Company, whichever is higher.
The Formula for the determination of the discount is given as follows :Average Profit – 0.6 (Base Figure)
Discount
=
x 40%
1.456 (Base Figure) – 0.6 (Base Figure)
whereby:
the Base Figure represents the higher of the audited profit before tax and extraordinary items of the CSE Group of the financial year
immediately preceding the financial year in which the date of grant falls, or ten (10) percent of the audited sales revenue of the Group
for the financial year immediately preceding the financial year in which the date of grant falls; and
the Average Profit represents the average audited profit before tax and extraordinary items of the Group for three (3) consecutive
financial years beginning from the financial year in which the date of grant falls; and
In the event that the Average Profit is more than or equal to 1.456 times of the higher of:a)
audited profit before tax and extraordinary items of the CSE Group of the financial year immediately preceding the financial
year in which the date of grant falls; and
b)
ten (10) percent of the audited sales revenue of the Group for the financial year immediately preceding the financial year in
which the date of grant falls;
the subscription price shall be calculated to be the result after a discount of forty (40) per cent.
No discount shall be given if the Average Profit falls below 0.6 times of the Base Figure. In the event that the Average Profit is more than
0.6 times but less than 1.456 times of the Base Figure, the discount shall be determined proportionately.
No Directors, executive officers or employees of the Company and of the Group participating in the CSE ESOS prior to 9 October 2001
received 5 percent or more of the total number of options available under the CSE ESOS prior to 9 October 2001.
(iii)
CSE Systems & Engineering Executives’ Share Option Scheme (“CSE ESOS”) subsequent to 9 October 2001
Under the Company’s CSE ESOS subsequent to 9 October 2001, the share options that are granted as at 31 December 2001 are as
follows :-
Date of grant
30 October 2001
Balance
as at
1.1.2001
Addition
Cancelled
Exercised
Balance
as at
31.12.2001
–
8,040,000
–
–
8,040,000
Price
No less than
$0.2448 and
not more than
$0.3060
Expiry
Date
30 October 2006
Only Directors and full time employees of the Group who have attained the age of twenty one (21) years are eligible to participate in
the CSE ESOS subsequent to 9 October 2001. Each option entitles the participant to subscribe for a number of new ordinary shares of
$0.05 each in the Company pre-determined at the date of grant. The options are granted in consideration of $1.00 per option for all the
shares in respect of which the option is granted. The shares under option may be exercised in full or in blocks of 1,000 shares or a
multiple thereof on the payment of the exercise price. The participant to whom the options have been granted do not have the right
to participate by virtue of the options in a share issue of any other company. Options granted are cancelled when the participant
ceases to be a full-time employee of the Company or any corporation in the Group subject to certain exceptions at the discretion of the
Company. The exercise of the options is also subjected to the satisfactory performance of the participant’s duties.
For all the options that are granted under CSE ESOS subsequent to 9 October 2001, those options may be exercised within a period
commencing after the second anniversary of the date of grant and expiring on the fifth anniversary of the date of grant.
For all the options that are granted under CSE ESOS subsequent to 9 October 2001, the subscription price at which a participant
subscribes for new ordinary shares of $0.05 each of the Company upon the exercise of the option granted shall be at a discount of
between zero (0) percent and twenty (20) per cent of the average of the last dealt prices for an ordinary share of $0.05 each of the
Company, as determined by reference to the daily Official List published by the Singapore Exchange Securities Trading Limited, for the
five (5) consecutive trading days immediately preceding the date of grant of the option, or the nominal value of the ordinary shares of
$0.05 each of the Company, whichever is higher.
The quantum of the discount shall be equal to the compounded rate of growth (expressed in percentage terms) of the Group’s audited
profit before tax and extraordinary items for two (2) consecutive financial years beginning from the financial year in which the date of
grant falls. The discount shall, in no event, exceed twenty (20) per cent, notwithstanding that the compounded rate of growth may
exceed twenty (20) per cent. No discount shall be given if the compounded rate of growth is nil or negative.
No Directors, executive officers or employees of the Company and of the Group participating in the CSE ESOS subsequent to 9
October 2001 received 5 percent or more of the total number of options available under the CSE ESOS subsequent to 9 October 2001.
(iv)
Under the Company’s US Plan, the share options that are granted as at 31 December 2001 are as follows :-
Date of grant
30 October 2001
Balance
as at
1.1.2001
Addition
Cancelled
Exercised
Balance
as at
31.12.2001
–
1,585,000
–
–
1,585,000
Price
$0.3060
Expiry
Date
30 October 2006
Only full time employees of the subsidiary companies of the Group incorporated in any state of the United States of America who have
attained the age of twenty one (21) years are eligible to participate in the US Plan, except for the employees who were already holding
options that are granted under the CSE ESOS at the time the US Plan was adopted by the Company. Each option entitles the
participant to subscribe for a number of new ordinary shares of $0.05 each in the Company pre-determined at the date of grant. The
shares under option may be exercised in full or in blocks of 1,000 shares or a multiple thereof on the payment of the exercise price. The
participant to whom the options have been granted do not have the right to participate by virtue of the options in a share issue of any
other company. Options granted are cancelled when the participant ceases to be a full-time employee of the subsidiary companies of
the Group incorporated in any state of the United States of America subject to certain exceptions at the discretion of the Company.
The exercise of the options is also subjected to the satisfactory performance of the participant’s duties.
The options granted under the US Plan may be exercised within a period commencing after the second anniversary of the date of grant
and expiring on the fifth anniversary of the date of grant.
The subscription price at which a participant subscribes for new ordinary shares of $0.05 each of the Company upon the exercise of the
option granted under the US Plan shall be the average of the last dealt prices for an ordinary share of $0.05 each of the Company, as
determined by reference to the daily Official List published by the Singapore Exchange Securities Trading Limited, for the five (5)
consecutive trading days immediately preceding the date of grant of the option, or the nominal value of the ordinary shares of $0.05
each of the Company, whichever is higher.
No Directors, executive officers or employees of the Group participating in the US Plan received 5 percent or more of the total number
of options available under the US Plan.
eBworx Limited
eBworx Limited adopted the eBworx share option plan 1 (“SOP-1”) on 26 September 2000 and pursuant to SOP-1 issued options to
employees to subscribe for and be allotted 8,712,000 shares at the subscription price of $0.7442 for each share. The subscription price
for each share in respect of which the options are exercisable shall be subject to a discount of 1% of the subscription price of the
option for every 1% compounded earnings per share growth over the financial years ended 31 December 2000 and 31 December 2001
and the financial year ending 31 December 2002, subject to a maximum discount of 40% of the subscription price of the options where
the rate of compounded earnings per share growth over such period is 40% or more. No discount shall be given on the subscription
price of the options where the rate of compounded earnings per share growth over such period is less than 1%. These options do not
entitle to holder to participate, by virtue of the options, in any share issue of any other corporation. All options that were previously
granted under the SOP-1 have been cancelled during the year.
During the financial year, eBworx Limited irrevocably granted to the founding members of Digital Nervous System Sdn Bhd, a subsidiary
company of eBworx Limited, an option to purchase from eBworx Limited, up to and subject to a maximum of 250,000 ordinary shares
of RM1.00 each in the share capital of Digital Nervous System Sdn Bhd at RM12.00 per ordinary share. This option was granted to the
founding members pursuant to the sales & purchase agreement between eBworx Limited and the founding members in respect of
eBworx Limited’ disposal of 20% equity interest in Digital Nervous System Sdn Bhd during the financial year. This Option is only
exercisable on 15 October 2002, 15 October 2003 or 15 October 2004.
During the financial year, eBworx Limited also irrevocably granted to an employee of eBworx Limited, for a consideration of $1.00, an
option to purchase from eBworx Limited up to and subject to a maximum of 50,000 ordinary shares of RM1.00 each in the share capital
of Digital Nervous System Sdn Bhd at RM12.00 per ordinary share. This Option is only exercisable on 15 October 2002, 15 October 2003
or 15 October 2004.
Interested Person Transactions
In compliance with Clause 9A10(2)(a)(i) of the Singapore Exchange Securities Trading Limited Listing Manual, there were no interested
person transactions conducted pursuant to the Shareholders’ Mandate in the financial year ended 31 December 2001 with respect to
Dinervest Investments Pte Ltd and Singapore Technologies Pte Ltd.
Audit Committee
The Audit Committee was established on 22 January 1999.
The Audit Committee comprises three members, two of whom, being Lee Soo Hoon Phillip (Chairman) and Dr. Lim Boh Soon, are nonexecutive Directors and are independent of management. Low Sek Fun, who was previously an executive Director of the Company,
retired from his executive position as the Chief Operating Officer of the Company and assumed the role as a non-executive Director of
the Company with effect from 1 October 2001.
The members of the Audit Committee at the date of this report are :
Non-executive Directors
Lee Soo Hoon Phillip (Chairman)
Low Sek Fun
Dr. Lim Boh Soon
The Audit Committee meets periodically with management and the auditors of the Company to discuss and review :(a)
the audit plans of the internal auditors and auditors of the Company and the results of their examination and evaluation of
the Company’s systems of internal accounting controls;
(b)
the Group’s financial and operating results and accounting policies;
(c)
the assistance given by the Company’s officers to the auditors;
(d)
the Group’s transactions with related parties; and
(e)
the financial statements of the Company and the consolidated financial statements of the Group before their submission to
the Board of Directors and the auditors’ report on those financial statements.
The Audit Committee has recommended to the Board of Directors the nomination of Ernst & Young for re-appointment as auditors of
the Company at the forthcoming annual general meeting.
Auditors
Ernst & Young, Certified Public Accountants, have expressed their willingness to accept reappointment.
On behalf of the Directors,
Lim Ming Seong
Director
Tan Mok Koon
Director
Singapore
28 March 2002
STATEMENT BY DIRECTORS PURSUANT TO SECTION 201(15)
We, Lim Ming Seong and Tan Mok Koon, being two of the Directors of CSE Systems & Engineering Ltd, do hereby state that, in the
opinion of the Directors :(i)
the accompanying balance sheets, profit and loss accounts, statements of changes in equity and consolidated statement of
cash flows together with the notes thereto 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 31 December 2001 and of the results of the business and changes in equity of the Company and of the
Group and the cash flows of the Group for the year ended 31 December 2001, and
(ii)
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 financial statements are authorised for issue by the Board of Directors on 28 March 2002.
Lim Ming Seong
Director
Tan Mok Koon
Director
Singapore
28 March 2002
REPORT ON CORPORATE GOVERNANCE
CSE Systems & Engineering Ltd is committed to maintaining a high standard of corporate governance within the Group. Good
corporate governance establishes and maintains a legal and ethical environment in the Group which strives to preserve the interests
of all stakeholders.
1.
Board of Directors
The Board oversees the business affairs of the Group, approves the financial objectives and the strategies to be implemented
by management and monitors standards of performance and issues of policy, both directly and through its committees.
The Board comprises 8 Directors, 1 of whom, being Tan Mok Koon, holds an executive position with the Company. Low Sek
Fun, who was previously an executive Director of the Company, retired from his executive position as the Chief Operating
Officer of the Company and assumed the role as a non-executive Director of the Company with effect from 1 October 2001.
The members of the Board of Directors at the date of this report are :Non-executive Directors :
Lim Ming Seong
Goh Boon Seong
Low Sek Fun
Dr. Lim Boh Soon
Chi Keh Fei Chris
Robert Paul Collins
(Chairman)
Executive Director :
Tan Mok Koon
(Managing Director)
The Board holds at least 3 meetings each year. The Board approves the Group’s strategic plans, key business initiatives, major
investments and funding decisions; it reviews the Group’s financial performance and evaluates the performance and determines
the compensation of senior management. These functions are carried out by the Board directly or through committees of the
Board which have been set up to support its work.
Three committees have been set up by the Board :Audit Committee
In the opinion of the Directors, CSE Systems & Engineering Ltd complies with the Best Practices Guide, with respect to audit
committees.
The Committee has full access to and co-operation by the Company’s management and has full discretion to invite any
Director or executive officer to attend its meetings. The Audit Committee has reasonable resources to enable it to discharge
its functions properly.
The Audit Committee may examine whatever aspects it deems appropriate of the Group’s financial affairs, its internal and
external audits and its exposure to risks of a regulatory or legal nature. It keeps under review the effectiveness of CSE Systems
& Engineering Ltd’s system of accounting and internal financial controls, for which the Directors are responsible. It also keeps
under review the Company’s programme to monitor compliance with its legal, regulatory and contractual obligations.
1.
Board of Directors (cont’d)
Executive Committee
The members of the Executive Committee at the date of this report comprise the following Directors :Lim Ming Seong
Goh Boon Seong
Tan Mok Koon
(Chairman)
(Managing Director)
Low Sek Fun, who was previously an executive Director of the Company and a member of the Executive Committee, retired
from his executive position as the Chief Operating Officer of the Company and assumed the role as a non-executive Director
of the Company with effect from 1 October 2001.
The role of the Committee is to :(i)
set the Group’s policy direction and oversee the strategic development of the Group’s operations;
(ii)
review and submit to the Board for approval all the Group’s budgets, business plans, reports on financial position,
development and strategic plans and financial projections;
(iii)
execute all decisions of the Board and other material matters relating to the business of the Group;
(iv)
establish the compensation of senior management of the Group other than the Executive Directors;
(v)
appoint a committee comprising Directors of the Company who are not participating in the CSE Systems & Engineering
Executives’ Share Option Scheme (“CSE ESOS”) to administer the CSE ESOS; and
(vi)
appoint a committee comprising Directors of the Company who are not participating in the CSE (U.S. Subsidiaries)
Incentive Share Option Scheme (“US Plan”) to administer the CSE US Plan.
CSE ESOS Committee
The members of the CSE ESOS Committee at the date of this report comprise the following Directors :Lim Ming Seong
Tan Mok Koon
(Chairman)
(Managing Director)
The role of the Committee is to :(i)
select eligible employees of the group to participate in CSE ESOS; and
(ii)
determine the number of shares and the subscription price to be offered to the participant.
1.
Board of Directors (cont’d)
US Plan Committee
The members of the US Plan Committee at the date of this report comprise the following Directors :Lim Ming Seong(Chairman)
Tan Mok Koon (Managing Director)
The role of the Committee is to :-
2.
(i)
select eligible employees of the Group to participate in CSE US Plan; and
(ii)
determine the number of shares and the subscription price to be offered to the participant.
Securities Transactions
The Group has issued a Policy on Share Dealings to all employees of the Group, setting out the implications of insider trading
and the recommendations of the Best Practices Guide issued by the Singapore Exchange Securities Trading Limited. The
Group has adopted a code of conduct to provide guidance to its officers with regard to dealing in the Company’s shares.
Chairman, Audit Committee
Singapore
28 March 2002
Low Sek Fun
Director
AUDITORS’ REPORT TO MEMBERS OF CSE SYSTEMS & ENGINEERING LTD
We have audited the financial statements of CSE Systems & Engineering Ltd and the consolidated financial statements of the Group
set out on pages 40 to 82, comprising the balance sheets of the Company and the Group as at 31 December 2001, the profit and loss
accounts and statement of changes in equity of the Company and of the Group and cash flows of the Group for the year ended 31
December 2001, 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)
(b)
the financial statements and consolidated 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)
the state of affairs of the Company and of the Group as at 31 December 2001, the results and changes in equity of the
Company and of the Group and the cash flows of the Group for the year ended on that date; and
(ii)
the other matters required by section 201 of the Act to be dealt with in the financial statements and consolidated
financial statements;
the accounting and other records, and the registers required by the Act to be kept by the Company and by those subsidiary
companies 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 and auditors’ reports of all subsidiary companies of which we have not acted as auditors,
being financial statements included in the consolidated financial statements. We have also considered the financial statements of WIndustries, Inc. and CSE Systems & Engineering (America), Inc. which are not required to be audited under the laws of the country of
incorporation being financial statements that are included in the consolidated financial statements. The names of those subsidiary
companies audited by our associated firms and those audited by other firms are stated in Note 3.
We are satisfied that the financial statements of the subsidiary companies 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 subsidiary companies were not subject to any qualification and in respect of
subsidiary companies incorporated in Singapore did not include any comment made under section 207(3) of the Act.
ERNST & YOUNG
Certified Public Accountants
Singapore
28 March 2002
BALANCE SHEETS AS AT 31 DECEMBER 2001
Group
Fixed assets
Subsidiary companies
Associated companies
Joint venture
Other investments
Intangible assets
Other recoverable
Current assets
Projects-in-progress
Stocks
Trade debtors
Other debtors, deposits and prepayments
Deferred tax asset
Amounts due from subsidiary companies
Amounts due from associated companies
Fixed deposits
Cash and bank balances
Current liabilities
Trade creditors and accruals
Amounts due to bankers
Amounts due to subsidiary companies
Amount due to an associated company
Provision for warranties
Provision for taxation
Net current assets/(liabilities)
Deferred tax liability
Capital and reserves
Share capital
Share premium
(Accumulated loss)/revenue reserve
Foreign currency translation reserve
Minority interest
Company
Note
2001
$’000
2000
$’000
2001
$’000
2000
$’000
4
5
6
7
8
9
10
11,453
–
177
42
–
6,139
–
5,586
–
1,078
44
1,001
539
3,766
8,168
97,518
–
50
–
–
–
2,018
90,146
–
50
–
–
–
11
12
13
14
15
5
6
18,280
1,219
28,340
4,229
260
–
548
1,134
4,565
13,419
495
34,779
1,092
–
–
–
382
6,787
7,227
726
5,917
550
–
12,763
–
–
879
6,599
–
10,624
231
–
10,117
–
349
702
58,575
56,954
28,062
28,622
3,843
13,361
36,746
–
–
965
2,060
3,575
16,061
13,202
–
20
1,258
3,059
1,316
4,551
36,746
6,688
–
658
502
1,523
6,551
10,197
2,170
–
947
1,134
56,975
37,175
50,461
22,522
1,600
(37)
(9,520)
19,779
–
(26,010)
(22,399)
–
(9,520)
6,100
–
(26,000)
9,854
5,783
73,817
72,314
13,393
45,180
(50,369)
1,015
13,174
45,049
(54,415)
(5)
13,393
45,180
15,244
–
13,174
45,049
14,091
–
9,219
635
3,803
1,980
73,817
–
72,314
–
9,854
5,783
73,817
72,314
11
16
5
6
17
16
18
19
20
21
The accounting policies and explanatory notes on pages 45 through 82 form an integral part of the financial statements.
PROFIT AND LOSS ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2001
Group
Company
Note
2001
$’000
2000
$’000
2001
$’000
2000
$’000
22
113,900
105,604
19,372
29,604
Cost of sales
(74,081)
(68,999)
(14,033)
(22,444)
Gross profit
39,819
36,605
5,339
7,160
2,753
121
5,315
315
3,837
343
3,274
864
16,949
4,857
2,255
5,044
6,297
13,045
4,465
2,410
3,546
158
2,648
1,121
971
1,028
995
3,503
1,113
557
1,033
659
35,402
23,624
6,763
6,865
7,291
(1,465)
(485)
(2)
18,611
(879)
2
(6)
2,756
(1,359)
–
–
4,433
(727)
–
–
Revenues
Other operating income
Miscellaneous income
Finance income
23
24
Operating expenses
Personnel and related costs
General and administrative costs
Selling and distribution costs
Upkeep building and equipment costs
Other operating costs
Total expenses
Profit from operating activities
Finance costs
Share of (loss)/profit of associated companies
Share of loss of joint venture
25
26
Profit before taxation
Taxation
Minority interest, net of tax
27
5,339
(2,540)
1,247
17,728
(3,719)
(283)
1,397
(244)
–
3,706
(962)
–
Net profit for the year
39
4,046
13,726
1,153
2,744
Earnings per share
(in cents)
Basic EPS
28
1.52
5.29
Diluted EPS
28
1.50
5.18
STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2001
2001
$’000
Group
2000
$’000
Company
2001
2000
$’000
$’000
Issued capital
Balance at beginning of year
Issuance of ordinary shares
13,174
219
11,957
1,217
13,174
219
11,957
1,217
263,485,407
4,375,000
239,141,875
24,343,532
Balance at end of year
13,393
13,174
13,393
13,174
267,860,407
263,485,407
45,049
12,538
45,049
12,538
131
33,076
131
33,076
267,860,407
263,485,407
Share premium
Premium on shares issued
during the year
Expenses on issue of ordinary
shares
–
45,180
(Accumulated loss) / revenue reserve
Balance at beginning of year,
as previously stated
(54,016)
Effect of adopting SAS 17 –
Employee Benefits
(399)
(565)
–
(565)
45,049
45,180
45,049
11,168
14,490
11,347
–
(399)
–
Balance at beginning of year,
restated
Goodwill written off
Net profit
(54,415)
–
4,046
11,168
(79,309)
13,726
14,091
–
1,153
11,347
–
2,744
Balance at end of year, restated
(50,369)
(54,415)
15,244
14,091
Translation reserve
Exchange differences for the year
(5)
1,020
69
(74)
–
–
–
–
1,015
(5)
–
–
Total equity and shares
outstanding
9,219
73,817
72,314
Net change in equity from
non-owner sources
excluding net profit
1,020
–
–
3,803
(74)
Number of shares
2001
2000
$’000
$’000
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2001
2001
$’000
2000
$’000
5,339
17,728
1,219
379
487
(638)
–
1,411
(121)
6
601
1,566
840
788
1,066
89
4
(2,648)
(1,608)
828
(315)
12
–
–
51
(53)
Operating income before reinvestment in working capital
Decrease/(increase) in debtors
(Increase)/decrease in projects-in-progress, net
(Decrease)/increase in creditors
11,877
2,971
(6,439)
(2,366)
15,154
(11,965)
2,164
923
Cash generated from operations
Interest paid
Interest income received
Income tax paid
6,043
(1,411)
121
(3,778)
6,276
(828)
315
(3,616)
Cash flows from operating activities :
Profit before taxation
Adjustments for :
Depreciation of fixed assets
Amortisation of intangible assets
Share of results of associated companies and joint venture
Gain on disposal of subsidiary company
Gain on disposal of intangible assets
Interest expense
Interest income
Loss on disposal of fixed assets
Loss on disposal of business operations
Provision for impairment in value of investment
Write-off of intangible assets
Currency realignment
Net cash generated from operating activities
975
2,147
Cash flows from investing activities :
Purchase of fixed assets
Acquisition of subsidiary companies, net of cash acquired
Purchase of intangible assets
Investment in associated company and joint venture
Purchase of other investments
Repayment from associated companies
Advance (to)/from associated companies
Proceeds from disposal of fixed assets
Additional investment in subsidiary company
Investment from minority interest
Proceeds from disposal of intangible assets
Disposal of subsidiary company, net of cash disposed
Proceeds from disposal of equity interest in subsidiary company
Disposal of business operations, net of cash disposed
(7,454)
–
(347)
–
–
–
(48)
371
(3,331)
–
–
793
276
(119)
(7,277)
(73,450)
(493)
(3,516)
(1,001)
571
20
267
(1,300)
525
2,775
–
–
–
Net cash used in investing activities
(9,859)
(82,879)
350
–
23,544
(16,480)
27,055
26,010
11,491
–
7,414
64,556
(1,470)
7,169
(16,176)
23,345
5,699
7,169
Cash flows from financing activities :
Proceeds from issuance of shares
Proceeds from long term borrowings from banks
Proceeds from short term borrowing from banks
Repayment of long term borrowings from banks
Net cash provided by financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year (Note 30)
Cash and cash equivalents at end of year (Note 30)
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2001
The disposal of subsidiary company has been shown in the statement as a single item. The effect on the individual assets and
liabilities is set out in the following:-
$’000
Fixed assets
Intangible assets
Other investments
132
47
1
Stocks & work-in-progress
215
Trade debtors
562
Other debtors
153
Cash & cash equivalent
297
Amounts due to associated companies
(520)
Trade creditors
(575)
Long term loan
(11)
Provision for taxation
Net assets disposed
Less : Minority interest
Add : Gain on disposal of subsidiary company
Disposal consideration
Less : Cash & cash equivalent
Cash inflow on disposal of subsidiary company, net of cash
5
306
(150)
934
1,090
(297)
793
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2001
1.
Corporate information
The financial statements of CSE Systems & Engineering Ltd for the year ended 31 December 2001 were authorised for issue in
accordance with a resolution of the Directors on 28 March 2002. CSE Systems & Engineering Ltd is a limited liability company
which is incorporated in Singapore.
The registered office of CSE Systems & Engineering Ltd is located at 10, Collyer Quay, #19-08 Ocean Building, Singapore
049315.
The principal activities of the Company are those relating to systems integration solution and the sales and provision of
computer network systems. The principal activities of the subsidiary companies are those of sales, provision of computer
network systems and investment holding. There have been no significant changes in the nature of these activities during the
financial year.
The Group operates in 9 (2000 : 9) countries, and the Group and Company employed 582 employees and 132 employees (2000
: 629 and 119) respectively as of 31 December 2001.
2.
Summary of significant accounting policies
(a)
Basis of preparation
The financial statements of the Company and of the Group which are expressed in Singapore dollars to the nearest
thousand of dollars, are prepared under the historical cost convention and are in accordance with Singapore Statements
of Accounting Standards and applicable requirements of Singapore law.
The accounting policies have been consistently applied by the Group and, except for the changes in accounting policy
discussed more fully under 2(b) below, are consistent with those used in prior year.
(b)
Adoption of new/revised accounting policies and their effects
The Company has adopted new/revised Singapore Statements of Accounting Standard as follows :(i)
SAS 22 (revised 2000) – Business Combinations
The adoption of SAS 22 has resulted in the Group changing the accounting policy on the treatment of goodwill
and negative goodwill arising on acquisition of business. The Group has adopted the transitional provision
of not restating the goodwill (negative goodwill) that has previously been written off against revenue reserve,
with the view of including the attributable goodwill (negative goodwill) in the determination of profit or loss
when the businesses are disposed or discontinued. The result of adopting this choice of transitional provision
is that the adoption of SAS 22 has no effect on the comparatives or the opening balance of revenue reserve.
(ii)
SAS 17 (2000) – Employee Benefits
The adoption of SAS 17 has resulted in the Group and Company making provisions for the obligations in
respect of short-term employee benefits in the form of accumulating compensated balances. These obligations
are provided when the employees render services that increase their entitlement to future compensated
absences. The new accounting policy has been applied retrospectively by adjusting the opening balances of
revenue reserve at 1 January 2001 and comparatives have been restated (Note 39).
2.
Summary of significant accounting policies (cont’d)
(b)
Adoption of new/revised accounting policies and their effects (cont’d)
(iii)
Other standards
The adoption of the following standards have not given rise to any adjustments to the opening balances of
revenue reserve of the previous year and current year or to changes in comparatives :•
•
•
•
•
•
•
(c)
SAS 8 (revised 2000) – Net profit or Loss for the Period, Fundamental Errors and Changes in Accounting
Policies,
SAS 10 (2000) – Events after the Balance Sheet Date,
SAS 31 (2000) – Provisions, Contingent Liabilities and Contingent Assets,
SAS 32 (2000) – Financial Instruments : Disclosure and Presentation,
SAS 34 (2000) – Intangible Assets,
SAS 35 (2000) – Discontinuing Operations, and
SAS 36 (2000) – Impairment of Assets
Basis of consolidation
The accounting year of the Company and all its subsidiary companies ends on 31 December and the consolidated
financial statements incorporate the financial statements of the Company and all its subsidiary companies. The
results of subsidiary companies acquired or disposed of during the year are included in or excluded from the respective
dates of acquisition or disposal, as applicable.
Assets, liabilities and results of overseas subsidiaries are translated into Singapore currency on the basis outlined in
paragraph (n) below.
A list of the Group’s subsidiary companies is shown in Note 3.
(d)
Shares in subsidiary companies are stated at cost unless, in the opinion of the Directors, there has been permanent
diminution in value, when they are written down to a valuation fixed by the Directors.
(e)
An associated company is defined as a company, not being a subsidiary, in which the Group has a long-term interest
of not less than 20% of the equity and whose financial and operating policy decisions the Group exercises significant
influence.
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 the investments in the
consolidated balance sheet.
The investment in associated companies is stated in the Company’s financial statements at cost and provision is
made for permanent impairment in value.
Details of the Group’s associated companies are given in Note 3.
2.
(f)
Joint venture
Investment in joint ventures are stated in the financial statements of the Company at cost. Provision is made for any
impairment in value that is other than temporary.
The Group’s share of the results of joint ventures, based on the latest available audited financial statements or
unaudited management financial statements, is included in the consolidated profit and loss account. The attributable
share of post acquisition retained reserves less accumulated losses is added to the cost of investments in joint
ventures shown in the consolidated balance sheet.
Equity accounting of joint venture companies’ results is discontinued where the Group’s share of losses equals or
exceeds the cost of investment in the joint venture companies unless the Group has incurred obligations or made
payments on behalf to satisfy obligations of the joint venture companies that the Group has guaranteed or otherwise
committed.
Details of the Group’s joint venture is given in Note 3.
(g)
Other investments
Unquoted investments held on a long term basis are stated at cost. Provision is made when the Directors consider
that there has been an impairment in value which is other than temporary.
(h)
Revenue recognition
Revenue from projects is recognised on the percentage of completion method. The stage of completion is measured
by the proportion of costs incurred to estimated total costs to complete the projects and restricted by progress
billings received or receivable. Losses, if any, are immediately recognised when their existence is foreseen.
Dividend income from subsidiaries is recognised when dividends are declared by the subsidiary companies.
(i)
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 accounts. 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.
The carrying amounts are reviewed at each balance sheet date to assess whether they are recorded in excess of their
recoverable amount, and if carrying value exceeds this recoverable amount, assets are written down.
2.
(j)
Depreciation
Depreciation is calculated on the straight line method to write off the cost of fixed assets over their estimated useful
lives which are as follows :Building
Leasehold improvements
Tools and equipment
Office furniture and fittings
Computer equipment
Motor vehicles
Plant and machinery
–
–
–
–
–
–
–
20 years
2 to 4 years
5 years
5 years
2 to 5 years
5 to 7 years
4 to 5 years
Fully depreciated 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. No depreciation is provided on construction-in-progress and
freehold land.
(k)
Goodwill
Goodwill is defined as any excess of the consideration paid over the fair value of the net assets acquired as at the date
of acquisition. Where the consideration is lower than the fair value of the net assets acquired, the difference is
recognised as negative goodwill. Goodwill is amortised over its estimated useful life of not more than 5 years using
the straight-line method.
To the extent that negative goodwill relates to expectation of future losses and expenses, the amount will be taken to
the profit and loss account in the period the losses and expenses are incurred.
If the negative goodwill cannot be matched to future losses, the amount is amortised over the remaining useful life of
the identifiable acquired depreciable assets.
The Group conducts an annual review of the carrying value of its goodwill and provides in full for any impairment in
value.
(l)
Stocks and projects-in-progress
Stocks are stated at the lower of cost and net realisable value. Cost comprises the cost of materials calculated on a
first-in-first-out basis. Net realisable value represents the estimated selling price less anticipated cost of disposal
and after making allowance for damaged, obsolete and slow-moving items.
Projects-in-progress are stated at cost plus attributable profits less progress payments received and receivable and
provision for foreseeable losses. Cost of projects-in-progress include direct materials, labour and an appropriate
proportion of overheads.
(m)
Provision for the additional costs incurred in rectification work during the warranty period is accrued as a percentage
of sales.
2.
(n)
Foreign currencies
Transactions arising in foreign currencies during the year are translated into Singapore dollars at rates closely
approximating those ruling on the transaction dates. Foreign currency monetary assets and liabilities are translated
into Singapore dollars at exchange rates ruling at the balance sheet date. All exchange differences arising from
translation are included in the profit and loss account.
On consolidation, all assets and liabilities of foreign subsidiary and associated companies are translated into Singapore
dollars at rates of exchange prevailing at year end and the results of foreign subsidiary and associated companies are
translated into Singapore dollars at the average exchange rates. Profits and losses arising from translation of foreign
subsidiary and associated companies are taken directly to foreign currency translation reserve as a separate component
of the shareholders’ funds.
(o)
Deferred taxation
Deferred taxation is accounted for under the liability method whereby the tax charge for the year is based on the
disclosed book profit after adjusting for all permanent differences. The amount of taxation deferred on account of all
timing differences is reflected in the deferred taxation account. Deferred tax benefits are not recognised unless there
is reasonable expectation of their realisation.
(p)
Cash and cash equivalents
Cash and cash equivalents consist of cash and bank balances less bank overdrafts but exclude secured bank overdrafts
which are used for financing activities.
(q)
Trade and other debtors
Trade and other debtors, which generally have 30 to 60 day terms, are recognised and carried at original invoice
amount less an allowance for any uncollectible amounts. Amounts due from subsidiary and associated companies
are repayable on demand and 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 as incurred.
(r)
Trade and other creditors
Trade and other creditors, which generally have 30 to 90 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.
Amounts due to subsidiary and associated companies are repayable on demand and 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 or Company.
(s)
Provisions
Provisions are recognised when the Group 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.
2.
(t)
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 loan and borrowing.
(u)
Leases
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the lease term, 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.
(v)
Impairment
The carrying amounts of the Group’s assets, other than stocks and debtors, are reviewed at each balance sheet date to
determine whether there is any indication of impairment. If such indication exists, the asset’s recoverable amount is
estimated. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable
amount. The impairment loss is charged to the profit and loss account.
(w)
Employee benefits
Equity compensation benefits
The Company has in place the following share option schemes for granting of share options to eligible employees of
the Group to subscribe for shares in the Company :
(i)
(ii)
(iii)
CSE Systems & Engineering Executives’ Share Option Scheme (“CSE ESOS”) subsequent to 9 October 2001;
and
The consideration paid in respect of the share options granted are charged to the profit and loss account upon the
grant of these share options. There are no charges to the profit and loss account upon the exercise of the share
options.
Details of the share option schemes and the respective share options that are granted as at 31 December 2001 are
disclosed in Notes 18 and 37.
Post employment benefits
The Group’s companies in Singapore, Malaysia and India make contributions to their respective countries’ state
pension schemes in accordance with the laws of those countries. In addition, the Group’s companies in the United
Kingdom operate a defined contribution pension scheme in accordance with the laws of the country. The contributions
are recognised as compensation expenses in the same period as the employment that give rise to the contributions.
Details of the defined contribution pension schemes are as disclosed in Note 25 under employees’ provident fund
and in Note 37.
2.
(x)
Derivative financial instruments
The Group uses predominantly foreign exchange forward contracts to hedge its risks associated primarily with foreign
currency exchange rate fluctuations. It is the Group’s policy that the Group does not trade in or hold any foreign
exchange forward contracts for trading or speculative purposes. The foreign exchange forward contracts entered into
by the Group are recorded as off-balance sheet items at their notional principal amounts.
Details of the Group’s financial risk management objectives and policies are set out in Note 36.
(y)
Borrowing costs
Borrowing costs are recognised as expenses in the period in which they are incurred.
3.
Group companies
Details of subsidiary companies at 31 December are :-
Name of company
(Place of business)
Cost
Percentage
of equity held
by the Group
2001
2000
2001
$’000
2000
$’000
Sales and provision of
computer network systems
(Thailand)
542
542
100
100
iii CSE Systems &
Engineering (Tianjin)
Co. Ltd (1)
(China)
(China)
212
212
100
100
ii
CSE Systems &
Engineering (India)
Private Limited
(India)
(India)
360
360
100
100
iv
(America), Inc.
(America)
(America)
759
759
100
100
i
Myers Systems Pte Ltd
(Singapore)
Systems integration
solution and sales and
provision of computer
network systems
(Singapore)
560
560
100
100
computer network
systems
(Malaysia)
496
496
70
70
ii
CSE Systems &
Engineering (Thailand)
Limited
(Thailand)
iii PI-CSE Systems &
Engineering Malaysia
Sdn Bhd (2)
(Malaysia)
3.
Group companies (cont’d)
Name of company
(Place of business)
Cost
Percentage
of equity held
by the Group
2001
2000
2001
$’000
2000
$’000
12,668
5,571
100
i
eBworx Limited
(Singapore)
e-business integration,
research and development
and investment holding
(Singapore)
i
Chaumont Pte Ltd
(Singapore)
Investment holding
(Singapore)
–
#
–
#
100
100
i
Nanterre Pte Ltd
(Singapore)
Dormant
–
#
–
#
100
100
i
ITServ Pte Ltd
(Singapore)
Dormant
–
#
–
#
100
100
iv
W-Industries, Inc.
(America)
Sale and provision of
system integration services
(America)
36,200
36,200
100
100
ii Servelec Group Limited
(United Kingdom)
Design, manufacture,
installation and
commissioning of
control of management
information systems and
development, manufacture
and sale of electronic and
micro processor monitoring
equipment
(United Kingdom)
45,646
45,646
100
100
v
(China)
–
100
–
CSE Technology (Beijing)
Co., Ltd
(China)
275
97,718
#
2 ordinary shares of $1 each
90,346
76.7
3.
Details of subsidiary companies held by subsidiary companies at 31 December are :-
Name of company
(Place of business)
Percentage
of equity held
by the Group
2001
2000
Held by eBworx Limited
ii
eBworx Hong Kong
Limited
(Hong Kong)
Provision of information
technology solutions
(Hong Kong)
100
76.7
ii
eBworx Malaysia Sdn Bhd
(Malaysia)
Provision of e-commerce
(Malaysia)
100
76.7
iv
eBworx America, Inc.
(America)
Provision of information
(America)
–
76.7
i
CIM Infotech Pte Ltd
(Singapore)
Provision of computer
software applications
(Singapore)
100
76.7
ii
Digital Nervous System
Sdn Bhd
(Malaysia)
software applications
(Malaysia)
80
76.7
ii
(formerly known as
Solutions Exchange, Inc.)
(The Philippines)
Purchase, sale, distribution,
maintenance of all kinds of
goods, commodities, wares,
intellectual properties and other
related information technology
(The Philippines)
–
76.7
iv
CIM Infotech America,
Inc. (3)
(America)
integrated manufacturing
services and dealing in
computer hardware
(America)
–
76.7
(3)
Held by Servelec Group Limited
ii
Servelec Limited
(United Kingdom)
Design, manufacture,
installation and commissioning
of control and management
information systems
(United Kingdom)
100
100
ii
Seprol Limited
(United Kingdom)
Development, manufacture
and sale of electronic and
microprocessor monitoring
equipment
(United Kingdom)
100
100
system integration services
(America)
100
100
Held by W-Industries, Inc.
iv
Integrated Control
System, Inc.
(America)
3.
Details of associated companies held by subsidiary company at 31 December are :-
Name of company
(Place of business)
Cost
Percentage
of equity held
by the Group
2001
2000
2001
$’000
2000
$’000
3,466
43
33
–
49
–
50
50
Held by eBworx Limited
Infiniteinfo, Inc.
(America)
Design and implementation
of internet solutions with
total integration to client’s
other applications
(America)
3,466
(formerly known as
Solutions Exchange, Inc.)
(The Philippines)
Purchase, sale, distribution,
maintenance of all kinds of
goods, commodities, wares,
intellectual properties and
other related information
technology
(The Philippines)
150
3,616
3,466
50
50
Details of joint venture at 31 December are :Held by the Company
OneRex Pte Ltd
(Singapore)
(i)
(ii)
(iii)
(iv)
(v)
Construction of network
infrastructure for condominiums and hosting of a
virtual mega-store to service
the need of condominium
residents
(Singapore)
Audited by Ernst & Young, Singapore
Audited by associated firms of Ernst & Young, Singapore
Audited by other auditors
(1)
Audited by Tianjin Quan Tong Certified Public Accountants
(2)
Audited by Arthur Andersen & Co Public Accountants, Kuala Lumpur
(3)
The subsidiary companies were liquidated during the financial year
Not required to be audited under the laws of the country of incorporation
CSE Technology (Beijing) Co., Ltd did not present audited financial statements as it was only incorporated on 27
November 2001.
4.
1,597
–
6,206
–
–
(7,803)
–
–
–
–
–
–
–
–
–
1,597
At 31 December 2001
Accumulated depreciation
At 1 January 2001
Charge for the year
Due to subsidiary disposed
Disposals
At 31 December 2001
Charge for 2000
Net book value
At 31 December 2001
At 31 December 2000
Construction
-in-progress
$’000
Cost
At 1 January 2001
Additions
Disposals
Reclassification
Group
Fixed assets
749
789
–
–
–
–
–
–
–
789
749
40
–
–
–
–
Freehold
land
$’000
1,032
8,857
26
297
250
14
33
–
–
9,154
1,282
69
–
–
–
7,803
Building
$’000
187
12
217
550
376
4
197
(8)
(19)
562
563
8
123
(30)
(102)
–
Leasehold
improvements
$’000
110
95
23
1,910
1,857
19
34
–
–
2,005
1,967
14
24
–
–
–
Plant and
machinery
$’000
314
338
83
228
102
7
121
–
(2)
566
416
21
131
–
(2)
–
Tools and
equipment
$’000
622
404
233
1,430
1,247
45
342
(33)
(171)
1,834
1,869
44
216
(97)
(198)
–
Office
furniture
and fittings
$’000
449
371
292
1,415
1,231
42
334
(40)
(152)
1,786
1,680
61
341
(86)
(210)
–
Computer
equipment
$’000
526
587
192
814
841
(10)
158
–
(175)
1,401
1,367
5
413
–
(384)
–
Motor
vehicles
$’000
5,586
11,453
1,066
6,644
5,904
121
1,219
(81)
(519)
18,097
11,490
262
7,454
(213)
(896)
–
Total
$’000
4.
–
–
7,803
At 31 December 2001
Charge for 2000
Net book value
At 31 December 2001
–
–
–
–
Accumulated depreciation
At 1 January 2001
Charge for the year
Disposals
At 31 December 2000
7,803
–
–
–
7,803
Leasehold
Building
$’000
At 31 December 2001
Cost
At 1 January 2001
Additions
Disposals
Reclassification
Company
Fixed assets (cont’d)
1,597
–
–
–
–
–
–
–
1,597
6,206
–
(7,803)
Constructionin-progress
$’000
130
3
182
426
292
134
–
429
422
7
–
–
Leasehold
improvements
$’000
–
–
–
–
2
–
(2)
–
2
–
(2)
–
Tools
and
equipment
$’000
83
68
51
104
204
33
(133)
172
287
22
(137)
–
Office
furniture
and fittings
$’000
94
100
135
243
243
114
(114)
343
337
120
(114)
–
Computer
equipment
$’000
114
194
53
112
125
45
(58)
306
239
200
(133)
–
Motor
vehicles
$’000
2,018
8,168
421
885
866
326
(307)
9,053
2,884
6,555
(386)
–
Total
$’000
4.
Fixed assets (cont’d)
Included in the cost of building of the Group is $7,803,000 which relates to the cost of a leasehold building of the Group while
the remaining $1,351,000 relates to the cost of freehold buildings of the Group.
Interest expense capitalised as cost of building of the Company and of the Group amounted to $110,000 (2000 : $Nil). As at
31 December 2001, the building of the Company was not yet in use.
5.
Company
Unquoted ordinary shares, at cost
Less : Provision for impairment in value of investment
Amounts due from subsidiary companies
– Non-trade
– Short term loan
Amounts due to subsidiary companies
– Trade
– Non-trade
– Short term loan
2001
$’000
2000
$’000
97,718
(200)
90,346
(200)
97,518
90,146
2,263
10,500
2,294
7,823
12,763
10,117
(963)
(4,175)
(1,550)
(123)
(564)
(1,483)
(6,688)
(2,170)
1,000
–
–
128
The short term loan due from subsidiary
company is stated after deducting provision
for doubtful debts of :Provision for the year and balance as at 31 December
Bad debts written-off directly to profit and loss account
The amounts due from/(to) subsidiary companies are unsecured, interest-free and is repayable on demand except for $631,000
(2000 : $607,000) of the short term loans due to subsidiary companies which bear interest at 4.0% (2000 : 4.0%) per annum and
$10,500,000 (2000 : $6,823,000) of short term loans due from subsidiary companies which bear interest ranging from 4.5% to
5.3% (2000 : 4.1% to 10.0%) per annum.
6.
Group
Unquoted, at cost
Share of net post-acquisition losses
Goodwill written-of
2001
$’000
2000
$’000
3,616
(566)
3,466
–
3,050
(524)
(2,349)
3,466
(39)
(2,349)
177
1,078
Provision for the year and balance at end of year
566
–
Amounts due from associated companies
– Trade
– Short term loan
236
312
–
–
548
–
–
(20)
Analysis of provision for provision in impairment in value of investment :-
Amount due to an associated company
– Non-trade
The amounts due from/(to) associated companies are unsecured, interest-free and repayable on demand.
7.
Joint Venture
Group
Unquoted shares, at cost
Share of net post-acquisition reserves
Company
2001
$’000
2000
$’000
2001
$’000
2000
$’000
50
(8)
50
(6)
50
–
50
–
42
44
50
50
The Group’s share of the balance sheet of the joint venture is as follows :Group
Non-current assets
Non-current liabilities
8.
2001
$’000
2000
$’000
42
–
45
(1)
42
44
Other investments
Unquoted shares, at cost
Due to disposal of subsidiary
1,001
(1)
1,001
–
1,000
(1,000)
1,001
–
–
1,001
Analysis of provision for impairment in value of investment :Provision for the year and balance as at 31 December
1,000
–
9.
Intangible assets
Royalty
expenses
$’000
Patent
rights
$’000
Goodwill
$’000
Preliminary
expenses
$’000
Total
$’000
–
–
–
–
–
–
–
–
–
–
–
–
6,518
–
–
562
1
347
(70)
(840)
562
1
6,865
(70)
(840)
–
–
6,518
–
6,518
–
–
–
–
–
–
–
379
–
23
–
(23)
23
379
(23)
At 31 December 2001
–
–
379
–
379
Charge for 2000
17
52
–
20
Net book value
At 31 December 2001
–
–
6,139
–
At 31 December 2000
–
–
–
539
Group
Cost
At 1 January 2001
Additions
Write-off
At 31 December 2001
Accumulated amortisation
At 1 January 2001
Provided during the year
Company
Royalty
expenses
$’000
Cost
At 1 January 2001 and at 31 December 2001
–
Accumulated amortisation
Charge for 2000
16
Net book value
At 31 December 2001 and at 31 December 2000
–
89
6,139
539
10.
Other recoverable
In 2000, the other recoverable relates to the subscription receivable that is due from an ex-director, executive officers and
employees of eBworx Limited, a subsidiary company of the Company, in respect of the 11,051,725 ordinary shares of $0.04
each in the share capital of eBworx Limited as shown in Note 23 to the financial statements.
In 2001, the Company acquired the 11,051,725 ordinary shares of $0.04 each in the share capital of eBworx Limited from the
ex-director, executive officers and employees of eBworx Limited. As a result, the subscription receivable is reclassified to
amount due to eBworx Limited from the Company during the year.
11.
Group
Company
2001
$’000
2000
$’000
2001
$’000
2000
$’000
Current asset
Being costs and attributable profits
in excess of progress billings
18,280
13,419
7,227
6,599
Current liability
Being progress billings in excess
of cost and attributable profits
(3,843)
(3,575)
(1,316)
(1,523)
14,437
9,844
5,911
5,076
70,715
49,472
42,123
30,838
This can be analysed as follows :Costs incurred and attributable profits
Less : Provision for foreseeable losses
Less : Progress billings
Analysis for provision for foreseeable losses :Balance at 1 January
Provision during the year
Provision written-back
Provision utilised
Due to subsidiaries acquired
Balance at 31 December
(268)
(1,674)
(242)
(75)
70,447
47,798
41,881
30,763
(56,010)
(37,954)
(35,970)
(25,687)
14,437
9,844
5,911
5,076
1,674
193
(154)
(1,445)
–
250
75
(506)
–
1,855
75
167
–
–
–
250
75
(250)
–
–
1,674
242
75
268
Included in the projects-in-progress of the Group and of the Company is fee paid to auditors for other services rendered
during the financial year amounting to $135,000 (2000 : $Nil). This expense is incurred in relation to certification services
rendered in respect of projects undertaken by the Company.
12.
Stocks
Group
2000
$’000
2001
$’000
2000
$’000
–
1,108
111
–
132
230
133
–
–
–
–
726
–
–
–
–
1,219
495
726
–
Stocks are stated after deducting
provision for stock obsolescence
332
269
–
–
Analysis of provision for stock obsolescence :Balance at 1 January
Provision for the year
269
8
55
–
–
–
46
223
–
–
–
–
–
–
–
–
332
269
–
–
Trade debtors are stated after deducting
provision for doubtful debts of
2,482
495
64
73
Analysis of provision for doubtful debts :Balance at 1 January
Provision for/(write-back of) doubtful debts
Written off
495
27
2,162
(5)
(197)
498
(13)
25
(15)
–
73
–
(9)
–
–
363
–
(290)
–
–
2,482
495
64
73
–
2
–
–
Software licenses
Raw materials
Finished goods
Stocks-in-transit
13.
Company
2001
$’000
Trade debtors
Bad debts written-off directly
to profit and loss account
14.
Other debtors, deposits and prepayments
Group
Prepayments
Other debtors
Deposits
Staff loans and advances
Dividend receivable
Receivable from bank
Proceeds receivable from disposal of operations
Insurance claims
Tax recoverable
15.
Company
2001
$’000
2000
$’000
2001
$’000
2000
$’000
478
172
601
147
–
233
982
1,018
598
419
331
187
155
–
–
–
–
–
6
101
148
49
13
233
–
–
–
12
98
96
25
–
–
–
–
–
4,229
1,092
550
231
Deferred tax asset
The deferred tax relates to timing differences provided for by the Group’s overseas subsidiary company, W-Industries, Inc.,
which arose from the different treatment of items for the accounting and taxation purposes and is expected to reverse in the
following year.
16.
Short term S$ fixed rate loans, unsecured
Bank overdraft, unsecured
Current portion of long term
– US$ fixed rate loan, unsecured
– Php* fixed rate loan, secured
Long term loans, unsecured
– US$ fixed rate loan
– S$ fixed rate loan
Long term Php fixed rate loan, secured
30,887
–
12,197
1,000
30,887
–
10,197
–
5,859
–
–
5
5,859
–
–
–
36,746
13,202
36,746
10,197
9,520
–
–
26,000
9,520
–
–
26,000
–
–
–
10
9,520
26,010
9,520
26,000
46,266
39,212
46,266
36,197
* Php – Philippines pesos
The short term loans bear interest at 1.75% - 4.70% (2000 : 3.42% - 8.05%) per annum.
In 2000, the long term unsecured loan of the Company and of the Group bears interest ranging between 3.60% - 4.11% per
annum and is repayable by July 2003. The long term secured loan of the Group bears interest at 13% per annum and is
repayable by November 2003.
In 2001, the long term unsecured loan of the Company and of the Group bears interest ranging between 2.83% - 4.77% per
annum and is repayable by May 2004.
17.
Group
Balance at 1 January
Provision during the year
Provision written back
Provision utilised
Company
2001
$’000
2000
$’000
2001
$’000
2000
$’000
1,258
11
–
850
(927)
(227)
952
(2)
506
1,033
(801)
(430)
947
–
–
443
(580)
(152)
897
–
–
894
(516)
(328)
965
1,258
658
947
Provision for warranties relates to the provision for the additional costs to be incurred in rectification work performed during
the warranty period of the project-in-progress. The provision for such costs is based on estimates made from historical data
associated with similar projects.
18.
Share capital
Group and Company
2001
2000
$’000
$’000
Authorised :600,000,000 ordinary shares at $0.05 each
30,000
30,000
Issued and fully paid :Balance at 1 January
263,485,407 (2000 : 239,141,875) ordinary shares of $0.05 each
13,174
11,957
Issued during the year :18,000,000 ordinary shares of $0.05 for cash at $1.53 each
–
900
500,000 ordinary shares of $0.05 each for cash at $0.16 each
–
25
5,843,532 ordinary shares of $0.05 each at $1.1419
–
292
4,375,000 ordinary shares at $0.05 each for cash at $0.08 each
219
–
267,860,407 (2000 : 263,485,407) ordinary shares of $0.05 each
13,393
13,174
18.
Share capital (cont‘d)
In the previous financial year, the Company issued the following ordinary shares of $0.05 each that rank pari passu in all
respects with the existing issued shares :(i)
(ii)
(iii)
18,000,000 shares at a premium of $1.48 each for cash as partial consideration for the purchase of the entire issued
and outstanding shares of the capital stock of W-Industries, Inc. as approved by the shareholders by special resolution
on 9 March 2000.
500,000 shares at a premium of $0.11 each for cash in accordance with a service agreement that was entered into
between an employee of the Group and the Company.
5,843,532 shares at a premium of $1.0919 each as partial consideration for the purchase of the entire issued and paid
up capital of Servelec Group Limited as approved by the shareholders by special resolution on 17 July 2000.
During the financial year, the Company issued 4,375,000 ordinary shares of $0.05 each at a premium of $0.03 each for cash to
a Director of the Company, pursuant to his exercise of all his outstanding share options granted pursuant to a service agreement
that was entered into between the Director of the Company and the Company. The 4,375,000 ordinary shares of $0.05 each that
were issued rank pari passu in all respects with the existing issued ordinary shares in the Company.
The holders of ordinary shares are entitled to receive dividends when declared by the Company. All ordinary shares carry one
vote per share without restriction.
The Company grants share options to Directors and full time employees of the Company and of the Group pursuant to the
following share option schemes :(i)
(ii)
(iii)
(iv)
Details of the share option schemes and the respective share options that are granted as at 31 December 2001 are disclosed
in the following :(i)
Share options granted pursuant to a service agreement
Pursuant to a service agreement that was entered into between a Director of the Company and the Company, the share
options that are granted as at 31 December 2001 are as follows:-
Date of grant
Balance
as at
1.1.2001
Addition
Cancelled
Exercised
Balance
as at
31.12.2001
2 March 1998
4,375,000
–
–
(4,375,000)
–
Price
Not less than
$0.0800 and
not more than
$0.1680
Expiry
Date
28 February 2004
The option entitles the Director to subscribe for the pre-determined number of new ordinary shares of $0.05 each in the
Company at the date of grant. The shares under option may be exercised in full or in blocks of 1,000 shares or a multiple
thereof on the payment of the exercise price. The Director to whom the options have been granted do not have the right to
participate by virtue of the options in a share issue of any other company. Options granted are cancelled when the Director
ceases to be a full-time employee of the Company or any corporation in the Group subject to certain exceptions at the
discretion of the Company. The exercise of the options is also subjected to the satisfactory performance of the Director’s
duties.
18.
Share capital (cont’d)
The option that is granted under the service agreement that was entered into between the Director of the Company and the
Company may be exercised within a period commencing after the third anniversary of the date of grant and expiring on the
sixth anniversary of the date of grant.
During the financial year, the Director exercised the option that is granted under the above mentioned service agreement to
subscribe for 4,375,000 ordinary shares of $0.05 each in the share capital of the Company at the exercise price of $0.08 per
share. The 4,375,000 ordinary shares of $0.05 each ranked pari passu in all respects with the existing issued ordinary shares in
the Company.
(ii)
CSE Systems & Engineering Executives’ Share Option Scheme (“CSE ESOS”) prior to 9 October 2001
Under the Company’s CSE ESOS prior to 9 October 2001, the share options that are granted as at 31 December 2001 are as
follows :-
Date of grant
Balance
as at
1.1.2001
1 October 1999
1,845,000
–
(595,000)
–
1,250,000
Not less than
$0.7918 and
not more than
$1.3280
1 October 2004
30 October 2000
8,350,000
–
(735,000)
–
7,615,000
Not less than
$0.5046 and
not more than
$0.8410
30 October 2005
1 February 2001
–
500,000
(500,000)
–
–
Not less than
$0.4422 and
not more than
$0.7370
1 February 2006
30 April 2001
–
200,000
–
–
200,000
Not less than
$0.2964 and
not more than
$0.4940
30 April 2006
700,000
(1,830,000)
–
9,065,000
10,195,000
Addition
Cancelled
Balance
as at
Exercised 31.12.2001
Price
Expiry
Date
18.
Only Directors and full time employees of the Group who have attained the age of twenty one (21) years are eligible to
participate in the CSE ESOS prior to 9 October 2001. Each option entitles the participant to subscribe for a number of new
ordinary shares of $0.05 each in the Company pre-determined at the date of grant. The options are granted in consideration
of $1.00 per option for all the shares in respect of which the option is granted. The shares under option may be exercised in
full or in blocks of 1,000 shares or a multiple thereof on the payment of the exercise price. The participant to whom the
options have been granted do not have the right to participate by virtue of the options in a share issue of any other company.
Options granted are cancelled when the participant ceases to be a full-time employee of the Company or any corporation in
the Group subject to certain exceptions at the discretion of the Company. The exercise of the options is also subjected to the
satisfactory performance of the participant’s duties.
For all the options that are granted under CSE ESOS prior to 9 October 2001, the options may be exercised within a period
commencing after the third anniversary of the date of grant and expiring on the fifth anniversary of the date of grant.
For all the options that are granted under CSE ESOS prior to 9 October 2001, the subscription price at which a participant
subscribes for new ordinary shares of $0.05 each of the Company upon the exercise of the option granted shall be at a
discount of between zero (0) percent and forty (40) per cent (as determined in accordance with the Formula as set out below)
of the average of the last dealt prices for an ordinary share of $0.05 each of the Company, as determined by reference to the
daily Official List published by the Singapore Exchange Securities Trading Limited, for the five (5) consecutive trading days
immediately preceding the date of grant of the option, or the nominal value of the ordinary shares of $0.05 each of the
Company, whichever is higher.
The Formula for the determination of the discount is given as follows:
Average Profit – 0.6 (Base Figure)
Discount =
x 40%
1.456 (Base Figure) – 0.6 (Base Figure)
whereby:
the Base Figure represents the higher of the audited profit before tax and extraordinary items of the CSE Group of the financial
year immediately preceding the financial year in which the date of grant falls, or ten (10) percent of the audited sales revenue
of the Group for the financial year immediately preceding the financial year in which the date of grant falls; and
the Average Profit represents the average audited profit before tax and extraordinary items of the Group for three (3) consecutive
financial years beginning from the financial year in which the date of grant falls; and
In the event that the Average Profit is more than or equal to 1.456 times of the higher of:(a)
audited profit before tax and extraordinary items of the CSE Group of the financial year immediately preceding the
financial year in which the date of grant falls; and
(b)
ten (10) percent of the audited sales revenue of the Group for the financial year immediately preceding the financial
year in which the date of grant falls;
the subscription price shall be calculated to be the result after a discount of forty (40) per cent.
No discount shall be given if the Average Profit falls below 0.6 times of the Base Figure. In the event that the Average Profit is
more than 0.6 times but less than 1.456 times of the Base Figure, the discount shall be determined proportionately.
No Directors, executive officers or employees of the Company and of the Group participating in the CSE ESOS prior to 9
October 2001 received 5 percent or more of the total number of options available under the CSE ESOS prior to 9 October 2001.
18.
(iii)
CSE Systems & Engineering Executives’ Share Option Scheme (“CSE ESOS”) subsequent to 9 October 2001
Under the Company’s CSE ESOS subsequent to 9 October 2001, the share options that are granted as at 31 December 2001 are
as follows :-
Date of grant
30 October 2001
Balance
as at
1.1.2001
Addition
Cancelled
Exercised
Balance
as at
31.12.2001
–
8,040,000
–
–
8,040,000
Price
No less than
$0.2448 and
not more than
$0.3060
Expiry
Date
30 October 2006
Only Directors and full time employees of the Group who have attained the age of twenty one (21) years are eligible to
participate in the CSE ESOS subsequent to 9 October 2001. Each option entitles the participant to subscribe for a number of
new ordinary shares of $0.05 each in the Company pre-determined at the date of grant. The options are granted in consideration
of $1.00 per option for all the shares in respect of which the option is granted. The shares under option may be exercised in full
or in blocks of 1,000 shares or a multiple thereof on the payment of the exercise price. The participant to whom the options
have been granted do not have the right to participate by virtue of the options in a share issue of any other company. Options
granted are cancelled when the participant ceases to be a full-time employee of the Company or any corporation in the Group
subject to certain exceptions at the discretion of the Company. The exercise of the options is also subjected to the satisfactory
performance of the participant’s duties.
For all the options that are granted under CSE ESOS subsequent to 9 October 2001, those options may be exercised within a
period commencing after the second anniversary of the date of grant and expiring on the fifth anniversary of the date of grant.
For all the options that are granted under CSE ESOS subsequent to 9 October 2001, the subscription price at which a participant
subscribes for new ordinary shares of $0.05 each of the Company upon the exercise of the option granted shall be at a
discount of between zero (0) percent and twenty (20) per cent of the average of the last dealt prices for an ordinary share of
$0.05 each of the Company, as determined by reference to the daily Official List published by the Singapore Exchange Securities
Trading Limited, for the five (5) consecutive trading days immediately preceding the date of grant of the option, or the nominal
value of the ordinary shares of $0.05 each of the Company, whichever is higher.
The quantum of the discount shall be equal to the compounded rate of growth (expressed in percentage terms) of the Group’s
audited profit before tax and extraordinary items for two (2) consecutive financial years beginning from the financial year in
which the date of grant falls. The discount shall, in no event, exceed twenty (20) per cent, notwithstanding that the compounded
rate of growth may exceed twenty (20) per cent. No discount shall be given if the compounded rate of growth is nil or negative.
No Directors, executive officers or employees of the Company and of the Group participating in the CSE ESOS subsequent to
9 October 2001 received 5 percent or more of the total number of options available under the CSE ESOS subsequent to 9
October 2001.
(iv)
Under the Company’s US Plan, the share options that are granted as at 31 December 2001 are as follows :-
Date of grant
30 October 2001
Balance
as at
1.1.2001
Addition
Cancelled
–
1,585,000
–
Exercised
Balance
as at
31.12.2001
Price
Expiry
Date
–
1,585,000
$0.3060
30 October 2006
18.
Only full time employees of the subsidiary companies of the Group incorporated in any state of the United States of America
who have attained the age of twenty one (21) years are eligible to participate in the US Plan, except for the employees who
were already holding options that are granted under the CSE ESOS at the time the US Plan was adopted by the Company.
Each option entitles the participant to subscribe for a number of new ordinary shares of $0.05 each in the Company predetermined at the date of grant. The shares under option may be exercised in full or in blocks of 1,000 shares or a multiple
thereof on the payment of the exercise price. The participant to whom the options have been granted do not have the right to
participate by virtue of the options in a share issue of any other company. Options granted are cancelled when the participant
ceases to be a full-time employee of the subsidiary companies of the Group incorporated in any state of the United States of
America subject to certain exceptions at the discretion of the Company. The exercise of the options is also subjected to the
satisfactory performance of the participant’s duties.
The options granted under the US Plan may be exercised within a period commencing after the second anniversary of the date
of grant and expiring on the fifth anniversary of the date of grant.
The subscription price at which a participant subscribes for new ordinary shares of $0.05 each of the Company upon the
exercise of the option granted under the US Plan shall be the average of the last dealt prices for an ordinary share of $0.05 each
of the Company, as determined by reference to the daily Official List published by the Singapore Exchange Securities Trading
Limited, for the five (5) consecutive trading days immediately preceding the date of grant of the option, or the nominal value
of the ordinary shares of $0.05 each of the Company, whichever is higher.
No Directors, executive officers or employees of the Group participating in the US Plan received 5 percent or more of the total
number of options available under the US Plan.
19.
Share premium
Group and Company
2001
2000
$’000
$’000
Balance at 1 January
Premium on issue of ordinary shares :18,000,000 ordinary shares of $0.05 each for cash at $1.48 each
500,000 ordinary shares of $0.05 each for cash at $0.11 each
5,843,532 ordinary shares of $0.05 each for cash at $1.0919 each
4,375,000 ordinary shares of $0.05 each for cash at $0.03 each
Less : Expenses on issue of ordinary shares
12,538
–
–
–
131
26,640
55
6,381
–
–
20.
45,049
(565)
45,180
45,049
(Accumulated loss) / revenue reserve
Group
Company
2001
$’000
2000
$’000
2001
$’000
2000
$’000
Balance at 1 January, as restated (Note 39)
Retained profit for the year, as restated (Note 39)
Goodwill written off
(54,415)
4,046
–
11,168
13,726
(79,309)
14,091
1,153
–
11,347
2,744
–
Balance at 31 December, as restated
(50,369)
(54,415)
15,244
14,091
21.
Foreign currency translation reserve
Group
2001
$’000
22.
Company
2000
$’000
(5)
2001
$’000
2000
$’000
69
–
–
Exchange difference for the year
arising on consolidation
1,020
(74)
–
–
1,015
(5)
–
–
Revenues
Revenues represent the billings recognised on projects-in-progress.
23.
Group
Gain on disposal of intangible assets
Gain on disposal of subsidiary
Commission income
Net exchange gain
Dividend income
Company
2001
$’000
2000
$’000
2001
$’000
2000
$’000
–
638
–
162
1,953
–
1,608
2,648
1
561
497
–
–
–
–
1,958
1,866
13
1,249
–
1
1,446
578
–
2,753
5,315
3,837
3,274
Last year, eBworx Limited sub-divided each existing ordinary shares of $1.00 each in the authorised and issued paid up share
capital of eBworx Limited into 25 ordinary shares of $0.04 each. The gain on disposal of subsidiary company of $2,648,000
resulted from the dilution in the Company’s equity interest in eBworx Limited when eBworx Limited issued the following
ordinary shares to the minority interest :(i)
(ii)
(iii)
8,239,065 ordinary shares of $0.04 each as consideration for the acquisition of 45% and 70% equity interest in Digital
Nervous System Sdn Bhd and Solutions Exchange, Inc. respectively.
5,912,700 ordinary shares of $0.04 each, or 236,508 ordinary shares of $1.00 each pre-subdivision, at a premium of
$0.122 each, or $3.05 each pre-subdivision, to one of its directors; and
6,140,000 ordinary shares of $0.04 each at a premium of $0.48 each to its employees and executive officers.
Pursuant to the above share issuance, 4,979,100 and 6,072,625 ordinary shares of $0.04 each of the total number of ordinary
shares of $0.04 in the share capital of eBworx Limited that were issued in (ii) and (iii) respectively were partly paid-up to 5% of
the subscription price. As a result, as at 31 December 2000, there was a subscription receivable of $3,766,000 from a director,
executive officers and employees of eBworx Limited as shown in Note 10 to the financial statements as other recoverable.
24.
Finance income
Group
Interest from subsidiary companies
Interest from others
25.
Company
2001
$’000
2000
$’000
2001
$’000
2000
$’000
–
121
–
315
302
41
594
270
121
315
343
864
101
(3)
12
165
1,219
379
39
55
2,162
109
(9)
14
113
1,066
89
(431)
46
25
72
3
12
–
326
–
167
–
(9)
60
(10)
14
–
421
16
(175)
–
(290)
–
–
–
(77)
2
–
(33)
232
–
–
–
(137)
–
128
–
378
501
1,113
737
527
501
–
737
–
1,146
840
6
601
693
51
12
–
–
–
3
–
–
–
–
–
249
61
1,396
234
131
907
249
18
666
234
44
406
1,000
566
–
–
–
–
–
–
1,000
–
–
–
Total expenses
Total expenses include :Auditors’ remuneration – Auditors of the Company
– Current year
– (Over) / under-provision in prior year
– Other services
– Other auditors of subsidiary companies
Depreciation of fixed assets
Amortisation of intangible assets
Provision for / (write-back of) foreseeable losses
Provision for stock obsolescence
Provision for/(write-back of) doubtful debts – trade
Bad debts written-off directly to profit and loss account
– trade
– subsidiary company
Bad debts recovered
(Write-back of) / provision for warranties
Directors’ remuneration
– Directors of the Company
– Directors of subsidiary companies
Research and development
– expense written off
Intangible assets written off
Loss on disposal of fixed assets
Loss on disposal of business operations
Directors fees
– Directors of the Company
– Directors of the subsidiary companies
Employees’ provident fund
– Other investments
– Associated company
– Subsidiary company
26.
Finance costs
Group
2001
$’000
Interest paid to subsidiary companies
Interest expense – others
Bank charges
27.
Company
2000
$’000
2001
$’000
2000
$’000
–
1,411
54
–
828
51
24
1,316
19
24
663
40
1,465
879
1,359
727
Taxation
Provision for taxation in respect of profit for the year :Current taxation
Over-provision for prior years’ taxation
Withholding tax
Deferred tax expense
Deferred tax asset
Share of associated company tax
3,127
(376)
12
37
(260)
–
3,667
–
29
–
–
23
474
(260)
30
–
–
–
933
–
29
–
–
–
2,540
3,719
244
962
The taxation charge for the Group materially differs from the amount determined by applying the Singapore tax rate of 24.5%
(2000 : 25.5%) to the pre-tax profits, mainly because the various taxation jurisdictions in which the Group operates impose
higher tax rates than that of Singapore, and that losses incurred by certain subsidiary companies cannot be offset against
profits from other companies of the Group.
As at 31 December 2001, the Group has unutilised tax losses amounting to approximately $1,450,000 (2000 : $50,000) available
for offset against future profits, subject to agreement by tax authorities and compliance with tax regulations in the respective
countries in which certain subsidiary companies operate.
The taxation charge for the Company materially differs from the amount determined by applying the Singapore tax rate of
24.5% (2000 : 25.5%) to the pre-tax profits, mainly because certain expenses incurred are not deductible for tax purposes. This
is partly compensated by the concessionary tax rate that has been granted to the Company by the Economic Development
Board (“EDB”) under the EDB Development & Expansion Incentive Scheme.
28.
Earnings per share
Group
2001
$’000
2000
$’000
As previously
reported
2000
$’000
4,046
13,726
14,125
2001
No of shares
2000
No of shares
2000
No of shares
Weighted average number of shares
outstanding during the year
263,485,407
258,961,125
258,961,125
issued under share option
3,500,000
398,630
398,630
266,985,407
259,359,755
259,359,755
Basic earnings per share
The basic earnings per share is computed based on :Net profit for the year
Diluted earnings per share
The weighted average number of ordinary shares adjusted for the effect of all dilutive potential ordinary shares is determined
as follows :-
outstanding during the year, used in the
computation of basic earnings per share
Weighted average number of unissued
ordinary shares under share options
Number of shares that would have been
issued at fair value
Weighted average number of ordinary shares
2001
No of shares
2000
No of shares
2000
No of shares
266,985,407
259,359,755
259,359,755
3,002,576
7,638,356
7,638,356
(2,076,583)
(2,076,583)
(906,600)
269,081,383
264,921,528
264,921,528
29.
Directors’ remuneration
The following number of Directors of the Company in remuneration bands is disclosed in compliance with paragraph 4 of the
Appendix 11 of the Singapore Exchange Securities Trading Limited Listing Manual :Company
$500,000 and above
$250,000 to $499,999
Below $250,000
30.
Executive
Directors
2001
Non-executive
Directors
Total
Executive
Directors
2000
Non-executive
Directors
Total
–
1
1
–
–
6
–
1
7
–
2
–
–
–
6
–
2
6
2
6
8
2
6
8
Cash and cash equivalent
Group
Fixed deposits
Cash and bank balances
31.
2001
$’000
2000
$’000
1,134
4,565
382
6,787
5,699
7,169
Turnover & operating profits by segments
The major segment of the Group comprises the Industrial Business Unit and the IT Consulting Business Unit.
Under the Industrial Business unit, the Group delivers a wide and diverse range of solutions involving the implementation of
Control and Safety Systems, Information Systems, Terminal Automation Systems, Pneumatic and Hydraulic Control Systems,
Programmable and SCADA Systems, Instrumentation and Electrical Field Construction Services, SCOPE Telemetry,
Programmable Control Systems (Simplex and Duplex), Triplicate Modular Redundant Systems and Solid State Relay and
Instrumentation for applications to the Energy and Petrochemical / Chemical, Oil and Gas and Power and Process Utility
industries on a turnkey basis. In addition, the Group also offers complete turnkey SCADA / Telemetry Systems to the water,
drainage, sewerage and environmental (pollution and hydrology) industries through the implementation of the client-server
distributed database SCADA package, SCOPE-X (Servelec Configurable Online Process Executive) and Seprol Ranges of RTUs.
Furthermore, the Group also offers the implementation of RIO, a fully integrated Clinical Information System, to automate
and facilitate the recording and reporting of patents related information to the Healthcare industry in relation to Mental
Health, Maternity and Children Cares.
The Group had merged and restructured its IT Consulting Business Unit and its eBworx Business Unit into a single business
unit in the current financial year for better management control and business focus.
Under the merged IT Consulting Business Unit, the Group offers solutions involving the implementation of Systems Integration
Services Systems, Electronic Document Workflow and Management Systems, Data Conversion Services Systems, Electronic
Registry and eFiling Solutions, Enterprise Network and Management Solutions to the Government sector. In addition, the
Group also delivers solutions involving Online Internet Banking Services Solutions, Mobile / Wireless Banking Solutions,
Provision of Digital Sales Force Automation Solutions with built-in Customer Relationship Management Systems and the
Provision of Online-Stock Trading Systems to the banking and finance industry.
31.
Other segment information :
Capital expenditure
Depreciation
Amortisation
Segment assets
Unallocated assets
Segment liabilities
Unallocated liabilities
1,701
659
75
(15,951)
(15,757)
3,875
775
–
45,956
59,551
10,444
444
379
(2,412)
15,925
1,999
407
14
(4,963)
20,897
8,700
3,700
1,066
89
5,783
9,854
14,319
1,219
379
66,853
2,115
(20,914)
(42,271)
13,726
17,728
(3,719)
(283)
2,648
315
(879)
–
2
(6)
15,648
105,604
$’000
2000
75,476
910
(18,169)
(48,363)
4,046
4,309
113,900
Profit after tax from ordinary activities
(1,939)
35,174
$’000
5,339
(2,540)
1,247
11,339
18,618
$’000
Consolidated
Profit before tax
Tax expense
Minority interest, net of taxes
10,639
Operating profit/(loss)
70,430
$’000
2001
36
121
(1,465)
(1,566)
(485)
(2)
95,282
Sales to external customers
$’000
IT Consulting Business Unit
2001
2000
Unallocated income
Finance income
Finance costs
Share of (loss)/profit of unconsolidated associated companies
Share of loss of unconsolidated joint venture
$’000
Industrial Business Unit
2001
2000
Segment Revenue
Business activities segment
Turnover & operating profits by segments (cont’d)
31.
19,701
31,733
Segment revenue
Sales to external
customers
Total assets
7,402
11,813
2001
$’000
Asia
9,674
12,134
2000
$’000
25,306
63,278
30,504
51,195
America
2001
2000
$’000
$’000
11,945
19,108
10,277
10,133
Europe/Middle East
2001
2000
$’000
$’000
76,386
113,900
68,968
105,604
Consolidated
2001
2000
$’000
$’000
Capital expenditure
Other Segment Information :
8,014
1,589
Singapore
2001
2000
$’000
$’000
1,128
2001
$’000
Asia
281
2000
$’000
3,951
1,629
America
2001
2000
$’000
$’000
1,226
201
Europe/Middle East
2001
2000
$’000
$’000
14,319
3,700
Consolidated
2001
2000
$’000
$’000
The “others” includes projects in Asia, America, Brazil and the Middle East. Projects in Asia cover countries such as China, Hong Kong, Korea, Japan, Thailand, Malaysia, Indonesia
and Vietnam.
Assets are employed to support the entire activity range and worldwide operations and cannot be meaningfully allocated to either the activities or geographical markets.
No analysis of operating profit is provided as it is similar to that of the profit before taxation save for the share of results of associated companies for 2001 and 2000 which were
insignificant.
18,513
32,142
Singapore
2001
2000
$’000
$’000
The following table presents revenue and expenditure information regarding geographical segments for the year ended 31 December 2001 and 2000.
Geographical segments
Turnover & operating profits by segments (cont’d)
32.
Contingent liabilities, unsecured
Group
Guarantees provided in respect of :Performance of contracts
33.
2000
$’000
2001
$’000
2000
$’000
3,615
3,160
2,230
3,160
790
6,320
790
6,320
Future capital expenditure
Purchase of property
34.
Company
2001
$’000
Operating lease commitments
As at the balance sheet date, the Group and Company have the following minimum lease payments under non-cancellable
operating lease on premises and equipment with initial or remaining term of one year or more :Group
Payable within 1 year
Payable later than 1 year but not later than 5 years
Payable later than 5 years
Rental expenses (principally for
offices and equipment)
Company
2001
$’000
2000
$’000
2001
$’000
2000
$’000
1,344
2,958
1,461
1,418
2,056
1,793
515
981
–
367
370
–
5,763
5,267
1,496
737
1,945
1,091
472
411
The Group leases a number of office premises under operating leases. These leases typically run for an initial tenure of
between one to nine years. Certain leases include options to renew the leases after the expiry of the initial tenure. Lease
payments under these leases are usually fixed for the entire initial tenure.
35.
Significant related party transactions
The following significant transactions took place during the year at terms agreed between the parties :Group
Company
2001
2000
2001
2000
$’000
$’000
$’000
$’000
36.
Sales
Purchases
Interest received
Interest paid
Rental income
Marketing fees
Technical fees
Management fees
Engineering fees
Director fees
Dividend
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
69
483
302
24
135
1,753
–
–
35
31
13
–
555
594
24
145
1,038
21
174
117
–
–
Purchases
Engineering fees
Directors fees
–
–
–
7
85
7
–
–
–
–
85
7
Financial instruments
Exposure to interest rate, foreign currency and credit risks arises in the normal course of the Group’s business. The Group uses
pre-dominantly foreign exchange forward contracts in connection with its risk management activities to reduce the Group’s
exposure to fluctuations in foreign exchange rates. While these are subject to the risk of market rates changing subsequent to
the contract date, such changes are generally offset by the opposite effects on the items being hedged. The Group does not
hold any foreign exchange forward contracts for trading or speculative purposes.
The Group has established processes to monitor and control hedging transactions in respect of the foreign exchange forward
contracts on a timely and effective manner as part of the Group’s risk management procedures. These risk management
processes are reviewed by the management on a periodic basis to ensure its effectiveness in managing the Group’s risk in
respect of the above.
The Group’s accounting policies in relation to derivative financial instruments are set out in Note 2(x).
36.
Financial instruments (cont’d)
Foreign currency risk
The Group has exposure to foreign currency risk as a result of engaging in transactions denominated in foreign currencies that
arise from the Group’s trading and investing activities in the course of business. Where exposures to foreign currency risk are
certain, it is the Group’s policy to conduct foreign currency hedging activities to hedge against such risks. The primary purpose
of the Group’s foreign currency hedging activities is to protect the Group against the volatility associated with foreign currency
exposure. The Group uses pre-dominantly foreign exchange forward contracts with maturities of less than 12 months to hedge
the above mentioned items.
The Group did not have any net foreign currency forward contract positions outstanding as at 31 December 2001.
Credit risks
The Group’s maximum exposure to credit risk, in the event that the counter-parties to the transactions with the Group fail to
perform their obligations as of 31 December 2001 in relation to each class of recognised financial assets, is the carrying
amount of those assets as indicated in the balance sheet, and is generally limited to the amounts, if any, by which the counterparties’ obligations exceed the obligations of the Group.
In the aspect of credit risk arising from the inability of customers of the Group to make payments when their receivables fall
due, it is the Group’s policy to provide credit terms to creditworthy and reputable customers. These receivables are continually
monitored on an ongoing basis to ensure that issues arising from non-collectibility are minimised. Therefore, the Group does
not expect material credit losses on its debts with customers.
In the aspect of credit risk arising from the Group’s foreign exchange forward contracts, it is the Group’s policy to enter into
foreign exchange forward contracts with a diversity of creditworthy and reputable financial institutions. Therefore, the Group
does not expect material credit losses on its foreign exchange forward contracts.
The Group has no significant concentration of credit risk.
Interest rate risk
The Group’s exposure to market risk for changes in interest rates relates primarily to the Group’s borrowings and overdraft
facilities from financial institutions, from which the Group obtains additional financing for its activities. The Group’s policy is
to manage its interest costs by obtaining the most favourable interest rates on its borrowings of various tenors and overdraft
facilities available without increasing its foreign currency exposure.
Surplus funds of the Group are also placed with financial institutions as fixed deposits to generate interest income.
Liquidity risk
To ensure the continuity of funding for the Group’s operations, the Group obtains short term funding from reputable financial
institutions.
Fair value
The carrying amounts of the Group’s trade and other debtors, amount due to/from associated companies, trade and other
creditors and of the Company’s amount due to/from subsidiary companies, approximate their fair values due to their shortterm nature.
The long term unsecured US$ fixed rate loan of the Company and of the Group is repriced on a semi-annual basis and bears
interest ranging between 2.83% - 4.77% per annum. The carrying amount of the long term unsecured US$ fixed rate loan
approximates its fair value.
37.
Employee benefits
Equity compensation benefits
The Company grants share options to Directors and full time employees of the Company and of the Group pursuant to the
following share option schemes:
(i)
(ii)
(iii)
(iv)
Details of the share option schemes and the respective share options that are granted as at 31 December 2001 are disclosed
in Note 18.
Post employment benefits
As required by law, the Group’s companies in Singapore, Malaysia and India make contributions to their respective countries’
state pension schemes, being the Central Provident Fund (“CPF”) in Singapore and the Employees Provident Fund (“EPF”) in
Malaysia and India. These state pension schemes are defined contribution plans that serve as the national retirement benefits
plan for the employees of the Group working in those countries.
As required by law, the Group’s companies in the United Kingdom operates a defined contribution pension scheme. Assets of
the scheme are held separately from those of the companies in the United Kingdom in an independently administered fund.
The contributions that are made towards the above mentioned contribution pension schemes are recognised as compensation
expenses in the same period as the employment that gives rise to the contributions and they are as disclosed in Note 25
under employees’ provident fund.
38.
Disposal of subsidiary company
On 30 November 2001, the Group disposed a subsidiary company. The subsidiary company was acquired in July 2000 and it
contributed a net profit of $161,000 to the consolidated profit & loss account of the Group for the financial period from 1 July
2000 to 31 December 2000 since the acquisition as a subsidiary company. The subsidiary company contributed a net loss of
$608,000 to the consolidated profit & loss account for the financial period of 11 months from 1 January 2001 to 30 November
2001 before the disposal.
39.
Effects of changes in accounting policy
The changes in accounting policies, to the extent that they are applied retrospectively, have the following impact (net
of tax) :Group
Company
2001
$’000
2000
$’000
2001
$’000
2000
$’000
(54,016)
11,168
14,490
11,347
Effect of changes in accounting
policy on (accumulated loss) /
revenue reserve
Opening (accumulated loss)/ revenue
reserve as previously reported
Employee Benefits
Opening (accumulated loss) /
revenue reserve as restated
(Note 20)
(399)
–
(399)
–
(54,415)
11,168
14,091
11,347
4,004
14,125
1,111
3,143
Effect of changes in accounting
policy on net profit for the year
Net profit before changes in
accounting policy
Employee Benefits
Net profit for the year as restated
(Note 20)
42
4,046
(399)
13,726
42
1,153
(399)
2,744
40.
Subsequent events
In January 2002, the Company issued 40,000,000 new ordinary shares of $0.05 each in the share capital of the Company for
cash at the issue price of $0.467 per ordinary share fully paid-up, pursuant to the private placement agreement dated 25
January 2002 entered into between the Company and The Development Bank Of Singapore. The ordinary shares that were
issued by the Company as a result of the above private placement rank pari passu in all respects with the existing issued
ordinary shares in the Company.
In February 2002, eBworx Limited, a subsidiary company of the Company, issued a notice to the Company that :a)
a call of 15.39 cents per ordinary share of $0.04 each in the share capital of eBworx Limited was made in respect of the
4,979,100 ordinary shares of $0.04 each in the share capital of eBworx Limited registered in the name of the Company;
and
b)
a call of 49.40 cents per ordinary share of $0.04 each in the share capital of eBworx Limited was also made in respect
of the 6,072,625 ordinary shares of $0.04 each in the share capital of eBworx Limited registered in the name of the
Company.
In respect of the above mentioned calls, the Company paid to eBworx Limited a total amount of $3,766,160, being the total
outstanding amount callable for the remaining 95% of unpaid portion of the 11,051,725 ordinary shares of $0.04 each in the
share capital of eBworx Limited, partly paid-up to 5%.
In March 2002, eBworx Limited sold and transferred 2 issued and fully paid up ordinary shares of RM1.00 each in the capital of
eBworx Malaysia Sdn Bhd, a wholly-owned subsidiary company of eBworx Limited, to Digital Nervous System Sdn Bhd, a
subsidiary company of the Group, for a consideration of RM2.00.
In March 2002, eBworx Limited sold and transferred 2 issued and fully paid up ordinary shares of HK$1.00 each in the capital
of eBworx Hong Kong Limited, a wholly-owned subsidiary company of eBworx Limited, to the Company for a consideration of
HK$2.00.
41.
Comparative figures
Certain comparative figures have been reclassified to conform with the current year’s presentation.
STATISTICS OF SHAREHOLDINGS AS AT 2 APRIL 2002
Authorised Capital
Issued and Fully Paid-Up Capital
Class of Shares
: S$30,000,000
: S$15,393,020.35
: Ordinary Shares of S$0.05 each with equal voting rights
Distribution of Shareholdings
Size of Shareholdings
No. of
Shareholders
1 - 1,000
1,001 - 10,000
10,001 - 1,000,000
1,000,001 and above
907
3,528
1,281
26
Total :
5,742
%
No. of Shares
%
15.80
61.44
22.31
0.45
904,125
18,610,917
54,204,822
234,140,543
0.29
6.05
17.61
76.05
100.00
307,860,407
100.00
No. of Shares
%
Twenty Largest Shareholders
No.
Name
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Dinervest Investments Pte Ltd
Tan Mok Koon
United Overseas Bank Nominees Pte Ltd
Citibank Nominees Singapore Pte Ltd
Raffles Nominees Pte Ltd
Low Sek Fun
Seapac Investment Pte Ltd
Tiong Kuok Thai
Wong Yon Ching
Teo Kit Choon
BNP Paribas Nominees Singapore Pte Ltd
DBS Nominees Pte Ltd
Lim Boon Kheng
Ong Khay Kern
Citibank Consumer Nominees Pte Ltd
Indosuez Singapore Nominees Pte Ltd
Salil Gopinath
Alan Stewart Gilby
Overseas Union Bank Nominees Pte Ltd
OCBC Securities Private Ltd
Total :
88,719,000
33,652,500
15,901,000
10,890,000
10,653,000
9,685,000
7,000,000
5,702,125
5,102,125
5,052,125
3,904,000
3,748,000
3,268,500
3,253,125
3,183,000
3,029,000
2,801,625
2,726,980
2,557,750
2,451,000
28.82
10.93
5.17
3.54
3.46
3.15
2.27
1.85
1.66
1.64
1.27
1.22
1.06
1.06
1.03
0.98
0.91
0.89
0.83
0.80
223,279,855
72.54
%
—
—
29.29
29.29
29.29
Substantial Shareholders as at 2 April 2002
(As shown in the Register of Substantial Shareholders)
Names of Substantial
Shareholders
Dinervest Investments Pte Ltd
Tan Mok Koon
Temasek Holdings (Private) Limited
Singapore Technologies Pte Ltd
Singapore Technologies Holdings Pte Ltd
No. of shares in which
substantial shareholders
have a direct interest
%
No. of shares in which
substantial shareholders are
deemed to have an interest
88,719,000
33,652,500
—
—
—
28.82
10.93
—
—
—
—
—
90,177,000
90,177,000
90,177,000
The above percentages are taken at the nearest to two decimal points. The total number of shares in issue is 307,860,407 of $0.05 each.
This page has been intentionally left blank
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the Annual General Meeting of CSE Systems & Engineering Ltd (“the Company”) will be held at 19A
Serangoon North Avenue 5, 3rd Floor, Avi-Tech Building Singapore 554859 on Monday, 13 May 2002 at 2.00 pm 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 31 December 2001 together
with the Auditors’ Report thereon.
(Resolution 1)
2.
To re-elect the following Directors retiring pursuant to Article 95(2) of the Company’s Articles of Association:
Mr Goh Boon Seong
Mr Lim Ming Seong
Mr Robert Paul Collins
( Retiring under Article 95(2))
(Resolution 2)
(Resolution 3)
(Resolution 4)
Mr Robert Paul Collins has indicated that he does wish to seek for re-election and will retire at the close of this meeting.
3.
To approve the payment of Directors’ fees of S$249,002 for the year ended 31 December 2001. (2000: S$233,809). (Resolution 5)
4.
To re-appoint Ernst & Young as the Company’s Auditors and to authorise the Directors to fix their remuneration. (Resolution 6)
5.
To transact any other ordinary business which may properly be transacted at an Annual General Meeting.
AS SPECIAL BUSINESS
To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions, with or without any modifications:
6.
Authority to allot and issue shares up to 20 per centum (20%) of issued capital
That pursuant to Section 161 of the Companies Act, Cap. 50 and Clause 941(3)(b) 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 twenty per centum (20%) of
the issued share capital of the Company for the time being 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.
[See Explanatory Note (i)]
(Resolution 7)
7.
Authority to allot and issue shares under the CSE Systems & Engineering Ltd Executives’ Share Option Scheme
That pursuant to Section 161 of the Companies Act, Cap. 50, the Directors be and hereby empowered to allot and issue shares in
the capital of the Company to the holders of options granted by the Company under the CSE Systems & Engineering Ltd Executives’
Share Option Scheme (“the Scheme”) established by the Company 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 fifteen per centum (15%) of the issued share capital of the Company for the time
being. [See Explanatory Note (ii)]
(Resolution 8)
8.
Authority to allot and issue shares under the CSE (US Subsidiaries) Incentive Stock Option Plan
That pursuant to Section 161 of the Companies Act, Cap. 50, the Directors be and hereby empowered to allot and issue shares in
the capital of the Company to the holders of options granted by the Company under the CSE (US Subsidiaries) Incentive Stock
Option Plan (“the Plan”) established by the Company upon the exercise of such options and in accordance with the terms and
conditions of the Plan provided always that the aggregate number of additional ordinary shares to be allotted and issued pursuant
to the Plan shall not exceed 8,000,000 shares. [See Explanatory Note (iii)]
(Resolution 9)
NOTICE OF ANNUAL GENERAL MEETING
9.
Renewal of Shareholders’ Mandate for Interested Person Transactions
That for the purposes of Chapter 9A of the Listing Manual of the Singapore Exchange Securities Trading Limited:(a) approval be given for the renewal of the mandate for the Company, its subsidiaries and target associated companies or any of
them to enter into any of the transactions falling within the types of Interested Person Transactions as set out on pages 60 to
64 of the Company’s Prospectus dated 29 January 1999 (“Prospectus”) with any party who is of the class of Interested Persons
described in the Prospectus, provided that such transactions are carried out in the normal course of business, at arm’s length
and on commercial terms and in accordance with the guidelines of the Company for Interested Person Transactions as set out
in the Company’s Prospectus (the “Shareholders’ Mandate”)
(b) the Shareholders’ Mandate shall, unless revoked or varied by the Company in general meeting, continue in force until the
conclusion of the next Annual General Meeting; and
(c) authority be given to the Directors to complete and do all such acts and things (including executing all such documents as
may be required) as they may consider necessary, desirable or expedient to give effect to the Shareholders’ Mandate as they
may think fit. [See Explanatory Note (iv)]
(Resolution 10)
By Order of the Board
Yvonne Choo/Tan San-Ju
Secretaries
Singapore, 25 April 2002
Explanatory Notes:
(i)
The Ordinary Resolution 7 proposed in item 6 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 which the
Directors may allot and issue under this Resolution would not exceed twenty per centum (20%) of the issued share capital of
the Company for the time being.
(ii)
The Ordinary Resolution 8 proposed in item 7 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 fifteen per centum (15%) of the issued share capital of the Company for the time being pursuant to the
exercise of the options under the Scheme.
(iii)
The Ordinary Resolution 9 proposed in item 8 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 8,000,000 shares pursuant to the exercise of the options under the Plan.
(iv)
The Ordinary Resolution 10 proposed in item 9 above, if passed, will authorise the Interested Person Transactions as described in the Prospectus and recurring in the year and will empower the Directors to do all acts necessary to give effect to the
Shareholders’ Mandate. This authority will, unless previously revoked or varied by the Company at a general meeting, expire
at the conclusion of the next Annual General Meeting of the Company.
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/it. 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 10 Collyer Quay #19-08 Ocean Building
Singapore 049315 not less than 48 hours before the time for holding the Meeting.
CSE SYSTEMS & ENGINEERING LTD
IMPORTANT:
(Incorporated in the Republic of Singapore with limited liability)
1.
PROXY FORM
2.
(Please see notes overleaf before completing this Form)
This Annual Report is also forwarded to investors who
have used their CPF monies to buy shares in the company
at the request of their CPF Approved Nominees, and is
sent solely for their information only.
The Proxy form is, therefore, 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.
I/We, ______________________________________________________________________________________________________________
of _________________________________________________________________________________________________________________
being a member/members of CSE Systems & Engineering 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 Monday, 13 May 2002 at 2.00 p.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:
1
Directors’ Report and Accounts for the year ended 31 December 2001
2
Re-election of Mr Goh Boon Seong as a Director
3
Re-election of Mr Lim Ming Seong as a Director
4
Re-election of Mr Robert Paul Collins as a Director [Mr Robert Paul Collins has indicated
that he does not wish to seek for re-election and will retire at the close of this meeting]
5
Approval of Directors’ fees amounting to S$249,002
6
Re-appointment of Ernst & Young as Auditors
7
Authority to allot and issue new shares
8
Authority to allot and issue shares under the CSE Systems & Engineering Ltd
Executives’ Share Option Scheme
9
Authority to allot and issue shares under the CSE (US Subsidiaries) Incentive
Stock Option Plan
10
Renewal of Shareholders’ Mandate for Interested Person Transactions
For
Against
–
–
(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 ___________________ 2002
Total number of Shares in:
................................................................................
Signature of Shareholder(s)
or, Common Seal of Corporate Shareholder
(a) CDP Register
(b) Register of Members
No. of Shares
Notes :
1.
Please insert the total number of Shares held by you. If you have Shares entered against your name in the Depository Register (as
defined in Section 130A of the Companies Act, Chapter 50 of Singapore), you should insert that number of Shares. If you have
Shares registered in your name in the Register of Members, you should insert that number of Shares. If you have Shares entered
against your name in the Depository Register and Shares registered in your name in the Register of Members, you should insert
the aggregate number of Shares entered against your name in the Depository Register and registered in your name in the Register
of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the Shares
held by you.
2.
A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxies to
attend and vote instead of him/her. A proxy need not be a member of the Company.
3.
Where a member appoints two proxies, the appointments shall be invalid unless he/she specifies the proportion of his/her
shareholding (expressed as a percentage of the whole) to be represented by each proxy.
4.
The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 10 Collyer Quay #19-08
Ocean Building Singapore 049315 not less than 48 hours before the time appointed for the Annual General Meeting.
5.
The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in
writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its seal
or under the hand of an officer or attorney duly authorised.
6.
A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks fit
to act as its representative at the Meeting, in accordance with Section 179 of the Companies Act, Chapter 50 of Singapore.
General:
The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or
illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the
instrument appointing a proxy or proxies. In addition, in the case of Shares entered in the Depository Register, the Company may
reject any instrument appointing a proxy or proxies lodged if the member, being the appointor, is not shown to have Shares entered
against his name in the Depository Register as at 48 hours before the time appointed for holding the Meeting, as certified by The
Central Depository (Pte) Limited to the Company.
19A Serangoon North Ave 5, 3rd Floor Avi-Tech Building Singapore 554859 Tel: (65) 6484 1622 Fax: (65) 6482 5003 Web: http://www.cse.com.sg

CSE 4 pdf - CSE Global

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