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Extending Reach, Increasing Capabilities Annual Report 2011

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Page 1: Extending Reach, Increasing Capabilities - listed companytelechoice.listedcompany.com/misc/ar2011.pdf · (StarHub Premium Outlet with ... • Awarded “Asiapac & Japan 2011 Top Performing

Extending Reach, Increasing CapabilitiesAnnual Report 2011

Page 2: Extending Reach, Increasing Capabilities - listed companytelechoice.listedcompany.com/misc/ar2011.pdf · (StarHub Premium Outlet with ... • Awarded “Asiapac & Japan 2011 Top Performing

Contents

01 Corporate Profile02 Segmental Highlights03 Financial Highlights04 Letter to Shareholders 08 Board of Directors 12 Executive Management 14 Operations Review 20 Planet Telecoms Touch-points 22 Group Structure23 Corporate Information 24 Corporate Governance31 Financial Contents

Page 3: Extending Reach, Increasing Capabilities - listed companytelechoice.listedcompany.com/misc/ar2011.pdf · (StarHub Premium Outlet with ... • Awarded “Asiapac & Japan 2011 Top Performing

TeleChoice International LimitedAnnual Report 2011

01

Corporate Profile

About TeleChoice International Limited (Regn No. 199802072R)

TeleChoice International Limited (“TeleChoice”) is a regional diversified provider and enabler of innovative info-communications products and services. Incorporated in Singapore on 28 April 1998 and listed on the Mainboard of the Singapore Exchange Securities Trading Limited (“SGX-ST”) on 25 June 2004, TeleChoice is a subsidiary of leading info-communications group, Singapore Technologies Telemedia Pte Ltd, which operates in the Asia Pacific, the Americas and Europe.

TeleChoice’s three business divisions collectively offer a comprehensive suite of services and solutions for the info-communications industry:

Persona l Communicat ions Solutions (“PCS”) Services division provides fulfilment, distribution and supply chain management services relating to mobile communication devices and accessories. Its spectrum of services include forecasting, purchasing, financing, logistics, warehousing, inventory support, roadshow management, retail customer premises equipment (“CPE”) stocks management and after sales service. It owns a retail chain through its Planet Telecoms subsidiary which operates a network of strategically located stores islandwide. Planet Telecoms also manages concept stores for major mobile handset manufacturers and is the only StarHub Exclusive Partner to manage two StarHub Platinum shops. PCS is also a major distributor of StarHub prepaid cards.

Info-Communications Technology Services (“ICT”) division is a leading regional integrated info-communications solutions provider. Its extensive offerings include enterprise IT infrastructure, business solutions and integration services, broadband network, fixed and wireless networking solutions, managed and hosted services, telephony and unified communications solutions and cloud computing applications and services. It also provides consultancy, managed operations and utility computing services. Under its SunPage brand, ICT also offers IDD, Global Conferencing, SMS broadcast and mobility solutions and services for the consumer and enterprise markets.

Network Engineering Services division is a regional provider of network engineering services and supp l ie r of spec ia l ised telecommunicat ion products. It designs, builds and manages telecommunication networks and provides a comprehensive suite of specialised products and cost effective solutions to address the network infrastructure needs of fixed and mobile operators in Asia-Pacific. Its services encompass radio network planning and optimisation, transmission network planning, network implementation, maintenance and project management. It also offers an extensive range of innovative and cost effective products for telecommunication access and coverage needs, as well as for power supply and backup requirements.

For more information, please visit our website at www.telechoice.com.sg

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TeleChoice International LimitedAnnual Report 2011

02

44.3

105.8

239.5

FY2011

389.6

14.4

45.9

267.2

FY2010

327.5

15.4

41.0

217.3

FY2009

273.7

21.7

40.8

291.5

FY2008

354.0

23.8

51.4

345.2

FY2007

420.4

Segmental Highlights

PCS SERvICES• Awarded Huawei and LG distributorships • Appointed as StarHub SCV logistics partner• Launched StarHub’s pre-paid card “Happy E-load Top Up” with 12 appointed

retailers• Opened three new Planet Telecoms outlets at: Nex Serangoon (LG Concept

Store), Causeway Point (StarHub Platinum Outlet) and Changi City Point (StarHub Premium Outlet with Accessories Corner)

• Won four StarHub’s awards:- Branded Customer Experience - Highest Sales Contributor - Home Broadband – 1st Runner-Up - Top Hubbing Sales

• Provided support and consultancy services for U Mobile’s mobile plans, handset purchases, retail outlet expansion, inventory and backend operations

ICT SERvICES• Acquired NxGen Communications Pte Ltd (“NxGen”), a regional info-

comm provider of managed services and system integration solutions, in November 2011

• Focused successfully on the enterprise market and gained traction with new services

• Broadened solutions base and strengthened key corporate accounts with S & I Systems Pte Ltd (“S&I”) and NxGen

• Launched Next Generation Nationwide Broadband Network and other cloud services including the industry’s first secured hosted wifi-as-a-service

• Appointed as Google App Solution Partner and Microsoft Cloud Essential Partner for Office365

• Showcased “CloudCover”, an in-house developed application unifying multi-tenanted Service Delivery and Management Platform supported by IDA, at IE Singapore’s pavilion at CommunicAsia 2011

• Conferred “Pioneer Advantage Partner” status by Huawei • Awarded “Asiapac & Japan 2011 Top Performing Value-Added Reseller

Pre-Sales of the Year” by Aruba Networks• Received the Oracle “Partner of the Year FY11 Excellence Award for

Commercial Sector”• Conducted a joint S&I and Oracle Workshop “Achieve Extreme Performance

with Oracle Exadata”• Participated in Symantec Vision FY2011 event to showcase “Smarter Data

Centre” theme

NETwoRk ENGINEERING SERvICES• Gained significant market share of Radio Network Planning and Optimisation

projects in Indonesia• Recognised by Nokia Siemens Networks as their “Best Network Operation

Services” partner for 2011• Conferred “Good Performance Award” for 2011 by Huawei • Completed mega In-building Radio Network Coverage (“IBC”) project at

Petronas Twin Towers and gained recognition as a leading IBC solutions provider in Malaysia

• Signed regional distribution agreement for Wavion carrier grade wi-fi solutions featuring unique beam-forming technology

• Incorporated wholly-owned subsidiary, N-Wave Technologies Philippines, Inc. in the Philippines

REvENuES$ Million

PCS ICT Network Engineering

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TeleChoice International LimitedAnnual Report 2011

03

Financial Highlights

DIvIDENDS DECLARED AGAINST PATMI (S$ Million)

SHAREHoLDERS’ EquITY NET oF NoN-CoNTRoLLING INTERESTS (NCI)

10

20

30

40

50

60

70

80

90

2

4

16

18

12.4

6

8

10

12

14

FY2007

14.2 14.2

11.4

7.3

11.3

FY2008

9.1

FY2009

7.9

FY2010

8.1

FY2011

6.6

FY2007

64.6

14.30

FY2008

65.9

14.53

FY2009

69.6

15.36

FY2010

74.2

16.36

FY2011

72.3

15.93

ToTAL ASSETSS$ Million

FY2011

FY2010

FY2009

FY2008

FY2007

20

37.0

37.7

25.0

18.1 44.9 42.6 108.83.2

29.2 46.6 104.63.8

44.7 34.7 135.118.0

40 60 80 100 120 140 160 180

79.7 30.9 170.422.8

48.0 62.1 25.0 149.814.7

EARNINGSS$ Million

FY20

10 PATMI

PBT

FY20

09 PATMI

PBT

FY20

11 PATMI

PBT

FY20

11*

PATMI

PBT

FY20

08 PATMI

PBT

FY20

07 PATMI

PBT

10.2

12.0 0.3 2.4

0.4 1.8 12.4

14.7

8.7

10.3 1.4 1.9

1.4 1.3 11.4

13.6

(1.1)

(0.2) 6.5 2.8

5.8 1.9 6.6

9.1

6.5

5.8 1.9 11.0

2.8 13.5

3.3

4.2

12.9 2.2

2.31.410.5

3.1 18.2

14.2

11.3

9.0 3.5 1.7

4.3 2.2 17.8

14.2

* without additional contingent consideration paid for S&I’s acquisition

PCS ICT Network Engineering

Inventories & WP Trade and other receivables Cash and cash equivalents Non-current assets

PATMI Dividend DeclaredShareholders’ Equity Net of NCI (S$ million)Net Assets Value per Ordinary Share (cents)

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TeleChoice International LimitedAnnual Report 2011

04

Letter to Shareholders

lEfT Bertie ChengChairman

rIghT Andrew lohPresident

Dear ShareholdersThe TeleChoice Group turned in a credible performance despite a number of industry challenges and a difficult economic and market environment in the financial year ended 31 December 2011 (“FY2011”).

fY2011 PerformanceFor FY2011, revenue improved by 19.0% to S$389.6 million from S$327.5 million in the financial year ended 31 December 2010 (“FY2010”). Our new subsidiary, S & I Systems Pte Ltd (“S&I”), which was acquired in 4Q2010, contributed strongly to our performance. Info-Communications

manufacturer support impacted the division’s performance. Engineering Services had to contend with lower revenue from power supply projects and product sales due to order delays.

A one-time additional contingent consideration which arose due to the better than expected operating performance of S&I had to be charged to our income statement, in compliance with the revised Financial Reporting Standard 103 Business Combination (“FRS 103”). Before the revision of FRS 103, this additional consideration would have been classified as goodwill with no impact to our income statement. If not for this

Technology (“ICT”) Services posted revenue growth of 635% over the previous year with the addition of S&I and NxGen Communications Pte Ltd (“NxGen”), which we acquired in 4Q2011. This was offset by a 10% and 3% drop in revenue from Personal Communications Solutions (“PCS”) Services and Network Engineering (“Engineering”) Services respectively. PCS Services had lower regional and local channel sales due largely to the strong demand for iPhones, which we do not carry as Apple Inc. deals directly with the local mobile operators. This and the limited offerings of new models from the other manufacturers and lower

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TeleChoice International LimitedAnnual Report 2011

05

contingent consideration, the Group would have recorded profit before tax of S$13.5 million, a decrease of 8.3% from S$14.7 million in FY2010. With the contingent consideration, profit before tax was reduced to S$9.1 million, a 38.4% decrease from FY2010. Net income fell by 43.8% to S$7.0 million from S$12.5 million in the previous year. The reason for the year-on-year decrease in net income, even without factoring in the contingent contribution, was the weaker performance by PCS Services.

We maintained a healthy S$30.5 million in cash and cash equivalents as at 31 December 2011, after payment of final consideration to S&I vendors, with our earnings per share at 1.45 cents and net asset value per share at 15.93 cents.

Expanding reach, Increasing CapabilitiesNotwithstanding the challenging business environment, each of our three business units made significant efforts in the past year to strengthen their respective businesses.

With the successful integration of S&I and the acquisition of NxGen, ICT Services has gained the scale and capability to effectively compete in the ICT space and gained a valuable foothold in the financial services and hospitality industries in the area of enterprise IT infrastructure, business solutions, system integration, managed solut ions and cloud computing solutions. TeleChoice has also established an important presence in Malaysia, Thailand and the Philippines through S&I’s and NxGen’s existing business networks.

Engineering Services had higher profit margins on the back of higher value projects in Indonesia where it has become a leading provider of Radio Network Optimisation and Radio Network Planning services. It has also completed a number of noteworthy in-building coverage projects in Malaysia where it leads the competition in this area. It is now undertaking projects for the key network operators in both these countries. The division established an office in the Philippines, effectively increasing its regional presence to five

markets, namely, Singapore, Malaysia, Indonesia, Vietnam and now the Philippines.

Despite the challenges which PCS Services faced, there were notable highlights to the division’s performance. It registered higher prepaid sales, becoming the leading prepaid card distributor for StarHub. It also increased its sales of Android OS system handset devices, especially Samsung. New brands were added to its stable of handset products and it increased its presence island-wide through Planet Telecoms (“Planet”) with three new outlets. Planet performed well in FY2011 and bagged some of StarHub’s most prestigious partner awards. PCS Services also provided support services for U Mobile, Malaysia’s fourth largest mobile operator, for the launch and packaging of its various mobile plans, handset purchases, expansion of its retail outlets, inventory management and backend operations.

The Year Ahead and future growthFY2012 will be a challenging year with Government growth estimates for Singapore dropping to between 1% to 3% due to the uncertain global economic outlook. We anticipate the possibility of lower consumer and enterprise spending in FY2012. We do, however, expect continued investment in network upgrading by regional telecom operators as developing regional economies improve their network systems and the implementation of LTE network technology continues in earnest.

Despite these challenges, we do have cause to be optimistic in the year ahead. PCS Services will capitalise on the increasing number of new Android and Windows OS handset models which will be released to counter the dominance of the iPhone. The renewed contract with StarHub for integrated fulfillment and management services, which includes fulfillment services for iPhones, will provide added opportunities. It will also further strengthen its retail presence through the opening of new Planet outlets. ICT Services will increase its capabilities in the enterprise space, further expand its product portfolio and explore vying

for public sector projects. Engineering Services will strengthen its regional operations while augmenting its product and service offerings.

Commitment to ShareholdersTaking into account our financial performance in FY2011, we are pleased to announce that the Board has recommended a final dividend of 1.6 cents per ordinary share (one-tier tax exempt). If approved at the Company’s Annual General Meeting to be held on 27 April 2012, it will be paid on 18 May 2012. Appreciation to AllOn behalf of the Board, we would like to extend our thanks to our management and staff for another year of dedication and hard work. We are also grateful to our business partners, customers and our shareholders, for the continued support through the years. We look forward to leading the company through a new year which will bring more opportunities to expanding our reach and increasing our capabilities.

Bertie Cheng Andrew lohChairman President

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TeleChoice International LimitedAnnual Report 2011

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Extending Reach...to bring our competencies to new markets

We have increased our service and product offerings, added new outlets to strengthen our retail presence in Singapore and intensified our activities in Malaysia, Indonesia, and Vietnam. We have also established a company in the Philippines to actively pursue new opportunities in this emerging market.

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TeleChoice International LimitedAnnual Report 2011

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Increasing Capabilities...to compete effectively in the info-communications space

Driving innovation is at the heart of TeleChoice as a diversified provider and enabler of innovative communications. We will continue to deliver solutions that enhance our product and service offerings and increase our capabilities to meet the changing demands of our customers.

Page 10: Extending Reach, Increasing Capabilities - listed companytelechoice.listedcompany.com/misc/ar2011.pdf · (StarHub Premium Outlet with ... • Awarded “Asiapac & Japan 2011 Top Performing

TeleChoice International LimitedAnnual Report 2011

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Board of Directors

BErTIE ChENgChairman and Independent DirectorAppointed on 6 May 2004Last re-appointed on 28 April 2011

Mr Cheng is the Chairman of the Board. He is also the Chairman of the Executive Committee and the Remuneration Committee.

Mr Cheng retired as Chief Executive Officer of POSBank in July 1997. He holds and has held directorships, in both listed and unlisted companies. Currently, he is a director of Hong Leong Finance Limited, Pacific Andes Resources Development Limited, CFM Holdings Limited and Singapore Technologies Electronics Limited. He is also the Non-Executive Chairman of Tee International Limited.

Mr Cheng holds a Bachelor of Arts Degree in Economics (Honours) from the University of Malaya in Singapore. He

received the Public Administration Medal (Silver) in 1984 and the Public Service Medal in 2001. He also received the Friend of Labour Award from the National Trade Union Congress (NTUC) in 2008.

Past directorships in listed companies and major appointments (from 1 January 2009 to 31 December 2011)

• Singapore Petroleum Company Limited

• Thomson Medical Centre Ltd

• Westech Electronics Limited

• Singapore Technologies Aerospace Limited

from left - right: Tang Yew Kay Jackson, Yen Se-Hua Stewart, Yap Boh Pin, Lim Chai Hock Clive, Bertie Cheng and Kwek Buck ChyeNot in picture: Lee Theng Kiat and Sio Tat Hiang

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TeleChoice International LimitedAnnual Report 2011

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YAP BOh PINIndependent DirectorAppointed on 6 May 2004Last re-appointed on 28 April 2011

Mr Yap is the Chairman of the Audit Committee, and is a member of the Nominating Committee.

He is currently Managing Director of B.P.Y. Private Limited, a firm of management consultants which provides financial planning, financial accounting, reviewing internal control systems as well as corporate secretarial services. Between July 1975 and January 1999, Mr Yap was a senior partner at Yap Boh Pin & Co which provided advice on auditing, taxation, liquidation and corporate restructuring matters. He is also a director of Lereno Bio-Chem Ltd, serving as Chairman of its Audit Committee and member of its Nominating Committee. He has also held directorships in various public companies between 1975 and 2000, including Singapore Land Limited, L&M Investments Limited and Pan Pacific Public Company Limited. During his appointment by these companies, Mr Yap was a member of their executive committee and/or audit committee, assisting in the evaluation and recommendation of changes to their system of internal controls as well as corporate governance.

In March 2007, Mr Yap was appointed as Director of Asia Mobile Holdings Pte. Ltd., a private limited company which is a subsidiary of Singapore Technologies Telemedia Pte Ltd. It has investments in StarHub Ltd and Shenington Investments Pte Ltd.

Beyond the corporate sector, Mr Yap is actively involved in various non-profit, educational and social welfare organisations. He is an Honorary Council Member of the Singapore Hokkien Huay Kuan since 16 June 2011. At end January 2008, Mr Yap was appointed a director of ACS (International). He is also a member of the Board of Trustees of the Chinese Development Assistance Council, as well as a member of the Audit Committee. In July 2009, Mr Yap was appointed a member of the Board of Directors, and Chairman of the Finance Committee of Singapore Heart Foundation.

Mr Yap qualified as a Chartered Accountant from the Institute of Chartered Accountants in England and Wales in 1966. He is a Fellow member of both the Institute of Certified Public Accountants of Singapore, and the Institute of Chartered Accountants in England and Wales.

Past directorships in listed companies and major appointments (from 1 January 2009 to 31 December 2011)

• Nil

YEN SE-hUA STEWArTIndependent DirectorAppointed on 6 May 2004Last re-elected on 28 April 2010

Mr Yen is the Chairman of the Nominating Committee, and serves as a member of the Remuneration Committee and the Executive Committee.

Mr Yen is currently the Chief Executive Officer of SECOM (Singapore) Pte Ltd, a provider of security services. Mr Yen has held senior management positions in industries such as defence marketing, construction and development, security, hospitality and aviation services.

Mr Yen began his career with the Singapore Ministry of Defence as a systems engineer. Mr Yen later joined Chartered Industries of Singapore Pte Ltd, where he was part of the team that established CDC-Construction and Development Pte Ltd (now known as Sembawang Engineers & Constructors Pte Ltd), a leading design and-build contractor in Singapore for civil engineering, residential and commercial building projects.

Mr Yen is currently also an independent director and a member of the Audit Committee and Chairman of Remuneration Committee of Hersing Corporation Ltd, a company listed in Singapore. Mr Yen obtained a Bachelor Degree in Engineering from McMaster University in 1972 and also holds a Diploma in Financial Management from New York University.

Past directorships in listed companies and major appointments (from 1 January 2009 to 31 December 2011)

• Regional Hotel Pte Ltd

• Ventura Development (Myanmar) Pte Ltd

• Aetos Security Management Pte Ltd

• Aetos Security Consultants Pte Ltd

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TeleChoice International LimitedAnnual Report 2011

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(cont’d)Board of Directors

TANg YEW KAY JACKSONIndependent DirectorAppointed on 1 November 2006Last re-elected on 28 April 2010

Mr Tang is a member of the Audit Committee.

After three years in the Singapore Government Administrative Service, Mr Tang spent the next 28 years in the banking and financial services industry and held senior management positions at Continental Illinois National Bank (now part of Bank of America), N.M. Rothschild & Sons (Singapore) Ltd, ST Capital Limited and Vertex Management (UK) Limited. He retired from full-time employment in January 2005.

Mr Tang has held directorships in various companies, both in Europe and ASEAN, including SGX Mainboard listed Singapore Food Industries Limited, where he served as a member of the Audit Committee.

Mr Tang graduated with a Bachelor of Social Sciences (Economics) (Honours) (1970), and obtained a postgraduate Diploma in Business Administration (1975), from the then University of Singapore.

Past directorships in listed companies and major appointments (from 1 January 2009 to 31 December 2011)

• Nil

lIM ChAI hOCK ClIVENon-Executive DirectorAppointed on 29 September 1999Last re-elected on 28 April 2009

Mr Lim serves as a member of the Executive Committee.

Mr Lim is credited with having successfully spearheaded the strategic development and growth of the Group since its inception in 1998 into a regional diversified provider and enabler of innovative communications today.

Following his retirement as Group President in November 2006, Mr Lim continues to contribute his extensive industry experience and expertise to the Group, as a Non-Executive Director and a member of the Executive Committee.

Mr Lim, who oversaw the strategic development and management of our Group as President, has over 13 years of experience in the telecommunications industry, including establishing Cellstar Pacific Pte Ltd, an Asean-wide cellular communication distribution business. Prior to undertaking his appointment as our Group President in January 2004, he held the position of Managing Director from March 1999 to December 2003 where he was responsible for the Group’s distribution business.

Mr Lim is currently the Managing Director of Leap International Pte Ltd, a private investment holding company. Mr Lim holds an MBA from the Asian Institute of Management, Manila, and a Master of Arts (Christian Studies) from Regent College, Vancouver, Canada and

a Doctoral Degree from Gordon Conswell Theological Seminary, MA, USA.

Past directorships in listed companies and major appointments (from 1 January 2009 to 31 December 2011)

• Nil

lEE ThENg KIATNon-Executive DirectorAppointed on 28 April 1998Last re-elected on 28 April 2011

Mr Lee serves as a member of the Executive Committee, Remuneration Committee and Nominating Committee.

Mr Lee is currently the President and General Counsel of Temasek International Pte. Ltd.

Prior to joining Temasek, he held the position of President and Chief Executive Officer of Singapore Technologies Telemedia Pte Ltd since its formation.

Mr Lee had successfully led Singapore Technologies Telemedia Pte Ltd’s effort in establishing itself as a significant mobile communications and global IP/data services group. Under his leadership, Singapore Technologies Telemedia Pte Ltd strategically expanded its global footprint in the Asia-Pacific region, the Americas and Europe. Today, portfolio companies in the group include Asia Mobile Holdings Pte. Ltd., which holds interests in StarHub Ltd, Mfone Co., Ltd and Lao Telecommunications Company Limited, eircom Ltd, Level 3 Communications, Inc., ST Teleport Pte Ltd, TeleChoice International Limited, U Mobile Sdn Bhd and VNPT Global.

Prior to Singapore Technologies Telemedia Pte Ltd, Mr Lee held various senior level positions in the former Singapore Technologies Pte Ltd overseeing its legal and strategic business development functions. Mr Lee has served in the Singapore Legal Service for over eight years before joining Singapore Technologies Pte Ltd.

Mr Lee holds a Bachelor of Laws (Honours) from the University of Singapore.

Past directorships in listed companies and major appointments (from 1 January 2009 to 31 December 2011)

• Global Crossing Limited

• eircom Limited

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TeleChoice International LimitedAnnual Report 2011

011

SIO TAT hIANgNon-Executive DirectorAppointed on 6 May 2004Last re-elected on 28 April 2011

Mr Sio serves as a member of the Audit Committee.

Mr Sio has over 20 years of financial and management experience, and is currently the Executive Director of Singapore Technologies Telemedia Pte Ltd.

Prior to that, he held the position of Executive Vice- President of Singapore Technologies Telemedia Pte Ltd from 1995 to 2010 and the position of Senior Executive Vice-President of Singapore Technologies Telemedia Pte Ltd from 2010 to March 2012.

In 1991, Mr Sio joined Singapore Technologies Holdings Pte Ltd as Vice-President of Corporate Finance, overseeing the treasury and investment management functions of the Singapore Technologies group of companies. He later held the position of Director of Strategic Investment and Group Treasurer and was part of the team which formed Singapore Technologies Telemedia Pte Ltd as the telecommunications branch of the Singapore Technologies group.

Mr Sio obtained a Bachelor Degree in Business Administration from the then University of Singapore in 1970, and attended the Senior Management Programme at the London Business School.

Past directorships in listed companies and major appointments (from 1 January 2009 to 31 December 2011)

• Nil

KWEK BUCK ChYEAlternate Director to Lee Theng KiatAppointed on 7 May 2004

Mr Kwek, who serves as an alternate director to Mr Lee Theng Kiat, has over 30 years of financial experience.

He joined the former Singapore Technologies group in 1992. He has served as Chief Financial Officer in various major operating units within the group including Chartered Semiconductor Manufacturing Ltd, ST Assembly Test Services Ltd (now known as STATS ChipPAC Ltd.), Vickers Capital Limited and Singapore Technologies Telemedia Pte Ltd.

Prior to joining the Singapore Technologies group, Mr Kwek spent 10 years at United Technologies Carrier Asia Pacific Operation where he assumed various regional responsibilities in planning, business development and joint venture start-ups. Mr Kwek is currently the Chief Financial Officer of StarHub Ltd, a position he has held since September 2002.

Mr Kwek obtained a Bachelor Degree in Accountancy from the then University of Singapore in 1975. He also attended the Advanced Management Program at Harvard Business School in 1997. Mr Kwek is a member of the Institute of Certified Public Accountants of Singapore.

Past directorships in listed companies and major appointments (from 1 January 2009 to 31 December 2011)

• Nil

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ANDrEW lOhPresident

Mr Loh joined TeleChoice in November 2005 as Senior Vice-President of Personal Communications Solutions Services (then known as Distribution Services) and was appointed as Group President in December 2006. He is responsible for the overall management and growth of TeleChoice.

Prior to joining the Group, Mr Loh w a s S e n i o r V i c e - P r e s i d e n t , International Operations of Singapore Technologies Telemedia Pte Ltd where his responsibilities included overseeing the business integration of Singapore Technologies Telemedia Pte Ltd’s global investments. This followed a 22-year career at United Technologies Carrier where he held several senior management positions both in Singapore and internationally.

Mr Loh ho lds a Bache lo r o f Engineering (Electrical) Degree from the University of Western Australia, Australia and a MBA from Michigan State University, USA.

Executive Management

STEVEN NgSenior Vice-PresidentInfo-Comm Technology Services

Mr Ng joined TeleChoice in March 2008. He is responsible for the overall management of the business unit, including setting strategy, identifying new market opportunit ies and developing new Info-Comm products and services.

Mr Ng has over 23 years of experience in the Info-Comm Technology industry. He has held senior management positions in AT&T, Gartner and other leading hightech companies covering the Asia Pacific markets. At AT&T, he was Managing Director for ASEAN Business Markets. He was later seconded to Concert Global Networks (an AT&T and BT Global Joint Venture) as Managing Director and Vice-President, Sales for Global Services Asia Pacific, becoming one of the pioneer leaders in the formation of this venture. Mr Ng subsequently joined Gartner as Managing Director and Regional Vice-President, overseeing i ts research and consulting business across Asia. With his combined industry experience, Mr Ng has a very broad base of knowledge and depth across IT, telecoms, networks and application solutions.

Mr Ng holds a Graduate Diploma in Marketing and a MBA from University of Dubuque, USA.

lEE YOONg KINSenior Vice-PresidentNetwork Engineering Services

Mr Lee jo ined Te leCho ice in D e c e m b e r 2 0 0 6 , a s s u m i n g responsibility for the overall growth and strategic direction of the Network Engineering Services division.

He has more than 20 years of senior business and operational experience in the IT and telecommunications industry, hav ing worked with Singapore Technologies Telemedia Pte Ltd, ST Electronics (Infocomm Systems) Pte Ltd and CSE Global Ltd. His previous positions include Managing Di rector of Equin ix S ingapore Pte. Ltd. which he co-founded in 1999 and General Manager and Board member of ST Teleport Pte Ltd, a company which he set up in 1994.

Mr Lee ho lds a Bache lo r o f Engineering Degree (First Class Honours) and a MBA from the National University of Singapore.

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PAUlINE WONgSenior Vice-PresidentPersonal Communications Solutions Services

Ms Wong was appointed to lead Personal Communications Solutions (“PCS”) Services in 2006. She oversees the overall management of the business unit, including its regional and retail operations. She is also responsible for developing strategies and identifying new market opportunities to grow the business.

Ms Wong joined our Group in December 1999 as Operations Manager for PCS Services (then known as Distribution Services) and has been a key contributor to the significant growth and success of the division’s business. She was previously Area Manager for Telecom Equipment Pte Ltd (a subsidiary of Singapore Telecommunications Ltd).

Ms Wong graduated with a Bachelor of Business Degree (Distinction) from the Royal Melbourne Institute of Technology University, Victoria, Australia, and holds an Executive MBA (Honours) from the University of Chicago Booth School of Business.

WONg lOKE MEIChief Financial Officer

Ms Wong was appointed Chief Financial Officer in 2007, having been Vice-President, Finance since 2005. Ms Wong oversees the financial affairs and reporting for the Group and supports the Group’s investor relations and risk management activities.

Ms Wong has over 20 years of experience in finance and accounting, most of which were with the Singapore Technologies Telemedia Pte Ltd group of companies. She joined our Group in June 1995 as an Accountant. She participated in the listing of TeleChoice on the Mainboard of the SGX-ST in June 2004.

Ms Wong holds a Bachelor of Accountancy Degree from the National University of Singapore a n d a M a s t e r i n B u s i n e s s Administration from Heroit Watt Univers i ty, Edinburgh, Uni ted Kingdom. Ms Wong is also a member of the Institute of Certified Public Accountants of Singapore.

gOh SONg PUAYVice-PresidentHuman Resource

Mr Goh is responsible for the management of local and regional human resource functions for the Group, including human capital deve lopment , leadersh ip and organisational development.

Mr Goh has more than 15 years human resource experience across a broad spectrum of industries. Prior to joining the Group in 2004, Mr Goh held various senior positions including Assistant Vice-President (HR) at StarHub Pte Ltd (now known as StarHub Ltd) and Director (HR) at i-STT Pte Ltd, a subsidiary of Singapore Technologies Telemedia Pte Ltd. He was also Director (HR) for the National University Hospital.

Mr Goh ho lds a Bache lo r o f Mechanical Engineering Degree from the National University of Singapore.

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Personal Communications Solutions(PCS) Services

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Overall PerformanceThe Group reg istered h igher revenue but lower net income for the year ended 31 December 2011 (“FY2011”). Revenue improved by 19% from S$327.5 million for the year ended 31 December 2010 (“FY2010”) to S$389.6 million. The increase in revenue was largely attributed to the Group’s Info-Communications Technology (“ICT”) Services division, offset by lower revenue from Personal Communications Solutions (“PCS”) Services division and Network Eng ineer ing (“Eng ineer ing” ) Services division.

Gross profit for FY2011 grew by 34% to S$41.6 million from S$31.1 million in FY2010 driven by the improved revenue. Gross margin for FY2011 increased by 1.2 percentage point to 10.7% due to h igher marg ins f rom Engineering Services and gross profit contributed from subsidiaries acquired by ICT Services. There was a 38% decrease in Group PBT which stood at S$9.1 million from S$14.7 million in FY2010. This was due to the additional contingent consideration charged to the income statement of S$4.4 million under the revised Financial Reporting Standard (“FRS”) 103 as a result of the better than expected performance of S & I Systems Ptd Ltd (“S&I”) which the Group acquired in 2010. Net profit consequently decreased by 47% to S$6.6 million as compared to S$12.4 million in FY2010. Without this additional contingent consideration, net profit would have stood at S$11.0 million, which would have been a considerably smaller 12% decrease over FY2010’s net profit.

The Group maintained a healthy cash position of S$30.5 million as at 31 December 2011, a decrease from S$34.5 million a year ago due

to higher investment activities and negative changes in working capital arising from higher receivables and work in progress, offset by lower inventories and higher payables.

Personal Communications Solutions (“PCS”) ServicesRevenue contribution from PCS Services was S$239.5 million while PBT stood at S$6.5 million (62% and 48% of total Group revenue and operating PBT respectively) in FY2011. Revenue decreased by 10% or S$27.7 million due to weaker handset sales, primarily because of the prevailing strong demand for the Apple iPhone which eroded handset sales of other manufacturers. PBT, consequently, decreased by 46% or S$5.5 million with PBT margins decreasing to 2.7% in FY2011 from 4.5% in FY2010. This is due to the change in sales mix with higher sales of lower margin prepaid cards as well as lower rebates from manufacturers partly mitigated by income from new services in Malaysia. Although local channel and regional sa les weakened due to the competitive landscape, the division enjoyed higher prepaid card sales

and retail sales. The prepaid card team turned in another year of solid performance through sales to more than 160 touch points located throughout Singapore. The division added new brands, such as LG, Huawei and Dell, to its portfolio of handsets and products, as it continued to improve the “customer experience” at its retail outlets. Through its subsidiary and retail arm, Planet Telecoms (S) Pte Ltd (“Planet Telecoms”), the Group increased the number of retail outlets with the latest additions being a StarHub Platinum outlet at Causeway Point, a StarHub Exclusive Partner outlet at Changi City Point and a LG concept store at Nex. There are now 15 Planet Telecoms operated outlets

operations Review

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Info-Communications Technology (ICT) Services

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throughout Singapore. StarHub also recognised Planet Telecoms pe r fo rmance by award ing i t Highest Sales Contributor, Branded Customer Experience, Top Hubbing Sales and Home Broadband (1st Runner–up) awards.

Info-Communications Technology (“ICT”) ServicesICT Services had a positive year both in terms of revenue performance and corporate development. The division registered S$105.8 million in revenue and S$4.2 million in operating PBT (27% and 31% of total Group revenue and operating PBT respectively). In comparison with the previous financial year, revenue increased by 635% or S$91.4 million largely due to the revenue contribution of integrated information technology solutions provider, S&I. Enterprise sales, particularly in network, telephony and cloud services, grew by 20% which reinforced the division’s growth strategy in transforming its legacy business to more broadly serve the corporate segment’s info-communications requirements. ICT’s operating PBT increased to S$4.2 million from S$0.3 million recorded in FY2010. PBT margins increased to 4.0% from 1.8% the previous year with positive contributions from S&I and NxGen Communications Pte Ltd (“NxGen”).

ICT Services’ position as a leading player in the ICT segment was f u r t h e r r e i n f o r c e d w i t h t h e Group’s acquisition in November 2011 of NxGen, a regional info-commun ica t ions p rov ide r o f managed serv ices wi th core competencies in networking and unified communication solutions. With i ts portfol io of f inancial services, hospitality and other large industry segment clientele, ICT’s

service offerings and market reach have been broadened considerably. Together with the earlier acquisition of S&I, ICT division’s revenue has crossed S$100 million providing the division the necessary scale to compete more effectively in the marketplace.

Network Engineering (“Engineering”) ServicesEngineering Services ended the year strongly and contributed S$44.3

million in revenue and S$2.8 million in PBT (accounting for 11% and 21% of total Group revenue and operating PBT respectively) in FY2011. A decrease in the number of power supply system projects and lower product sales brought revenue down by 3% or S$1.6 million compared with FY2010. This was offset by higher radio network planning revenue in Indonesia and higher in-building coverage revenue from Malaysia and Indonesia. PBT increased by

operations Review

NxGen was awarded “Key Supplier Award 2011” by Avaya

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Network EngineeringServices

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operations Review

17% or S$0.4 million in FY2011 on account of higher margin and lower exchange loss. Consequently, PBT margin increased to 6.2% in FY2011 compared to 5.4% in FY2010.

Engineering Services continued to expand regionally. In addition to full operational presence in Singapore, Indonesia, Malaysia and a representative office in Vietnam, it has in November 2011, incorporated a new subsidiary in the Philippines, N-Wave Technologies Philippines, Inc.

Prospects & growth StrategiesThe next few months will prove to be challenging with the uncertainties brought about by the European financial crisis. Projections for Singapore’s economic growth are between 1% to 3% with consumer demand and business sentiment expected to be subdued. We remain, nonetheless, cautiously optimistic in the performance of our three business divisions in the coming year.

PCS Services is likely to benefit from the continued demand of smartphones and the ever increasing array of new communication devices using the Google Android and Windows OS platforms. Samsung’s new product roll-outs and Nokia’s new phone models will help improve local and regional sales for handsets and we will work with our principals to expand sales. The renewal of the fulfillment contract with StarHub and the inclusion of iPhones will also provide added opportunities for the division. Planet Telecoms will continue to source additional choice outlet locations as it further expands its retail presence.

ICT Services will leverage on the on-going demand for technology refresh, productivity driven info-communications solutions, services outsourc ing and c loud-based solutions. The division is moving with key industry trends as the convergence of traditional IT &

managed services, networking and unified communications, with the benefits of cloud computing, will present new opportunities for us to differentiate and lead the market. Most importantly, customers can expect us to deliver fresh and innovative solutions and to offer a “next generation” approach to all their info-communications needs.

Engineering Service will benefit from the continued investment by regional operators in ugrading their network and from the implementation of LTE networks. The division’s sales pipeline and order book is strong and we will continue to look for further regional growth opportunities.

PT. NexWave was conferred “Good Performance Award” for 2011 by Huawei

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Planet Telecoms Touch-points

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NORTHPlaNeT TelecOmsBlk 713 Ang Mo Kio Avenue 6 #01-4054 Singapore 560 713Tel: 6457 4788 Fax: 6452 6705Email: [email protected] MRT: NS16 Ang Mo KioOpening hours: 11am to 9pm daily

Blk 183 Toa Payoh Central #01-278Singapore 310 183Tel: 6356 5466 Fax: 6252 5477Email: [email protected] MRT: NS19 Toa PayohOpening hours: 11am to 9pm daily

Blk 190 Toa Payoh Central #01-568Singapore 310 190Tel: 6256 4788 Fax: 6256 5466Email:[email protected] MRT: NS19 Toa PayohOpening hours: 11am to 9pm daily

lG cONcePT sHOP23 Serangoon Central #04-02 NEX Mall Singapore 556 083Tel: 6636 7392 Fax: 6636 7391Email: [email protected] MRT: NE12 CC13 SerangoonOpening hours: 11am to 9pm daily

sTaRHub causeway POiNT1 Woodlands Square #03-07/08/09 Causeway Point Singapore 738 099Tel: 6499 8950 Fax: 6753 6628Email: [email protected] MRT: NS9 WoodlandsOpening hours: 11am to 9pm daily

ceNTRalPlaNeT TelecOms90 Bras Basah Road #B1-07 Esplanade MRT Station Singapore 189 562Tel: 6337 2128 Fax: 6337 2129Email: [email protected] MRT: CC3 Esplanade Opening hours: 11am to 9pm daily

easTPlaNeT TelecOms799 New Upper Changi Road #03-20 Bedok Point Singapore 467 351Tel: 6243 1712 Fax: 6243 1713Email: [email protected] MRT: EW5 BedokOpening hours: 11am to 9pm daily

2 Tampines Central 5 #03-22 Century Square Singapore 529 509Tel: 6785 1118 Fax: 6784 1118Email: [email protected] MRT: EW2 TampinesOpening hours: 11am to 9pm daily

80 Marine Parade Road #B1-37 Parkway Parade Singapore 449 269Tel: 6346 2008 Fax: 6346 5008Email: [email protected] MRT: Opening hours: 11am to 9pm daily

5 Changi Business Park Central 1 #02-21 Changi City Point Singapore 486 038Tel: 6636 1986 Fax: 6636 1985Email: [email protected] MRT: CG1 ExpoOpening hours: 11am to 9pm daily

samsuNG mObile sHOP799 New Upper Changi Road #03-20 Bedok Point Singapore 467 351Tel: 6243 2235 Fax: 6243 2236Email: [email protected] MRT: EW5 BedokOpening hours: 11am to 9pm daily

samsuNG mObile wORld2 Tampines Central 5 #04-02A Century Square Singapore 529 509Tel: 6786 5466 Fax: 6783 5477Email: [email protected] MRT: EW2 TampinesOpening hours: 11am to 9pm daily

wesTPlaNeT TelecOms21 Choa Chu Kang Avenue 4 #B1-01A Lot 1 Shoppers’ Mall Singapore 689 812Tel: 6762 1008 Fax: 6763 0338Email: [email protected] MRT: NS4 BP1 Choa Chu KangOpening hours: 11am to 9pm daily

NOkia sHOP63 Jurong West Central 3 #B1-77 Jurong Point Shopping CentreSingapore 648 331Tel: 6861 2539 Fax: 6861 2529Email: [email protected] MRT: EW27 Boon LayOpening hours: 11am to 9pm daily

sTaRHub imm2 Jurong East Street 21 #01-60 to 62 IMM Building Singapore 609 604Tel: 6720 2829 Fax: 6720 2827Email: [email protected] MRT: NS1 Jurong EastOpening hours: 11am to 9pm daily

Planet Telecoms Touch-points

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TeleChoice International Limited

Personal CommuniCations solutions

Planet Telecoms (S) Pte Ltd92%

TeleChoice (Indonesia) Pte Ltd PT TeleChoice (Indonesia)100% 99%

TeleChoice Philippines Inc *80%

network engineering

99.99%

0.01%

1%

NexWave Technologies Pte Ltd PT NexWave100%

100%

100%

N-Wave Technologies (Malaysia) Sdn Bhd

N-Wave Technologies Philippines, Inc.

info-CommuniCations teChnology

100%

N-Wave Telecoms (Malaysia) Sdn Bhd*

SunPage Communications Pte Ltd

PT Sakalaguna Semesta

S & I Systems Pte Ltd

49%

78%

50%

51%

100%

100%

Achilles Consulting Pte Ltd

Sunway S&I Systems Sdn Bhd

U-Computing Pte Ltd

Sunway S&I Systems (Thailand) Ltd

100%

NxGen Inc

NxGen Communications (M) Sdn Bhd

100%

90%

55%

100%

49%

NexWave Telecoms Pte. Ltd.

NxGen Communications Pte Ltd

NexWave Solutions Pte. Ltd.

Group Structure

* These subsidiaries are in the process of liquidation

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bOaRd OF diRecTORsBertie Cheng (Chairman)Yap Boh PinYen Se-Hua StewartTang Yew Kay JacksonLee Theng Kiat Sio Tat HiangLim Chai Hock CliveKwek Buck Chye (alternate to Lee Theng Kiat)

cOmPaNy secReTaRyPek Siok Lan

ReGisTeRed OFFice51 Cuppage Road #09-01 Singapore 229469

eXTeRNal audiTORsKPMG LLPAudit Partner: Jeya Poh Wah Suppiah(Partner since financial year ended 31 Dec 2010)

diRecTORy OF subsidiaRies aNd assOciaTed cOmPaNies

siNGaPORecorporateTeleChoice International Limited5 Clementi Loop Level 2MSingapore 129816Tel: 65 6849 4000 Fax: 65 6849 4012www.telechoice.com.sg

Personal communications solutions services TeleChoice International LimitedTeleChoice (Indonesia) Pte LtdPlanet Telecoms (S) Pte Ltd5 Clementi Loop Level 2MSingapore 129816Tel: 65 6849 4000 Fax: 65 6466 8820www.telechoice.com.sgwww.planet-telecoms.com.sg

info-communications Technology servicesNexwave Telecoms Pte. Ltd.Nexwave Solutions Pte. Ltd.SunPage Communications Pte Ltd 5 Clementi Loop Level 2MSingapore 129816Tel: 65 6481 7666 Fax: 65 6481 0110 www.nexwavetelecoms.com

S & I Systems Pte Ltd U Computing Pte Ltd31 Kaki Bukit Road 3 #05-20/23 TechlinkSingapore 417818Tel: 65 6319 4888 Fax: 65 6319 4880www.si-asia.comwww.u-computing.com.sg

Achilles Consulting Pte Ltd31 Kaki Bukit Road 3 #05-20/23 TechlinkSingapore 417818Tel: 65 6778 5489 Fax: 65 6779 2880www.achillescg.com

NxGen Communications Pte Ltd31 Kaki Bukit Road 3#06-06 Techlink BuildingSingapore 417818Tel: 65 6272 3202 Fax: 65 6272 2301www.nxg-c.com

Network engineering servicesNexwave Technologies Pte Ltd 5 Clementi Loop Level 2MSingapore 129816Tel: 65 6849 4040 Fax: 65 6849 4037www.nexwave.com.sg

malaysiaN-Wave Technologies (Malaysia) Sdn BhdB808 Block B Kelana SquareJln SS7/26 Kelana Jaya47301 Petaling JayaSelangor, MalaysiaTel: 60 3 7880 6611 Fax : 60 3 7880 8393

Sunway S&I Systems Sdn BhdLevel 12 Menara SunwayJalan Lagoon Timur Bandar Sunway 46150 Petaling JayaSelangor, MalaysiaTel: 60 3 5639 9996 Fax: 60 3 5639 9515www.si-asia.com.my

NxGen Communications (M) Sdn Bhd3A06 Block C Phileo Damansara 1No 9 Jalan 16/11 off Jalan Damansara46350 Petaling Jaya Selangor, MalaysiaTel: 60 3 7954 2455, 60 3 7958 1455 Fax: 60 3 7954 8455www.nxg-c.com

NxGen Communications (M) Sdn. Bhd1-15-10 Suntech Penang CybercityLintang Mayang Pasir 3 11950 Bayan BaruPulau Pinang, MalaysiaTel: 60 4 644 2455, 60 4 644 1455Fax: 60 4 644 9455www.nxg-c.com

iNdONesiaPT TeleChoice (Indonesia) Menara Kadin Indonesia Lt 30Jl H R Rasuna Said Blok X-5 Kav 2-3Jakarta 12950, Indonesia Tel: 62 21 5289 1919Fax: 62 21 5299 4599

PT Sakalaguna SemestaRuko Seasons CityBlok A No.18 Jalan Jembatan BesiJakarta 11320, IndonesiaTel: 62 21 2907 1482Fax: 62 21 2907 1465www.sakalaguna.com

PT NexWaveJl Dr Sahardjo No. 266 Menteng Dalam Jakarta Selatan 12870, IndonesiaTel: 62 21 829 0809Fax: 62 21 829 2502

PHiliPPiNesN-Wave Technologies Philippines, Inc.19/F BDO Plaza8737 Paseo De Roxas CorMakati Avenue Makati City, PhilippinesTel: 63 2 840 3783

NxGen IncUnit 1701 Hanston Square Bldg#17 San Miguel AveOrtigas Center, Pasig City 1605, PhilippinesTel: 63 2 655 8343 Fax: 63 2 655 3561www.nxg-c.com

THailaNdSunway S&I Systems (Thailand) Ltd184/114 Floor 20 Type E Forum TowerRatchadapisek RoadHuaykwang Bangkok 10310, ThailandTel: 66 2 6452 018 Fax: 66 2 6452 060www.si-asia.com

VieTNamNexwave Technologies Pte LtdVietnam Representative OfficeUnit #3, 4/F Saigon Business Centre65 Le Loi Boulevard District 1Ho Chi Minh, VietnamTel: 84 8 3827 0207Fax: 84 8 3827 0272

Corporate Information

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Our Board of Directors and Management are committed to maintaining high standards of corporate governance, to protect the interests of our shareholders and other stakeholders.

This Report describes our corporate governance practices, with reference to the principles set out in the Singapore Code of Corporate Governance.

(A) Board Matters

Principle 1 : Board’s Conduct of its Affairs

Our Board is responsible for guiding our overall strategic direction, corporate governance, and providing oversight in the proper conduct of our businesses.

The Board meets regularly to review our key activities and business strategies. Regular Board Meetings are held quarterly to deliberate on strategic matters and policies including significant acquisitions and disposals, the annual budget, review the performance of the business and approve the release of the quarterly and year-end reports. Where necessary, we convene additional Board sessions to address significant transactions or developments.

Our President, Andrew Loh Sur Jin, is charged with full executive responsibility for the running of our businesses, making operational decisions and implementing business directions, strategies and policies. The Board has also established an Executive Committee (“ec”) to oversee major business and operational matters. The EC comprises Bertie Cheng, Lee Theng Kiat, Lim Chai Hock Clive and Yen Se-Hua Stewart.

Management regularly consults and updates the EC on all major business and operational issues.

The Board is also supported by other Board committees which are delegated with specific responsibilities, as described under “Principle 4: Board Membership” of this Report.

The Board, upon the recommendation of the Audit Committee (“ac”), has adopted a comprehensive set of internal controls, which sets out authority and approval limits for capital and operating expenditure, investments and divestments, bank borrowings and cheque signatories arrangements at Board level. Authority and approval sub-limits are also provided at Management levels to facilitate operational efficiency.

Management monitors changes to regulations and accounting standards closely. Updates and briefings on regulatory requirements are conducted either during Board sessions or by circulation of papers.

Newly-appointed Directors are given briefings by Management on the business activities of the Group and its strategic directions, as well as their statutory and other duties and responsibilities as directors.

To help ensure compliance with the applicable securities and insider trading laws, including the best practices set out in the SGX-ST Listing Manual, we have adopted and implemented our Guidelines on Dealing in Securities of TeleChoice. We send regular compliance notices to all Directors and staff. All our Directors and employees are prohibited from dealing in our securities during the period of, two weeks before the respective announcement of our first quarter, second quarter and third quarter financial results, and one month before the announcement of our full year financial results. Restrictions are lifted from the date of the announcement of the respective results. All our Directors and employees are also required to observe the applicable insider trading laws at all times.

Corporate Governance

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Corporate Governance (cont’d)

Principle 2 : Board Composition and Balance

To be effective, we believe our Board should comprise a majority of Non-Executive Directors independent of Management, with the right core competencies and diversity of experience to enable them to contribute effectively.

Our Board currently comprises seven (7) Directors, all of whom are Non-Executive Directors and independent of Management. Our Board comprises a majority of Independent Directors, namely Bertie Cheng, Yap Boh Pin, Yen Se-Hua Stewart and Tang Yew Kay Jackson, which helps ensure a strong element of independence in all our Board’s deliberations.

The composition of our Board enables Management to benefit from an outside diverse and objective perspective of issues that are brought before our Board. It also enables our Board to interact and work with Management through a robust exchange of ideas and views to help shape the strategic directions. This, coupled with a clear separation of the role of our Chairman and our President, provides a healthy professional relationship between our Board and Management, with clarity of roles and robust oversight.

Profiles of each Director are found on pages 8 to 11 of this Annual Report.

Principle 3 : Chairman and President

We believe there should be a clear separation of the roles and responsibilities between our Chairman and President. Our Chairman and the President are separate persons in order to maintain an effective balance of power and responsibilities.

Our Chairman is Bertie Cheng, an Independent Non-Executive Director. Our Chairman leads the Board and ensures that our Board members work together with Management, with the capability and moral authority to engage and contribute effectively and constructively on various matters, including strategic issues and business planning processes.

Our President, Andrew Loh Sur Jin, is charged with full executive responsibility for the running of our businesses, making operational decisions and implementing business directions, strategies and policies. Our President is supported on major business and operational issues by the oversight of our EC.

Principle 4 : Board Membership

We believe that Board renewal must be an ongoing process, to ensure good governance, and maintain relevance to the changing needs of the company and business. As required by our Articles of Association, our Directors are subject to retirement and re-election by shareholders as part of the Board renewal process. Nominations and election of Board members are the prerogatives and rights of all our shareholders.

In carrying out its functions, our Board is supported by key Board committees, namely the AC, the Remuneration Committee (“Rc”), the Nominating Committee (“Nc”) and the EC. Each of our Board committees has been established with clear charters setting out their respective areas of authority, terms of reference and committee procedures. Other Board committees can be formed from time to time to look into specific areas as and when the need arises. Membership in the different committees is carefully managed to ensure that there is equitable distribution of responsibilities amongst Board members, to maximise the effectiveness of the Board and foster active participation and contribution from Board members. Diversity of experiences and appropriate skills are also considered, along with the need to ensure appropriate checks and balances between the different Board committees.

Details of frequency and participation at our Board, AC, RC and NC meetings for FY11 are set out in Table 1.

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Corporate Governance (cont’d)

Table 1 FY11 – Directors’ Attendance at Board and Board Committees Meetings

director

boardaudit

committeeRemuneration

committeeNominatingcommittee

No. of meetings

Held

No. of meetings attended

(% attendance)

No. of meetings

Held

No. of meetings attended

(% attendance)

No. of meetings

Held

No. of meetings attended

(% attendance)

No. of meetings

Held

No. of meetings attended

(% attendance)

Bertie Cheng 6 6 (100%) NA NA 1 1 (100%) NA NA

Yap Boh Pin 6 6 (100%) 4 4 (100%) NA NA 1 1 (100%)

Yen Se-Hua Stewart 6 6 (100%) NA NA 1 1 (100%) 1 1 (100%)

Tang Yew Kay Jackson

6 6 (100%) 4 4 (100%) NA NA NA NA

Lee Theng Kiat 6 5 (83%) NA NA 1 0 (0%) 1 1 (100%)

Sio Tat Hiang 6 4 (67%) 4 2 (50%) NA NA NA NA

Lim Chai Hock Clive 6 5 (83%) NA NA NA NA NA NA

Our NC is responsible for selecting our Directors and implementing a framework for assessing our Board’s performance. Our NC is chaired by an Independent Non-Executive Director, Yen Se-Hua Stewart and also comprises Yap Boh Pin (Independent Non-Executive Director) and Lee Theng Kiat (Non-Executive Director). The members of our NC (including the Chairman) are all Non-Executive Directors independent of Management.

Our RC is responsible for reviewing cash and long-term incentive compensation policies for our President, senior Management and key staff. Our RC is chaired by an Independent Non-Executive Director, Bertie Cheng, and also comprises Yen Se-Hua Stewart (Independent Non-Executive Director) and Lee Theng Kiat (Non-Executive Director). The members of our RC (including the Chairman) are all Non-Executive Directors independent of Management.

Our Articles of Association require one-third of our Directors to retire and subject themselves to re-election by shareholders at every annual general meeting (“aGm”) (“one-third rotation rule”). In other words, no Director stays in office for more than three years without being re-elected by our shareholders.

In addition, a newly-appointed Director is required to submit himself for retirement and re-election at the AGM immediately following his appointment. Thereafter, he is subject to the one-third rotation rule.

Principle 5 : Board Performance

We believe that Board performance is ultimately reflected in our business performance. Our Board should ensure compliance with applicable laws and all Board members should act in good faith, with due diligence and care, in our best interests and the best interests of our shareholders.

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Corporate Governance (cont’d)

Our Board, through the delegation of its authority to the NC, has used its best efforts to ensure that our Directors are equipped with the necessary background, experience and expertise in technology, business, finance and management skills to make valuable contributions and that each Director brings to our Board an independent and objective perspective to enable balanced and well-considered decisions to be made.

Our NC has implemented a framework for assessing Board performance, and undertakes regular reviews of our Board (and each Director’s) performance, with inputs from our other Board members. The results of the Board appraisal exercise, which is conducted at least once annually, are circulated to all Directors for information and feedback. The information gleaned from the completed Board appraisal exercise(s) are taken into consideration by the NC, in determining whether there are any changes needed to the appraisal system, prior to the commencement of the next Board appraisal cycle.

Principle 6 : Access to Information

We believe that our Board should be provided with timely and complete information prior to Board meetings and as and when the need arises.

Management provides adequate and timely information to our Board, on our affairs and issues requiring our Board’s attention, as well as monthly reports providing updates on our key operational activities and financial performance. The monthly flow of information and reports allows our Directors to make informed decisions and also to keep abreast of key challenges and opportunities between our Board meetings.

Frequent dialogue takes place between Management and members of our Board, and our President encourages all Directors to interact directly with all members of our Management team.

Our Articles of Association provide for Directors to participate in meetings by teleconference or videoconference.

Where a physical Board meeting is not possible, timely communication with members of our Board is effected through electronic means, which include electronic mail and teleconference. Alternatively, Management will arrange to personally meet and brief each Director, before seeking our Board’s approval.

Our Board has separate and independent access to our senior Management and the Company Secretary at all times. Our Board also has access to independent professional advice where appropriate.

Likewise, our AC has separate and independent access to the external and internal auditors, without the presence of our President and other senior Management members, in order to have free and unfettered access to information that our AC may require.

(B) Remuneration Matters

Principle 7 : Procedures for Developing Remuneration Policies

Principle 8 : Level and Mix of Remuneration

Principle 9 : Disclosure on Remuneration

We believe that a framework of remuneration for our senior Management and key staff should not be taken in isolation. It should be linked to the development of our senior Management and key staff to ensure that there is a continual development of talent and renewal of strong and sound leadership for our continued success. For this reason, our RC oversees the compensation package for our senior Management and key staff.

All members of our RC are Non-Executive Directors, independent of Management. From time to time, we may co-opt an outside member into our RC to provide additional perspectives on talent management and remuneration practices.

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Corporate Governance (cont’d)

Our RC has access to expert professional advice on human resource matters whenever there is a need to consult externally. In its deliberations, our RC takes into consideration industry practices and norms in compensation. Our President is not present during the discussions relating to his own compensation, and terms and conditions of service, and the review of his performance. However, our President will be in attendance when our RC discusses the policies and compensations of our senior Management and key staff, as well as major compensation and incentive policies such as share options, stock purchase schemes, framework for bonus, staff salary and other incentive schemes.

All decisions at any RC meeting is decided by a majority of votes of RC members present and voting (the decision of the RC shall at all times exclude the vote, approval or recommendation of any member having a conflict of interest in the subject matter under consideration).

We remunerate our Directors with Directors’ fees which take into account the nature of their responsibilities and frequency of meetings. Directors’ fees for our Directors for FY11 (set out in Table 2 below) are subject to the approval of our shareholders at the upcoming Annual General Meeting.

Table 2 FY11 – Directors’ Fees

Name Fees(1) (s$)

Bertie Cheng 67,000

Yap Boh Pin 63,000

Yen Se-Hua Stewart 58,000

Tang Yew Kay Jackson 53,000

Lee Theng Kiat 52,000(2)

Sio Tat Hiang 49,000(2)

Lim Chai Hock Clive 42,000

Notes:-

(1) These fees are subject to approval by shareholders as a lump sum at the upcoming Annual General Meeting for FY11.(2) These fees are payable to STT Communications Ltd.

Details of remuneration paid to our top five (5) key executives for FY11 are set out below. For competitive reasons, the Company is only disclosing the band of remuneration of each key executive for FY11, within bands of S$250,000, in Table 3 below.

Table 3 FY11 – Top Five (5) Key Executives’ Remuneration

Name salary, bonus & Other benefits(1)

Loh Sur Jin Andrew B

Lee Yoong Kin A

Pauline Wong Mae Sum A

Wong Loke Mei A

Ng Kwang Seng Steven A

Note:-

(1) Remuneration Bands: “A” refers to remuneration from S$250,001 up to S$500,000 and “B” refers to remuneration from S$750,001 up to S$1,000,000.

There is no employee who is an immediate family member of a Director or the President, whose remuneration exceeds S$150,000 a year.

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TeleChoice International LimitedAnnual Report 2011

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Corporate Governance (cont’d)

(C) Accountability and Audit

Principle 10 : Accountability

We have always believed that we should conduct ourselves in ways that deliver maximum sustainable value to our shareholders. We promote best practices as a means to build an excellent business for our shareholders. Our Board has overall accountability to our shareholders for our performance and in ensuring that we are well managed. Management provides our Board members with monthly business and financial reports, comparing actual performance with budget and highlighting key business indicators and major issues that are relevant to our performance, position and prospects.

Principle 11 : Audit Committee

Our AC consists of three (3) Non-Executive Directors, the majority of whom including the Chairman are Independent Directors. The AC members are Yap Boh Pin as Chairman, Sio Tat Hiang and Tang Yew Kay Jackson. Our AC members bring with them invaluable professional and managerial expertise in the accounting, financial and telecommunications sectors.

Our AC’s responsibilities include reviewing our annual audit plan, internal audit processes, the adequacy of internal controls, Interested Party Transactions for which there is a shareholders’ mandate renewable annually. Our AC has full authority to commission and review findings of internal investigations into matters where there is any suspected fraud or irregularity or failure of internal controls or violation of any law likely to have a material impact on our operating results. Our AC is also authorised to investigate any matter within its charter with the full co-operation of Management. Our AC reviews and approves the quarterly, half-yearly and annual financial statements and the appointment and re-appointment of auditors before recommending them to the Board for approval.

Our AC meets with the external and internal auditors, without the presence of Management, at least once during the year, to discuss matters it believes should be raised privately.

Our AC reviews the nature and extent of non-audit services provided by the external auditors during the year to assess the external auditors’ independence. Having satisfied that the independence of the external auditors is not impaired by their provision of non-audit services, and that Rules 712 and 715 of the SGX-ST Listing Manual have been complied with, the AC has recommended to the Board that KPMG LLP be nominated for re-appointment as the external auditors at the next AGM.

In line with our commitment to a high standard of internal controls and its zero tolerance approach to fraud, we have put in place a whistle blower policy (the “Policy”) providing employees a direct channel to the AC, for reporting suspected fraud and possible impropriety in financial reporting, unethical conduct, dishonest practices or other similar matters. This Policy aims at protecting employees against discrimination or retaliation as a result of their reporting information regarding, or their participation in, inquiries, investigations or proceedings involving TeleChoice or its agents. With such a policy in place, we are able to take swift action against any fraudulent conduct and minimise any financial losses arising from such conduct. The Policy is available on our intranet that is accessible by all employees.

Principle 12 : Internal Controls

Principle 13 : Internal Audit

We believe in the benefits of having in place a system of internal controls to properly safeguard our shareholders’ interests and our assets, and to better manage risks.

Our AC is delegated the full responsibility to review, with our external auditors, their evaluation of the effectiveness and adequacy of our system of internal controls, and monitor the response to their findings and actions taken to correct any noted deficiencies. Our AC regularly updates the Board on internal audit findings and issues.

Our AC also oversees the function of enterprise risk management. Our risk management framework is designed to provide systems and processes to enable us to take cognizance of the various risks and hence make better decisions. Major identified risk categories include strategic, operational, market and compliance risks. The risk management processes are tailored to address these categories of risks.

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Corporate Governance (cont’d)

The AC is supported by senior Management representatives who:-

a. oversee and ensure that our risk management policies are adequate and remain effective;

b. conduct regular reviews to ensure that our business units and key functions adequately prioritise and address risk management issues; and

c. prepare regular updates on Risk Management issues for the AC.

Our internal audit function is carried out by TeleChoice’s internal auditor (the “internal auditors”) and where necessary, we may, on an adhoc basis, engage third parties to provide certain internal audit services. The Internal Auditors report primarily to the AC Chairman, and administratively to the President and the Chief Financial Officer.

The Internal Auditors develop their annual internal audit plan in consultation with, but independent of Management, and submit the plan to our AC for review and approval. Our AC meets with the Internal Auditors at least once a year without the presence of Management to ensure independence of these functions.

Based on the work performed by our Internal Auditors, and the review undertaken by external auditors, the Board with the concurrence of the AC is of the opinion that we have in place adequate internal controls and nothing has come to the Board’s attention to cause the Board to believe that our system of internal controls and risk management is inadequate.

Communication with Shareholders

Principle 14 : Communication with Shareholders

Principle 15 : Greater Shareholder Participation

We believe in having regular communication with shareholders and also prompt disclosure of information to shareholders.

Our Investor Relations team manages investor relations and has arranged a series of events during the year to brief the media and investment analysts on our performance.

For the release of the respective quarterly and year-end results, the announcement is first released via SGXNET together with our press release. Thereafter, the media and investor analysts meet with Management for briefing(s) within the ambit of our SGXNET announcements to ensure that there is fair and non-selective disclosure of information.

We support the Code’s principle to encourage shareholders’ participation. To facilitate greater shareholders’ participation, we participate in on-line Management Q&A sessions where we invite questions from the investing public on our publicly disclosed business and financial results. A registered shareholder may appoint a proxy to attend and vote at our general meetings. Hence, our shareholders have the opportunity to direct any queries regarding the resolutions proposed to be passed to our Directors and Management who are present at our general meetings. Our external auditors are also invited to be present at our AGMs to assist our Directors in answering questions from our shareholders relating to the conduct of the audit and the preparation and content of the auditors’ report.

Financial and other information (including news releases and SGXNET announcements) are made available on our website at http://www.telechoice.com.sg and this is regularly updated.

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Financial Contents

32 Group Financial Review37 Directors’ Report49 Statement by Directors50 Independent Auditors’ Report51 Statements of Financial Position52 Consolidated Income Statement53 Consolidated Statement of Comprehensive Income54 Consolidated Statement of Changes in Equity56 Consolidated Cash Flow Statement58 Notes to the Financial Statements117 Supplementary Information118 Shareholdings Statistics120 Notice of Fourteenth Annual General Meeting Proxy Form

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Group Financial Review

1.1 Operating Results of the Group 

in $ million Fy2011 Fy2010 change (%)

Revenue 389.6 327.5 19.0

Gross profit 41.6 31.1 33.8

Other income 0.9 0.4 104.7

Share of profit of jointly-controlled entity (0.3) 0.1 (309.2)

Total expenses 381.1 313.3 21.6

Operating profit before taxation* 13.5 14.7 (8.3)

Profit before taxation 9.1 14.7 (38.4)

Operating Profit after taxation* 11.4 12.5 (8.3)

Profit after taxation 7.0 12.5 (43.8)

Operating Profit after tax and non-controlling interests * 11.0 12.4 (11.5)

Profit after tax and non-controlling interests 6.6 12.4 (47.1)

* Exclude the additional contingent consideration of $4.4m paid to the vendors of S & I Systems Pte Ltd. In accordance with revised FRS 103 Business Combination, additional contingent consideration is classified as a financial liability within the scope of FRS 39 and shall be measured at fair value with any resultant gain or loss recognized in the income statement. Before the revision of FRS 103, such amount was classified as goodwill.

Group revenue increased by 19% or $62.1 million to $389.6 million in FY2011.

Personal communication solutions services (Pcs) contributed to 62% of group revenue in FY2011 (FY2010: 82%). Revenue decreased by 10% or $27.7 million to $239.5 million compared to the previous financial year. The decrease was due to lower regional and local channel sales attributed to the competitive landscape, mitigated by the increase in retail from higher activation commissions and prepaid cards sales from increase in customer base. Sales to StarHub still accounts for more than a third of PCS’s revenue and has also recorded a slight increase year-on-year with the increase in demand for Samsung phones offsetting the loss from not carrying the i-Phones.

info-comm Technology services (icT) contribution to group revenue has increased to 27% (FY2010: 4%). Revenue increased by 635% or $91.4 million to $105.8 million in FY2011 as a result of consolidation of S & I Systems Pte Ltd (“s&i”) and NxGen Communications Pte Ltd (“NxGen”) accounts. 14 months of revenue from S&I and 2 months from NxGen in total of $92.0 million was included in FY2011. There was also higher revenue from enterprise solutions services and new services which was offset by lower iDD usage as a result of intense competition in the voice business.

Network engineering services (engineering) contributed to 11% of group revenue in FY2011 (FY2010: 14%). 62% of the Engineering’s revenue was contributed by the Indonesian operations (FY2010: 60%). Revenue decreased by 3% or $1.6 million to $44.3 million in FY2011 from lower power supply projects and regional product sales. These were mitigated by higher Radio Network Planning (“RNP”) revenue in Indonesia, and higher In-Building Coverage (“ibc”) revenue in Malaysia and Indonesia.

1.2 Gross profit

in $ million Fy2011 Fy2010 change (%)

Gross profit 41.6 31.1 33.8

Gross margin 10.7% 9.5% 1.2 ppt

ppt - percentage point

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TeleChoice International LimitedAnnual Report 2011

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Group Financial Review (cont’d)

1.2 Gross profit (con’td)

Gross profit increased by 33.8% or $10.5 million to $41.6 million in FY2011. The higher gross profit arose from the acquisition of S&I by ICT and higher gross profit achieved by Engineering, offset by lower gross profit from PCS.

Gross margins increase from 9.5% in FY2010 to 10.7% in FY2011. The increase was attributed to the increase in revenue contribution from S&I which has higher gross margin than the organic business of 8.6%. PCS reported lower gross margin due to the higher sales mix of lower margin prepaid cards revenue which has increased by 50%. ICT’s competitive pricing for IDD business also resulted in lower gross margin for the organic business. Engineering reported higher gross margin than FY2010 due to improvement in margins from the operations in Indonesia and Malaysia.

1.3 Other income

Other income comprises mainly of rental and management service income. The increase of 105% or $0.5 million was partly attributed to the consolidation of the newly acquired subsidiaries. In 2010, the amount included $0.1 million from the jobs credit scheme from the Singapore Government. The jobs credit was given in 2009 to encourage companies to preserve jobs during the economic downturn and was extended for half a year in 2010 at stepped-down rates.

1.4 Share of profit/losses of jointly-controlled entity

In FY2011, investment in PT Sakalaguna reported losses from insufficient rebates obtained from the operators to subsidise the losses from starter pack sales, additional costs incurred from renovation of outlet and irrecoverable taxes. This resulted in share of losses of $0.3 million being accounted for in FY2011 as compared to share of profit of $0.1 million in FY2010.

1.5 Total expenses

in $ million Fy2011 Fy2010 change (%)

Cost of sales 348.0 296.4 17.4

Selling and marketing expenses 10.5 5.2 100.6

Administrative expenses 15.7 11.3 39.8

Other expenses 2.4 0.5 332.1

Additional contingent consideration paid on business combination 4.4 – nm

Net finance costs/(income) 0.1 (0.1) 200.0

Total expenses 381.1 313.3 21.6

Included in total expenses:

Staff costs 32.3 19.4 66.3

Depreciation and amortisation 3.1 1.3 138.5

nm – not meaningful

Total expenses, including cost of sales, amounted to $381.1 million in FY2011, an increase of 22% or $67.8 million compared to FY2010. The significant increase in the operating expenses was due to the consolidation of S&I and NxGen which was acquired on 1 November 2010 and 1 November 2011 respectively. It also includes a one-time charge amounting to $4.4 million arising from the application of revised FRS 103.

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TeleChoice International LimitedAnnual Report 2011

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Group Financial Review (cont’d)

1.5 Total expenses (cont’d)

cost of sales comprises of cost of equipment sold, carrier costs and commissions, costs of cabling and installation, network expenses, depreciation and amortisation and attributable direct overheads. Cost of sales increased by 17% or $51.6 million over FY2010 largely due to the consolidation of S&I and NxGen.

selling and marketing expenses increased by 101% or $5.3 million. Operating expenses for S&I and NxGen amounted to $5.4 million in FY2011and this was offset by the 2% or $0.1 million reduction for organic business due to lower advertising and promotion activities and lower staff costs.

administrative expenses were 40% or $4.4 million higher than the previous financial year mainly due to the operating expenses of $4.6 million from S&I and NxGen. Operating expense for organic business decreased by 1% or $0.2 million as a result of lower staff costs and travelling expenses, offset by higher depreciation and amortisation.

Other expenses of $2.4 million in FY2011 as compared to $0.5 million in FY2010 were largely because of $1.6 million amortisation of the intangible assets in FY2011 from the acquisition of S&I and NxGen. Also included in FY2011 was loss on disposal of a dormant subsidiary in Thailand, and withholding tax on dividend received from a subsidiary in Indonesia amounting to $0.1 million each.

additional contingent consideration of $4.4 million was paid during the year for the acquisition of S&I. The additional contingent consideration came about from the better than expected operating performance by S&I. In accordance with revised FRS 103 Business Combination, additional contingent consideration that is classified as a financial liability is within the scope of FRS 39 and shall be measured at fair value with any resultant gain or loss recognized in the income statement. Before the revision of FRS 103, such amount was classified as goodwill.

Net finance cost was $0.1 million in FY2011 as compared to net finance income of $0.1 million in FY2010. This was due to higher bank loans during the year as trade financing loans were taken to support projects by a subsidiary. The finance costs in FY2011 also include interest accretion from discounting long term accrued contingent consideration payable for the acquisition of NxGen.

staff costs increased by 66% or $12.9 million to $32.3 million mainly attributed to the acquisition of S&I and NxGen, and higher headcounts for Engineering operations in Indonesia to support the increased sales activities.

depreciation and amortisation cost increased 139% or $1.8 million. Amortisation of intangible assets relates to customer relationships and order books arising from the acquisition of S&I and NxGen over a 5 to 7 year period. Increase in depreciation expense arose from capital expenditure on renovation for new retail outlets operated by PCS.

1.6 Operating profit before tax

Operating profit before tax margins Fy2011 Fy2010 change

Personal Communications Solutions services (PCS) 2.7% 4.5% (1.8) ppt

Info-Comm Technology services (ICT) 4.0% 1.8% 2.2 ppt

Network Engineering services (Engineering) 6.2% 5.4% 0.8 ppt

Group 3.5% 4.5% (1.0) ppt

Group operating PBT, excluding the $4.4 million charged to income statement with the application of revised FRS 103, decreased by 8% or $1.2 million to $13.5 million in FY2011. Group PBT operating margin decreased 1.0 percentage point to 3.5% in FY2011. Engineering and ICT’s PBT margins improved over FY2010 but was offset by the decline in margins from PCS. Including the impact from revised FRS 103, the Group PBT margin would have been 2.3%, which was 2.2 percentage point lower than the previous financial year.

Pcs contributed to 48% of group operating PBT in FY2011 (FY2010: 82%). PBT decreased by 46% or $5.5 million to $6.5 million in FY2011 due to the decline in revenue and lower margin. The lower margin was attributed to a higher sales mix of lower margin prepaid cards sales and lower rebates received from manufacturers. There was also higher provision for stock obsolescence. The decrease was partly mitigated by income from new services in Malaysia and higher line activation commissions received in Singapore.

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Group Financial Review (cont’d)

1.6 Operating profit before tax (cont’d)

icT contributed to 31% of group operating PBT in FY2011 (FY2010: 2%) from the acquisition of S&I and NxGen. PBT increased from $0.3 million in FY2010 to $4.2 million in FY2011. Operating PBT in FY2011 was higher than FY2010 as a result of positive contributions from S&I and NxGen of $4.3 million and $0.2 million respectively net of amortization expenses. These were offset by share of losses from PT Sakalaguna, lower PBT from iDD business and legal and due diligence costs incurred for M&A activities.

engineering contributed to 21% of group operating PBT in FY2011 (FY2010: 16%). PBT increased by 17% or $0.4 million to $2.8 million in FY2011 from higher gross margin contributed by overseas operations. There were also higher gross margin from power supply, IBC projects and transmission equipment sales and lower exchange losses of $0.1 million, offset by $0.1 million of withholding tax incurred on dividend received from a subsidiary in Indonesia.

1.7 Profit after tax and non-controlling interests

in $ million Fy2011 Fy2010 change (%)

Income tax expenses 2.1 2.2 (8.4)

Effective tax rate 22.7% 15.3% 7.4 ppts

Profit after tax and non-controlling interests 6.6 12.4 (47.1)

Profit after tax margins 1.7% 3.8% (2.1) ppts

Group PaTmi decreased by 47% or $5.8 million to $6.6 million in FY2011 due to the one-time charge of $4.4 million from the application of revised FRS 103. Without this, PATMI would have been $11.0 million, 12% or $1.4 million lower than FY2010, and the net margin would have been 2.8% instead of 1.7%.

income tax expenses were slightly lower than the last financial year by 8% or $0.1 million. The higher effective tax rate in FY2011 was mainly due the $4.4 million additional contingent consideration paid for business combination that was charged to income statement. Excluding this one-time charge, the operating effective tax rate would be 15.2%, 0.1% ppts lower than last year. In FY2011, the higher tax payable on the Indonesia operations was offset by the lower tax payable from the Singapore companies with relief from M&A allowances and Productivity and Innovation Credit (“Pic”). The lower effective tax rate in FY2010 was due to tax write back and tax relief obtained by the Singapore companies from the M&A allowances and PIC schemes.

2. Liquidity and Capital Resources

cashflow (in $ million) Fy2011 Fy2010 change (%)

Cashflow from:

Operating activities 1.4 3.1 (54.8)

Investing activities (3.0) (8.7) (65.5)

Financing activities (2.3) (6.5) (64.6)

Net change in cash and cash equivalent (3.9) (12.1) (67.8)

Cash and cash equivalent at end of year 30.5 34.5 (11.6)

Group’s cash and cash equivalent decreased by 12% or $4.0 million from $34.5 million as at 31 December 2010 to $30.5 million as at 31 December 2011. The Group’s bank borrowings increased from $9.1 million at 31 December 2010 to $16.2 million at 31 December 2011. The increase in bank borrowings arises mainly from trade financing required to support a project by a subsidiary and the consolidation of trade financing loan of $1.0 million for NxGen.

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Group Financial Review (cont’d)

2. Liquidity and Capital Resources (cont’d)

Net cash decreased by $11.1 million from $25.4 million at 31 December 2010 to $14.3 million at 31 December 2011 after the $7.4 million payment of final consideration on S&I acquisition. Net cash per share decreased by 43% from 5.6 cents per share in FY2010 to 3.2 cents per share in FY2011.

Operating activities Cashflow from operating activities decreased from $3.1 million in FY2010 to $1.4 million in FY2011. Negative changes in working capital of $12.6 million in FY2011 were $1.9 million higher than previous year due to higher receivables and work in progress, mitigated by higher payables and lower inventories. Tax payments in FY2011 were $1.1 million higher than FY2010 with payments by S&I and higher tax for Engineering operations in Indonesia.

investing activities The cash outflow in FY2011 was due to the payment of final consideration of $7.4 million for the acquisition of S&I. This was offset by cash acquired from NxGen of $5.4 million. Purchase considerations for NxGen had yet to be paid. The cash outflow in FY2010 was mainly due to the initial net purcahse consideration paid for the acquisition of S&I of $7.5 million.

Financing activities Net cash outflow of $2.3 million in FY2011 was lower than the outflow of $6.5 million in FY2010. The lower outflow in FY2011 was mainly due to a trade financing loan taken to support a project by a subsidiary. This was offset by higher dividend and interest payments, and higher treasury shares purchased in FY2011 compared to the previous financial year.

3. Shareholders Returns

Fy2011 Fy2010 change (%)

Net dividends per share (cents) - ordinary 1.60 1.80 (11.1)

Dividends declared ($ million) 7.3 8.1 (9.9)

Dividend payout ratio (%) 110.6 65.3 45.3 ppt

Dividends yield (%) 7.4 7.2 0.2 ppt

Basic Earnings per share (cents) (1) 1.45 2.74 (47.1)

Return on equity (%) 9.1% 16.7% (7.6) ppt

Return on capital employed (%) 7.7% 14.9% (7.2) ppt

Return on total assets (%) 3.9% 9.2% (5.3) ppt

Notes: (1) The number of shares used for the purpose of calculating the EPS for FY2011 and FY2010 were 453,431,000 and 453,449,000 respectively.

Without the one-time impact from the revised FRS 103, the EPS would have been at 2.42 cents

For FY2011, the Company has propose the revised a final dividend of 1.6 cents per ordinary share or $7.3 million. This is 11% or $0.8 million lower than the 1.8 cents per ordinary share proposed for FY2010. Including the $7.3 million of dividend payout in May 2012, total dividend paid since listing in June 2004 will be 18.65 cents per share or $83.8 million. This represents 76% of earnings over the same period.

Year on year earnings per share decreased 47% from 2.74 cents to 1.45 cents. It would have been 2.42 cents per share if without the impact from the application of revised FRS 103.

Return on equity decreased from 16.7% to 9.1% in FY2011 while return on capital employed is 7.7% in FY2011 (FY2010: 14.9%) with lower earnings. Return on total assets of 3.9% (FY2010: 9.2%) were lower than FY2010 due to lower earnings with increase in asset base from S&I and NxGen.

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TeleChoice International LimitedAnnual Report 2011

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Directors’ Report

We are pleased to submit this annual report to the members of the Company together with the audited financial statements for the financial year ended 31 December 2011.

Directors

The directors in office at the date of this report are as follows:

Bertie Cheng

Yap Boh Pin

Yen Se-Hua Stewart

Tang Yew Kay Jackson

Lee Theng Kiat

Sio Tat Hiang

Lim Chai Hock Clive

Kwek Buck Chye (Alternate to Lee Theng Kiat)

Directors’ interests

According to the register kept by the Company for the purposes of Section 164 of the Companies Act, Chapter 50 (the Act), particulars of interests of directors who held office at the end of the financial year (including those held by their spouses and infant children) in shares, debentures, warrants and share options in the Company and in related corporations (other than wholly-owned subsidiaries) are as follows:

Holdings at beginning of

the year

Holdings at end of

the year

Name of director and related corporations in which interests (fully paid ordinary shares unless otherwise stated) are held

The company

Ordinary shares

Bertie Cheng

- Held in the name of Hong Leong Finance Nominees Pte Ltd 500,000 500,000

Yap Boh Pin 150,000 150,000

Yen Se-Hua Stewart

- Held in the name of Advanced Guard Limited 150,000 150,000

Tang Yew Kay Jackson 100,000 100,000

Sio Tat Hiang 150,000 150,000

Lim Chai Hock Clive 1,300,000 1,300,000

- Held in the name of Leap International Pte Ltd 88,198,000 88,198,000

Kwek Buck Chye 150,000 150,000

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Directors’ Report (cont’d)

Holdings at beginning of

the year

Holdings at end of

the year

Name of director and related corporations in which interests (fully paid ordinary shares unless otherwise stated) are held

Related corporations

cityspring infrastructure management Pte ltd

unitholdings in cityspring infrastructure Trust

Kwek Buck Chye 30,000 30,000

i-sTT investments Pte. ltd.

Ordinary shares

Lee Theng Kiat

- Held in trust for STT Communications Ltd 1 1

singapore Technologies engineering ltd

Ordinary shares

Bertie Cheng 3,648 12,242

- Held in the name of Hong Leong Finance Nominees Pte Ltd 137,000 164,000

Kwek Buck Chye 14,000 –

Options to subscribe for ordinary shares

Bertie Cheng

- Exercisable between 11.08.2007 and 10.08.2011 at $2.84 each 27,000 –

- Exercisable between 16.03.2008 and 15.03.2012 at $3.23 each 27,000 27,000

- Exercisable between 11.08.2008 and 10.08.2012 at $3.61 each 27,000 27,000

unvested restricted shares (performance period 01.01.2008 to 31.12.2008) 1

Bertie Cheng 1,758 –

1 Balance of unvested restricted shares to be released according to the stipulated vesting periods.

unvested restricted shares (performance period 01.01.2009 to 31.12.2009) 2

Bertie Cheng 4,274 2,138

2 Balance of unvested restricted shares to be released according to the stipulated vesting periods.

Directors’ interests (cont’d)

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Directors’ Report (cont’d)

Holdings at beginning of

the year

Holdings at end of

the year

Name of director and related corporations in which interests (fully paid ordinary shares unless otherwise stated) are held

Related corporations (cont’d)

singapore Technologies engineering ltd (cont’d)

Time-based restricted shares to be delivered after 2010 3

Bertie Cheng 8,000 –

3 The shares under the time-based restricted award were awarded in March 2011.

singapore Telecommunications limited

Ordinary shares

Bertie Cheng 2,720 2,720

Yap Boh Pin 1,550 1,550

Tang Yew Kay Jackson 2,850 2,850

Lee Theng Kiat 1,610 1,610

Sio Tat Hiang 1,490 –

Kwek Buck Chye 3,027 3,027

smRT corporation ltd

Ordinary shares

Lim Chai Hock Clive – 100,000

- Held in the name of Leap International Pte Ltd 1,000,000 1,000,000

starHub ltd

Ordinary shares

Lee Theng Kiat 173,230 205,354

Kwek Buck Chye 834,840 763,070

unvested restricted shares (performance period 01.01.2007 to 31.12.2008) 4

Lee Theng Kiat 7,024 –

Kwek Buck Chye 25,780 –

4 Balance of unvested restricted shares to be released according to the stipulated vesting periods.

Directors’ interests (cont’d)

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Directors’ Report (cont’d)

Holdings at beginning of

the year

Holdings at end of

the year

Name of director and related corporations in which interests (fully paid ordinary shares unless otherwise stated) are held

Related corporations (cont’d)

starHub ltd (cont’d)

conditional award granted under the 2008 starHub Performance share Plan 5

Kwek Buck Chye 80,000 –

5 The actual number of shares to be delivered under the award wil l depend on the level of achievement of the set performance targets in StarHub Ltd over a three-year period from 1 January 2008 to 31 December 2010. No shares will be delivered if the threshold performance targets are not achieved, while up to twice the number of shares that are the subject of the award will be delivered if the stretched performance targets are met or exceeded.

unvested restricted shares (performance period 01.01.2008 to 31.12.2009) 6

Lee Theng Kiat 4,768 2,268

Kwek Buck Chye 23,900 11,900

6 Balance of unvested restricted shares to be released according to the stipulated vesting periods.

conditional award granted under the 2009 starHub Performance share Plan 7

Kwek Buck Chye 80,000 80,000

7 The actual number of shares to be delivered under the award wil l depend on the level of achievement of the set performance targets in StarHub Ltd over a three-year period from 1 January 2009 to 31 December 2011. No shares will be delivered if the threshold performance targets are not achieved, while up to twice the number of shares that are the subject of the award will be delivered if the stretched performance targets are met or exceeded.

conditional award granted under the 2009 starHub Restricted stock Plan 8

Lee Theng Kiat 15,800 –

Kwek Buck Chye 59,000 34,130

8 The actual number of shares to be delivered under the award wil l depend on the level of achievement of the set performance targets in StarHub Ltd over a two-year period from 1 January 2009 to 31 December 2010. No shares will be delivered if the threshold performance targets are not achieved, while up to 1.5 times the number of shares that are the subject of the award will be delivered if the stretched performance targets are met or exceeded. Shares will be delivered in phases according to the stipulated vesting periods.

Directors’ interests (cont’d)

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Directors’ Report (cont’d)

Holdings at beginning of

the year

Holdings at end of

the year

Name of director and related corporations in which interests (fully paid ordinary shares unless otherwise stated) are held

Related corporations (cont’d)

starHub ltd (cont’d)

unvested restricted shares (performance period 01.01.2009 to 31.12.2010) 9

Lee Theng Kiat – 9,146

9 Balance of unvested restricted shares to be released according to the stipulated vesting periods.

conditional award granted under the 2010 starHub Performance share Plan 10

Kwek Buck Chye 92,000 92,000

10 The actual number of shares to be delivered under the award wil l depend on the level of achievement of the set performance targets in StarHub Ltd over a three-year period from 1 January 2010 to 31 December 2012. No shares will be delivered if the threshold performance targets are not achieved, while up to twice the number of shares that are the subject of the award will be delivered if the stretched performance targets are met or exceeded.

conditional award granted under the 2010 starHub Restricted stock Plan 11

Kwek Buck Chye 59,000 59,000

11 The actual number of shares to be delivered under the award wil l depend on the level of achievement of the set performance targets in StarHub Ltd over a two-year period from 1 January 2010 to 31 December 2011. No shares will be delivered if the threshold performance targets are not achieved, while up to 1.5 times the number of shares that are the subject of the award will be delivered if the stretched performance targets are met or exceeded. Shares will be delivered in phases according to the stipulated vesting periods.

conditional award granted under the 2011 starHub Performance share Plan 12

Kwek Buck Chye – 121,900

12 The actual number of shares to be delivered under the award wil l depend on the level of achievement of the set performance targets in StarHub Ltd over a three-year period from 1 January 2011 to 31 December 2013. No shares will be delivered if the threshold performance targets are not achieved, while up to twice the number of shares that are subject of the award will be delivered if the stretched performance targets are met or exceeded.

Directors’ interests (cont’d)

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Directors’ Report (cont’d)

Holdings at beginning of

the year

Holdings at end of

the year

Name of director and related corporations in which interests (fully paid ordinary shares unless otherwise stated) are held

Related corporations (cont’d)

starHub ltd (cont’d)

conditional award granted under the 2011 starHub Restricted stock Plan 13

Kwek Buck Chye – 71,000

13 The actual number of shares to be delivered under the award wil l depend on the level of achievement of the set performance targets in StarHub Ltd over a two-year period from 1 January 2011 to 31 December 2012. No shares will be delivered if the threshold performance targets are not achieved, while up to 1.5 times the number of shares that are the subject of the award will be delivered if the stretched performance targets are met or exceeded. Shares will be delivered in phases according to the stipulated vesting periods.

Time-based restricted shares to be delivered after 2010 14

Lee Theng Kiat 18,000 –

14 The shares under the time-based restricted award were awarded in May 2011.

Vertex Technology Fund ltd

(Final meeting on 12 October 2011 and dissolved on 13 January 2012)

Ordinary shares of par value of us$1.00 each fully paid

Kwek Buck Chye

- Held in the name of HSBC Institutional Trust Services (Singapore) Limited 20 20

Vertex Technology Fund (ii) ltd

(Final meeting on 12 October 2011 and dissolved on 13 January 2012)

Ordinary shares of par value of us$1.00 each fully paid

Kwek Buck Chye

- Held in the name of DBS Vickers Securities Nominees (Singapore) Pte Ltd 80 80

Redeemable preference shares of us$0.01 each fully paid

Kwek Buck Chye

- Held in the name of DBS Vickers Securities Nominees (Singapore) Pte Ltd 76.59 76.59

Directors’ interests (cont’d)

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Directors’ Report (cont’d)

Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares, debentures, warrants or share options of the Company, or of related corporations, either at the beginning or at the end of the financial year.

There were no changes in any of the above mentioned interests in the Company between the end of the financial year and 21 January 2012.

Except as disclosed under the “Share Options” section of this report, neither at the end of, nor at any time during the financial year, was the Company a party to any arrangement whose objects are, or one of whose objects is, to enable the directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

Except for salaries, bonuses and fees and those benefits that are disclosed in Notes 25 and 28 to the financial statements, since the end of the last financial year, no director has received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporation with the director or with a firm of which he is a member or with a company in which he has a substantial financial interest.

Equity Compensation Benefits

a) Share options

The TeleChoice Pre-IPO Share Option Scheme (the “Pre-IPO Scheme”) and the TeleChoice Post-IPO Employee Share Option Scheme (the “Post-IPO Scheme”) (collectively referred to as the “Schemes”), were approved and adopted by the members at an Extraordinary General Meeting of the Company held on 7 May 2004.

Pre–IPO Scheme

Information regarding the Pre-IPO Scheme is set out below:

(i) The Pre-IPO Scheme is administered by the Company’s Remuneration Committee comprising three directors, namely Bertie Cheng, Yen Se-Hua Stewart and Lee Theng Kiat (the “Committee”).

(ii) On 18 May 2004, the Company granted share options to management and employees of the Company, STT Communications Ltd (“STTC”), its immediate holding company, and the subsidiaries of STTC and certain non-executive directors of the Company (collectively referred to as the “Eligible Persons”) to subscribe for an aggregate of 20,000,000 shares of the Company.

(iii) Eligible Persons are entitled to exercise the share options subject to the following vesting periods:

Vesting schedulePercentage of shares over which

an Option is exercisable (%)

On the date falling twelve months from 18 May 2004 25

On the date falling twenty-four months from 18 May 2004 25

On the date falling thirty-six months from 18 May 2004 25

On the date falling forty-eight months from 18 May 2004 25

(iv) The exercise price for each option is $0.2079. Options granted to non-executive directors (including independent directors) have a life span of five years. Options granted to the Eligible Persons (other than the non-executive directors) have a life span of ten years.

Directors’ interests (cont’d)

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Directors’ Report (cont’d)

Post – IPO Scheme

Information regarding the Post-IPO Scheme is set out below:

(i) The Post-IPO Scheme is administered by the Committee.

(ii) The eligible participants of the Post-IPO Scheme are:

• executive and non-executive directors and employees of the Company and its subsidiaries and associated companies.

• executive and non-executive directors and employees of STTC and its subsidiaries.

• controlling shareholders of the Company and the associates of the controlling shareholders.

(iii) The nominal amount of the aggregate number of shares over which the Committee may grant options on any date, when aggregated with the nominal amount of the number of shares issued and issuable in respect of all options granted under the Post-IPO Scheme and other share option schemes of the Company, shall not exceed 15% of the issued and paid-up share capital of the Company on the day preceding the date of the relevant grant.

(iv) Under the Post-IPO Scheme, the exercise price for each ordinary shares in respect of which an option is exercisable is determined by the Committee in its absolute discretion on the date of grant at a maximum discount of 20% to market price determined to be the average of the last dealt prices for the shares on the Main Board of the Singapore Exchange Securities Trading Limited (“SGX-ST”) for the five consecutive market days immediately preceding the relevant date of grant of the relevant option.

(v) The vesting period of the options granted under the Post-IPO Scheme is between one and two years.

(vi) The exercise price of the options granted under the Post-IPO Scheme shall not be less than $0.02.

At the end of the financial year, there were no outstanding options granted under the Schemes to directors on the unissued ordinary shares of the Company.

Since the commencement of the Schemes, no options have been granted to STTC or the subsidiaries of STTC.

Since the commencement of the Schemes, no options have been granted to directors or employees of the Company, STTC or the subsidiaries of STTC under the Scheme, except for 40 employees of the Company, STTC and subsidiaries of STTC, who were granted options to subscribe for an aggregate of 20,000,000 ordinary shares in the Company.

As at the end of the financial year, unissued shares of the Company under the Pre-IPO Scheme are as follows:

Number of option holders

exercise priceper share

Number ofunissued shares

exercise period

1 $0.2079 25,000 18/5/2005 - 17/5/2014

1 $0.2079 25,000 18/5/2006 - 17/5/2014

3 $0.2079 93,000 18/5/2007 - 17/5/2014

4 $0.2079 437,500 18/5/2008 - 17/5/2014

580,500

Except as disclosed above, there were no unissued shares of the Company or its subsidiaries under options granted by the Company or its subsidiaries as at the end of the financial year.

Equity Compensation Benefits (cont’d)

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Directors’ Report (cont’d)

b) Long Term Incentive Plans

The TeleChoice Restricted Share Plan (the “TeleChoice RSP”) and TeleChoice Performance Share Plan (the “TeleChoice PSP”) (collectively referred to as the “Plans”), were approved and adopted by the members at an Extraordinary General Meeting of the Company held on 27 April 2007.

Information regarding the Plans is set out below:

(i) The Plans were established with the objective of motivating senior executives to strive for superior performance and sustaining long-term growth for the Company.

(ii) The Plans are administered by the Committee.

(iii) The following persons (collectively referred to as the “Eligible Persons”) shall be eligible to participate in the Plans at the absolute discretion of the Committee:

• employees and non-executive directors of the Company and/or any of its subsidiaries;

• employees and non-executive directors of STTC and its subsidiaries, who may be seconded to render services and contribute to the success of the Group; and

• employees of associated companies.

(iv) Under the TeleChoice PSP, conditional awards of shares are granted. Awards represent the right of a participant to receive fully paid shares upon the participant achieving certain pre-determined performance targets which are set based on corporate objectives aimed at sustaining longer-term growth. After the awards vest, the shares comprised in the awards are issued at the end of the performance and/or service period once the Committee is, at its sole discretion, satisfied that the prescribed performance targets have been achieved.

The actual number of shares given will depend on the level of achievement of the prescribed performance targets over the performance period, currently prescribed to be a three-year period. No shares will be delivered if the threshold performance targets are not achieved, while up to 1.5 times the number of shares that are the subject of the award will be delivered if the stretched performance targets are met or exceeded.

(v) Under the TeleChoice RSP, conditional awards vest over a two-year period, once the Committee is, at its sole discretion, satisfied that the performance and extended service conditions are attained. The total number of shares to be awarded depends on the level of attainment of the performance targets. No shares will be delivered if the threshold performance targets are not achieved, while up to 1.3 times the number of shares that are the subject of the award will be delivered if the stretched performance targets are met or exceeded.

(vi) Since the commencement of the Plans to the financial year ended 31 December 2011, conditional awards aggregating 11,468,000 (2010: 8,660,000) shares have been granted under the aforesaid Plans, representing the number of shares to be delivered if the performance targets are achieved at “on-target” level. 1,878,587 shares under the Plans were awards released during the financial year ended 31 December 2011 (2010: 636,000 shares).

Equity Compensation Benefits (cont’d)

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Directors’ Report (cont’d)

At the end of the financial year, details of the awards granted under the Plans are as follows:

date of grant

awards granted

during the financial

year

awards released

during the financial

year

aggregate awards granted

since the commencement

of Plans to31 december 2011

aggregate awards released

since the commencement

of Plans to31 december 2011

aggregate awards

outstanding as at

31 december 2011

Telechoice RsP

1/06/2007 – 36,000 1,569,000 353,500 –

1/06/2008 – 184,500 1,471,000 369,000 184,500

1/06/2009 – 314,167 725,000 314,167 628,333

1/06/2010 – – 748,000 – 737,000

1/06/2011 1,944,000 – 1,944,000 – 1,944,000

Telechoice PsP

1/06/2007 – – 1,020,000 346,500 –

1/06/2008 – 1,343,920 1,533,000 1,343,920 –

1/06/2009 – – 797,000 – 797,000

1/06/2010 – – 797,000 – 797,000

1/06/2011 864,000 – 864,000 – 864,000

The vesting period of the awards granted under the Plans is between one to three years.

At the end of the financial year, set out below are the details of the participants who have been granted options under the Schemes and/or received awards granted under the Plans, which in aggregate, represent 5% or more of the aggregate of:

(i) the total number of new shares available under the Schemes and Plans collectively; and

(ii) the total number of existing shares delivered pursuant to options under the Schemes and awards released under the Plans collectively.

Equity Compensation Benefits (cont’d)

b) Long Term Incentive Plans (cont’d)

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Directors’ Report (cont’d)

Name of employee

aggregateawards granted

since the commencement

of Plans to31 december 2011

aggregateawards released

since the commencement

of Plans to31 december 2011

aggregateoptions granted

since the commencement

of Pre-iPO scheme to

31 december 2011

aggregateoptions exercised

since the commencement

of Pre-iPO scheme to

31 december 2011

Loh Sur Jin Andrew 3,580,000 1,071,900 – –

Lee Yoong Kin 1,683,000 440,797 – –

Ng Kwang Seng Steven 1,442,000 404,289 – –

Pauline Wong Mae Sum 1,900,000 483,134 850,000 637,500

Wong Loke Mei 531,000 90,666 1,000,000 1,000,000

Audit committee

The members of the Audit Committee during the year and at the date of this report are:

• Yap Boh Pin (Chairman), independent non-executive director

• Tang Yew Kay Jackson, independent non-executive director

• Sio Tat Hiang, non-executive director

The Audit Committee performs the functions specified in Section 201B of the Act, the SGX-ST Listing Manual and the best practices as set out in the SGX-ST Listing Manual and the Code of Corporate Governance.

The Audit Committee has held five meetings since the last directors’ report. In performing its functions, the Audit Committee met with the Company’s external and internal auditors to discuss the scope of their work, the results of their examination and evaluation of the Company’s internal accounting control system.

The Audit Committee also reviewed the following:

• assistance provided by the Company’s officers to the internal and external auditors;

• financial statements of the Group and the Company prior to their submission to the directors of the Company for adoption; and

• interested person transactions (as defined in Chapter 9 of the SGX-ST Listing Manual).

The Audit Committee has full access to management and is given the resources required for it to discharge its functions. It has full authority and the discretion to invite any director or executive officer to attend its meetings. The Audit Committee also recommends the appointment of the external auditors and reviews the level of audit and non-audit fees.

The Audit Committee is satisfied with the independence and objectivity of the external auditors and has recommended to the Board of Directors that the auditors, KPMG LLP, be nominated for re-appointment as auditors at the forthcoming Annual General Meeting of the Company.

Equity Compensation Benefits (cont’d)

b) Long Term Incentive Plans (cont’d)

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Directors’ Report (cont’d)

Auditors

The auditors, KPMG LLP, have indicated their willingness to accept re-appointment.

On behalf of the Board of Directors

_______________________________Bertie ChengDirector

_______________________________Yap Boh PinDirector

26 March 2012

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Statement by Directors

In our opinion:

(a) the financial statements set out on pages 51 to 116 are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2011 and the results, changes in equity and cash flows of the Group for the year ended on that date in accordance with the provisions of the Singapore Companies Act, Chapter 50 and Singapore Financial Reporting Standards; and

(b) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.

The Board of Directors has, on the date of this statement, authorised these financial statements for issue.

On behalf of the Board of Directors

_______________________________Bertie ChengDirector

_______________________________Yap Boh PinDirector

26 March 2012

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Independent Auditors’ ReportMembers of the Company TeleChoice International Limited

Report on the financial statements

We have audited the accompanying financial statements of TeleChoice International Limited (the Company) and its subsidiaries (the Group), which comprise the statements of financial position of the Group and the Company as at 31 December 2011, the income statement, statement of comprehensive income, statement of changes in equity and cash flow statement of the Group for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 51 to 116.

Management’s responsibility for the financial statements

Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act, Chapter 50 (the Act) and Singapore Financial Reporting Standards and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets.

Auditors’ responsibility

Our responsibility is to express an opinion on these financial statements based on our audit.We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements of the Group and the statement of financial position of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2011 and the results, changes in equity and cash flows of the Group for the year ended on that date.

Report on other legal and regulatory requirements

In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.

KPMG LLPPublic Accountants andCertified Public Accountants

Singapore26 March 2012

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Statements of Financial PositionAs at 31 December 2011

Group company

Note 2011 2010 2011 2010$’000 $’000 $’000 $’000

Non-current assetsProperty, plant and equipment 4 2,918 2,788 118 106Intangible assets 5 17,953 10,508 – –Subsidiaries 6 – – 37,018 27,494Jointly-controlled entity 7 1,062 1,371 955 955Deferred tax assets 8 549 430 155 95Unbilled receivables 295 2,907 – –Total non-current assets 22,777 18,004 38,246 28,650

current assetsInventories 9 21,958 29,999 13,940 23,026Work-in-progress 10 15,038 7,709 – –Trade and other receivables 11 79,745 44,708 27,429 15,421Cash and cash equivalents 16 30,874 34,687 11,064 19,213Total current assets 147,615 117,103 52,433 57,660Total assets 170,392 135,107 90,679 86,310

equityShare capital 17 21,840 21,782 21,840 21,782Reserves 18 50,457 52,440 35,749 39,801Total equity attributable to equity holders of the company 72,297 74,222 57,589 61,583Non-controlling interests 1,433 1,324 – –Total equity 73,730 75,546 57,589 61,583

Non-current liabilitiesDeferred tax liabilities 8 1,224 1,068 – –Financial liabilities 21 – 830 – –Accrued contingent consideration 19 5,444 – 5,444 –Total non-current liabilities 6,668 1,898 5,444 –

current liabilitiesBank overdrafts 16 385 193 – –Accrued contingent consideration 19 5,005 3,000 5,005 3,000Trade and other payables 20 60,859 39,298 19,949 14,783Financial liabilities 21 16,183 8,264 2,000 5,000Current tax payable 1,887 2,598 618 1,904Provision for warranties 22 275 297 74 40Deferred income 5,400 4,013 – –Total current liabilities 89,994 57,663 27,646 24,727Total liabilities 96,662 59,561 33,090 24,727

Total equity and liabilities 170,392 135,107 90,679 86,310

The accompanying notes form an integral part of these financial statements.

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Consolidated Income StatementYear ended 31 December 2011

Group

Note 2011 2010

$’000 $’000

Revenue 24 389,579 327,455

Cost of sales (347,987) (296,360)

Gross profit 41,592 31,095

Other income 878 429

Sales and marketing expenses (10,476) (5,222)

Administrative expenses (15,751) (11,264)

Other expenses (6,803) (552)

Results from operating activities 9,440 14,486

Finance income 25 198 94

Finance costs 25 (311) (19)

Net finance (costs)/income (113) 75

Share of (losses)/profit of a jointly-controlled entity (net of tax) (274) 131

Profit before income tax 25 9,053 14,692

Income tax expense 26 (2,053) (2,242)

Profit for the year 7,000 12,450

Profit attributable to:

Owners of the Company 6,577 12,424

Non-controlling interests 423 26

Profit for the year 7,000 12,450

earnings per share (cents)

Basic earnings per share (cents) 27 1.45 2.74

Diluted earnings per share (cents) 27 1.45 2.74

The accompanying notes form an integral part of these financial statements.

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Consolidated Statement of Comprehensive Income Year ended 31 December 2011

Group

2011 2010

$’000 $’000

Profit for the year 7,000 12,450

Other comprehensive income

Translation difference relating to financial statements of foreign subsidiaries (207) 140

Exchange differences on monetary items forming part of net investment in foreign operations (44) (240)

Income taxes on other comprehensive income – –

Other comprehensive income for the year, net of tax (251) (100)

Total comprehensive income for the year 6,749 12,350

Total comprehensive income attributable to:

Owners of the Company 6,334 12,324

Non-controlling interests 415 26

Total comprehensive income for the year 6,749 12,350

The accompanying notes form an integral part of these financial statements.

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Consolidated Statement of Changes in EquityYear ended 31 December 2011

attributable to owners of the company

Noteshare

capitalaccumulated

profitsGeneral reserve

capital reserves

Goodwill written

off

share option

reserve

Reserve for

own shares

exchange translation

reserve Total

Noncontrolling

interestsTotal

equity

Group $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

At 1 January 2010 21,707 33,625 27 17,591 (2,105) 355 (21) (1,587) 69,592 39 69,631

Total comprehensive income for the year

Profit for the year – 12,424 – – – – – – 12,424 26 12,450

Other comprehensive income

Translation differences relating to financial statements of foreign subsidiaries – – – – – – – 140 140 – 140

Exchange differences on monetary items forming part of net investment in foreign operations – – – – – – – (240) (240) – (240)

Total other comprehensive income – – – – – – – (100) (100) – (100)

Total comprehensive income for the year – 12,424 – – – – – (100) 12,324 26 12,350

Transactions with owners of the company, recognised directly in equity

contributions by and distributions to owners of the company

Issue of 300,000 ordinary shares at exercise price of $0.2079 per share under share option scheme 23 62 – – – – – – – 62 – 62

Share-based payments expenses – – – – – 316 – – 316 – 316

Share options exercised 13 – – – – (13) – – – – –

Purchase of treasury shares – – – – – – (136) – (136) – (136)

Issue of treasury shares – – – – – (145) 145 – – – –

Final dividend of 1.75 cents per share (one-tier tax exempt) – (7,936) – – – – – – (7,936) – (7,936)

Total contributions by and distributions to owners of the Company 75 (7,936) – – – 158 9 - (7,694) – (7,694)

changes in ownership interests in subsidiaries

Acquisition of non-controlling interests with a change in control 30 – – – – – – – – – 1,259 1,259

Total changes in ownership interests in subsidiaries – – – – – – – – – 1,259 1,259

Total transactions with owners of the Company 75 (7,936) – – – 158 9 – (7,694) 1,259 (6,435)

At 31 December 2010 21,782 38,113 27 17,591 (2,105) 513 (12) (1,687) 74,222 1,324 75,546

The accompanying notes form an integral part of these financial statements.

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TeleChoice International LimitedAnnual Report 2011

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Consolidated Statement of Changes in Equity (cont’d)Year ended 31 December 2011

attributable to owners of the company

Noteshare

capitalaccumulated

profitsGeneral reserve

capital reserves

Goodwill written

off

share option

reserve

Reserve for

own shares

exchange translation

reserve Total

Noncontrolling

interestsTotal

equity

Group $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

At 1 January 2011 21,782 38,113 27 17,591 (2,105) 513 (12) (1,687) 74,222 1,324 75,546

Total comprehensive income for the year

Profit for the year – 6,577 – – – – – – 6,577 423 7,000

Other comprehensive income

Translation differences relating to financial statements of foreign subsidiaries – – – – – – – (199) (199) (8) (207)

Exchange differences on monetary items forming part of net investment in foreign operations – – – – – – – (44) (44) – (44)

Total other comprehensive income – – – – – – – (243) (243) (8) (251)

Total comprehensive income for the year – 6,577 – – – – – (243) 6,334 415 6,749

Transactions with owners of the company, recognised directly in equity

contributions by and distributions to owners of the company

Issue of 227,500 ordinary shares at exercise price of $0.2079 per share under share option scheme 23 48 – – – – – – – 48 – 48

Share-based payments expenses – – – – – 318 – – 318 – 318

Share options exercised 10 – – – – (10) – – – – –

Purchase of treasury shares – – – – – – (473) – (473) – (473)

Issue of treasury shares – – – (139) – (344) 483 – – – –

Final dividend of 1.8 cents per share (one-tier tax exempt) – (8,146) – – – – – – (8,146) – (8,146)

Dividend declared by a subsidiary to non-controlling interest – – – – – – – – – (380) (380)

Total contributions by and distributions to owners of the Company 58 (8,146) – (139) – (36) 10 – (8,253) (380) (8,633)

changes in ownership interests in subsidiaries

Purchase and cancellation of outstanding shares from non-controlling interests – (6) – – – – – – (6) 6 –

Capital contribution from non-controlling interests – – – – – – – – – 68 68

Total changes in ownership interests in subsidiaries – (6) – – – – – – (6) 74 68

Total transactions with owners of the Company 58 (8,152) – (139) – (36) 10 – (8,259) (306) (8,565)

At 31 December 2011 21,840 36,538 27 17,452 (2,105) 477 (2) (1,930) 72,297 1,433 73,730

The accompanying notes form an integral part of these financial statements.

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Consolidated Cash Flow Statement Year ended 31 December 2011

Group

Note 2011 2010

$’000 $’000

Operating activities

Profit before income tax 9,053 14,692

Adjustments for:

Amortisation of intangible assets 1,748 339

Depreciation of property, plant and equipment 1,397 954

Interest expense 311 19

Interest income (198) (94)

Loss/(gain) on disposal of property, plant and equipment and intangible assets 84 (8)

Loss on disposal of a subsidiary 135 –

Additional contingent consideration paid on business combination 4,418 –

Provision for warranties (14) 85

Share-based payments expenses 318 316

Share of losses/(profits) of a jointly-controlled entity 274 (131)

17,526 16,172

Changes in working capital:

Inventories and work-in-progress 1,562 (10,127)

Trade and other receivables (24,741) (6,871)

Trade and other payables 10,401 6,532

Changes in deferred income 183 (256)

Cash generated from operations 4,931 5,450

Income taxes paid (3,524) (2,372)

cash flows from operating activities 1,407 3,078

investing activities

Proceeds from disposal of property, plant and equipment 4 60

Payment of contingent consideration (7,418) –

Acquisition of subsidiary, net of cash acquired 30 5,425 (7,483)

Purchase of intangible assets and property, plant and equipment (1,292) (1,325)

Capital contribution from non-controlling interests 68 –

Interest received 198 94

cash flows from investing activities (3,015) (8,654)

Balance carried forward (1,608) (5,576)

The accompanying notes form an integral part of these financial statements.

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Consolidated Cash Flow Statement (cont’d)Year ended 31 December 2011

Group

Note 2011 2010

$’000 $’000

Balance brought forward (1,608) (5,576)

Financing activities

Balances with related corporations (non-trade) (10) 33

Dividend paid (8,146) (7,936)

Interest paid (263) (19)

Proceeds from short-term bank loans 21,145 5,000

Repayment of short-term loans (14,640) (3,530)

Purchase of treasury shares (473) (136)

Proceeds from issue of shares under share option scheme 48 62

cash flows from financing activities (2,339) (6,526)

Net decrease in cash and cash equivalents (3,947) (12,102)

Cash and cash equivalents at beginning of the year 34,494 46,642

Effect of exchange rate changes on balances held in foreign currency (58) (46)

cash and cash equivalents at end of the year 16 30,489 34,494

The accompanying notes form an integral part of these financial statements.

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Notes to the Financial Statements

These notes form an integral part of the financial statements.

The financial statements were authorised for issue by the Board of Directors on 26 March 2012.

1. Domicile and activities

TeleChoice International Limited (the “Company” or “TeleChoice”) is incorporated in the Republic of Singapore and has its place of business at 5 Clementi Loop Level 2M, Singapore 129816.

The principal activities of the Company during the financial year are investment holding and those of wholesalers, retailers, suppliers, importers, exporters, distributors, agents and dealers of mobile phones, prepaid cards, radio and telecommunication equipment and accessories and the provision of related services. The principal activities of the subsidiaries are set out in Note 6 to the financial statements respectively.

The immediate and ultimate holding companies are STT Communications Ltd (“STTC”) and Temasek Holdings (Private) Limited, respectively. These companies are incorporated in the Republic of Singapore.

The consolidated financial statements relate to the Company and its subsidiaries (referred to as the “Group”) and the Group’s interest in a jointly-controlled entity.

2. Basis of preparation

2.1 Statement of compliance

The financial statements are prepared in accordance with Singapore Financial Reporting Standards (FRS).

2.2 Basis of measurement

The financial statements have been prepared on the historical cost basis except as disclosed in the accounting policies set out below.

2.3 Functional and presentation currency

These financial statements are presented in Singapore dollars, which is the Company’s functional currency. All financial information presented in Singapore dollars has been rounded to the nearest thousand, unless otherwise stated.

2.4 Use of estimates and judgements

The preparation of financial statements in conformity with FRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying amounts of assets and liabilities that are not readily apparent from other sources.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

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Notes to the Financial Statements (cont’d)

In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are described in the following notes:

• Note 5 Accuracy of intangible assets and residual goodwill capitalised arising from the purchase price allocation exercise

• Note 6 Accuracy of contingent consideration included in the cost of investments in subsidiaries

• Note 9 Valuation of inventories

• Note 11 Valuation of receivables

The accounting policies set out below have been applied consistently by the Group. The accounting policies used by the Group have been applied consistently to all periods presented in these financial statements.

2.5 Changes in accounting policies

Measurement of non-controlling interests in business combinations

From 1 January 2011, the Group has applied the amendments to FRS 103 Business Combinations resulting from the Improvements to FRSs 2010 in measuring at the acquisition date, non-controlling interests that are not present ownership interests and do not entitle their holders to a proportionate share of the acquiree’s net assets in the event of liquidation. Such non-controlling interests are now measured as fair value (see note 3.1).

Previously, the Group has elected on a transaction-by-transaction basis whether to measure non-controlling interests that are not present ownership interest and do not entitle holders to non-controlling interests’ proportionate share of the recognised amounts of the acquiree’s identifiable net assets at the acquisition date.

This change in accounting policy has been applied prospectively to new business combinations occurring on or after 1 January 2010 and has no material impact on earnings per share.

Identification of related party relationships and related party disclosures

From 1 January 2011, the Group has applied the revised FRS 24 Related Party Disclosures (2010) to identify parties that are related to the Group and to determine the disclosures to be made on transactions and outstanding balances, including commitments, between the Group and its related parties. FRS 24 (2010) improved the definition of a related party in order to eliminate inconsistencies and ensure symmetrical identification of relationships between two parties.

The adoption of FRS 24 (2010) does not have a material impact on the disclosures of transactions and outstanding balances, including commitments, with these related parties for the current and comparative years in Note 28 to the financial statements.

The adoption of FRS 24 (2010) affects only the disclosures made in the financial statements. There is no financial effect on the results and financial position of the Group for the current and previous financial years. Accordingly, the adoption of FRS 24 (2010) has no impact on earnings per share.

2. Basis of preparation (cont’d)

2.4 Use of estimates and judgements (cont’d)

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Notes to the Financial Statements (cont’d)

3. Summary of significant accounting policies

The financial statements have been prepared in accordance with Singapore Financial Reporting Standards (FRS), except as explained in note 2.5, which addresses changes in accounting policies.

3.1 Basis of consolidation

Business combinations

Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting rights that are currently exercisable.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in the income statement.

Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.

Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in the income statement.

For non-controlling interest that are present ownership interests and entitle their holders to a proportionate share of the acquiree’s net assets in the event of liquidation, the Group elects on a transaction-by-transaction basis whether to measure them at fair value, or at the non-controlling interest’s proportionate share of the recognised amounts of the acquiree’s identifiable net assets, at the acquisition date. All other non-controlling interests are measured at acquisition-date fair value or, when applicable, on the basis specified in another standard.

When share-based payment awards (replacement awards) are required to be exchanged for awards held by the acquiree’s employees (acquiree’s awards) and relate to past services, then all or a portion of the amount of the acquirer’s replacement awards is included in measuring the consideration transferred in the business combination. This determination is based on the market-based value of the replacement awards compared with the market-based value of the acquiree’s awards and the extent to which the replacement awards relate to past and/or future services.

Subsidiaries

Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Group. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interest even if doing so causes the non-controlling interests to have a deficit balance.

Acquisitions from entities under common control

Business combinations arising from transfers of interests in entities that are under the control of the shareholder that controls the Group are accounted for as if the acquisition had occurred at the beginning of the earliest comparative year presented or, if later, at the date that common control was established; for this purpose comparatives are restated. The assets and liabilities acquired are recognised at the carrying amounts recognised previously in the Group’s controlling shareholder’s consolidated financial statements. The components of equity of the acquired entities are added to the same components within Group equity and any gain/loss arising is recognised directly in equity.

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Notes to the Financial Statements (cont’d)

3. Summary of significant accounting policies (cont’d)

3.1 Basis of consolidation (cont’d)

Loss of control

Upon the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in the income statement. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence retained.

Investment in a jointly controlled entity

Joint ventures are those entities over whose activities the Group has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions.

Investment in a jointly controlled entity is accounted for using the equity method and is recognised initially at cost. The cost of the investment includes transaction costs.

The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of the jointly controlled entity, after adjustments to align the accounting policies of the jointly controlled entity with those of the Group, from the date that joint control commences until the date that joint control ceases.

When the Group’s share of losses exceeds its interest in the jointly controlled entity, the carrying amount of that interest, including any long-term investments, is reduced to zero and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the jointly controlled entity.

Acquisition of non-controlling interests

Acquisitions of non-controlling interests are accounted for as transactions with owners in their capacity as owners and therefore the carrying amounts of assets and liabilities are not changed and goodwill is not recognised as a result of such transactions. The adjustments to non-controlling interests are based on a proportionate amount of the net assets of the subsidiary. Any difference between the adjustment to non-controlling interests and the fair value of consideration paid is recognised directly in equity and presented as part of equity attributable to owners of the Company.

Transactions eliminations on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with associates and joint ventures are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

Accounting for subsidiaries and jointly-controlled entity by the Company

Investments in subsidiaries and jointly-controlled entity are stated in the Company’s balance sheet at cost less accumulated impairment losses.

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Notes to the Financial Statements (cont’d)

3. Summary of significant accounting policies (cont’d)

3.2 Foreign currencies

Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated to the respective functional currencies of Group entities at rates of exchange closely approximated to those ruling at the balance sheet date. The functional currencies of the Group entities comprise Singapore Dollars, Indonesian Rupiah, United States Dollars, Ringgit Malaysia and Thai Baht. Translation differences are dealt with through the income statement.

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured in terms of historical cost are translated using the exchange rate at the date of the transaction. Foreign currency differences arising on the retranslation are recognised in the income statement, except for differences arising on the retranslation of available-for-sale equity instruments, a financial liability designated as a hedge of the net investment in a foreign operation that is effective, or qualifying cash flow hedges, which are recognised in other comprehensive income.

Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition of foreign operations, are translated to Singapore Dollars for consolidation at the rates of exchange ruling at the balance sheet date. The results of foreign operations are translated at the average exchange rates for the year.

Foreign currency differences are recognised in other comprehensive income, and presented in the foreign currency translation reserve in equity. However, if the foreign operation is a non-wholly-owned subsidiary, then the relevant proportionate share of the translation difference is allocated to non-controlling interests. When a foreign operation is disposed of such that control or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to income statement as part of the gain or loss on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of its investment in a joint venture that includes a foreign operation while retaining joint control, the relevant portion of the cumulative amount is reclassified to income statement.

Net investment in a foreign operation

Exchange differences arising from monetary items that in substance form part of the Company’s net investment in a foreign operation are recognised in the Company’s income statement. Such exchange differences are reclassified to equity in the consolidated financial statements. When the hedged net investment is disposed of, the cumulative amount in equity is transferred to the income statement as an adjustment to the consolidated income statement arising on disposal.

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Notes to the Financial Statements (cont’d)

3. Summary of significant accounting policies (cont’d)

3.3 Property, plant and equipment

Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses.

Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located and capitalised borrowing costs. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

When parts of an item of property, plant and equipment have different useful lives they are accounted for as separate items (major components) of property, plant and equipment.

Gains and losses arising from the retirement or disposal of property, plant and equipment are determined as the difference between the estimated net disposal proceeds and the carrying amount of the asset and are recognised in the income statement on the date of retirement or disposal.

Subsequent costs

The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that future economic benefits embodied within the component will flow to the Group and its cost can be measured reliably. The carrying amount of the replaced component is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in income statement as incurred.

Depreciation

Depreciation is recognised in income statement on a straight-line basis so as to write off items of property, plant and equipment, and major components that are accounted for separately, over their estimated useful lives, as follows:

Leasehold improvements - 2 to 5 yearsBase station renovations - 5 yearsPlant and equipment - 1 to 5 yearsOffice furniture, fittings and equipment - 2 to 5 yearsComputers - 2 to 3 yearsMotor vehicles - 5 years

Depreciation methods, useful lives and residual values are reviewed and adjusted as appropriate, at each reporting date.

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Notes to the Financial Statements (cont’d)

3. Summary of significant accounting policies (cont’d)

3.4 Intangible assets

Retail business infrastructure

Retail business infrastructure acquired in a business combination represents the partnership agreement with a major customer. The retail business infrastructure is amortised in the income statement on a straight-line basis over 3 years, from the date of the agreement.

Customer and distributor network

Customer and distributor network acquired in a business combination represents the network of customers and agents for the telecommunication services. Amortisation is charged to the income statement over 5 years on a straight-line basis commencing from the date of the business combination. In 2007, this has been reclassified to goodwill. In 2008, this goodwill has been fully impaired.

Retail leases rights

The expenditure incurred represents the right to operate certain retail outlets arising from a business transfer agreement entered with a third party. Retail leases rights are amortised in the income statement on a straight-line basis over the period of the operating leases of the retail outlets. In 2011, the retail leases rights have been written off.

Order backlogs

Order backlogs acquired in a business combination represent the contracts and confirmed purchase orders yet to be fulfilled. Order backlogs are amortised to the income statement over the contractual time taken to fulfill the customer orders.

Customer relationships

Customer relationships acquired in a business combination represent the network of customers where the Group has established relationships with the customers particularly in the financial services industry through contracts. Amortisation for customer relationship is recognised in the income statement on a straight-line basis over 5 to 7 years, commencing from the date of acquisition.

Goodwill

Goodwill that arises upon the acquisition of subsidiaries is included in intangible assets and represents the excess of:

• the fair value of the consideration transferred; plus

• the recognised amount of any non-controlling interests in the acquiree; plus

• if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree,

over the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed. When the excess is negative, a bargain purchase gain is recognised immediately in income statement.

Subsequent measurement

Goodwill is measured at cost less accumulated impairment losses and is subjected to testing for impairment, as described in note 3.9.

Other intangible assets

Other intangible assets comprised computer software are stated at cost less accumulated amortisation and impairment losses. Amortisation is charged to the income statement over their estimated useful lives on a straight-line basis commencing from the date the asset is available for use.

The estimated useful lives of computer software are 2 to 5 years.

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Notes to the Financial Statements (cont’d)

3. Summary of significant accounting policies (cont’d)

3.5 Inventories

Inventories, including consignment stocks held for sales at convenience stores, are stated at the lower of cost and net realisable value. Cost is determined on the first-in-first-out basis or specified identification method.

Net realisable value is the estimated selling price in the ordinary course of business less estimated costs of completion and estimated costs necessary to make the sale.

When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in which the related revenue is recognised. The amount of any allowance for write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any allowance for write-down of inventories, arising from an increase in net realisable value, is recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

3.6 Work in progress

Work-in-progress comprises uncompleted network engineering contracts. Project work-in-progress is accounted for under the percentage of completion method. The stage of completion is assessed by reference to surveys of work performed.

Work-in-progress is measured at cost plus attributable profit recognised to date, net of progress billings and allowances for foreseeable losses recognised, and is presented in the balance sheet as construction work-in-progress (as an asset) or as excess of progress billings over construction work-in-progress (as a liability), as applicable.

Costs include cost of direct materials, direct labour and costs incurred in connection with the construction.

Progress claims not yet paid by the customer are included in the balance sheet under progress billing receivables.

3.7 Financial assets

A financial asset is recognised if the Group becomes a party to the contractual provisions of the asset. Financial assets are derecognised if the Group’s contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial asset to another party without retaining control or transfers substantially all the risks and rewards of the asset. Regular way purchases and sales of financial assets are accounted for at trade date, i.e., the date that the Group commits itself to purchase or sell the asset.

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

The Group classifies its non-derivative financial assets as loans and receivables.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are recognised initially at fair value plus, for financial assets not at fair value through profit or loss, any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are subsequently measured at amortised cost using the effective interest method, less any impairment losses.

Loans and receivables comprise unbilled receivables, trade and other receivables and cash and cash equivalents.

Cash and cash equivalents comprise cash balances, bank deposits and bank overdraft. For the purpose of the consolidated statement of cash flows, cash and cash equivalents are presented net of bank overdrafts which are repayable on demand and which form an integral part of the Group’s cash management.

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Notes to the Financial Statements (cont’d)

3. Summary of significant accounting policies (cont’d)

3.8 Impairment of financial assets

A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event has a negative effect on the estimated future cash flows of that asset that can be estimated reliably.

An impairment loss in respect of loans and receivables is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate.

The Group considers evidence of impairment for loans and receivables at both a specific asset and collective level. All individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.

All impairment losses are recognised in the income statement. Any impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised in the income statement.

3.9 Impairment of non-financial assets

The carrying amounts of the Group’s non-financial assets other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the assets’ recoverable amounts are estimated. Goodwill and other non-financial assets with infinite useful lives or not available for use, are tested for impairment at each reporting date.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that are largely independent from other assets and groups. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash-generating unit.

Subject to an operating segment ceiling test, for the purposes of goodwill impairment testing, cash-generating units to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. Goodwill acquired in a business combination is allocated to groups of cash-generating units that are expected to benefit from the synergies of the combination.

Impairment losses are recognised in the income statement unless it reverses a previous revaluation, credited to equity, in which case it is charged to equity. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

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Notes to the Financial Statements (cont’d)

3. Summary of significant accounting policies (cont’d)

3.10 Share capital

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects.

Where share capital recognised as equity is repurchased and held as treasury shares, the amount of the consideration paid, including directly attributable costs, net of any tax effects, is presented as a deduction from equity. Where such shares are subsequently reissued, sold or cancelled, the consideration received is recognised as a change in equity. No gain or loss is recognised in the income statement.

3.11 Financial liabilities

A financial liability is recognised if the Group becomes a party to the contractual provisions of the liability. Financial liabilities are derecognised if the Group’s obligations specified in the contract expire or are discharged or cancelled.

Financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method.

3.12 Intra-group financial guarantees

Financial guarantee contracts are accounted for as insurance contracts. A provision is recognised based on the Company’s estimate of the ultimate cost of settling all claims incurred but unpaid at the reporting date. The provision is assessed by reviewing individual claims and tested for adequacy by comparing the amount recognised and the amount that would be required to settle the guarantee contract.

3.13 Leases

Finance leases – Group as a lessor

Leased assets in which the Group transfers substantially all the risk and rewards of ownership to the lessee are classified as finance lease.

The leased asset is derecognised and the present value of the lease receivable (net of initial direct costs for negotiating and arranging the lease) is recognised on the balance sheet and included in “trade and other receivables”. The difference between the gross receivables and the present value of the lease receivable is recognized as unearned finance income.

Each lease payment received is applied against the gross investment in the finance lease receivable to reduce both the principal and unearned finance income. The finance income is recognised in the income statement on the basis that reflects a constant periodic rate of return on the net investment in the finance lease receivable.

Initial direct costs incurred by the Group in negotiating and arranging finance lease are added to finance lease receivables and recognised as an expense in the income statement over the lease term on the same basis as the lease income.

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Notes to the Financial Statements (cont’d)

3. Summary of significant accounting policies (cont’d)

3.13 Leases (cont’d)

Finance leases – Group as a lessee

Finance leases are those leasing agreements that give rights approximating to ownership. Property, plant and equipment acquired by way of such leases is capitalised at the lower of its fair value and the present value of the minimum lease payments at the inception of the lease, less accumulated depreciation and impairment losses.

Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability.

Finance charges are charged directly to the income statement.

Capitalised leased assets are depreciated over the shorter of the economic useful life of the asset and the lease term.

Operating leases

Where the Group has the use of assets under operating leases, payments made under the leases are recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised in the income statement as an integral part of the total lease payments made. Contingent rentals are charged to the income statement in the accounting period in which they are incurred.

3.14 Employee benefits

Defined contribution plans

Contributions to defined contribution plans are recognised as an expense in the income statement when incurred.

Employee leave entitlements

Employees’ entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for the annual leave as a result of services rendered by the employees up to the balance sheet date.

Share-based payments

Share option plans

The share option schemes allow the Group employees to acquire shares of the Company. The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. At each balance sheet date, the Company revises its estimates of the number of options that are expected to become exercisable. It recognises the impact of the revision of original estimates in employee expense and in a corresponding adjustment to equity over the remaining vesting period. The proceeds received net of any directly attributable transactions costs are credited to share capital (nominal value) when the options are exercised.

The share option reserve is transferred to retained earnings upon cancellation or expiry of the vested option or awards. When the options are exercised or awards are released, the share option reserve is transferred to share capital if new shares are issued.

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Notes to the Financial Statements (cont’d)

3. Summary of significant accounting policies (cont’d)

3.14 Employee benefits (cont’d)

Performance Share Plan and Restricted Stock Plan

The Performance Share Plan and the Restricted Stock Plan are accounted as equity-settled share-based payments. Equity-settled share-based payments are measured at fair value at the date of grant. The share-based expense is amortised and recognised in the income statement on a straight-line basis over the vesting period. At each balance sheet date, the Company revises its estimates of the number of shares that the participating employees and directors are expected to receive based on non-market vesting conditions. The difference is charged or credited to the income statement, with a corresponding adjustment to equity over the remaining vesting period.

The fair value of the options granted to employees of its subsidiaries is recognised as an increase in the cost of the Company’s investment in subsidiaries, with a corresponding increase recorded in equity over the vesting period.

3.15 Provision for warranties

A provision is recognised in the balance sheet when there is a legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

The provision for warranties is based on estimates made from historical warranty data associated with similar products and services. Claims, when incurred, are charged against this provision.

3.16 Revenue recognition

Revenue is the fair value of the consideration received or receivable from the gross inflow of economic benefits during the period arising from the course of activities of the Group and is shown net of any related sales taxes, estimated returns, discount and volume rebates.

Revenue from sale of goods is recognised when significant risks and rewards of ownership are transferred to the buyer, there is neither continuing management involvement to the degree usually associated with ownership nor effective control over the goods sold, and the amount of revenue and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Revenue for consignment goods sold to convenience stores which have not been sold to consumers is deferred and presented in the balance sheet as deferred income.

Revenue from rendering of services that are short duration is recognised when the services are completed. Revenue from rendering of long-term services is recognised by reference to the stage of completion of the transaction at the end of the reporting period determined by services performed to date as a percentage of total services and the amount of revenue, stage of completion, and the costs incurred for the transaction and the costs to complete the transaction can be measured reliably.

Income on project work-in-progress is recognised using the percentage of completion method. When losses are expected, full provision is made after adequate allowance has been made for estimated costs to completion. The stage of completion is assessed by reference to surveys of work performed.

Revenue from sales of pre-paid phone cards and information technology maintenance services for which services have not been rendered is deferred and presented in the balance sheet as deferred income. Upon the expiry of pre-paid phone cards, any unutilised value of the cards is taken to income statement.

3.17 Finance income and finance costs

Interest income is recognised as it accrues, using the effective interest method, except where collection is contingent upon certain conditions being met, then such income is recognised when received.

Interest expense and similar charges are expensed in the income statement in the period in which they are incurred.

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Notes to the Financial Statements (cont’d)

3. Summary of significant accounting policies (cont’d)

3.18 Income tax

Income tax on the results for the year comprises current and deferred tax. Income tax is recognised in the income statement except for the tax effects of items recognised directly in equity, which are recognised in the statement of changes in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Temporary differences are not recognised for goodwill not deductible for tax purposes and the initial recognition of assets or liabilities that affect neither accounting nor taxable profit. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amounts of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

A deferred tax asset is recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred tax is provided on temporary differences arising on investments in subsidiaries, associates and jointly-controlled entities, except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not be reversed in the foreseeable future.

3.19 Segment reporting An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. All operating segments’ operating results are reviewed regularly by the Group’s President to make discussions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Inter-segment pricing is determined based on terms agreed between the segment concerned.

Segment capital expenditure comprises additions to property, plant and equipment and intangible assets.

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Notes to the Financial Statements (cont’d)

Group Note

leasehold improvements

$’000

base station renovations

$’000

Plant and equipment

$’000

Office furniture,

fittings and equipment

$’000computers

$’000

motorvehicles

$’000Total$’000

cost

At 1 January 2010 1,440 283 17,840 688 3,102 102 23,455

Translation differences on consolidation – – (4) (2) (4) 1 (9)

Additions 343 – 507 31 277 37 1,195

Disposals (188) (53) (7,325) (264) (818) – (8,648)

Acquisition through business combinations 30 313 – 54 53 68 – 488

Reclassifications/adjustments (7) – (143) 1 6 – (143)

At 31 December 2010 1,901 230 10,929 507 2,631 140 16,338

Translation differences on consolidation (4) – (21) – (17) (1) (43)

Additions 284 – 389 53 389 – 1,115

Disposals (220) – (932) (47) (535) – (1,734)

Acquisition through business combinations 30 81 – 344 38 9 – 472

Reclassifications – – 1 – – (1) –

Transfer to intangible assets 5 – – – – (191) – (191)

At 31 December 2011 2,042 230 10,710 551 2,286 138 15,957

accumulated depreciation

At 1 January 2010 1,225 283 16,089 645 2,859 94 21,195

Translation differences on consolidation (1) – 2 (3) (2) 1 (3)

Depreciation for the year 206 – 476 24 236 12 954

Disposals (186) (53) (7,279) (264) (814) – (8,596)

At 31 December 2010 1,244 230 9,288 402 2,279 107 13,550

Translation differences on consolidation (3) – (12) 1 (12) (1) (27)

Depreciation for the year 377 – 640 63 309 8 1,397

Disposals (201) – (928) (46) (531) – (1,706)

Transfer to intangible assets 5 – – – – (175) – (175)

At 31 December 2011 1,417 230 8,988 420 1,870 114 13,039

carrying amount

At 1 January 2010 215 – 1,751 43 243 8 2,260

At 31 December 2010 657 – 1,641 105 352 33 2,788

At 31 December 2011 625 – 1,722 131 416 24 2,918

4. Property, plant and equipment

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Notes to the Financial Statements (cont’d)

leasehold improvements

Office furniture,

fittings and equipment computers Total

company $’000 $’000 $’000 $’000

cost

At 1 January 2010 315 402 1,299 2,016

Additions 13 2 68 83

Disposals – (208) (391) (599)

At 31 December 2010 328 196 976 1,500

Additions 23 6 78 107

Disposals – (6) (164) (170)

At 31 December 2011 351 196 890 1,437

accumulated depreciation

At 1 January 2010 298 387 1,219 1,904

Depreciation for the year 24 7 57 88

Disposals – (208) (390) (598)

At 31 December 2010 322 186 886 1,394

Depreciation for the year 8 7 80 95

Disposals – (6) (164) (170)

At 31 December 2011 330 187 802 1,319

carrying amount

At 1 January 2010 17 15 80 112

At 31 December 2010 6 10 90 106

At 31 December 2011 21 9 88 118

4. Property, plant and equipment (cont’d)

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Notes to the Financial Statements (cont’d)

Notecomputersoftware

Retailbusiness

infrastructure

Retail leases rights

customer relationships

Order backlogs Goodwill Total

Group $’000 $’000 $’000 $’000 $’000 $’000 $’000

cost

At 1 January 2010 2,093 1,304 – – – 895 4,292

Additions 169 – 104 – – – 273

Disposals – – – – – (778) (778)

Acquisition through business combinations 30 – – – 4,661 447 5,359 10,467

At 31 December 2010 2,262 1,304 104 4,661 447 5,476 14,254

Additions 177 – – – – – 177

Disposals/Write off (87) – (104) – – – (191)

Adjustment 30 – – – – – (30) (30)

Acquisition through business combinations 30 – – – 2,027 280 6,783 9,090

Transfer from property, plant and equipment 4 191 – – – – – 191

At 31 December 2011 2,543 1,304 – 6,688 727 12,229 23,491

accumulated amortisation and impairment losses

At 1 January 2010 1,986 1,304 – – – 895 4,185

Amortisation charge for the year 114 – 7 155 63 – 339

Disposals – – – – – (778) (778)

At 31 December 2010 2,100 1,304 7 155 63 117 3,746

Amortisation charge for the year 124 – 37 982 605 – 1,748

Disposals/Write off (87) – (44) – – – (131)

Transfer from property, plant and equipment 4 175 – – – – – 175

At 31 December 2011 2,312 1,304 – 1,137 668 117 5,538

carrying amount

At 1 January 2010 107 – – – – – 107

At 31 December 2010 162 – 97 4,506 384 5,359 10,508

At 31 December 2011 231 – – 5,551 59 12,112 17,953

5. Intangible assets

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Notes to the Financial Statements (cont’d)

The amortisation charge is recognised in the following line items of the income statement:

2011 2010

$’000 $’000

Cost of sales 21 51

Administrative expenses 103 70

Other expenses 1,624 218

1,748 339

Accuracy of intangible assets and residual goodwill capitalised arising from the purchase price allocation exercise

Acquisition of NxGen Communications Pte Ltd (“NxGen”) in FY 2011

During the financial year, management identified customer relationships and order backlogs as intangible assets identified arising from acquisition of NxGen with the assistance of its financial advisor. Management used the Multi-Period Excess Earnings Methodology (“MEEM”) which was based on the present value of the future cash flows to be generated over the intangible assets’ useful lives to determine the fair values of the intangible assets capitalised. The fair values of the customer relationships and order backlogs were computed based on the Weighted Average Cost of Capital (“WACC”) of 10.7% and 12.9% for its Singapore and Malaysia operations respectively, adjusted for the risk premium respectively for customer relationships and order backlogs.

The future cash flows used in the MEEM and the WACC applied, were based on management’s best estimates and changes in the WACC will affect the fair values of the intangible assets and the residual goodwill capitalised.

As at the balance sheet date, based on the key assumptions, management believes that the fair values of intangible assets appear reasonable. The residual goodwill was capitalised based on a provisional net assets value of $1.53 million at the acquisition date.

Acquisition of S & I Systems Pte Ltd (“S&I”) in FY 2010

In 2010, management identified customer relationships and order backlogs as intangible assets identified arising from acquisition of S&I, with the assistance of its financial advisor. Management used the Multi-Period Excess Earnings Methodology (“MEEM”) which was based on the present value of the future cash flows to be generated over the intangible assets’ useful lives to determine the fair values of the intangible assets capitalised. The fair values of the customer relationships and order backlogs were computed based on the Weighted Average Cost of Capital (“WACC”) of 13.09% and 17.01% for its Singapore and Malaysia operations respectively, adjusted for the risk premium respectively for customer relationships and order backlogs.

The future cash flows used in the MEEM and the WACC applied, were based on management’s best estimates and changes in the WACC will affect the fair values of the intangible assets and the residual goodwill capitalised.

As at the balance sheet date, based on the key assumptions, management believes that the fair values of intangible assets and residual goodwill capitalised appear reasonable.

Impairment testing for cash generating units containing goodwill

For the purpose of impairment testing, goodwill is allocated to the cash generating units (“CGUs”) within the Info-Comm Technology (“ICT”) business. The recoverable amounts of the CGUs were either based on the CGU’s fair value less costs to sell or its value-in-use and the latter was determined by discounting the future cash flows to be generated from the continuing use of the CGUs.

5. Intangible assets (cont’d)

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Notes to the Financial Statements (cont’d)

5. Intangible assets (cont’d)

Goodwill arising on acquisition of NxGen amounting to $6.78 million

As at 31 December 2011, Management performed an impairment assessment on the goodwill arising from the acquisition of NxGen. In ascertaining the recoverable amount of NxGen, management was of the view that the acquisition cost of NxGen amounting to $11.3 million was representative of NxGen’s fair value less costs to sell, given that there were no significant changes in values arising from factors since the date of acquisition on 1 November 2011 to 31 December 2011. In this context, the recoverable amount exceeded the carrying amount of NxGen as at 31 December 2011 and accordingly, the goodwill has not been impaired.

Goodwill arising on acquisition of S&I amounting to $5.33 million

As at 31 December 2011, Management performed an impairment assessment on the goodwill arising from the acquisition of S&I. The recoverable amount of S&I was based on its value-in-use and was determined by discounting the future cash flows to be generated from the continuing use of the CGU.

Key assumptions used in discounted cash flow projection calculations of S&I

Key assumptions used in the calculation of recoverable amounts are budgeted EBITDA margins, discount rate and terminal value growth rate.

These assumptions are as follows:

Budgeted EBITDA margin

Management forecasted a decline in revenue from its Singapore operations in 2012 against 2011 due to a scale down of capital expenditure by S&I’s customers in 2012. Incremental year-on-year revenue growth is projected using the average historical rate for 2013 to 2016. Budgeted EBIDTA is expected to maintain or improve slightly through more value added services provided to the customers.

Discount rate

The discount rates of 13.09% and 17.01% for S&I’s Singapore and Malaysia operations were used in the calculation of net present values is the pre-tax rate that reflects the risk free rate and the premium for specific risks relating to the CGUs.

Terminal value growth rate

The CGUs within the ICT business used five years of cash flows in its discounted cash flow model using a perpetual model with zero growth rate which was reflective of the operating environment.

As at the balance sheet date, based on the key assumptions, management believes that the recoverable amount exceeds its carrying amount.

Sensitivity to changes in assumptions

Management has identified that Budgeted EBITDA growth is the key assumption for which a change in -54% could cause the carrying amount of the CGU to exceed the recoverable amount.

The value assigned to the key assumption represents management’s assessment of the future trends of the information technology industries and is based on both external sources and internal sources (historical data).

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Notes to the Financial Statements (cont’d)

6. Subsidiaries

company

2011 2010

$’000 $’000

Investments in subsidiaries 40,727 30,838

Impairment losses (3,709) (4,344)

Long-term loan due from a subsidiary – 1,000

37,018 27,494

Details of significant subsidiaries are as follows:

Name of subsidiaryPrincipalactivities

country of incorporation

effective equityheld by the Group

2011 2010

% %

NexWave Technologies Pte Ltd Provision of network engineering services

Singapore 100 100

NexWave Telecoms Pte. Ltd. Provision of telecommunication

services

Singapore 100 100

NexWave Solutions Pte. Ltd. Dormant Singapore 100 100

N-Wave Technologies (Malaysia) Sdn Bhd Provision of network engineering services

and consultancy services

Malaysia 100 100

Planet Telecoms (S) Pte Ltd Sale of telecommunication

equipment and provision of services

Singapore 92 92

S & I Systems Pte Ltd Integrated information

technology solutions provider

Singapore 90 90

NxGen Communications Pte Ltd Provision of system integration services

Singapore 55.0 –

TeleChoice (Indonesia) Pte Ltd Dormant Singapore 100 100

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Notes to the Financial Statements (cont’d)

Name of subsidiaryPrincipalactivities

country of incorporation

effective equityheld by the Group

2011 2010

% %

TeleChoice Philippines Inc. ^ Dormant Philippines 80 80

Held by Telechoice (indonesia) Pte ltd:

PT TeleChoice Indonesia Dormant Indonesia 100 100

Held by Nexwave Telecoms Pte. ltd.:

SunPage Communications Pte Ltd Provision of telecommunication

related services

Singapore 100 100

N-Wave Telecoms (Malaysia) Sdn Bhd ^ Dormant Malaysia 100 100

Held by Nexwave Technologies Pte ltd:

PT NexWave Provision of network engineering services

Indonesia 100 100

N-Wave Technologies Philippines, Inc. Provision of network engineering services

Philippines 100 –

Held by s & i systems Pte ltd:

Sunway S&I Systems (Thailand) Ltd Provision of IT consultancy and

solutions services

Thailand 44.1 44.1

U Computing Pte Ltd Provision of information and communication

technology solutions

Singapore 70.2 70.2

Achilles Consulting Pte Ltd Business and management

consulting services

Singapore 45.0 37.8

Sunway S&I Systems Sdn Bhd Trading of computer hardware and

software

Malaysia 45.9 45.9

S&I Systems (HK) Limited ^^ Dormant Hong Kong – 90

S&I Software China Co., Ltd ^^ Dormant People’s Republic of China

– 90

6. Subsidiaries (cont’d)

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Notes to the Financial Statements (cont’d)

Name of subsidiaryPrincipalactivities

country of incorporation

effective equityheld by the Group

2011 2010

% %

Held by NxGen communications Pte ltd:

NxGen Communications (M) Sdn Bhd Provision of system integration services

Malaysia 55.0 –

NxGen Inc Provision of information and communication related services

Philippines 55.0 –

^ - Under members’ voluntary liquidation^^ - Deregistered during the year

KPMG Singapore is the auditor of all significant Singapore-incorporated subsidiaries. Osman Bing Satrio & Rekan, a member of Deloitte Touche Tohmatsu Limited, is the auditor for PT NexWave, a significant subsidiary incorporated in Indonesia. For this purpose, a subsidiary is considered significant as defined under SGX-ST Listing Manual if its net tangible assets represents 20% or more of the Group’s consolidated net tangible assets, or if its pre-tax profits accounts for 20% or more of the Group’s consolidated pre-tax profits.

Acquisition of NxGen

During the financial year, the Company acquired 100% equity interest in NxGen for a maximum consideration of $11.3 million. The acquisition of NxGen is carried out in two tranches, with the first tranche involving an aggregate of 330,000 ordinary shares, representing 55% of the total issued ordinary shares of NxGen while the second tranche involves the aggregate of the remaining 270,000 ordinary shares, representing 45% of the total issued ordinary shares.

The total consideration comprised a Tranche 1 consideration of $5.0 million and a Tranche 2 consideration of up to $6.3 million. Tranche 1 consideration was determined based on 55% of the valuation of NxGen at 7 times the agreed net profit after tax for the financial year ended 31 December 2010 of $1.3 million. As at 31 December 2011, an amount of $10.4 million in connection with Tranches 1 and 2 considerations has been accrued following the completion of the re-audit of NxGen for the financial year ended 31 December 2010, as stipulated in the Sales and Purchase Agreement.

Tranche 2 consideration (“contingent consideration”) of $6.3 million was arrived based on 45% of the valuation of NxGen of $14 million, which in turn was based on a multiple of the average of the agreed cumulative net profit after tax of NxGen for a period of 3 years (“Assessment Period”) commencing from the date of completion of Tranche 1 from 1 November 2011 to 31 October 2014 and the associated probability. Since the contingent consideration is long-term in nature, it is discounted to present value amounting to $5.4 million.

The computation of the contingent consideration during the assessment period involved judgement and management estimates. The financial health and near-term business outlook of NxGen, including factors such as industry performance and operating, cash flows of the generated for the provision of services are considered.

Acquisition of S&I

In 2010, the Company acquired 90% equity interest in S&I for an estimated total cash consideration of $14.34 million. The total cash consideration comprised (i) an initial consideration of $11.34 million, which was paid upon the completion of the acquisition on 1 November 2010 and (ii) a contingent consideration amounting to $3 million, determined by reference to the adjusted consideration. The adjusted consideration was computed based on a pre-determined formula and was dependent on the profit achieved by S&I for the twelve months ending 31 October 2011 (“Assessment Period”).

6. Subsidiaries (cont’d)

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Notes to the Financial Statements (cont’d)

6. Subsidiaries (cont’d)

Loan to a subsidiary

During the financial year, the loan to a subsidiary has been fully repaid. In 2010, the loan was unsecured and borne interest at 1.7% per annum. As the amount was, in substance, a part of the Company’s net investment in the subsidiary, it was stated at cost.

7. Jointly-controlled entity

Group company

2011 2010 2011 2010

$’000 $’000 $’000 $’000

Interest in jointly-controlled entity 1,062 1,371 955 955

Details of jointly-controlled entity are as follows:

Name of jointly-controlled entity country of incorporation effective equityheld by the Group

2011 2010

% %

PT Sakalaguna Semesta(audited by Johannes, Patricia Juara and Rekan Public Accountants)

Indonesia 49 49

The financial information of the Group’s share of interest in the jointly-controlled entity is as follows:

2011 2010

$’000 $’000

Results

Revenue 51,724 66,394

Expenses (51,998) (66,219)

(Loss)/Profit before taxation (274) 175

Taxation – (44)

(Loss)/Profit after taxation (274) 131

assets and liabilities

Non-current assets 103 135

Current assets 2,878 2,505

Current liabilities (1,919) (1,269)

Net assets 1,062 1,371

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80

Notes to the Financial Statements (cont’d)

at 1 January

2010

charged/ (credited) to income statement

at 31

december 2010

charged/ (credited) to

income statement

at 31

december 2011

$’000 $’000 $’000 $’000 $’000

company

deferred tax assets

Inventories (26) 18 (8) (19) (27)

Provision for warranties (10) 3 (7) (6) (13)

Accrual for unconsumed leave (21) – (21) (9) (30)

Others – (77) (77) (28) (105)

(57) (56) (113) (62) (175)

deferred tax liabilities

Property, plant and equipment 19 (1) 18 2 20

(38) (57) (95) (60) (155)

at 1 January

2010

acquisition of

subsidiaries (Note 30)

charged/ (credited) to

income statement (Note 26)

exchange differences

at 31 december

2010

acquisition of

subsidiaries (Note 30)

credited

to income statement (Note 26)

exchange differences

at 31 december

2011

Group $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

deferred tax assets

Property, plant and equipment (15) – (56) 1 (70) – (52) – (122)

Inventories (43) – 2 3 (38) – (24) 1 (61)

Accruals (157) (44) (137) 1 (337) – (27) 4 (360)

(215) (44) (191) 5 (445) – (103) 5 (543)

deferred tax liabilities

Property, plant and equipment 297 63 (107) – 253 97 (103) – 247

Intangible assets – 868 (38) – 830 414 (273) – 971

Accruals 22 – (22) – – – – – –

319 931 (167) – 1,083 511 (376) – 1,218

8. Deferred tax assets and liabilities

Movements in deferred tax assets and liabilities (prior to offsetting of balances) during the year are as follows:

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81

Notes to the Financial Statements (cont’d)

8. Deferred tax assets and liabilities (cont’d)

Deferred tax liabilities and assets are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred taxes relate to the same taxation authority. The amounts determined after appropriate offsetting are included in the balance sheet as follows:

Group company

2011 2010 2011 2010

$’000 $’000 $’000 $’000

Deferred tax assets 549 430 155 95

Deferred tax liabilities 1,224 1,068 – –

The following deductible temporary differences have not been recognised:

Group

2011 2010

$’000 $’000

Unutilised tax losses – 1,468

Unrecognised deferred tax assets – 329

The tax losses are subject to agreement by the tax authorities and compliance with tax regulations in the respective countries in which certain subsidiaries operate. The deductible temporary differences do not expire under current tax legislation. The tax losses brought forward had been fully utilized during the financial year ended 31 December 2011.

As at 31 December 2010, deferred tax assets had not been recognised because it was not probable that future taxable profits would be available against which the Group could utilise the benefits.

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82

Notes to the Financial Statements (cont’d)

9. Inventories

Group company

2011 2010 2011 2010

$’000 $’000 $’000 $’000

Raw materials 364 684 – –

Inventories held for resale - at cost 19,057 20,306 11,939 14,443

Inventories held for resale - at net realisable value 2,537 9,009 2,001 8,583

21,958 29,999 13,940 23,026

The Group carries out periodic reviews on inventory obsolescence and any decline in the net realisable value below cost will be recorded against inventory balance. Such reviews require management to consider future demand for the inventories. The net realisable value represents management’s best estimate of the recoverable amount and is based on the acceptable evidence available at the end of the reporting date. Management considers ageing analysis and technical assessment of the inventories as part of its inventory obsolescence assessment process. Such evaluation process requires significant judgement and may affect the carrying amount of inventories at the balance sheet date.

10. Work-in-progress

Group

2011 2010

$’000 $’000

Contract cost 34,032 31,434

Attributable profit 3,970 5,555

38,002 36,989

Progress billing (22,964) (29,280)

Work-in-progress 15,038 7,709

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83

Notes to the Financial Statements (cont’d)

11. Trade and other receivables

Group company

2011 2010 2011 2010

$’000 $’000 $’000 $’000

Trade receivables 37,965 16,728 1,516 1,628

Allowance for doubtful receivables (75) (113) – –

Net receivables 37,890 16,615 1,516 1,628

Other receivables and deposits 12 11,370 5,609 4,154 345

Amounts due from:

- related parties 13 27,541 21,273 20,423 10,561

- subsidiaries 14 – – 1,170 2,831

- holding companies 15 1,155 – 11 –

Loans and receivables 77,956 43,497 27,274 15,365

Prepayments 1,789 1,211 155 56

79,745 44,708 27,429 15,421

The Group’s and Company’s primary exposure to credit risk arises through its trade and amount due from related corporations and multinational corporations. The Group’s historical experience in the collection of accounts receivable falls within the recorded allowances. As a result, management believes that no additional credit risk beyond the amounts provided for is inherent in the Group’s trade receivables and balances due from related corporations.

The maximum exposure to credit risk for loans and receivables at the reporting date (by type of customer) is:

Group company

2011 2010 2011 2010

$’000 $’000 $’000 $’000

Related parties 28,696 21,273 20,434 10,561

Subsidiaries – – 1,170 2,831

Non-related parties:

- Multinational companies 10,650 10,856 – –

- Other companies 38,610 11,368 5,670 1,973

77,956 43,497 27,274 15,365

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84

Notes to the Financial Statements (cont’d)

Impairment losses

The ageing of loans and receivables at the reporting date is:

Grossimpairment

losses Grossimpairment

losses

2011 2011 2010 2010

$’000 $’000 $’000 $’000

Group

No credit terms 23,478 – 13,461 –

Not past due 39,429 – 20,913 –

Past due 0 – 30 days 6,361 18 5,192 26

Past due 31 – 120 days 8,137 21 3,010 22

Past due 121 – 360 days 566 23 990 21

More than one year 60 13 44 44

78,031 75 43,610 113

company

No credit terms 12,470 – 3,515 –

Not past due 12,937 – 11,769 –

Past due 0 – 30 days 1,910 – 700 –

Past due 31 – 120 days 1 – (634) –

Past due 121 – 360 days (46) – 24 –

More than one year 2 – (9) –

27,274 – 15,365 –

The change in impairment loss in respect of loans and receivables during the year is as follows:

Group

2011 2010

$’000 $’000

At 1 January 113 327

Impairment loss (reversed)/recognised (4) 86

Amount written-off (34) (300)

Acquisition through business combination – 2

Translation differences – (2)

At 31 December 75 113

11. Trade and other receivables (cont’d)

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Notes to the Financial Statements (cont’d)

12. Other receivables and deposits

Group company

2011 2010 2011 2010

$’000 $’000 $’000 $’000

Deposits 1,076 683 2 2

Unbilled receivables 8,772 3,602 – 33

Dividend receivable – – 3,420 –

Other receivables 1,522 1,324 732 310

11,370 5,609 4,154 345

Other receivables and deposits do not carry any credit terms.

13. Amounts due from and to related parties

Group company

2011 2010 2011 2010

$’000 $’000 $’000 $’000

Amounts due from related parties:

- related corporations (trade):

Billed portion 15,441 13,408 12,107 7,391

Unbilled portion 12,099 7,852 8,316 3,170

27,540 21,260 20,423 10,561

- related corporations (non-trade) 1 13 – –

27,541 21,273 20,423 10,561

The unbilled portion relates to accrued sales made to related parties that have not been invoiced as at the balance sheet date.

Group company

2011 2010 2011 2010

$’000 $’000 $’000 $’000

Amounts due to related parties:

- related corporations (trade) 1,270 1,513 72 77

- related corporations (non-trade) 47 18 – 2

1,317 1,531 72 79

The non-trade amounts due from/(to) related corporations are unsecured and interest-free, and repayable on demand.

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86

Notes to the Financial Statements (cont’d)

Trade amounts due from related corporations include the followings:

Group company

2011 2010 2011 2010

$’000 $’000 $’000 $’000

Retention sum relating to construction work-in-progress 471 1,616 – –

14. Amounts due from and to subsidiaries

company

2011 2010

$’000 $’000

Amounts due from subsidiaries:

- trade 518 2,160

- non-trade 652 671

1,170 2,831

Amounts due to subsidiaries:

- trade – 3

- non-trade 1,044 1,014

- short-term loan 6,340 6,340

7,384 7,357

The non-trade amounts due from and to subsidiaries are unsecured and repayable on demand.

As at 31 December 2011, the short-term loan due to a subsidiary was unsecured, interest-free and repayable on demand.

15. Amounts due from and to holding companies

Group company

2011 2010 2011 2010

$’000 $’000 $’000 $’000

Amounts due from holding companies (trade) 1,155 – 11 –

Amounts due to immediate holding company (non-trade) 151 202 149 202

The non-trade amounts due to the immediate holding company are unsecured and interest-free, and repayable on demand.

13. Amounts due from and to related parties (cont’d)

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87

Notes to the Financial Statements (cont’d)

16. Cash and cash equivalents

Group company

2011 2010 2011 2010

$’000 $’000 $’000 $’000

Cash at banks and in hand 27,279 27,918 11,064 17,213

Short-term bank deposits 3,595 6,769 – 2,000

Cash and cash equivalents 30,874 34,687 11,064 19,213

Bank overdrafts (385) (193)

Cash and cash equivalents in the statement of cash flow 30,489 34,494

As at 31 December 2011, the Group has cash and cash equivalent totalling $2,478,000 (2010: $3,076,000) which are held in countries with foreign exchange controls.

17. Share capital

Group and company

2011 2010

NoteNo. of shares

No. of shares

(’000) $’000 (’000) $’000

Fully paid ordinary shares with no par value:

Ordinary shares

At 1 January 453,615 21,782 453,315 21,707

Exercise of share options 23 227 58 300 75

At 31 December 453,842 21,840 453,615 21,782

The Group has issued share options under its Pre-IPO Share Option Scheme (see Note 23). The Group and the Company transferred $10,000 fair value for options exercised as at 31 December 2011 from share options reserve to share capital. (2010: $13,000)

During the year, the Company completed the buy-back of 1,834,000 (2010: 600,000) ordinary shares under the terms of Share Purchase Mandate approved by shareholders on 27 April 2007. The total consideration for these shares bought back from the market is $472,850 (2010: $136,100), being the market price, including incidental cost. This amount was classified as a deduction from equity under “reserve for own shares”. At 31 December 2011, the Company held 6,913 (2010: 51,500) of its own uncancelled shares.

The holders of ordinary shares (excluding treasury shares) are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All shares (excluding treasury shares) rank equally with regard to the Company’s residual assets.

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88

Notes to the Financial Statements (cont’d)

Capital management

The Board’s policy when managing capital is to safeguard the Group’s ability to continue as a going concern and to maintain an optimal capital structure to maximise shareholder value. The Board of Directors monitors the return on capital employed, which the Group defines as net operating income plus financing costs after tax divided by total shareholders’ equity plus borrowings. The Board also monitors the level of dividends to ordinary shareholders.

The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position. The Group’s target is to achieve a return on capital employed of between 7% and 11% in 2011, the return was 7.7% (2010: 14.9%). In comparison, the interest expense on interest-bearing borrowings (excluding liabilities with imputed interest) was 1.27% to 8.0% (2010: 1.35% to 4.50%) per annum.

From time to time, the Group purchases its own shares on the market; the timing of the purchases depends on market prices. Primarily, the shares purchased are intended to be used for issuing shares under the Group’s long term incentive plans. Buy and sell decisions are made based on the requirements under the plans.

The Board defines “capital” to include funds raised through the issuance of ordinary share capital, accumulated profits and proceeds raised from debt facilities.

There were no changes in the Group’s approach to capital management during the year.

The Company and its subsidiaries are not subject to externally imposed capital requirements.

18. Reserves Group company

2011 2010 2011 2010

$’000 $’000 $’000 $’000

Capital reserves 17,452 17,591 13,161 13,300

General reserve 27 27 – –

Reserve for own shares (2) (12) (2) (12)

Share option reserve 477 513 365 401

Goodwill written-off (2,105) (2,105) – –

Exchange translation reserve (1,930) (1,687) – –

Other reserves 13,919 14,327 13,524 13,689

Accumulated profits 36,538 38,113 22,225 26,112

50,457 52,440 35,749 39,801

In accordance with the merger relief provisions of Section 69 (B) of the Companies Act (Cap.50), the capital reserve of the Company comprises reserve arising from the excess of the fair value of the Company’s share issued as consideration for the acquisition of subsidiaries over their par value.

Capital reserves of the Group comprise merger reserve of $17.6 million (2010: $17.6 million) and losses on the reissuance of treasury shares of $0.14 million (2010: Nil).

17. Share capital (cont’d)

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89

Notes to the Financial Statements (cont’d)

18. Reserves (cont’d)

Merger reserve comprises the following:

Group

2011 2010

$’000 $’000

Aggregate of share capital of subsidiaries acquired 23,403 23,403

Aggregate of losses of subsidiaries prior to acquisition by STTC (6,372) (6,372)

Acquisition of additional 7% equity interest in NexWave Solutions Pte. Ltd. by STTC 1,455 1,455

Goodwill on acquisition of subsidiaries by STTC 2,105 2,105

Cost of investment paid by STTC 20,591 20,591

Par value of shares issued for acquisition of subsidiaries (3,000) (3,000)

17,591 17,591

The Group is required to transfer 20% of the registered share capital of its Indonesian subsidiary’s net profit in each year to general reserve if there are available retained earnings, until the general reserve reaches 20% of the registered share capital of its Indonesian subsidiary. Reserve for own shares comprises the cost of the Company’s shares held by the Group.

The share option reserve comprises the cumulative value of the employee services received for the outstanding share options.

The goodwill written off represents the excess of consideration paid on the acquisition of subsidiaries prior to 1 January 2001 over the share of the fair value of net assets acquired.

The exchange translation reserve of the Group comprises foreign exchange differences arising from the translation of the financial statements of foreign entities whose functional currency is different from that of the Company and from the monetary items which form part of the Group’s net investment in foreign subsidiaries.

19. Accrued contingent consideration

As at 31 December 2011, accrued contingent consideration comprised the “current” portion and the “non-current” portion of Tranches 1 and 2 considerations amounting to $5 million and $5.4 million respectively to the selling shareholders of NxGen. Management has agreed to pay the selling shareholders of NxGen a second tranche consideration of up to $6.3 million for the remaining 45% interest as disclosed in Note 6 to the financial statements. The amount will be adjusted to such proportion if the cumulative profit after tax of NxGen for the 3 years from the date of acquisition on 1 November 2011 falls below $5.2 million. The present value of the accrued contingent consideration at acquisition date amounting to $5.4 million was computed based on a discounted rate of 5.3%, which was the post-tax cost of debt of the Company.

Interest expense of $48,000 (2010: Nil) was recognised in the income statement to unwind the effects of discounting.

In 2010, management accrued for the contingent consideration of $3 million payable to the selling shareholders of S&I as disclosed in Note 6 to the financial statements.

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90

Notes to the Financial Statements (cont’d)

20. Trade and other payables

Group company

2011 2010 2011 2010

$’000 $’000 $’000 $’000

Trade payables 27,310 17,095 8,695 2,439

Prepayments and deposits from customers 205 320 – –

Accruals for payroll and staff related costs 5,427 4,844 1,589 1,805

Accrued expenses 26,449 15,306 2,060 2,901

Amounts due to:

- related parties 13 1,317 1,531 72 79

- subsidiaries 14 – – 7,384 7,357

- holding companies 15 151 202 149 202

60,859 39,298 19,949 14,783

21. Financial liabilities

Group company

2011 2010 2011 2010

$’000 $’000 $’000 $’000

Non current liabilities

Unsecured bank loan – 230 – –

Secured bank loan – 600 – –

At 31 December – 830 – –

current liabilities

Unsecured bank loans 16,183 7,464 2,000 5,000

Secured bank loan – 800 – –

At 31 December 16,183 8,264 2,000 5,000

The secured bank loan as at 31 December 2010 relates to an arrangement between one of the subsidiaries and a financial institution to assign all the subsidiary’s rights, title and interest in, to and under a sales and maintenance contract entered between a customer and the subsidiary.

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91

Notes to the Financial Statements (cont’d)

21. Financial liabilities (cont’d)

Terms and debts repayment schedule

Terms and conditions of outstanding loans and borrowings are as follows:

2011 2010

Nominal interest

rateyear of

maturityFace

valuecarrying amount

Face value

carrying amount

$’000 $’000 $’000 $’000

Group

Floating rate loans 1.27 – 8.00 2012 16,183 16,183 8,614 8,614

Fixed rate loan 4.50 2012 – – 480 480

16,183 16,183 9,094 9,094

company

Floating rate loans 1.27 – 1.32 2012 2,000 2,000 5,000 5,000

The following are the expected contractual undiscounted cash outflows of financial liabilities:

carrying amount

contractual cashflows

less than 12 months

1 to 5 years

Group $’000 $’000 $’000 $’000

2011

Variable interest rate loans 16,183 (16,224) (16,224) –

Accrued contingent consideration 10,449 (11,305) (5,005) (6,300)

Trade and other payables 60,654 (60,654) (60,654) –

87,286 (88,183) (81,883) (6,300)

2010

Variable interest rate loans 8,614 (8,744) (8,101) (643)

Fixed interest rate loan 480 (501) (263) (238)

Accrued contingent consideration 3,000 (3,000) (3,000) –

Trade and other payables 38,978 (38,978) (38,978) –

51,072 (51,223) (50,342) (881)

company

2011

Variable interest rate loans 2,000 (2,000) (2,000) –

Accrued contingent consideration 10,449 (11,305) (5,005) (6,300)

Trade and other payables 19,949 (19,949) (19,949) –

32,398 (33,254) (26,954) (6,300)

2010

Variable interest rate loans 5,000 (5,010) (5,010) –

Accrued contingent consideration 3,000 (3,000) (3,000) –

Trade and other payables 14,783 (14,783) (14,783) –

22,783 (22,793) (22,793) –

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92

Notes to the Financial Statements (cont’d)

22. Provision for warranties

Group company

2011 2010 2011 2010

$’000 $’000 $’000 $’000

At 1 January 297 212 40 56

Provision (written back)/made (14) 85 34 (16)

Translation difference (8) – – –

At 31 December 275 297 74 40

The provision made for warranty costs relates mainly to mobile phones, network engineering services and radio and telecommunication equipment sold during the year. The provision is based on estimates made from historical warranty data.

23. Equity compensation benefits

a) Employee share options

The TeleChoice Pre-IPO Share Option Scheme (the “Pre-IPO Scheme”) and the TeleChoice Post-IPO Employee Share Option Scheme (the “Post-IPO Scheme”) (collectively referred to as the “Schemes”) were approved and adopted by the members at an Extraordinary General Meeting of the Company held on 7 May 2004.

Pre–IPO Scheme

Information regarding the Pre-IPO Scheme is set out below:

(i) The Pre-IPO Scheme is administered by the Company’s Remuneration Committee comprising three directors, namely Bertie Cheng, Yen Se-Hua Stewart and Lee Theng Kiat (the “Committee”).

(ii) On 18 May 2004, the Company granted share options to management and employees of the Company, STT Communications Ltd (“STTC”), its immediate holding company, and the subsidiaries of STTC and certain non-executive directors of the Company (collectively referred to as the “Eligible Persons”) to subscribe for an aggregate of 20,000,000 shares of the Company.

(iii) Eligible Persons are entitled to exercise the share options subject to the following vesting periods:

Vesting schedulePercentage of shares over which

an option is exercisable (%)

On the date falling twelve months from 18 May 2004 25

On the date falling twenty-four months from 18 May 2004 25

On the date falling thirty-six months from 18 May 2004 25

On the date falling forty-eight months from 18 May 2004 25

(iv) The exercise price for each option is $0.2079. Options granted to non-executive directors (including independent directors) have a life span of five years. Options granted to the Eligible Persons (other than the non-executive directors) have a life span of ten years.

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93

Notes to the Financial Statements (cont’d)

23. Equity compensation benefits (cont’d)

a) Employee share options (cont’d)

Post – IPO Scheme

Information regarding the Post-IPO Scheme is set out below:

(i) The Post-IPO Scheme is administered by the Committee.

(ii) The eligible participants of the Post-IPO Scheme are:

• executive and non-executive directors and employees of the Company and its subsidiaries and associated companies.

• executive and non-executive directors and employees of STTC and its subsidiaries.

• controlling shareholders of the Company and the associates of the controlling shareholders.

(iii) The nominal amount of the aggregate number of shares over which the Committee may grant options on any date, when aggregated with the nominal amount of the number of shares issued and issuable in respect of all options granted under the Post-IPO Scheme and other share option schemes of the Company, shall not exceed 15% of the issued and paid-up share capital of the Company on the day preceding the date of the relevant grant.

(iv) Under the Post-IPO Scheme, the exercise price for each ordinary share in respect of which an option is exercisable is determined by the Committee in its absolute discretion on the date of grant at a maximum discount of 20% to market price determined to be the average of the last dealt prices for the shares on the Main Board of the Singapore Exchange Securities Trading Limited (“SGX-ST”) for the five consecutive market days immediately preceding the relevant date of grant of the relevant option.

(v) The vesting period of the options granted under the Post-IPO Scheme is between one and two years.

(vi) The exercise price of the options granted under the Post-IPO Scheme shall not be less than $0.02.

Movements in the number of share options and its exercise price are as follows:

exercise price

No. of options

exercise price

No. of options

2011 2011 2010 2010

$ $

At 1 January 0.2079 808,000 0.2079 1,108,000

Exercised 0.2079 (227,500) 0.2079 (300,000)

At 31 December 0.2079 580,500 0.2079 808,000

Exercisable at 1 January 808,000 1,108,000

Exercisable at 31 December 580,500 808,000

During the year, options exercised resulted in 227,500 (2010: 300,000) shares being issued at an exercise price of $0.2079 (2010: $0.2079) each. Options were exercised on a regular basis throughout the year. The weighted average share price during the dates when the share options are exercised is $0.2521 (2010: $0.2325) per share.

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94

Notes to the Financial Statements (cont’d)

Share options outstanding at the end of the year have the following expiry dates and exercise price:

date of grant of options exercise periodexercise

priceOptions

outstanding

$ 2011 2010

18 May 2004 18/5/2005 to 17/5/2014 0.2079 25,000 25,000

18 May 2004 18/5/2006 to 17/5/2014 0.2079 25,000 40,000

18 May 2004 18/5/2007 to 17/5/2014 0.2079 93,000 130,000

18 May 2004 18/5/2008 to 17/5/2014 0.2079 437,500 613,000

580,500 808,000

The fair value of services received in return for share options granted are measured by reference to the fair value of share options granted. The estimate of the fair value of the services received is measured based on a Black-Scholes model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioral considerations.

date of grant of options 18/05/2004 18/05/2004 18/05/2004 18/05/2004

Vesting date 18/05/2005 18/05/2006 18/05/2007 18/05/2008

Fair value of share options and assumptions:

Fair value at measurement date $0.059 $0.053 $0.048 $0.044

Share price $0.29 $0.29 $0.29 $0.29

Exercise price $0.2079 $0.2079 $0.2079 $0.2079

Expected volatility 20% 20% 20% 20%

Expected option life 2.0 years 3.0 years 4.0 years 5.0 years

Expected dividends 6.9% 6.9% 6.9% 6.9%

Risk-free interest rate 1.50% 1.75% 1.75% 2.07%

The expected volatility is based on the historic valuation of shares based on net assets values, adjusted for any expected changes to future volatility to those net assets values.

There are no market conditions associated with the share option grants.

b) TeleChoice Restricted Share Plan and Performance Share Plan

The TeleChoice Restricted Share Plan (the “TeleChoice RSP”) and TeleChoice Performance Share Plan (the “TeleChoice PSP”) (collectively referred to as the “Plans”), were approved and adopted by the members at an Extraordinary General Meeting of the Company held on 27 April 2007.

23. Equity compensation benefits (cont’d)

a) Employee share options (cont’d)

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95

Notes to the Financial Statements (cont’d)

Information regarding the Plans is set out below:

(i) The Plans were established with the objective of motivating senior executives to strive for superior performance and sustaining long-term growth for the Company.

(ii) The Plans are administered by the Committee.

(iii) The following persons (collectively referred to as the “Eligible Persons”) shall be eligible to participate in the Plans at the absolute discretion of the Committee:

• employees and non-executive directors of the Company and/or any of its subsidiaries;

• employees and non-executive directors of STTC and its subsidiaries, who may be seconded to render services and contribute to the success of the Group; and

• employees of associated companies.

(iv) Under the TeleChoice PSP, conditional awards of shares are granted. Awards represent the right of a participant to receive fully paid shares upon the participant achieving certain pre-determined performance targets set based on corporate objectives aimed at sustaining longer-term growth. After the awards vest, and the shares comprised in the awards are issued at the end of the performance and/or service period once the Committee is, at its sole discretion, satisfied that the prescribed performance targets have been achieved.

(v) Under the TeleChoice RSP, awards granted vest only after the satisfactory completion of time-based service conditions (time-based restricted awards) or where the award is performance-related after a further period of service beyond the performance targets completion date (performance-based restricted awards).

(vi) The vesting period of the shares granted under the Plans is between one to three years.

(vii) As at 31 December 2011, the initial awards of 5,011,000 (2010: 4,147,000) shares under the TeleChoice PSP and the initial awards of 6,457,000 (2010: 4,513,000) shares under the TeleChoice RSP were made to Eligible Persons.

The key assumptions applied in estimating the fair values under the TeleChoice PSP are as follows:

date of grant of shares 1 June 2011

1 June 2010

1 June 2009

1 June 2008

1 June 2007

Fair value at grant date $0.187 $0.178 $0.144 $0.189 $0.142

assumptions under monte-carlo model expected Volatility

TeleChoice International Limited 25.36% 28.90% 30.42% 26.12% 27.95%

Straits Times Index 29.82% 24.55% 31.38% 17.60% 10.04%

Risk-free interest rates 1.18% 1.03% 0.74% 1.70% 2.45%

23. Equity compensation benefits (cont’d)

b) TeleChoice Restricted Share Plan and Performance Share Plan (cont’d)

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96

Notes to the Financial Statements (cont’d)

The key assumptions applied in estimating the fair values under TeleChoice RSP are as follows:

date of grant of shares 1 June 2011

1 June 2010

1 June 2009

1 June 2008

1 June 2007

Fair value at grant date:

For RSP vested 24 months from grant date $0.206 $0.184 $0.166 $0.199 $0.195

For RSP vested 36 months from grant date $0.186 $0.167 $0.151 $0.181 $0.177

For RSP vested 48 months from grant date $0.167 $0.152 $0.137 $0.164 $0.161

assumptions under monte-carlo model expected Volatility

TeleChoice International Limited 25.36% 28.90% 30.42% 26.12% 27.95%

Risk-free interest rates

Singapore 2-year Government Bond yield 0.51% 0.50% 0.50% 1.21% 2.35%

Singapore 3-year Government Bond yield 0.58% 0.55% 0.74% 1.70% 2.45%

Singapore 4-year Government Bond yield 0.88% 0.76% 0.99% 2.21% 2.54%

The fair value of the shares is estimated using a Monte-Carlo simulation methodology at the measurement dates, which are grant dates of these share awards. The accrual for the share expenses under the Plans has been estimated on the basis that the Group will be on target in respect of the performance conditions.

During the financial year, the Group expensed off $318,000 (2010: $316,000) to the income statement based on the fair value of the PSP and RSP at the grant date.

24. Revenue

Revenue represents the invoiced value of goods sold and services rendered, less discounts, and the value of work done on cabling and installation projects that are undertaken.

Group

2011 2010

$’000 $’000

Equipment and cards sales 292,535 264,716

Voice services 8,546 10,199

Cabling and installation project revenue 44,300 45,920

Mobile data and location tracking services 475 1,349

Logistic services 5,677 5,271

Information technology projects and consultancy services 38,046 –

389,579 327,455

23. Equity compensation benefits (cont’d)

b) TeleChoice Restricted Share Plan and Performance Share Plan (cont’d)

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TeleChoice International LimitedAnnual Report 2011

97

Notes to the Financial Statements (cont’d)

25. Profit before income tax

Profit before income tax is arrived at after including the following items:

Group

Note 2011 2010

$’000 $’000

Additional contingent consideration paid on business combination 30 4,418 –

Amortisation of intangible assets 5 1,748 339

Cost of inventories recognised in income statement 266,251 242,498

Depreciation of property, plant and equipment 4 1,397 954

Directors’ remuneration 384 397

Exchange loss 157 250

(Reversal of)/Impairment loss on trade receivables 11 (4) 86

Loss/ (gain) on disposal of property, plant and equipment and intangible assets 84 (8)

Loss on disposal of a subsidiary 135 –

Audit fees paid to:

- auditors for the Company 244 195

- Other auditors 87 39

Non-audit fees paid to:

- auditors for the Company 2 2

- Other auditors – –

(Reversal of)/Provision made for warranties 22 (14) 85

Rental expenses 3,922 2,554

Staff costs 32,259 19,404

Contributions to defined contribution plans, included in staff costs 2,132 1,398

Share-based payments expenses, included in staff costs 318 316

Writedown of inventories 2,698 2,200

Other income

Government grant income from Jobs Credit Scheme – 132

Others (mainly rental and management service income) 878 297

878 429

Finance income

Interest income

- banks and financial institutions 64 88

- interest accretion 134 –

- jointly-controlled entity – 6

198 94

Finance costs

Interest paid and payable to banks and financial institutions 263 19

Interest accretion 48 –

311 19

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98

Notes to the Financial Statements (cont’d)

26. Income tax expense

Group

Note 2011 2010

$’000 $’000

current tax expense

Current year 2,528 2,666

Under/(Over)provision of tax expense in prior years 4 (66)

2,532 2,600

deferred tax expense

Origination and reversal of temporary differences (485) (253)

Under/(Over)provision of tax expense in prior years 6 (105)

8 (479) (358)

Income tax expense 2,053 2,242

Reconciliation of effective tax rate

Profit before taxation 9,053 14,692

Income tax using Singapore tax rate of 17% (2010: 17%) 1,539 2,497

Recognition of previously unrecognized tax losses (285) (133)

Non-deductible expenses 1,196 123

Non-taxable income (117) (72)

Tax incentives (668) (225)

Effect of different tax rates in other countries 378 223

Under/(Over)provision in respect of prior years’ tax 10 (171)

2,053 2,242

In the ordinary course of business, there are many transactions and calculations for which the ultimate tax treatment is uncertain. Therefore, the Group recognises tax liabilities based on estimates of whether additional taxes and interest will be due. These tax liabilities are recognised when the Group believes that certain positions may not be fully sustained upon review by tax authorities, despite the Group’s belief that its tax return positions are supportable. The Group believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors including interpretations of tax law and prior experience. This assessment relies on estimates and assumptions and may involve a series of multifaceted judgements about future events. New information may become available that causes the Group to change its judgement regarding the adequacy of existing tax liabilities, such changes to tax liabilities will impact tax expense in the period that such a determination is made.

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TeleChoice International LimitedAnnual Report 2011

99

Notes to the Financial Statements (cont’d)

27. Earnings per share

Group

2011 2010

$’000 $’000

Basic earnings per share is based on:Profit attributable to equity holders of the Company 6,577 12,424

Group

Number of shares

2011 2010

(’000) (’000)

Issued ordinary shares at beginning of the year 453,563 453,227

Effect of share options exercised 156 217

Effect of own shares held (288) 5

Weighted average number of ordinary shares at the end of year 453,431 453,449

Basic earnings per share is calculated by dividing the Group’s profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the financial year.

Group

2011 2010

$’000 $’000

Diluted earnings per share is based on:

Profit attributable to equity holders of the Company 6,577 12,424

For the purpose of calculating diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to take into account the dilutive effect arising from the dilutive share options with the potential ordinary shares weighted for the period outstanding.

The effect of the exercise of share options on the weighted average number of ordinary shares in issue is as follows:

Group

Number of shares

2011 2010

(’000) (’000)

Weighted average number of shares issued, used in calculation of basic earnings per share 453,431 453,449

Potential ordinary shares issuable under share options 105 96

Weighted average number of ordinary shares issued and potential shares assuming full conversion 453,536 453,545

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100

Notes to the Financial Statements (cont’d)

There are no anti-dilutive options for the year ended 31 December 2011 and 2010.

Group

2011 2010

earnings per share

Basic earnings per share (cents) 1.45 2.74

Diluted earnings per share (cents) 1.45 2.74

28. Significant related party transactions

In the normal course of business, the Group purchases and sells products and services to related parties. Significant transactions with related parties, other than those disclosed elsewhere in the financial statements, are as follows:

Group

2011 2010

$’000 $’000

ultimate Holding company

Revenue from sale of products and provision of services 1,156 101

immediate Holding company

Revenue from sale of products and provision of services 32 14

Management fees 32 65

Related corporations

Revenue from sale of products and provision of services 112,784 105,442

Purchase of products and services 66,852 51,626

Rental and warehouse expenses 112 98

Telecommunication services received 1,546 1,661

key management

Short-term employment benefits

- Directors 384 397

- Other key management personnel 2,405 2,281

Share-based payments

- Other key management personnel 275 289

3,064 2,967

27. Earnings per share (cont’d)

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101

Notes to the Financial Statements (cont’d)

29. Operating segments

The Group has 3 reportable segments, as described below, which are the Group’s strategic business units. The strategic business units offer different products and services, and are managed separately because they required different marketing and technical expertise. For each of the strategic business units, the Group’s President reviews internal management reports on a monthly basis. The following describes the operations in each of the Group’s reportable segments:

Personal communications solutions services (“Pcs”): This division provides fulfilment, distribution and supply chain management services relating to mobile communication devices and accessories. Its spectrum of services include forecasting, purchasing, financing, logistics, warehousing, inventory support, roadshow management, retail customer premises equipment (“CPE”) stocks management, and after sales service. It owns a retail chain through its Planet Telecoms subsidiary which operates a network of strategically located stores islandwide. Planet Telecoms also manages concept stores for major mobile handset manufacturers and is the only StarHub Exclusive Partner to manage two StarHub Platinum shops. PCS is also a major distributor of StarHub prepaid cards.

info-comm Technology services (“icT”): This division is a leading regional integrated info-communications solutions provider. Its extensive offering includes enterprise IT infrastructure, business solutions and integration services, broadband network, fixed and wireless networking solutions, managed and hosted services, telephony and unified communications solutions and cloud computing applications and services. It also provides consultancy, managed operations and utility computing services. Under its SunPage brand, ICT also offers IDD, Global Conferencing, SMS broadcast and mobility solutions and services for the consumer and enterprise markets.

Network engineering services: This division is a regional provider of network engineering services and supplier of specialized telecommunication products. It designs, builds and manages telecommunication networks and provides a comprehensive suite of specialized products and cost effective solutions to address the network infrastructure needs of fixed and mobile operators in Asia-Pacific. Its services encompass radio network planning and optimisation, transmission network planning, network implementation, maintenance and project management. It also carries an extensive range of innovative and cost effective products for telecommunication access and coverage needs, as well as for power supply and backup requirements.

Geographical Segments

The Group has operations primarily in Singapore, Indonesia and Malaysia. The rest are mainly export customers in Hong Kong.

In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customers. Segment assets are based on the geographical location of assets.

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102

Notes to the Financial Statements (cont’d)

29. Operating segments (cont’d)

Information about Reportable Segments

Personal communications solutions services

info-comm technology

services

Network engineering

services Total

2011 2010 2011 2010 2011 2010 2011 2010

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Revenue and expenses

Total revenue from external customers 239,544 267,178 105,735 14,357 44,300 45,920 389,579 327,455

Inter-segment revenue – 7 97 64 – – 97 71

239,544 267,185 105,832 14,421 44,300 45,920 389,676 327,526

Government grant income from Jobs Credit Scheme – 71 – 38 – 23 – 132

Interest income 16 90 135 10 60 53 211 153

Interest expenses 3 – 290 12 31 66 324 78

Depreciation of property, plant and equipment 353 211 573 292 471 451 1,397 954

Amortisation of intangible assets 37 7 1,685 320 26 12 1,748 339

Reportable segment profit before income tax 6,465 11,979 102 122 2,760 2,460 9,327 14,561

Share of (losses)/profit of a jointly-controlled entity (net of tax) – – (274) 131 – – (274) 131

Other material non-cash items:

Reportable segment assets 53,691 62,618 81,464 40,434 34,175 30,684 169,330 133,736

Investment in a jointly-controlled entity – – 1,062 1,371 – – 1,062 1,371

Capital expenditure

- Property, plant and equipment 393 479 84 126 638 590 1,115 1,195

- Intangible assets – 104 9,118 10,636 149 – 9,267 10,740

Reportable segment liabilities 17,563 17,897 59,762 26,097 19,337 15,567 96,662 59,561

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103

Notes to the Financial Statements (cont’d)

29. Operating segments (cont’d)

Reconciliations of reportable segment revenue, profit or loss, assets and liabilities and other material items:

Group

2011 2010

$’000 $’000

Revenue

Total revenue for reportable segments 389,676 327,526

Elimination of inter-segment revenue (97) (71)

Consolidated revenue 389,579 327,455

Profit or loss

Total profit or loss for reportable segments 9,327 14,561

Share of (losses)/profit of a jointly-controlled entity (274) 131

Consolidated profit before income tax 9,053 14,692

assets

Total assets for reportable segments 169,330 133,736

Investment in a jointly-controlled entity 1,062 1,371

Consolidated total assets 170,392 135,107

liabilities

Total liabilities for reportable segments 96,662 59,561

Reportable segment totals adjustments

consolidated totals

$’000 $’000 $’000

Other material items 2011

Interest income (211) 13 (198)

Interest expenses 324 (13) 311

Capital expenditure

- property, plant and equipment 1,115 – 1,115

- intangible assets 9,267 – 9,267

Other material items 2010

Government grant income from Jobs Credit Scheme (132) – (132)

Interest income (153) 59 (94)

Interest expenses 78 (59) 19

Capital expenditure

- property, plant and equipment 1,195 – 1,195

- intangible assets 10,740 – 10,740

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104

Notes to the Financial Statements (cont’d)

29. Operating segments (cont’d)

Geographical information

RevenueNon-current

assets*

$’000 $’000

31 december 2011

Singapore 321,687 19,883

Indonesia 27,651 861

Malaysia 17,898 367

Hong Kong 21,729 –

Other countries 614 55

Consolidated total 389,579 21,166

31 december 2010

Singapore 230,274 15,487

Indonesia 27,876 626

Malaysia 1,411 90

Hong Kong 65,642 –

Other countries 2,252 –

Consolidated total 327,455 16,203

* Non-current assets presented consist of property, plant and equipment, intangible assets and unbilled receivables.

Major Customer

Revenue from one customer of the Group’s personal communications solution and one customer of info-comm technology services segments represents approximately 33% (2010: 37%) of the Group’s total revenues.

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105

Notes to the Financial Statements (cont’d)

30. Acquisition of subsidiary and non-controlling interest

Acquisition of NxGen

On 1 November 2011, the Company obtained control of NxGen following the completion of the Sale and Purchase Agreement with the shareholders of NxGen to acquire 600,000 ordinary shares in the share capital of NxGen, representing 100% of NxGen’s total issued and authorised share capital and voting interests in NxGen. The acquisition was carried out in two tranches, with the first tranche involving an aggregate of 330,000 NxGen’s shares, representing 55% of the total number of issued NxGen shares, and the second tranche involving an aggregate of 270,000 NxGen shares, representing 45% of the total number of issued NxGen shares.

NxGen is a regional Info-Comm provider of managed services and system integration solutions. Its core competency in networking and unified communication solutions and its success in managed services and its proprietary “Smart View” IP network management service complements and enhances the Company’s Info-Comm Technology (ICT) services and capabilities.

For the post-acquisition period of two months ended 31 December 2011, NxGen contributed revenue of $4.3 million and profit before tax of $0.62 million respectively to the Group’s financial results. If the acquisition had occurred on 1 January 2011, the consolidated revenue would have been $19.2 million and consolidated profit before tax for the year would have been $3.8 million. In determining these amounts, management has assumed that the fair value adjustments, determined provisionally, that arose on the date of acquisition would have been the same if the acquisition had occurred on 1 January 2011.

The following summaries the major classes of consideration transferred, and the recognised amounts of assets acquired and liabilities assumed at the acquisition date:

Consideration to be transferred

2011

$’000

Tranche 1 consideration accrued at completion date 5,005

Present value of contingent Tranche 2 consideration accrued based on estimated net profit after tax achievable during Assessment Period 5,396

Total purchase consideration accrued 10,401

Contingent consideration

The Company has agreed to pay the selling shareholders additional consideration amounting to $6.3 million, computed based on the estimated net profit after tax achievable for the period of 3 years, commencing from the date of Tranche 1 completion, based on a pre-determined formula as disclosed in Note 6 to the financial statements.

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106

Notes to the Financial Statements (cont’d)

30. Acquisition of subsidiary and non-controlling interest (cont’d)

Identifiable assets acquired and liabilities assumed

Note 2011

$’000

Plant and equipment 4 472

Intangible assets 5 2,307

Inventories 941

Trade and other receivables 4,306

Cash and cash equivalents 5,425

Deferred tax liabilities 8 (511)

Trade and other payables (7,248)

Deferred income (1,204)

Current tax payable (287)

Financial liabilities (583)

Total identifiable net assets 3,618

Goodwill acquired 5 6,783

Consideration not yet paid (10,401)

Cash acquired, net of overdrafts (5,425)

Acquisition of subsidiary, net of cash acquired as disclosed in the consolidated cash flow statement (5,425)

The following fair values have been determined on a provisional basis:

• The fair values of intangible assets (NxGen’s customer relationships, order backlogs and goodwill) have been determined provisionally pending completion of an independent valuation;

• Certain inventories acquired have been identified as slow-moving and management is in the midst of determining the net realisable values as some inventories are expected to be obsolete;

• Certain invoices of certain customers included in “trade and other receivables” acquired have been long outstanding and may potentially be in dispute and management is in the midst of determining the respective recoverable amounts as some are expected to be uncollectible; and

• As stipulated in the Sales and Purchase Agreement, the vendors are entitled to declare a dividend of such amount as they may reasonably determine after taking into account the unaudited consolidated net tangible assets (“NTA”) of NxGen as at the Tranche 1 completion date. The NTA shall be the aggregate of the historical average net working capital of NxGen for the financial year ended 31 December 2010 as determined by an independent auditor and the amount of plant and equipment of NxGen as at Tranche 1 completion date, which has not been finalised with the selling shareholders of NxGen as at the balance sheet date. Accordingly, management has provisionally accrued a dividend payable of $4.68 million included in “trade and other payables” on the assumption that the final agreed consolidated NTA of NxGen at Tranche 1 completion date would be $1.53 million.

If new or additional information obtained within one year from the acquisition date about the facts and circumstances that existed at acquisition date identifies adjustments to the above amounts, or any additional amounts that existed at acquisition date, then the acquisition accounting will be revised.

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107

Notes to the Financial Statements (cont’d)

30. Acquisition of subsidiary and non-controlling interest (cont’d)

Goodwill

Goodwill was recognised as a result of the acquisition as follows:

Note 2011

$’000

Total consideration payable 10,401

Fair value of identifiable net assets (3,618)

Goodwill 5 6,783

The goodwill is attributable to the business synergies expected to be achieved from integrating NxGen into the Group’s ICT business. The integration of NxGen and the Group’s ICT business, together with another subsidiary, S&I, will provide an excellent catalyst for capability development and enhancement. With improved resources in the combined asset, the integration of the business is expected to consequently lead to improvements in productivity and effectiveness, which will help to create greater value and satisfaction to customers and cost savings. None of the goodwill recognised is expected to be deductible for income tax purposes.

Acquisition-related costs

The Group incurred acquisition-related costs of $155,000 related to external legal fees and due diligence costs. The legal fees and due diligence costs have been included in administrative expenses in the Group’s income statement.

Acquisition of S&I

In the previous financial year ended 31 December 2010, the Company obtained control of S&I following the completion of the Sale and Purchase Agreement with the shareholders of S&I to acquire 471,694 ordinary shares in the share capital of S&I, representing 90% of S&I’s total issued and authorised share capital and voting interests in S&I. The Company has paid an initial purchase consideration of $11.34 million in the previous financial year.

Contingent consideration

The Company agreed to pay the selling shareholders additional consideration amounting to $3.06 million, computed based on the estimated net profit after tax and non-controlling interests achievable during the Assessment Period subsequent to completion based on a pre-determined formula.

Contingent payments from selling shareholder

Pursuant to the Sale and Purchase Agreement (“SPA”) entered into by the Company and the selling shareholder, the selling shareholder would need to compensate the Company 90% of the difference between the actual profit after tax and non-controlling interests achieved during the Assessment Period and $2.67 million when actual profit falls below $2.67 million. Similarly, the Company would need to pay the selling shareholder 90% of the difference between the actual profit after tax and non-controlling interests achieved during the Assessment Period and $3.33 million, when actual profit exceeds $3.33 million.

During the Assessment Period, S&I performed better than expected. As a result, based on the terms and conditions in the SPA, the Company paid an aggregate of $18.76 million as purchase consideration for the acquisition as compared to the initial cost of investment of $14.34 million accrued as at the date of acquisition. The additional contingent consideration of $4.42 million was recognised and reflected under “other expenses” in the consolidated income statement.

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108

Notes to the Financial Statements (cont’d)

30. Acquisition of subsidiary and non-controlling interest (cont’d)

Identifiable assets acquired and liabilities assumed

Note 2010

$’000

Property, plant and equipment 4 488

Intangible assets 5 5,108

Non-current portion of unbilled receivables 2,907

Inventories 2,619

Trade and other receivables 8,600

Cash and cash equivalents 3,857

Loans and borrowings (4,624)

Deferred tax liabilities 8 (887)

Trade and other payables (7,828)

Non controlling interest (261)

Total identifiable net assets 9,979

Non-controlling interests, based on their proportionate interest in the recognised amounts of the assets and liabilities of the acquiree (998)

Goodwill acquired 5 5,359

Consideration not yet paid (3,000)

Cash acquired, net of overdrafts (3,857)

Acquisition of subsidiary, net of cash acquired as disclosed in the consolidated cash flow statement 7,483

Goodwill

Goodwill was recognised as a result of the acquisition as follows:

Note 2010

$’000

Total consideration transferred 14,340

Fair value of identifiable net assets (9,979)

Non-controlling interests, based on their proportionate interest in the recognised amounts of the asset and liabilities of the acquiree 998

Goodwill 5 5,359

During the year, an adjustment of $30,000 was made to the goodwill as a result of changes made to the retained earnings of the acquiree at acquisition date.

The goodwill is attributable to the business synergies expected to be achieved from integrating S&I into the Group’s ICT business. The integration of S&I and the Group’s ICT business will provide an excellent catalyst for capability development and enhancement. With improved resources in the combined asset, the integration of the business is expected to consequently lead to improvements in productivity and effectiveness, which will help to create greater value and satisfaction to customers and cost savings. None of the goodwill recognised is expected to be deductible for income tax purposes.

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109

Notes to the Financial Statements (cont’d)

30. Acquisition of subsidiary and non-controlling interest (cont’d)

Acquisition-related costs

The Group incurred acquisition-related costs of $194,000 related to external legal fees and due diligence costs. The legal fees and due diligence costs have been included in administrative expenses in the Group’s income statement.

31. Determination of fair values

A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following method. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability:

(i) Plant and equipment

The fair value of plant and equipment recognised as a result of a business combination is the estimated amount for which the asset could be exchanged on the date of acquisition between a willing buyer and a willing seller in an arm’s length transaction. The fair value of items of plant and equipment is based on the market approach and cost approaches using quoted market prices for similar items when available and replacement cost when appropriate. Depreciated replacement cost estimates reflect adjustments for physical deterioration as well as functional and economic obsolescence.

(ii) Intangible assets

The fair values of customer relationships and order backlogs acquired in a business combination are determined using the multi-period excess earnings method, whereby the subject asset is valued after deducting a fair return on all other assets that are part of creating the related cash flows.

(iii) Inventories

The fair value of inventories acquired in a business combination is determined based on the estimated selling price in the ordinary course of business less the estimated costs of completion and sale, and a reasonable profit margin based on the effort required to complete and sell the inventories.

(iv) Trade and other receivables

The fair value of trade and other receivables is estimated at the present value of future cash flows, discounted at the market rate of interest at the reporting date. This fair value is determined for disclosure purposes or when acquired in a business combination.

(v) Non-derivative financial liabilities

The fair value of non-derivative financial liabilities, which is determined for measurement upon acquisition and disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date.

(vi) Contingent consideration

The fair value of contingent consideration is calculated using the income approach based on the expected payment amounts and their associated probabilities (i.e. probability weighted). Since the contingent consideration is long-term in nature, it is discounted to present value.

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TeleChoice International LimitedAnnual Report 2011

110

Notes to the Financial Statements (cont’d)

32. Financial risk management

Overview

The Group’s activities expose it to credit risk, liquidity risk and market risk (including interest rate risk and currency risk). The Group has a system of controls in place to create an acceptable balance between the cost of risks occurring and the cost of managing the risks. The management continually monitors the Group’s risk management process to ensure that an appropriate balance between risk and control is achieved. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities.

Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers.

Trade and other receivables

The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. As at 31 December 2011, the Group has 37% (2010: 34%) of total receivables due from 2 major receivables (2010: 2 major receivables), and approximately 33% (2010: 37%) of the Group’s revenue is attributable to sales transactions with these 2 customers (2010: 2 customers).

The Group has a credit policy under which each new customer is analysed individually for creditworthiness before the Group’s standard payment and delivery terms and conditions are offered. The Group’s review includes external ratings, where available, and in some cases bank references. Otherwise, the credit quality of customers is assessed after taking account its financial position and past experience with the customers. Credit exposure to customers is restricted by credit limits that are approved by the Credit Control Committee at the entity level and the continuous monitoring by the Committee.

In monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they are an individual or legal entity, whether they are a multinational corporation, wholesale, retail or end-user customer, geographic location, industry, aging profile, maturity and existence of previous financial difficulties. Trade and other receivables relate mainly to the Group’s related parties and multinational corporations.

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistics for similar financial assets.

There are no other significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet.

Liquidity risk

The Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by management to finance the Group’s operations and to mitigate the effects of fluctuations in cash flows. The Group maintains sufficient level of cash and cash equivalents to meet its working capital. When required, the Group also obtains short-term bridging arrangement with banks to pay for their purchases of equipment.

Management monitors cash flow requirements through regular cash flow forecast carried out at the operating companies’ level in accordance with the working capital requirement. The Group sets asset productivity targets which vary by entity and location taking into consideration the business environment that the entity operates in. Asset productivity targets used are debtor and inventory turnover days.

Cash and fixed deposits are placed with banks and financial institutions which are regulated.

In addition, the Group maintains total lines of credit of $69 million (2010: $59 million) for term loans and working capital line facilities, at a margin over cost of funds.

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TeleChoice International LimitedAnnual Report 2011

111

Notes to the Financial Statements (cont’d)

32. Financial risk management (cont’d)

Cash flow and fair value interest rate risk

Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market interest rates. The Group’s exposure to cash flow interest rate risks arises mainly from short-term floating rate borrowings.

Effective interest rate and repricing analysis

In respect of the interest-earning financial assets and interest-bearing financial liabilities, the following table indicates their effective interest rates at the balance sheet date and the periods in which they reprice:

effective interest%

within 1 year$’000

Group

2011

Financial assets

Cash at bank – 27,279

Short-term bank deposits 0.01 to 3.00 3,595

Financial liabilities

Bank overdrafts 7.60 385

Unsecured bank loans 1.27 to 8.00 16,183

2010

Financial assets

Cash at bank – 27,918

Short-term bank deposits 0.03 to 0.42 6,769

Financial liabilities

Bank overdrafts 7.30 193

Unsecured bank loans 1.35 to 4.50 7,694

Secured bank loan 4.50 1,400

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112

Notes to the Financial Statements (cont’d)

effective interest%

within 1 year$’000

company

2011

Financial assets

Cash at bank – 11,064

Short-term bank deposits – –

Financial liabilities

Unsecured bank loans 1.27 to 1.32 2,000

2010

Financial assets

Cash at bank – 17,213

Short-term bank deposits 0.37 2,000

Financial liabilities

Unsecured bank loans 1.35 to 1.48 5,000

Sensitivity analysis

The Group’s borrowings and short-term deposits at variable rates on which effective hedges have not been entered into, are denominated mainly in Singapore Dollars. If the interest rates increase/(decrease) by 100 basis point with all other variables being held constant, the profit before tax will be higher by the amounts shown below.

income statement

100 bp increase 100 bp decrease

Group $’000 $’000

31 december 2011

Short-term bank deposits 36 (36)

Borrowings (166) 166

(130) 130

31 december 2010

Short-term bank deposits 68 (68)

Borrowings (93) 93

(25) 25

32. Financial risk management (cont’d)

Effective interest rate and repricing analysis (cont’d)

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TeleChoice International LimitedAnnual Report 2011

113

Notes to the Financial Statements (cont’d)

32. Financial risk management (cont’d)

Foreign currency risk

The Group incurs foreign currency risk in respect of bank deposits as well as sales and purchases that are denominated in a currency other than the Group entities’ functional currencies. The currency giving rise to this risk is primarily the Ringgit Malaysia and US dollar. The risk arises mainly from timing mismatches between such sales and purchases denominated in these currencies. The Group ensures that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances.

The Group’s investments and long-term loan to its subsidiaries are not hedged as those currency positions are considered to be long-term in nature.

The Group’s and Company’s exposure to foreign currencies are as follows:

31 december 2011 $’000 $’000

Rm usd

Group

Trade and other receivables 2,722 2,477

Cash and cash equivalents 1,125 3,797

Trade and other payables (69) (3,152)

Financial liabilities – (3,366)

Net exposure 3,778 (244)

company

Cash and cash equivalents – 48

Net exposure – 48

31 december 2010

Group

Trade and other receivables – 2,011

Cash and cash equivalents – 2,228

Trade and other payables – (1,187)

Financial liabilities – (833)

Net exposure – 2,219

company

Cash and cash equivalents – 49

Net exposure – 49

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TeleChoice International LimitedAnnual Report 2011

114

Notes to the Financial Statements (cont’d)

32. Financial risk management (cont’d)

Foreign currency risk (cont’d)

Sensitivity analysis

A 10 percent strengthening of the following currencies against Singapore Dollar at 31 December would have increased (decreased) profit before tax by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant.

income statement

Group company

$’000 $’000

31 december 2011

RM 378 –

USD (24) 5

354 5

31 december 2010

USD 222 5

A 10 percent weakening of the above currencies against Singapore Dollar at 31 December would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.

Estimating the fair values

As at 31 December 2011, the fair value of non-current unbilled receivables and accrued contingent considerations amounted to $295,000 (2010: $2,906,572) and $5,444,000 (2010: Nil) respectively.

The notional amounts of financial assets and liabilities with a maturity of less than one year (including trade and other receivables, cash and cash equivalents, trade and other payables and financial liabilities) are assumed to approximate their fair values because of the short period to maturity.

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TeleChoice International LimitedAnnual Report 2011

115

Notes to the Financial Statements (cont’d)

32. Financial risk management (cont’d)

Accounting classifications

Noteloans and

receivables

Other financial liabilities

Total carrying amount

$’000 $’000 $’000Group31 december 2011Trade and other receivables 11 77,956 – 77,956Cash and cash equivalents 16 30,874 – 30,874

108,830 – 108,830

Bank overdrafts 16 – 385 385Accrued contingent consideration 19 – 5,005 5,005Trade and other payables 20 – 60,859 60,859Financial liabilities 21 – 16,183 16,183

– 82,432 82,432

31 december 2010Trade and other receivables 11 43,497 – 43,497Cash and cash equivalents 16 34,687 – 34,687

78,184 – 78,184

Bank overdrafts 16 – 193 193Accrued contingent consideration 19 – 3,000 3,000Trade and other payables 20 – 39,298 39,298Financial liabilities 21 – 9,094 9,094

– 51,585 51,585

company31 december 2011Trade and other receivables 11 27,274 – 27,274Cash and cash equivalents 16 11,064 – 11,064

38,338 – 38,338

Accrued contingent consideration 19 – 5,005 5,005Trade and other payables 20 – 19,949 19,949Financial liabilities 21 – 2,000 2,000

– 26,954 26,954

31 december 2010Trade and other receivables 11 15,365 – 15,365Cash and cash equivalents 16 19,213 – 19,213

34,578 – 34,578

Accrued contingent consideration 19 – 3,000 3,000Trade and other payables 20 – 14,783 14,783Financial liabilities 21 – 5,000 5,000

– 22,783 22,783

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TeleChoice International LimitedAnnual Report 2011

116

Notes to the Financial Statements (cont’d)

33. Commitments

The Group leases offices, a warehouse and a number of retail outlets under operating leases. The leases typically run for an initial period of two to three years, with an option to renew the lease after that date. Lease payments are usually increased annually to reflect market rentals.

At 31 December 2011, the Group and the Company have commitments for future minimum lease payments under non-cancellable operating leases as follows:

Group company

2011 2010 2011 2010

$’000 $’000 $’000 $’000

Payable:

Within 1 year 4,119 2,337 1,002 334

After 1 year but within 5 years 8,629 1,787 1,136 –

12,748 4,124 2,138 334

34. Corporate guarantee

The Group has provided the following guarantees to third parties during the financial year:

• Performance guarantees in respect of purchases and suppliers contracts projects entered by the Group amounting to $1,588,000 (2010: $831,000).

• Corporate guarantees amounting to $10,399,000 (2010: $7,830,000) in favour of subsidiaries granted to cover purchases and bank facilities.

35. Subsequent events

Subsequent to the balance sheet date, the directors proposed a final dividend of 1.6 cents per ordinary share (one-tier tax exempt) in respect of financial year ended 31 December 2011. The final dividend amounting to approximately $7,253,000 has not been recognised as at year end and is subject to shareholders’ approval at the forthcoming Annual General Meeting of the Company in 2012.

Subsequent to the balance sheet date, the Company bought back a total of 500,000 ordinary shares under the terms of Share Purchase Mandate approved by shareholders on 27 April 2007. The total consideration for these shares bought back from the market is $125,167 being the market price including incidental cost.

36. New accounting standards and interpretations not yet adopted

A number of new standards, amendments to standards and interpretations have been issued as at balance sheet date but are not yet effective. The Group is in the process of assessing the impact of adopting these standards.

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TeleChoice International LimitedAnnual Report 2011

117

Supplementary Information(SGX-ST Listing Manual disclosure requirements)

1. Directors’ Remuneration

Company’s directors receiving remuneration from the Group (other than Directors’ Fee & Benefits for Non-Executive Directors)

Number of directors

2011 2010

Remuneration of:

$500,000 and above – –

$250,000 to below $500,000 – –

Below $250,000 – –

– –

2. Interested Person Transactions

aggregate value of all transactions conducted

under a shareholders’ mandate pursuant to Rule

920 of the sGX listing manual

2011 2010

$’000 $’000

Transactions for the sales of goods and services 113,972 105,557

Temasek Holdings (Private) Limited and its Associates 113,972 105,557

Transactions for the purchase of goods and services 68,542 53,450

Temasek Holdings (Private) Limited and its Associates 68,542 53,450

Total interested Person Transactions 182,514 159,007

3. Material Contracts

There was no material contract entered into or still subsisting at the end of the financial year, for the purpose of Rule 1207(8) of the SGX Listing Manual.

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TeleChoice International LimitedAnnual Report 2011

118

Shareholdings Statistics As at 13 March 2012

Class of shares - Ordinary shares Voting rights - 1 vote per ordinary share

ANALYSIS OF SHAREHOLDINGS

size of shareholdings No. of shareholders % No. of shares %

1 - 999 2 0.09 1,090 0.00

1,000 - 10,000 1,164 50.61 5,918,592 1.30

10,001 - 1,000,000 1,117 48.56 85,572,988 18.86

1,000,001 and above 17 0.74 362,349,330 79.84

2,300 100.00 453,842,000 100.00

TOP 20 SHAREHOLDERS

No. Name of shareholder No. of shares %*

1 STT Communications Ltd 228,937,500 50.50

2 Leap International Pte Ltd 88,198,000 19.46

3 United Overseas Bank Nominees Pte Ltd 8,241,000 1.82

4 Choo Soon Kiah 7,360,000 1.62

5 Citibank Consumer Nominees Pte Ltd 7,000,000 1.54

6 DBS Nominees Pte Ltd 5,453,000 1.20

7 Ng Hian Chow 2,829,000 0.62

8 Tan Chwee Huat 1,880,000 0.41

9 Tan Kia Hong 1,793,000 0.40

10 Citibank Nominees Singapore Pte Ltd 1,545,930 0.34

11 DB Nominees (S) Pte Ltd 1,538,000 0.34

12 Goh Albert @ Goh Men San Albert 1,390,000 0.31

13 OCBC Nominees Singapore Pte Ltd 1,356,000 0.30

14 Tay Kiong Hong 1,317,000 0.29

15 Helen Chee 1,248,000 0.28

16 DBS Vickers Securities (S) Pte Ltd 1,191,000 0.26

17 Loh Sur Jin Andrew 1,071,900 0.24

18 Lim Siow Sun nee Lau Yuen Ling 1,000,000 0.22

19 Yee Lat Shing 1,000,000 0.22

20 Yeo Kock Tay 1,000,000 0.22

365,349,330 80.59

* The percentage of shareholdings was computed based on the issued share capital of the Company as at 13 March 2012 of 453,335,087 shares (which excludes 506,913 shares which are held as treasury shares representing approximately 0.11% of the total number of issued shares excluding treasury shares).

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119

Shareholdings Statistics (cont’d)As at 13 March 2012

SUBSTANTIAL SHAREHOLDERS

(As recorded in the Register of Substantial Shareholders)

Name direct interest % (4) deemed interest % (4)

Leap International Pte Ltd 88,198,000 19.46 – –

Lim Chai Hock Clive (1) – – 89,498,000 19.74

Michelle Ho Li Ann (2) – – 89,498,000 19.74

STT Communications Ltd (3) 228,937,500 50.50 – –

Singapore Technologies Telemedia Pte Ltd (3) – – 228,937,500 50.50

Temasek Holdings (Private) Limited (3) – – 228,937,500 50.50

Notes:

(1) Lim Chai Hock Clive and his wife, Michelle Ho Li Ann own in aggregate 100% of the interest in Leap International Pte Ltd (“leap international”). Lim Chai Hock Clive holds a total deemed interest in 89,498,000 shares (being 1,300,000 shares held in the name of Citibank Nominees Singapore Pte Ltd and 88,198,000 shares held by Leap International), representing 19.74% of the issued share capital of the Company.

(2) Michelle Ho Li Ann is the spouse of Lim Chai Hock Clive. Accordingly, Michelle Ho Li Ann is deemed interested in the shares held by Lim Chai Hock Clive.

(3) STT Communications Ltd (“sTTc”) is a subsidiary of Singapore Technologies Telemedia Pte Ltd (“sTT”), which is a wholly-owned subsidiary of Temasek Holdings (Private) Limited (“Temasek”). Temasek and STT are deemed to be interested in the 228,937,500 shares held by STTC by virtue of Section 7 of the Companies Act (Cap. 50).

(4) The percentage of shareholdings was computed based on the issued share capital of the Company as at 13 March 2012 of 453,335,087 shares (which excludes 506,913 shares which were held as treasury shares as at that date).

Shareholdings Held in Hands of Public

Based on information available to the Company, approximately 29.26% of the Company’s shares listed on the Singapore Exchange Securities Trading Limited were held in the hands of the public. Therefore the Company has complied with Rule 723 of the Listing Manual.

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TeleChoice International LimitedAnnual Report 2011

120

Notice of Fourteenth Annual General Meeting

NOTice is HeReby GiVeN that the Fourteenth Annual General Meeting of TeleChoice International Limited (the “company”) will be held at Lotus Room @ The Chevrons 48 Boon Lay Way 3rd Storey Singapore 609961 on 27 April 2012 at 10.30 a.m. to transact the following business:

AS ORDINARY BUSINESS

1. To receive and adopt the Audited Financial Statements for the financial year ended 31 December 2011 and the Directors’ and Auditors’ Report thereon.

Resolution 1

2. To declare a final tax exempt (one-tier) dividend of 1.6 cents per ordinary share in the capital of the Company (“share”), for the financial year ended 31 December 2011.

Resolution 2

3. That pursuant to Section 153(6) of the Companies Act (Cap. 50) (the “companies act”), Mr Bertie Cheng be and is hereby re-appointed as a Director to hold such office until the next Annual General Meeting of the Company.

Resolution 3

See Explanatory Note (a)

4. That pursuant to Section 153(6) of the Companies Act, Mr Yap Boh Pin be and is hereby re-appointed as a Director to hold such office until the next Annual General Meeting of the Company.

Resolution 4

See Explanatory Note (b)

5. To re-elect Mr Lim Chai Hock Clive, who is retiring in accordance with Article 91 of the Articles of Association of the Company.

Resolution 5

See Explanatory Note (c)

6. To re-elect Mr Yen Se-Hua Stewart, who is retiring in accordance with Article 91 of the Articles of Association of the Company.

Resolution 6

See Explanatory Note (d)

7. To approve Directors’ Fees of $384,000 for the financial year ended 31 December 2011.(Directors’ Fees for the financial year ended 31 December 2010: $397,000. Directors’ Fees for the financial year ended 31 December 2009: $383,000).

Resolution 7

8. To re-appoint KPMG LLP as auditors of the Company and to authorise the Directors to fix their remuneration.

Resolution 8

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Notice of Fourteenth Annual General Meeting

TeleChoice International LimitedAnnual Report 2011

121

Notice of Fourteenth Annual General Meeting (cont’d)

AS SPECIAL BUSINESS

To consider and, if thought fit, to pass the following resolutions as Ordinary Resolutions:

9. That authority be and is hereby given to the Directors to:

(a) (i) issue Shares whether by way of rights, bonus or otherwise; and/or

(ii) make or grant offers, agreements or options (collectively, “instruments”) that might or would require Shares to be issued, including but not limited to the creation and issue of (as well as adjustments to) warrants, debentures or other instruments convertible into Shares,

at any time and upon such terms and conditions and for such purposes and to such persons as the Directors may in their absolute discretion deem fit; and

(b) (notwithstanding the authority conferred by this Resolution may have ceased to be in force) issue Shares in pursuance of any Instrument made or granted by the Directors while this Resolution was in force,

provided that:

(i) the aggregate number of Shares to be issued pursuant to this Resolution (including Shares to be issued in pursuance of Instruments made or granted pursuant to this Resolution), does not exceed 50% of the issued Shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with sub-paragraph 9(ii) below), of which the aggregate number of Shares to be issued other than on a pro rata basis to shareholders of the Company (including Shares to be issued in pursuance of Instruments made or granted pursuant to this Resolution) does not exceed 20% of the issued Shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with sub-paragraph 9(ii) below);

(ii) (subject to such manner of calculation as may be prescribed by the Singapore Exchange Securities Trading Limited (the “sGX-sT”)) for the purpose of determining the aggregate number of Shares that may be issued under sub-paragraph 9(i) above, the percentage of issued Shares (excluding treasury shares) shall be based on the number of issued Shares (excluding treasury shares) in the capital of the Company at the time this Resolution is passed, and adjusting for: (1) new Shares arising from the conversion or exercise of any convertible securities or share options or vesting of share awards which are outstanding or subsisting at the time this Resolution is passed; and (2) any subsequent bonus issue, consolidation or subdivision of Shares;

(iii) in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of the Listing Manual of the SGX-ST for the time being in force (unless such compliance has been waived by the SGX-ST) and the Articles of Association for the time being of the Company; and

(iv) (unless revoked or varied by the Company in General Meeting) the authority conferred by this Resolution shall continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is the earlier.

See Explanatory Note (e)

Resolution 9

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Notice of Fourteenth Annual General Meeting (cont’d)

10. That authority be and is hereby given to the Directors to allot and issue from time to time such number of Shares in the Company as may be required to be allotted and issued pursuant to the exercise of options under the TeleChoice Pre-IPO Share Option Scheme (“Pre-iPO scheme”), provided that (i) the aggregate number of Shares to be issued pursuant to the Pre-IPO Scheme does not exceed 20,000,000 Shares, and (ii) the aggregate number of Shares to be issued under all of the share option plans and share incentive schemes of the Company in force, does not exceed 15% of the total number of issued Shares in the capital of the Company (excluding treasury shares) from time to time.

See Explanatory Note (f)

Resolution 10

11. That authority be and is hereby given to the Directors to:

(a) offer and grant options in accordance with the rules and terms of the TeleChoice Post-IPO Employee Share Option Scheme (“Post-iPO scheme”) and/or to grant awards in accordance with the rules and terms of the TeleChoice Restricted Share Plan (the “Restricted share Plan”) and/or the TeleChoice Performance Share Plan (the “Performance share Plan”) (the Post-IPO Scheme, the Restricted Share Plan and the Performance Share Plan shall collectively be referred to as the “share Plans”); and

(b) allot and issue from time to time such number of Shares in the capital of the Company as may be required to be allotted and issued pursuant to the exercise of options under the Post-IPO Scheme and/or such number of fully paid Shares in the capital of the Company as may be required to be allotted and issued pursuant to the vesting of the awards granted under the Restricted Share Plan and/or the Performance Share Plan,

provided that the aggregate number of Shares to be issued under the Pre-IPO Scheme and the Share Plans shall not exceed 15% of the total number of issued Shares in the capital of the Company (excluding treasury shares) from time to time.

See Explanatory Note (g)

Resolution 11

12. That:

(a) approval be and is hereby given, for the purposes of Chapter 9 of the Listing Manual (“chapter 9”) of SGX-ST, for the Company, its subsidiaries and associated companies that are entities at risk (as that term is used in Chapter 9), or any of them, to enter into any of the transactions falling within the types of interested person transactions described in the Annexure to the Appendix to the Annual Report dated 12 April 2012 (the “appendix”) with any party who is of the class of interested persons described in the Annexure to the Appendix, provided that such transactions are made on normal commercial terms and in accordance with the review procedures for such interested person transactions;

(b) the approval given in sub-paragraph 12(a) above (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 of the Company; and

(c) the Directors of the Company be and are hereby authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary or in the interests of the Company to give effect to the Shareholders’ Mandate and/or this Resolution.

See Explanatory Note (h)

Resolution 12

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Notice of Fourteenth Annual General Meeting (cont’d)

13. That:

(a) for the purposes of Sections 76C and 76E of the Companies Act, the exercise by the Directors of the Company of all the powers of the Company to purchase or otherwise acquire issued Shares in the capital of the Company not exceeding in aggregate the Maximum Limit (as defined in sub-paragraph 13(c) below), at such price or prices as may be determined by the Directors from time to time up to the Maximum Price (as defined in sub-paragraph 13(c) below), whether by way of:

(i) market purchase(s) on the SGX-ST through the SGX-ST’s trading system and/or any other securities exchange (“Other exchange”) on which the Shares may for the time being be listed and quoted (“market Purchases”); and/or

(ii) off-market purchase(s) (if effected otherwise than on the SGX-ST or, as the case may be, Other Exchange) in accordance with any equal access scheme(s) as may be determined or formulated by the Directors as they consider fit, which scheme(s) shall satisfy all the conditions prescribed by the Companies Act (“Off-market Purchases”),

and otherwise in accordance with all other laws and regulations and rules of the SGX-ST or, as the case may be, Other Exchange as may for the time being be applicable, be and is hereby authorised and approved generally and unconditionally (the “share Purchase mandate”);

(b) unless varied or revoked by the Company in general meeting, the authority conferred on the Directors of the Company pursuant to the Share Purchase Mandate may be exercised by the Directors at any time and from time to time during the period commencing from the date of the passing of this Resolution and expiring on the earlier of:

(i) the date on which the next Annual General Meeting of the Company is held; or

(ii) the date by which the next Annual General Meeting of the Company is required by law to be held; or

(iii) the date on which the purchases or acquisitions of Shares pursuant to the Share Purchase Mandate are carried out to the full extent mandated;

(c) in this Resolution:

“average closing Price” means the average of the last dealt prices of a Share for the last five consecutive Market Days (as defined in this sub-paragraph 13(c) below) on which the Shares are transacted on the SGX-ST or, as the case may be, Other Exchange, immediately preceding the date of the Market Purchase by the Company or, as the case may be, the date of the making of the offer pursuant to the Off-Market Purchase, and deemed to be adjusted in accordance with the listing rules of the SGX-ST, or as the case may be, Other Exchange, for any corporate action which occurs after the relevant five Market Day period;

“date of the making of the offer” means the date on which the Company announces its intention to make an offer for an Off-Market Purchase, stating the purchase price (which shall not be more than 110% of the Average Closing Price of the Shares (excluding related expenses of the purchase or acquisition)) for each Share, and the relevant terms of the equal access scheme for effecting the Off-Market Purchase;

Resolution 13

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TeleChoice International LimitedAnnual Report 2011

124

Notice of Fourteenth Annual General Meeting (cont’d)

“market day” means a day on which the SGX-ST, or as the case may be, Other Exchange is open for trading in securities;

“maximum limit” means that number of issued Shares representing 10% of the issued ordinary Share in the capital of the Company as at the date of the passing of this Resolution (excluding any Shares which are held as treasury shares as at that date); and

“maximum Price”, in relation to a Share to be purchased or acquired, means the purchase price (excluding brokerage, commission, applicable goods and services tax and other related expenses) which shall not exceed:

(i) in the case of a market purchase of a Share, 105% of the Average Closing Price of the Shares; and

(ii) in the case of an off-market purchase of a Share pursuant to an equal access scheme, 110% of the Average Closing Price of the Shares; and

(d) the Directors of the Company and/or any of them be and are hereby authorised to complete and do all such acts and things (including executing such documents as may be required) as they and/or he may consider expedient or necessary to give effect to the transactions contemplated and/or authorised by this Resolution.

See Explanatory Note (i)

OTHER BUSINESS

14. To transact any other business that may be transacted at an Annual General Meeting of the Company.

By Order of The Board

Pek siok lanCompany Secretary

Singapore, 12 April 2012

Notes:

1. A member of the Company entitled to attend and vote at the Annual General Meeting is entitled to appoint not more than two proxies to attend and vote in his stead.

2. A proxy need not be a member of the Company.3. The instrument appointing a proxy must be deposited at the Company’s registered office at 51 Cuppage Road #09-01 Singapore

229469 (Attention: The Company Secretary) not later than 48 hours before the time appointed for the Annual General Meeting.

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TeleChoice International LimitedAnnual Report 2011

125

Notice of Fourteenth Annual General Meeting (cont’d)

Notice of Books Closure and Dividend Payment Dates

Subject to shareholders’ approval of the payment of the proposed final dividend at the Fourteenth Annual General Meeting to be convened on 27 April 2012, the Share Transfer Books and Register of Members of the Company will be closed on 5 May 2012.

Duly completed transfers received by the Company’s Registrar, M & C Services Private Limited, 138 Robinson Road #17-00 The Corporate Office Singapore 068906, up to 5.00 p.m. on 4 May 2012 (the “entitlement date”) will be registered to determine shareholders’ entitlement to the proposed final dividend. Subject as aforesaid, persons whose securities accounts with The Central Depository (Pte) Limited are credited with ordinary shares in the capital of the Company as at 5.00 p.m. on the Entitlement Date, will be entitled to the proposed final dividend.

The proposed final dividend, if approved by shareholders of the Company, will be paid on 18 May 2012.

EXPLANATORY NOTES:

(a) Ordinary Resolution No. 3 is to approve the re-appointment of Mr Bertie Cheng as a Director to hold such office until the next annual general meeting of the Company pursuant to Section 153(6) of the Companies Act (Cap. 50) (the “companies act”). Upon his re-appointment, Mr Cheng, who is considered independent, will remain as the Chairman of the Board of Directors of the Company and, as the Chairman of the Executive Committee and the Remuneration Committee of the Company.

(b) Ordinary Resolution No. 4 is to approve the re-appointment of Mr Yap Boh Pin as a Director to hold such office until the next annual general meeting of the Company pursuant to Section 153(6) of the Companies Act. Upon his re-appointment, Mr Yap, who is considered independent for the purposes of Rule 704(8) of the Listing Manual, will remain as the Chairman of the Audit Committee and a member of the Nominating Committee of the Company.

(c) Ordinary Resolution No. 5 is to approve the re-election of Mr Lim Chai Hock Clive, who is retiring by rotation, in accordance with Article 91 of the Articles of Association of the Company. Upon his re-election, Mr Lim will remain as a member of the Executive Committee of the Company.

(d) Ordinary Resolution No. 6 is to approve the re-election of Mr Yen Se-Hua Stewart, who is retiring by rotation, in accordance with Article 91 of the Articles of Association of the Company. Upon his re-election, Mr Yen, who is considered independent, will remain as the Chairman of the Nominating Committee and as a member of the Remuneration Committee and the Executive Committee of the Company.

(e) Ordinary Resolution No. 9 is to authorise the Directors to issue Shares in the capital of the Company and to make or grant instruments (such as warrants or debentures) convertible into Shares, and to issue Shares in pursuance of such instruments, up to an amount not exceeding in total 50% of the issued Shares (excluding treasury shares) in the capital of the Company, with a sub-limit of 20% for issues other than on a pro rata basis to shareholders. For the purpose of determining the aggregate number of Shares that may be issued, the percentage of issued share capital shall be based on the issued share capital of the Company at the time that Ordinary Resolution No. 9 is passed, after adjusting for (a) new Shares arising from the conversion or exercise of any convertible securities or share options or vesting of share awards which are outstanding or subsisting at the time that Ordinary Resolution No. 9 is passed, and (b) any subsequent bonus issue, consolidation or subdivision of Shares.

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TeleChoice International LimitedAnnual Report 2011

126

Notice of Fourteenth Annual General Meeting (cont’d)

Notice of Books Closure and Dividend Payment Dates (cont’d)

(f) Ordinary Resolution No. 10 is to authorise the Directors to allot and issue Shares in the Company pursuant to the exercise of options granted under the TeleChoice Pre-IPO Share Option Scheme (“Pre-iPO scheme”). The Pre-IPO Scheme was adopted at an Extraordinary General Meeting of the Company on 7 May 2004. On 12 May 2004, pursuant to the Pre-IPO Scheme, the Company granted share options to eligible participants, to subscribe for an aggregate of 20,000,000 Shares. Details of the Pre-IPO Scheme are set out in the Company’s prospectus dated 16 June 2004.

(g) Ordinary Resolution No. 11 is to authorise the Directors to offer and grant options and/or grant awards and to allot and issue Shares in the capital of the Company in accordance with the rules and terms of the TeleChoice Post-IPO Employee Share Option Scheme (“Post-iPO scheme”), the TeleChoice Restricted Share Plan (the “Restricted share Plan”) and/or the TeleChoice Performance Share Plan (the “Performance share Plan”) (the Post-IPO Scheme, the Restricted Share Plan and the Performance Share Plan shall collectively be referred to as the “share Plans”), provided that the aggregate number of Shares to be allotted and issued pursuant to the Pre-IPO Scheme and the Share Plans shall not exceed 15% of the total number of issued Shares in the capital of the Company (excluding treasury shares) from time to time. The Post-IPO Scheme was adopted at the Extraordinary General Meeting of the Company held on 7 May 2004. Details of the Post-IPO Scheme are set out in the Company’s prospectus dated 16 June 2004. The Restricted Share Plan and the Performance Share Plan were adopted by the shareholders of the Company at the Extraordinary General Meeting of the Company held on 27 April 2007. Details of the Restricted Share Plan and the Performance Share Plan are set out in the Company’s circular to shareholders dated 11 April 2007. The grant of options and/or awards under the respective Share Plans will be made in accordance with their respective provisions.

(h) Ordinary Resolution No. 12 is to renew the mandate to allow the Company, its subsidiaries and its associated companies that are entities at risk or any of them to enter into certain interested person transactions with certain classes of interested persons as described in the Annexure to the Appendix to the Annual Report dated 12 April 2012 (the “appendix”). The authority will, unless revoked or varied by the Company in general meeting, continue in force until the conclusion of the next annual general meeting of the Company.

(i) Ordinary Resolution No. 13 is to renew the mandate to allow the Company to purchase or acquire issued ordinary Shares in the capital of the Company on the terms and subject to the conditions of the Resolution.

The Company may use internal resources or external borrowings or a combination of both to fund the purchases or acquisitions of Shares pursuant to the proposed Share Purchase Mandate. The amount of financing required for the Company to purchase or acquire its Shares, and the impact on the financial position of the Company, cannot be ascertained as at the date of this Notice as these will depend on the number of Shares purchased or acquired and the price at which such Shares were purchased or acquired.

The financial effects of the purchase or acquisition of such Shares by the Company pursuant to the proposed Share Purchase Mandate on the audited financial statements of the Company and the Company and its subsidiaries for the financial year ended 31 December 2011, based on certain assumptions, are set out in paragraph 3.7.3 of the Letter to Shareholders in the Appendix.

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TELECHOICE INTERNATIONAL LIMITED(Registration No. 199802072R)(Incorporated in the Republic of Singapore)

PROXY FORMFourteenth Annual General Meeting

IMPORTANT

1. For investors who have used their CPF monies to buy shares in the capital of TeleChoice International Limited, this Annual Report is forwarded to them at the request of their CPF Approved Nominees and is sent FOR INFORMATION ONLY.

2. This Proxy Form is not valid for use by such CPF investors and shall be ineffective for all intents and purposes if used or purported to be used by them.

I/We ________________________________________________ (Name) NRIC/Passport/Co. Reg. No._____________________________

of _______________________________________________________________________________________________________ (Address)

being a member/members of TELECHOICE INTERNATIONAL LIMITED (the “Company”) hereby appoint:

Name addressNRic/ Passport Number

Proportion of shareholdings

No. of shares %

and/or (delete as appropriate)

as my/our proxy/proxies to attend and to vote for me/us on my/our behalf and, if necessary, to demand a poll, at the Fourteenth Annual General Meeting of the Company to be held on 27 April 2012 at Lotus Room @ The Chevrons 48 Boon Lay Way 3rd Storey Singapore 609961 at 10.30 a.m. and at any adjournment thereof.

(Please indicate with an “X” in the spaces provided whether you wish your vote(s) to be cast for or against the Resolutions as set out in the Notice of Annual General Meeting. In the absence of specific directions, the proxy/proxies will vote or abstain as he/they may think fit, as he/they will on any other matter arising at the Annual General Meeting.)

No. Ordinary Resolutions For against

Ordinary business

1. Adoption of Financial Statements and Reports

2. Declaration of Final Tax Exempt (one-tier) Dividend

3. Re-appointment of Mr Bertie Cheng as Director

4. Re-appointment of Mr Yap Boh Pin as Director

5. Re-election of Mr Lim Chai Hock Clive as Director

6. Re-election of Mr Yen Se-Hua Stewart as Director

7. Approval of Directors’ Fees

8. Re-appointment of KPMG LLP as Auditors

special business

9. Authority for Directors to issue shares

10.Authority for Directors to issue and allot shares, pursuant to the exercise of options granted under the TeleChoice Pre-IPO Share Option Scheme

11.Authority for Directors to offer and grant options and/or grant awards, and allot and issue shares, pursuant to the TeleChoice Post-IPO Employee Share Option Scheme, the TeleChoice Restricted Share Plan and the TeleChoice Performance Share Plan

12. Approval of Renewal of the Shareholders’ Mandate for Interested Person Transactions

13. Approval of Renewal of the Share Purchase Mandate

Dated this ____________ day of _____________________ 2012.

______________________________________Signature(s) or Common Seal of Member(s)

Total Number of Shares Held

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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 (Cap. 50), 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 in his stead. A proxy need not be a member of the Company.

3. Where a member appoints two proxies, the appointments shall be invalid unless he specifies the proportion of his shareholding 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 51 Cuppage Road #09-01, Singapore 229469 (Attn: Company Secretary) 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. Where an instrument appointing a proxy is signed on behalf of the appointor by an attorney, the letter or power of attorney or a duly certified copy thereof must (failing previous registration with the Company) be lodged with the instrument of proxy, failing which the instrument may be treated as invalid.

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 Annual General Meeting, in accordance with Section 179 of the Companies Act (Cap. 50).

7. 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 members whose shares are entered against their names in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if such members are not shown to have shares entered against their names in the Depository Register as at 48 hours before the time appointed for holding the Annual General Meeting, as certified by The Central Depository (Pte) Limited to the Company.

2nd fold here

1st fold here

3rd fold here

TelecHOice iNTeRNaTiONal limiTed51 Cuppage Road

#09-01Singapore 229469

Attn : Company Secretary

Affix

Postage

Stamp

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TeleChoice International Limited 5 Clementi Loop Level 2MSingapore 129816Tel: 65 6849 4000Fax: 65 6849 4012Company Registration No. 199802072R

www.telechoice.com.sg