Full Annual Report 2006 - Singapore Technologies Engineering

THE WINNING 

SPIRIT 

ANNUAL REPORT 2006

CONTENTS 

01 The Winning Spirit 

10 Letter to Shareholders 

16 Financial Highlights 

22 Board of Directors 

26 Senior Management 

30 Organisation Chart 

32 Corporate Governance 

44 Environment, Health and Safety 

45 Corporate Social Responsibility 

46 Investor Relations 

48 Investor Relations Calendar 2006 

48 Financial Calendar 2007 

49 Share Price Performance 

50 Human Resources 

54 Awards and Commendations 

56 Operating Financial Review 

62 ST Engineering at a Glance 

89 Financial Report

1 

The winning spirit entails more than 

performance. It is an active and 

adaptive mindset – one that defies odds, 

embraces the courage to be different, and 

determination in the face of adversity. 

ST Engineering empowers its people to 

direct positive energy into innovation 

and achievement. With the winning 

spirit, challenges are transformed into 

opportunities, problems into successes.

THE WINNING SPIRIT ST Engineering AR 2006 10 

Letter to Shareholders 

The Group recorded double digit growth for a second straight year in 2006. 

Our net profit rose by 12% to $445.1m on the strength of the Aerospace 

and Electronics sectors and higher contributions from our overseas 

acquisitions. Group turnover was up 34% to $4.49b, while profit before tax 

increased 12% to $564.3m. Our earnings per share were 15.2 cents, an 

increase of 11%. Economic Value Added grew 13% to $327.8m. Return 

on equity was a very respectable 28.4%, higher than the 26.5% in 2005. 

Cash and cash equivalents, including funds under management, remained a 

healthy $1.4b. 

Dear Shareholders 

Global markets continued their upward momentum in 2006, 

with Singapore’s growth at a new high compared to recent 

years. Higher interest rates and oil prices, however, threatened 

to hinder economic activity and exerted pressure on bottom 

lines for most industries. While higher oil prices have minimal 

direct impact on the Group, they affected the aviation industry, 

increasing the cost of operations for airlines already in a difficult 

market compounded by heightened competition from low cost 

carriers. China appears to have had some success in cooling 

its economy and growth continued to be strong, aided in part 

by the build up to the 2008 Olympics. India is another growing 

market where the Group seeks to increase its presence. 

Another area of opportunity is the booming Gulf States. 

While various geographies pose different challenges, 

they serve as opportunities for the Group as we grow our 

presence globally. 

Against this backdrop, the ST Engineering Group enjoyed 

another good year in 2006 with net profit growing by 12% 

to $445.1m. 

Becoming a Global Entity 

The Group today is a global entity operating in five continents, 

spanning 20 countries and 35 cities. 

With our recent acquisitions, the profile of our business mix 

is increasingly global and commercial, due to the nature and 

location of these new acquisitions. These new additions have 

steadily increased their contributions to the Group, enabling 

us to diversify our earnings stream. As a vital part of our total 

business mix, the Group’s defence business continues to grow 

with new solutions and product offerings. Customers are 

increasingly focused on the total cost of ownership and market 

best practices. Our flexibility to leverage on the interplay 

between our defence and commercial businesses, and tapping 

the strengths of each, helps strengthen the Group’s ability to 

provide innovative and cost effective systems and solutions. 

Group revenues outside of Asia has today grown to 47% 

from 28% in 2002, reflecting our geographic spread and 

global customer base which covers more than 60 countries. 

Globalisation helps to diversify geographic-centric economic 

and political factors, thereby hedging the interests of the Group. 

Globalisation is the cornerstone of our strategy for growth and 

to build leading businesses to add vigour to the Group. We

11 

Peter SEAH Lim Huat Chairman (left) TAN Pheng Hock President and CEO (right) 

select each new addition carefully to enhance the value of our 

existing businesses, expand our technologies and capabilities, 

address new markets, enlarge our customer base, and infuse 

fresh talent into our cosmopolitan workforce. 

In line with our globalisation thrust, this year we acquired two 

companies in the US – one in simulation and digital media, 

and another in specialty vehicles. In addition, a joint venture 

company was formed with Kalyani Group for the research, 

development and manufacture of military land-based products 

and solutions, specifically large calibre guns and small arms 

for India’s defence and security requirements. Our Aerospace 

sector is starting an aircraft maintenance facility in Panama in 

2Q2007, which enhances our aerospace global network and 

complements the existing North American facilities in Mobile, 

Alabama, and San Antonio, Texas. 

Growing by Double Digit 

The Group recorded double digit growth for a second straight 

year in 2006. Our net profit rose by 12% to $445.1m on the 

strength of the Aerospace and Electronics sectors and higher 

contributions from our overseas acquisitions. Group turnover 

was up 34% to $4.49b, while profit before tax increased 

12% to $564.3m. Our earnings per share were 15.2 cents, 

an increase of 11%. Economic Value Added grew 13% to 

$327.8m. Return on equity was a very respectable 28.4%, 

higher than the 26.5% in 2005. Cash and cash equivalents, 

including funds under management, remained a healthy $1.4b. 

ST Engineering’s market cap reached $9.07b as at end 

December 2006, compared to $8.33b at the close of 2005. 

Recognising our Shareholders 

The ST Engineering Board of Directors is proposing to pay 

100% of 2006 net profit of $445.1m to our loyal shareholders 

as dividends. This will translate into a dividend of 15.11 cents 

per share, and a dividend yield of 5.1%. The dividends comprise 

an ordinary tax exempt (one-tier) dividend of 4 cents per share, 

and a special tax exempt (one-tier) dividend of 11.11 cents 

per share. The Group plans to start paying half-year interim 

ordinary dividends from 2007. 

Winning the Trust of Customers 

Contracts announced during the year exceeded US$1.3b. 

The figure does not include smaller projects nor represent the 

Group’s total sales. These contract wins expanded our order 

book to an all time high of $7.37b by yearend.


Letter to Shareholders 

We won several significant contracts in 2006. Among them 

were the US$635m Airbus contract for total aviation support 

to Skybus, Airlines, a new carrier a new in carrier the US; in the two US; roll-on two roll-off roll-on vessels rolloff 

be vessels used by to be Airbus used to by transport Airbus to large transport aircraft large components, aircraft 

to 

including components, sections including for their sections new A380 for their aircraft; new A380 and two aircraft; and 

two shipbuilding contracts contracts from from the US the Navy US Navy amounting amounting to over to over 

US$360m, namely the Egyptian Navy fast missile craft project 

and a missile range instrumentation ship. The latter project is 

significant as it marks the first time we have won a contract 

from the US Navy since we acquired VT Halter Marine in 2002. 

Our Electronics sector’s foothold in the Chinese rail market 

now totals nearly $50m, including three projects in Guangzhou. 

It was also strengthened with the development of an integrated 

traffic command centre system, the first-of-its-kind aimed at 

efficiently managing major rail lines in Beijing. This makes us 

the first Singapore company to win a major Beijing Olympics 

related contract. 

Many of the contracts for the Group came from existing 

customers. A repeat customer is a happy customer. For an 

organisation driven by performance and results, there is no 

better validation and recognition than having customers come 

back time after time. 

Enhancing Capabilities 

The Singapore Army commissioned into service an enhanced 

version of our Bionix armoured vehicle, BXII, in 2006. This 

latest Bionix boosts SAF’s 3rd Generation networked capability. 

Featuring innovations from the Electronics and Land Systems 

sectors, the BXII is integrated with the rest of the fighting 

forces through a battlefield management system and networkcentric 

wireless communications systems. In support of 

the digitised army programme, this provides an integrated 

situation awareness capability, collaborative planning tools and 

knowledge-based command and control (C2). This enables 

ground commanders to make responsive decisions and exercise 

highly effective C2 operations in a fast-moving battlefield – a 

prime example of how the Group delivers value to customers 

through innovation. 

The need for continuous capability improvement is a given, 

particularly in an ever-evolving and competitive global market. 

This is supported by a corporate culture which encourages 

innovation in integrating technologies and collaboration 

with like-minded partners to add new solutions to meet our 

customers’ needs. 

Some of these Group-wide capabilities and technologies were 

showcased at Asian Aerospace 2006. Many of these are 

dual-purpose or applicable to both the defence and commercial 

businesses, including a slew of homeland security solutions. 

With our components companies in Scandinavia and the 

UK merged into one, our Aerospace sector has enlarged 

its product and services offerings in Europe, and added 

Scandinavian Airlines as a major customer. Together with 

the existing components repair capabilities, we now have 

expanded global coverage, as well as enhanced breadth and 

depth of our capabilities. 

Living Up to Corporate Citizenry 

As the Group expands, so does our Corporate Social 

Responsibility (CSR). Every country and every business has 

its own matrix of CSR hot buttons, ranging from the way we 

do business and preserve the environment to conservation/ 

recycling practices, staff welfare and community programmes. 

Good corporate governance is especially vital as the Group 

globalises. Transparent practices need to be applied with 

cultural and local sensitivity. ST Engineering constantly raises 

the bar in best practices, implementing a whistle-blowing 

process during the year.

13 

In 2007, we will continue to grow our business organically 

in new markets, with new products and systems innovation, 

as well as develop new capabilities to address changing 

customer needs. In addition, the Group will focus on 

creating synergies among our businesses and leverage 

economies of scale in all four sectors. 

Looking Ahead 

As the Group spreads its wings globally, we are constantly 

mindful of the multitude of risks each new market entry brings, 

be they natural, political, economic or socio-cultural. The risk 

and business management framework that we have put in 

place, which is constantly being refined and reviewed, helps 

mitigate such business risks. 

Hurricane Katrina remains an important lesson of what could 

have been had we been less prepared. It is a reminder for us to 

stay vigilant and adaptive to an array of business challenges as 

we continue to grow our businesses globally. 

Going global also means making tough and painful decisions 

when necessary. We closed our UK aircraft maintenance 

facility in Bournemouth this year after being unable to turn it 

around since its setup in 2001. This was decided together 

with our joint venture partner in the long term interests of 

both companies and stakeholders. 

In 2007, we will continue to grow our business organically in 

new markets, with new products and systems innovation, as 

well as develop new capabilities to address changing customer 

needs. In addition, the Group will focus on creating synergies 

among our businesses and leverage economies of scale in all 

four sectors. 

At the same time, the Group will continue to seek companies 

and partners that enhance our core business through 

acquisitions, joint ventures, partnerships and collaborations. 

We adopt a pragmatic approach when developing new markets, 

realistically appraising the key performance indicators and 

adopting a flexible strategy for a particular environment which 

may require the Group to be a subcontractor, licensor, or 

supplier to local players. 

As an innovative organisation, we increasingly develop 

intellectual property to serve as a defensive measure in our 

global thrust and as leverage for market entry strategy where 

it makes sense. 

For the coming year, the Group expects to achieve a 

higher turnover and profit before tax, barring unforeseen 

circumstances. 

Expressing our Appreciation 

We formally express our appreciation to shareholders at the 

AGM and in the annual report. In reality, our gratitude for 

your support extends throughout the year. In the same light, 

we thank our customers for their continuing support through 

the years. 

Our Board of Directors is the beacon which steers Group 

strategy and sets Group directions. The Directors’ experience 

and depth of knowledge, willingly shared, have mapped our 

course and continue to guide our future. 

We would like to record our deep appreciation to our Director, 

Lieutenant-General Ng Yat Chung, who will be retiring at our 

coming AGM. 

Not least of all, our special thanks to our family of over 17,000 

members around the world. Your dedication and loyalty have 

contributed to our success and winning spirit. 

Peter SEAH Lim Huat 

Chairman 

TAN Pheng Hock 

President and CEO 

16 March 2007

THE WINNING SPIRIT ST Engineering AR 2006 14


Financial Highlights 

Group turnover rose 34% to $4,486m. EBIT, PBT and PATMI were 

$457.6m, $564.3m and $445.1m, representing growth rates of 17%, 12% 

and 12% respectively. Order book rose to a new high at $7.37b. Return 

on equity improved from 26.5% for FY2005 to 28.4% for FY2006. The 

Board is proposing to pay 100% of net profits as dividends or 

15.11 cents per share. 

TURNOVER BY SECTOR ($m) 

06 

05 

04 

03 

02 

0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 

PROFIT BEFORE TAX BY SECTOR ($m) 

06 

05 

04 

03 

02 

0 100 200 300 400 500 600 

PROFIT AFTER TAX BY SECTOR ($m) 

06 

05 

04 

03 

02 

0 100 200 300 400 500 

Aerospace Electronics Land Systems Marine Others

17 

Key Financial Data 

2006 2005 2004 2003 2002 

TURNOVER 

BY SECTOR ($m) 4,486 100% 3,338 100% 2,948 100% 2,819 100% 2,619 100% 

Aerospace 1,673 37% 1,236 37% 1,118 38% 

1,092 39% 

1,043 40% 

Electronics 951 21% 701 21% 626 21% 

614 22% 

571 22% 

Land Systems 1,002 22% 600 18% 591 20% 

717 25% 710 27% 

Marine 702 16% 660 20% 484 16% 387 14% 280 11% 

Others 158 4% 141 4% 129 5% 

9 – 

15 – 

PROFIT BEFORE TAX 

BY SECTOR ($m) 564.3 100% 503.2 100% 446.2 100% 412.7 100% 413.0 100% 

Aerospace 305.3 54% 255.4 51% 235.4 53% 

225.2 55% 

213.0 52% 

Electronics 104.6 19% 76.0 15% 64.5 14% 61.4 15% 

56.7 14% 

Land Systems 70.0 12% 65.0 13% 71.5 16% 96.4 23% 

96.9 23% 

Marine 79.5 14% 87.9 17% 69.8 16% 

35.2 9% 

41.1 10% 

Others 4.9 1% 18.9 4% 5.0 1% 

(5.5) (2%) 

5.3 1% 

PROFIT AFTER TAX 

BY SECTOR ($m) 445.1 100% 396.3 100% 354.2 100% 325.6 100% 330.7 100% 

Aerospace 255.0 57% 210.3 53% 187.3 53% 

176.3 54% 

155.6 47% 

Electronics 76.3 17% 58.0 15% 51.6 15% 

48.0 15% 

42.8 13% 

Land Systems 51.9 12% 49.0 12% 58.1 16% 

76.5 24% 

100.6 30% 

Marine 67.8 15% 70.3 18% 53.7 15% 

30.8 9% 

29.2 9% 

Others (5.9) (1%) 8.7 2% 3.5 1% 

(6.0) (2%) 

2.5 1%


Key Financial Data 

2006 2005 2004 2003 2002 

Shareholders’ funds ($m) 1,565 1,493 1,358 1,324 1,452 

Total assets ($m) 5,514 4,566 4,042 4,122 4,351 

Net tangible assets ($m) 996.4 1,131 1,296 1,266 1,431 

Gross dividend per share (cents) 15.11 13.60 12.39 11.30 18.50 

Dividend yield (%) 5.09 5.24 5.67 6.12 9.25 

Dividend cover 1.00 1.00 1.00 1.00 0.74 

Earnings per share (cents) 15.15 13.64 12.26 11.29 11.47 

Return on turnover (%) 10.2 12.3 12.2 11.6 12.7 

Return on equity (%) 28.4 26.5 26.1 24.6 22.8 

Return on total assets (%) 8.3 9.0 8.9 7.9 7.7 

Net tangible assets per share (cents) 33.80 38.80 44.80 43.90 49.60 

06 

1,565 

02 

1,452 

04 

1,358 

05 

1,493 

03 

1,324 

SHAREHOLDERS’ FUNDS ($m) 

06 

28.4 

04 

26.1 

05 

26.5 

02 

22.8 

03 

24.6 

RETURN ON EQUITY (%) 

02 

49.6 

04 

44.8 

03 

43.9 

05 

38.8 

NET TANGIBLE ASSETS PER SHARE (CENTS) 06 

33.8

19 

Productivity Data 

2006 2005 2004 2003 2002 

Average staff strength 15,912 13,099 11,684 11,702 11,413 

Sales per employee ($) 281,910 254,821 252,333 240,898 229,492 

Profit after tax per employee ($) 27,974 30,255 30,316 27,823 28,977 

Employment costs ($m) 1,243.0 899.9 826.9 798.0 759.1 

Employment costs per $ of turnover ($) 0.28 0.27 0.28 0.28 0.29 

Economic Value Added ($m) 327.8 290.6 234.5 240.9 190.2 

Economic Value Added spread (%) 12.3 16.2 13.7 13.9 11.3 

Economic Value Added per employee ($) 20,598 22,187 20,075 20,587 16,664 

Value added ($m) 1,990.8 1,500.6 1,363.1 1,337.0 1,274.2 

Value added per employee ($) 125,112 114,559 116,668 114,253 111,646 

Value added per $ of employment costs ($) 1.60 1.67 1.65 1.68 1.68 

Value added per $ of gross property, 

plant and equipment ($) 0.99 1.02 1.03 1.05 1.03 

Value added per $ of turnover ($) 0.44 0.45 0.46 0.47 0.49 

04 30.3 05 30.3 

02 29.0 

06 28.0 

03 27.8 

PROFIT AFTER TAX PER EMPLOYEE ($’000) 

05 22.2 

03 20.6 

04 20.1 

06 20.6 

02 16.7 

ECONOMIC VALUE ADDED PER EMPLOYEE ($’000) 

06 125.1 

03 114.3 

04 116.7 

05 114.6 

02 111.6 

VALUE ADDED PER EMPLOYEE ($’000)


Group Economic Value Added Statement 

($m) 2006 2005 2004 2003 2002 

Net profit before tax 512.8 457.3 387.8 367.4 370.7 

Adjust for: 

Share of results of associated companies 

and joint ventures 51.5 45.9 58.4 45.3 42.3 

Interest expense 45.1 10.4 8.0 3.7 5.0 

Others 11.6 2.2 (4.8) 18.4 5.3 

Adjusted profit before interest and tax 621.0 515.8 449.4 434.8 423.3 

Cash operating taxes (Note 1) (112.8) (99.3) (85.7) (84.7) (76.3) 

Net operating profit after tax (NOPAT) – (a) 508.2 416.5 363.7 350.1 347.0 

Average capital employed (Note 2) 2,691.9 1,865.4 1,725.0 1,712.1 1,685.8 

Weighted average cost of capital (Note 3) (%) 6.6 6.1 7.4 6.5 9.3 

Capital charge – (b) (177.7) (113.8) (127.6) (111.3) (156.8) 

Economic Value Added (EVA) – [(a) – (b)] 330.5 302.7 236.1 238.8 190.2 

Minority share of EVA (2.7) (12.1) (1.6) 2.1 – 

EVA attributable to ordinary shareholders 327.8 290.6 234.5 240.9 190.2 

Unusual items (UI) gains/(losses) (Note 4) (30.7) (7.0) 6.1 0.7 7.9 

EVA attributable to ordinary shareholders 

(exclude UI) 297.1 283.6 240.6 241.6 198.1 

Note 1: 

Note 2: 

The reported current tax is adjusted for the statutory tax impact of 

interest expense. 

Monthly average share capital plus interest bearing liabilities, 

timing provision, goodwill impaired/amortised, and present value 

of operating leases. 

Major Capital Components: 

$m 

Long term debt 834.1 

Short term debt 178.5 

Equity 1,438.0 

Others 241.3 

2,691.9 

Note 3: 

Note 4: 

The Weighted Average Cost of Capital is calculated in accordance to 

Singapore Technologies Engineering Group EVA Policy as follows: 

i) Cost of Equity using Capital Asset Pricing Model with market risk 

premium at 6.0% (2005 @ 6.0%); 

ii) Risk-free rate of 3.31% (2005 @ 2.62%) based on yield-tomaturity 

of Singapore Government 10 years Bonds; 

iii) Ungeared beta at 0.65 (2005 @ 0.65) based on Singapore 

Technologies Engineering risk categorisation; and 

iv) Cost of Debt rate at 3.54% (2005 @ 3.03%) using 5-year 

Singapore dollar Swap Offered Rate plus 25 basis point 

(2005 @ 75 basis point). 

Unusual Items (UI) refer to divestment of investment properties, 

subsidiary and associates, long term investments and disposal of major 

property, plant and equipment. 

06 

05 

327.8 

290.6 

02 

03 

240.9 

04 

234.5 

EVA ATTRIBUTABLE TO ORDINARY 

SHAREHOLDERS ($m) 

190.2

21 

Group Value Added Statement 

($m) 2006 2005 2004 2003 2002 

Value added from: 

Revenue earned 4,485.8 3,337.9 2,948.1 2,819.0 2,619.2 

Bought in materials and services (2,644.0) (1,959.0) (1,698.6) (1,578.5) (1,452.1) 

1,841.8 1,378.9 1,249.5 1,240.5 1,167.1 

Income from investments and interest 79.9 49.4 36.2 32.1 49.6 

Exchange loss (3.9) (1.8) (2.1) (1.2) (4.2) 

Other non-operating income 21.5 28.2 21.1 20.3 19.4 

Share of results of associated companies and 

joint ventures 51.5 45.9 58.4 47.3 43.8 

Amortisation of goodwill on acquisition of 

associated companies – – – (2.0) (1.5) 

Total value added 1,990.8 1,500.6 1,363.1 1,337.0 1,274.2 

Distribution of total value added 

To employees in wages, salaries and benefits 1,241.0 898.3 826.2 797.4 758.5 

To government in income and other taxes 116.8 99.6 93.8 93.1 83.8 

To providers of capital on: 

• Interest paid on borrowings 42.3 8.0 4.2 2.2 2.9 

• Dividends to shareholders 399.5 359.8 326.5 449.9 247.8 

1,799.6 1,365.7 1,250.7 1,342.6 1,093.0 

Balance retained in/(applied from) business 

Depreciation 130.7 79.1 77.7 86.4 78.6 

Impairment of assets 9.3 16.5 1.0 1.1 1.9 

Retained profits (15.6) 5.3 (0.6) (149.7) 44.2 

124.4 100.9 78.1 (62.2) 124.7 

Non-production cost and income 

Bad debts (9.2) (13.6) 0.2 25.7 11.1 

Income from investments and interest 79.9 49.4 36.2 32.1 49.6 

Exchange loss (3.9) (1.8) (2.1) (1.2) (4.2) 

66.8 34.0 34.3 56.6 56.5 

Total distribution 1,990.8 1,500.6 1,363.1 1,337.0 1,274.2 

06 1,990.8 

05 1,500.6 

02 1,274.2 

03 1,337.0 

04 1,363.1 

TOTAL VALUE ADDED ($m)


Board of Directors 

The names of the directors 

holding office at the date of 

this report are set out below 

together with details of their 

academic and professional 

qualifications, age, date of first 

appointment as director, date 

of last re-election as director 

as well as directorships in listed 

companies. 

Mr Peter SEAH Lim Huat, 

Chairman 

Mr Peter Seah Lim Huat, 60, 

was appointed non executive 

Chairman on 15 April 2002 

and was last re-elected on 31 

March 2006. He is currently 

a member of the Temasek 

Holdings Advisory Panel. Mr 

Seah was a banker for 33 

years before retiring as Vice 

Chairman and CEO of the 

former Overseas Union Bank 

in 2001 and joining Singapore 

Technologies Pte Ltd as 

President and CEO. He held 

this position until 31 December 

2004. Mr Seah is the Chairman 

of SembCorp Industries 

Limited* and Singapore 

Computer Systems Limited*. 

He also sits on the Boards of 

CapitaLand Limited*, Chartered 

Semiconductor Manufacturing 

Ltd # , STATS ChipPAC Ltd # and 

StarHub Ltd*. 

Mr Seah is also President 

Commissioner of PT Indosat 

Tbk, PT Bank Internasional 

Indonesia Tbk and Deputy 

Chairman of Global Crossing 

Limited and ST Telemedia Pte 

Ltd. His other appointments 

include being a member of the 

Board of Siam Commercial 

Bank Public Company 

Limited and the Government 

of Singapore Investment 

Corporation. He serves as 

a member of the Institute 

of Defence and Strategic 

Studies, Defence Science 

Technology Agency (DSTA), 

Singapore Chinese Chamber 

of Commerce and Industry and 

Singapore Business Federation 

Council. Mr Seah was awarded 

the Public Service Star (Bintang 

Bakti Masyarakat) in 1999 

and made a Justice of the 

Peace in 2003. He graduated 

from the former University 

of Singapore (NUS) in 1968 

with an Honours degree in 

Business Administration. 

Mr TAN Pheng Hock 

Mr Tan Pheng Hock, 49, is 

the President and CEO of 

ST Engineering and an 

executive Director. He was 

appointed Director on 1 May 

2001 and was last re-elected 

on 31 March 2005. Mr Tan 

sits on the Board of SembCorp 

Marine Ltd* and Neptune 

Orient Lines Limited*. He is 

Chairman of the Nanyang 

Polytechnic Board of Governors 

and Deputy Chairman of 

the Singapore Workforce 

Development Authority. 

Mr Tan began his career with 

the Group as an engineer 

in ST Marine in 1981. He 

was previously Executive 

Vice President of ST Marine, 

President of ST Kinetics, 

President and Chief Operating 

Officer of ST Engineering 

and ST Engineering Group 

President. Mr Tan holds a 

Bachelor of Science (First 

Class Honours) in Marine 

Engineering from the University 

of Surrey, UK and a Master of 

Science in Management from 

Stanford University, USA. 

Mr KOH Beng Seng 

Mr Koh Beng Seng, 56, is the 

CEO of Octagon Advisers Pte 

Ltd. He was appointed an 

independent non executive 

Director on 15 September 

2003 and will be due for 

re-election at this coming 

AGM under Article 98 of 

the Company’s Articles of 

Association. Mr Koh was 

Deputy President of United 

Overseas Bank Ltd (UOB) 

until 31 January 2005. Prior 

to UOB, Mr Koh was Senior 

Advisor to Asia Pulp & Paper 

Co Ltd and Advisor to Bank 

of China and the International 

Monetary Fund. Mr Koh has 

extensive experience in the 

financial services sector. 

He was with the Monetary 

Authority of Singapore from 

1973 to 1998, where he served 

as Deputy Managing Director 

from 1988 to 1998. Mr Koh 

is a Director of Bank of China 

(Hong Kong) Limited^, Fraser 

& Neave Ltd* and Sing-Han 

International Financial Services 

Limited. Mr Koh holds a 

Bachelor of Commerce 

(First Class Honours) from 

the former Nanyang University, 

Singapore, and a Master of 

Business Administration from 

Columbia University, USA.

23 

PAST DIRECTORSHIPS IN 

THE LAST THREE YEARS 

Mr Peter SEAH Lim Huat 

• Civil Aviation Authority 

of Singapore 

• Board of Commissioners 

of Currency Singapore 

• AF (Indonesia) Pte Ltd 

• EDBV Management Pte Ltd 

• EDB Ventures 2 Pte Ltd 

• EDB Ventures Pte Ltd 

• PSA International Pte Ltd 

• Singapore Technologies 

Pte Ltd 


Semiconductors Pte Ltd 

Lieutenant-General 

NG Yat Chung 

LG Ng Yat Chung, 45, is the 

Chief of the Defence Force 1 . 

He was appointed a non 

executive Director on 15 June 

2003 and will retire at this 

coming AGM. He joined the 

Singapore Armed Forces (SAF) 

in 1979 and was awarded the 

SAF Overseas Scholarship in 

1980. In the course of his 

military career, he has held 

various key command and 

staff positions in the Ministry 

of Defence (MINDEF). LG 

Ng is the Deputy Chairman 

of SRCC Pte Ltd. He is 

also a member of the Board 

of Trustees of the National 

University of Singapore and 

a Director of DSTA. LG Ng 

holds a Bachelor of Arts 

(Honours) in Engineering 

Tripos and a Master of Arts 

(Mathematics) from the 

University of Cambridge, UK, 

as well as a Master of Business 

Administration from Stanford 

University, USA. 

Dr TAN Kim Siew 

Dr Tan Kim Siew, 52, is 

Permanent Secretary (Defence 

Development), MINDEF. He 

was appointed a non executive 

Director on 15 December 2003 

and will be due for re-election 

at this coming AGM under 

Article 98 of the Company’s 

Articles of Association. Prior 

to his present appointment 

with MINDEF, he was the 

Deputy Secretary (Policy) with 

the Ministry of Finance. He 

was formerly the CEO and 

Chief Planner of the Urban 

Redevelopment Authority 

(URA) from 1996 to 2001. 

Dr Tan is the Chairman of 

DSTA and also a Director 

of Singapore Technologies 

Holdings Pte Ltd. Dr Tan 

holds a Bachelor of Arts in 

Engineering Tripos and a 

PhD in Engineering from the 

University of Cambridge, UK. 

Professor LUI Pao Chuen 

Prof Lui Pao Chuen, 64, is 

the Chief Defence Scientist in 

MINDEF. He was appointed 

a non executive Director on 

1 October 1997 and was 

last re-elected on 31 March 

2006. Prof Lui sits on the 

management boards of 

various scientific and research 

institutes. He is an Adjunct 

Professor in the Engineering 

Faculty of NUS. He is also 

the Chairman of SembCorp 

Design and Construction Pte 

Ltd, a subsidiary of SembCorp 

Industries Ltd, and Chairman 

of the Management Boards 

of Temasek Defence Systems 

Institute, NUS, and Temasek 

Laboratories, NUS and NTU. 

Prof Lui graduated from the 

former University of Singapore 

with a Bachelor of Science 

(Honours) in Physics and 

obtained a Master of Science 

degree in Operations Research 

& Systems Analysis from 

the Naval Postgraduate 

School, USA. 


• TranSys Pte Ltd 

• ST Training & Simulation 

Pte Ltd 

• Unicorn International 

Pte Limited 


• Chartered Semiconductor 

Manufacturing Ltd 

• STATS ChipPAC Ltd. 

• Far Eastern Bank Limited 

• Industrial & Commercial 

Bank Limited 

• Overseas Union Bank Limited 

• United Overseas Bank Limited 

• United Overseas Bank 

(Canada) 

Lieutenant-General 

NG Yat Chung 


Kinetics Ltd 

• Trade Development Board 

• Public Utilities Board 

Dr TAN Kim Siew 

• HDB Corporation Pte Ltd 

• Keppel Offshore & Marine Ltd 


• SembCorp Engineers and 

Constructors Pte Ltd 

1 until 23 March 2007


Board of Directors 

Mr Winston TAN Tien Hin 

Mr Winston Tan Tien Hin, 58, 

is the Managing Director of 

Corporate Brokers International 

Pte Ltd. He was appointed 

an independent non executive 

Director on 1 October 1997 

and was last re-elected on 31 

March 2006. Mr Tan is also a 

member of the Salvation Army 

Advisory Board. He holds a 

Bachelor of Science in Physics 

from the former University of 

Singapore. 

Mr Lucien WONG Yuen Kuai 

Mr Lucien Wong Yuen Kuai, 

53, is the Managing Partner 

of Allen & Gledhill. He was 

appointed an independent 

non executive Director on 

1 October 1997 and will be 

due for re-election at this 

coming AGM under Article 

98 of the Company’s Articles 

of Association. Mr Wong is 

a Director of Cerebos Pacific 

Limited*. He is also a member 

of the Monetary Authority 

of Singapore and Board of 

Trustees of NUS. Mr Wong 

graduated from the former 

University of Singapore with a 

Bachelor of Law degree. 

Dr Philip PILLAI 

Dr Philip Pillai, 59, is the 

Senior Partner of Shook Lin 

& Bok. He was appointed an 

independent non executive 

Director on 1 April 2000 and 

was last re-elected on 31 

March 2005. Dr Pillai is a 

Director of Singapore Press 

Holdings Limited*, Hotung 

Investment Holdings Limited* 

and International Board of 

Trustees of Haggai Institute, 

Atlanta. Dr Pillai obtained his 

Bachelor of Law (First Class 

Honours) from the former 

University of Singapore and a 

Master of Law and SJD from 

Harvard University, USA.

25 

PAST DIRECTORSHIPS IN 

THE LAST THREE YEARS 

Mr Winston TAN Tien Hin 


Electronics Limited 

• Enersave Holdings Ltd 

• Gintic Technologies Pte Ltd 

• Ascendas Pte Ltd 

Mr Lucien WONG 

• CapitaLand Limited 

• Raffles Hotel (1886) Ltd 

• John Hancock International 

(Southeast Asia) Pte Ltd 

• John Hancock Life Assurance 

Company Ltd 

• Construction Exchange Pte Ltd 

• Raffles Investments (1993) 

Pte Ltd 

• Raffles Investments 

(Singapore) Pte. Limited 

• Raffles Investments Limited 

Mr QUEK Poh Huat 

Mr Quek Poh Huat, 60, is 

the Group CEO of Singapore 

Power Ltd. He was appointed 

a non executive Director on 

15 April 2002 and was last 

re-elected on 31 March 

2006. Mr Quek is a Director 

of Singapore Power Ltd, SP 

PowerAssets Limited, SP 

AusNet @ and SP Services 

Limited. He is also the 

Chairman of PowerGas Ltd, 

SPI Management Services Pty 

Ltd, SP PowerGrid Limited and 

Temasek Management Services 

Pte Ltd. He is also Singapore’s 

non resident Ambassador 

to Sweden. Mr Quek was 

awarded the Public Service Star 

award in August 1994. He 

obtained a Bachelor of Science 

in Chemical Engineering from 

the University of Leeds, UK, 

and a Master of Science in 

Management from the Naval 

Postgraduate School, USA. 

Mr Venkatachalam 

KRISHNAKUMAR 

Mr Venkatachalam 

Krishnakumar, 57, is a Senior 

Advisor to Barclays Bank PLC, 

Global Retail and Commercial 

Banking. Prior to his present 

appointment, he was a Senior 

Advisor to McKinsey and Co. 

He was the Chief Operating 

Officer and Chief Financial 

Officer for the Asia Pacific 

Consumer Bank of Citigroup 

until his retirement on 28 

February 2005, after a 31- 

year career with them. He 

was appointed an independent 

non executive Director on 

15 April 2002 and was last 

re-elected on 31 March 2005. 

He is a Director of Singapore 

Computer Systems Limited* 

and also a member of the 

Board of the Singapore Land 

Authority. He holds a Bachelor 

of Engineering and a Master 

of Business Administration 

from the Indian Institute of 

Management, India. 

Brigadier-General Bernard 

TAN Kok Kiang 

BG Bernard Tan Kok Kiang, 

40, is the Director, Joint 

Intelligence Directorate of 

MINDEF. He was appointed 

Alternate Director to LG Ng 

Yat Chung on 1 June 2003. 

He has held various positions in 

the last 17 years and assumed 

his present office in 2002. 

He joined the SAF in 1984 

and was awarded the President 

cum SAF Scholarship in 1985. 

He was also awarded the 

Lee Kuan Yew Scholarship in 

2001. BG Tan is currently the 

Director of URA, Chairman 

of Sembawang Country Club 

and Board member of St 

Joseph’s Institution. BG Tan 

holds a Bachelor of Social 

Science (First Class Honours) 

in Economics and Political 

Science from the University of 

Birmingham, UK, and a Master 


from the Massachusetts 

Institute of Technology, USA. 

Dr Philip PILLAI 

• Lindeteves-Jacoberg Ltd* 

• PT Agro Indomas 

Mr QUEK Poh Huat 

• Shangri-la Asia Ltd 

• S I Technology Fund Limited 

• PSA Corporation Ltd 

• Asia Financial Holdings Pte Ltd 

• Singapore Power International 

(Pte) Ltd 

• Singapore Telecommunications 

Limited 

• Other subsidiaries of Temasek 

Holdings (Private) Limited 

* listed on Singapore Exchange Securities Trading Limited 

# listed on both Singapore Exchange Securities Trading Limited and NASDAQ 

^ listed on Stock Exchange of Hong Kong 

@ A stapled group comprising SP Australia Networks (Transmission) Ltd, SP Australia Networks (Distribution) Ltd and 

SP Australia Networks (Finance) Trust, acting through its responsible entity, SP Australia Networks (RE) Ltd. It is duallisted 

on the Australian Stock Exchange and the Singapore Exchange Securities Trading Limited.


Senior Management

Leadership is a team effort, drawing on 

individual strengths united by a common goal. 

27


Senior Management 

1 


is President and CEO of 

ST Engineering and a Director 

of the ST Engineering Board. 

(Mr Tan’s profile is on page 22) 

2 

Mr WEE Siew Kim 

Mr WEE Siew Kim, 46, 

was appointed Deputy CEO 

in May 2004, overseeing 

the Aerospace and Marine 

sectors. He is concurrently the 

President, Defence Business 

of ST Engineering, a position 

he has held since 1 May 

2002. Prior to his current 

position, Mr Wee was President 

of ST Engineering’s Europe 

operations from July 2001. 

He joined ST Aerospace as 

an engineer in 1984. He 

was President of ST Aerospace 

from December 1997 to 

July 2001. Mr Wee is also 

a Member of Parliament 

for the Ang Mo Kio Group 

Representative Constituency. 

He has a Bachelor of Science 

(First Class Honours) in 

Aeronautical Engineering from 

the Imperial College of Science 

& Technology, University of 

London, UK, and a Master in 



3 

Mr SEAH Moon Ming 

Mr SEAH Moon Ming, 50, 

was appointed Deputy CEO 

of ST Engineering, overseeing 

the Electronics and Land 

Systems sectors, and President, 

International Business in May 

2004. He is concurrently 

President, ST Electronics, 

a position he has held since 

8 December 1997, after 

serving as Managing Director 

from 1 July 1997. Mr Seah 

was General Manager of CET 

Technologies, a subsidiary of 

ST Electronics, from July 1994 

to July 1997. He is Chairman 

of the Board of Governors of 

Temasek Polytechnic. Mr Seah 

also serves as Vice Chairman 

of ECS Holdings Limited and 

Trek 2000 Limited. He is a 

Fellow of the Institution of 

Engineers Singapore, a senior 

member of IEEE and a member 

of Eta Kappa Nu. Mr Seah 

holds a Master of Science 

(with distinction) in Electrical 

Engineering from the Naval 

Postgraduate School, USA. 

4 

Mr Raphael CHIN 

Mr Raphael Chin, 42, is 

currently Acting Chief 

Financial Officer of the 

ST Engineering Group. 

He began his career at 

ST Engineering in 1990 as 

an accountant in the Group’s 

Aerospace sector. He 

subsequently held various 

finance positions in its 

subsidiaries, including SASCO, 

Perth Aerospace Engineering 

and STA Systems. In 1999, 

he took up the position of 

Financial Controller at 

ST Marine. The following year, 

he was appointed VP/Financial 

Controller of ST Engineering 

and became SVP/Group 

Financial Controller in 2006. 

Mr Chin holds a Bachelor 

of Economics from Monash 

University, Australia, and a 

Master of Commerce (Hons) 

from the University of Auckland, 

New Zealand. He is a Fellow of 

the Institute of Certified Public 

Accountants of Singapore.

29 

6 

5 4 2 1 

3 7 8 

5 

Mr TAY Kok Khiang 

Mr TAY Kok Khiang, 57, 

was appointed President 

of ST Aerospace on 10 

July 2001. Mr Tay joined 

ST Aerospace as Vice 

President/General Manager 

of ST Aerospace Engineering 

Pte Ltd in 1993 and held 

many senior management 

appointments before becoming 

President. He was Deputy 

President & Chief Operating 

Officer prior to his current 

appointment. Mr Tay holds 

a Bachelor of Engineering 

(Honours) and a Master 

of Science in Industrial 

Engineering from the National 

University of Singapore. 

6 

Mr SEW Chee Jhuen 

Mr SEW Chee Jhuen, 43, 

was appointed President of 

ST Kinetics on 1 September 

2006. Prior to his current 

position, Mr Sew was the 

Deputy President (Operations) 

and President, Defence 

Business, of ST Kinetics. 

He joined ST Aerospace as 

an aeronautical engineer in 

1988 and has held various 

management appointments 

before becoming Deputy 

President (Operations). 

Mr Sew holds a Bachelor of 

Science (with distinction) in 

Aeronautical Engineering and 

Mechanics from the University 

of Minnesota and a Master in 



7 

Mr SEE Leong Teck 

Mr SEE Leong Teck, 56, 

was appointed President 

of ST Marine in December 

1997. He began his career 

with Vosper Thornycroft 

(Singapore) and joined 

ST Marine as a naval 

architect in 1980, rising 

through the ranks to become 

Deputy General Manager 

and eventually President. 

Mr See holds a Master of 

Science in Naval Architecture 

from the University of 

London, UK and a Master 


from the Cranfield School of 

Management, UK. 

8 

General (Retired) 

John G COBURN 

Gen (Ret) John G COBURN, 

64, was appointed Chairman 

and CEO of ST Engineering’s 

US subsidiary, VT Systems, 

Inc on 1 December 2001. 

Gen (Ret) Coburn joined 

the Group after an illustrious 

39-year career with the 

US Department of Defense. 

Prior to taking up this position, 

he was Commanding General 

of the US Army Materiel 

Command (AMC), one of the 

largest commands in the army 

with 50,000 employees and 

activities in 42 states and 

over a dozen foreign countries. 

Gen (Ret) Coburn holds a Juris 

Doctor from the University of 

Missouri, USA.


Organisation Chart AS AT 28 FEBRUARY 2007 

TAN Pheng Hock 

President and CEO 

Raphael CHIN 

Acting Chief Financial Officer 

Members of Executive Office 

INTERNAL AUDIT 

David EAW 

Senior Vice President 

(Reporting to Audit Committee) 

DEFENCE BUSINESS 

LOW Yee Kah 


INTERNATIONAL 

MARKETING 

Patrick CHOY 

Executive Vice President 

TECHNOLOGY 

FONG Saik Hay 

Chief Technology Officer 

NEW BUSINESS 

Steven CHEONG 


HUMAN RESOURCE 

TAN Nga Kok 

Senior Vice President/ 

Director 

LEGAL 

LOW Meng Wai 

Vice President/Director 

INFORMATION 

TECHNOLOGY 

TEO Chin Seng 

Chief Information Officer 

STRATEGIC PLANS 

Robin THEVATHASAN 


SPECIAL PROJECTS 

CORPORATE 

COMMUNICATIONS 

WU Tzu Chien 

President 

CHANG Cheow Teck 

President 

LIM Beng See 

Vice President/Head 

BUSINESS 

EXCELLENCE 

Harnek SINGH 

Vice President/Director 

RISK MANAGEMENT 

ONG Soon Leong 

Vice President/Head 

PROCUREMENT 

GOH Bak Nguan 

Chief Procurement Officer/ 

Vice President

31 

SEAH Moon Ming 

Deputy CEO 

ELECTRONICS and LAND SYSTEMS 

President 

INTERNATIONAL BUSINESS 

WEE Siew Kim 

Deputy CEO 

AEROSPACE and MARINE 

President 

DEFENCE BUSINESS 

ELECTRONICS 

LAND SYSTEMS 

AEROSPACE 

MARINE 

SEAH Moon Ming 

President 

SEW Chee Jhuen 

President 

TAY Kok Khiang 

President 

SEE Leong Teck 

President 

LEE Fook Sun 

Deputy President, 

Operations and President, 

Defence Business 

NG Chong Khim 

President, 

Communication and Sensor 

Systems Group 


Corporate Services and 

Marketing 

TAY Hun Kiat 

President 

Asia Pacific Operations 

TEO Boon Swee 

Executive Vice President, 

Specialty Vehicles 

& Services 

GAN Boon Jin 

Senior Vice President, 

Land Systems & Solutions/ 


Alex TEO 

Vice President, 

Total Support & Services 

HO Yuen Sang 


Operations/Chief Operating 

Officer 

& President, 


Jeremy CHAN 


Marketing & Total 

Aviation Support 

HAN Yew Kwang 

Chief Operating Officer, 


US OPERATIONS 

EUROPE OPERATIONS 

John G COBURN 

Chairman and CEO 

OOI Ling Heong 

Executive Vice President 

ADVANCED 

ENGINEERING CENTRE 

INTEGRATED SERVICES 

FONG Saik Hay 

President 

LIM Soon Heng 

Vice President/ 

General Manager

33 

Corporate Governance 

Board’s Conduct of Its Affairs (Principle 1) 

The Board’s corporate objective is the creation of long term 

value for shareholders. It strives to achieve this through its 

commitment to high standards of corporate governance by 

providing the leadership and guidance to management to 

develop and drive corporate strategy, business directions, 

acquisitions and divestments and risk policy for ST Engineering. 

There are matters which the Board has reserved for its own 

decision making. These include major acquisitions and 

investments, shareholder matters, policies relating to corporate 

governance, CEO appointment, approval of budgets, board 

changes and appointments on board committees. Board 

members receive monthly consolidated management reports 

on the financial performance of each business sector, capital 

commitments and significant operational highlights. 

Other matters are delegated to Board committees and the 

Executive Office for review and decision making. The Executive 

Office comprises the President and CEO; Dy CEO, Electronics 

and Land Systems/President, International Business; Dy CEO, 

Aerospace and Marine/President, Defence Business; and CFO. 

The Board comprises 11 directors and an alternate director. 

On appointment, a new director is issued a formal letter of 

appointment setting out his duties and responsibilities under the 

various regulations. A new director is also given a briefing by 

the President and CEO on the strategies and performance of 

the Company and its key subsidiaries as well as an introduction 

to the senior management team. 

The Board consists of members with established track records 

in finance, banking, technology, legal and management skills. 

Each non executive director brings to the Board an independent 

and objective perspective based on his training and expertise to 

enable balanced and well considered decisions to be made. 

From time to time, the Board is updated on the relevant 

laws, continuing listing obligations and standards requiring 

compliance, and their implications for the Group as part of 

ongoing training for existing directors. 

The Board meets at least twice a year and convenes special 

board meetings where necessary. The Company’s Articles of 

Association allows Board meetings to be conducted by way 

of teleconference or video conference. The Chairman has a 

second or casting vote. 

The Board is supported in its tasks by Board Committees which 

have been established to focus on the key areas of corporate 

governance oversight. 

The number of Board and Board Committee meetings held 

during the year is tabulated below: 

TYPE OF MEETING 

NO. OF 

MEETINGS 

ATTENDANCE 

(AVERAGE %) 

Board 2 77% 

Audit Committee 5 100% 

Business Investment and Divestment 

Committee 

2 70% 

Executive Resource and 

Compensation Committee 

4 92% 

Nominating Committee 1 100% 

Senior Human Resource Committee 1 75% 

Risk Review Committee 4 85% 

Budget and Finance Committee 3 92% 

Research, Development and 

Technology Committee 

3 78% 

Minutes of the Board Committee meetings are made available 

to all Board members.



Independence of the Board (Principles 2 and 3) 

The Chairman of the Board is Mr Peter Seah, a non executive 

director. Mr Seah was appointed to the Board on 15 April 2002 

as Chairman. He was re-elected at the 2006 AGM. 

As a non executive director, Mr Seah is free from any 

relationship with the executive management of the Company 

that could materially interfere with the exercise of his 

independent judgment. However, as he is a Member of the 

Temasek Advisory Panel in Temasek Holdings, the Company’s 

major shareholder, he is not considered independent within the 

definition of the Corporate Governance Code (Code). 

The President and CEO is Mr Tan Pheng Hock, who is an 

executive director. Save for Mr Tan Pheng Hock, our remaining 

10 directors are non executive directors. The Nominating 

Committee (NC) has reviewed the provisions in the Code with 

regard to relationships and has concluded that five directors 

are independent. The independent directors are Mr Koh Beng 

Seng, Mr Venkatachalam Krishnakumar, Dr Philip Pillai, Mr 

Winston Tan and Mr Lucien Wong. More than one third of the 

Board is independent as required under the Code. 

The Board held a total of two meetings during the year, in 

accordance with its planning cycle, for the approval of the 

FY2005 results and release of half year results respectively. 

Board Committees (Principles 4, 7 and 11) 

Supporting the Board are the following Board Committees: 

• Audit Committee 

• Business Investment and Divestment Committee 

• Executive Resource and Compensation Committee 

• Nominating Committee 

• Budget and Finance Committee 

• Research, Development and Technology Committee 

• Senior Human Resource Committee 

• Risk Review Committee 

• Tenders Committee 

The composition of the Board Committees is found on the 

next page. 

According to the Corporate Governance Code guidelines, 

an independent director is one who has no relationship with 

the Company, its related companies or its officers that could 

interfere, or be reasonably perceived to interfere with the 

exercise of the director’s independent business judgment. 

Relationship tests aside, it is the quality of the governance that 

counts and that distinguishes an independent and effective 

board. While not all the non executive directors are considered 

independent based on relationship tests, the Board has, at all 

times exercised independent judgment in decision making using 

its collective wisdom and experience to act in the best interests 

of the Company.

35 


BOARD COMPOSITION AND COMMITTEES AS AT 31 DECEMBER 2006 

Audit Committee 

(estbd on 5/1/1998) 

Business Investment and Divestment 

Committee 

(estbd on 8/9/1997) 

Executive Resource and Compensation 

Committee 

(estbd on 6/12/1997) 

Nominating Committee 

(estbd on 4/12/2002) 

Budget and Finance Committee 

(estbd on 5/1/1998) 

Research Development and Technology 

Committee 

(estbd on 1/8/2003) 

Senior Human Resource Committee 

(estbd on 16/1/1998) 

Risk Review Committee 

(estbd on 7/12/1998) 

Tenders Committee 

(estbd on 5/1/1998) 

BOARD MEMBERS 

Mr Peter SEAH Lim Huat C C M C 

Mr TAN Pheng Hock M M M M M 


C 

Lieutenant-General NG Yat Chung M M M 

Dr TAN Kim Siew M M 


Mr Winston TAN Tien Hin M M C 

Mr Lucien WONG Yuen Kuai C M 

Dr Philip Nalliah PILLAI M M C 

Mr QUEK Poh Huat M M 

Mr Venkatachalam KRISHNAKUMAR M M M M 

Brigadier-General Bernard 

TAN Kok Kiang 1 

C 

Rolling list of any three Board Directors 

NON BOARD MEMBER 

Mr CHANG See Hiang 

CM 

Denotes: 

C – Chairman 

M – Member 

CM – Co-opted Member 

1 Alternate director to Lieutenant-General NG Yat Chung



Board Selection, Training and Evaluation of Performance 

(Principles 4 and 5) 

The NC is responsible for reviewing the composition of 

the Board regularly and identifying and selecting suitable 

candidates to the Board. The Committee also reviews the 

retirement and re-election of directors. 

Dr Philip Pillai is the Chairman of the NC. The other members 

are Mr Peter Seah and Mr Venkatachalam Krishnakumar. 

Both Dr Pillai and Mr Krishnakumar are independent non 

executive directors. 

The NC is charged with the responsibility of ensuring that the 

Company’s Board and its subsidiaries comprise individuals who 

are able to discharge their responsibilities as directors. The NC 

identifies suitable candidates for appointment to the boards 

of the Group, in particular, candidates who can value add to 

the management through their contributions in the relevant 

strategic business. 

The NC has the same members as the Executive Resource & 

Compensation Committee. This is because both committees 

share similar objectives of searching for talent and expertise 

for Board renewal and to strengthen management. 

During the year, the NC reviewed and affirmed the 

independence of the Company’s independent directors and 

reviewed the composition of the Board and the profile of Board 

members in relation to the needs of the ST Engineering Board. 

The NC also assessed the current board size and determined 

that it is adequate for the effective functioning of the Board. 

The NC also reviewed the directors who were due for 

retirement and re-election. 

At each AGM, one third of the directors with the longest term in 

office is required to retire and submit themselves for re-election. 

Mr Koh Beng Seng, LG Ng Yat Chung, Dr Tan Kim Siew and Mr 

Lucien Wong will retire. LG Ng has confirmed that he will not 

be seeking re-election. Save for LG Ng, the retiring directors, 

being eligible, have offered themselves for re-election. The 

NC has reviewed their contributions and recommended that 

each of the retiring Directors be re-elected at the Company’s 

forthcoming AGM. 

Access to Information (Principle 6) 

The Board receives monthly reports providing updates on key 

operational activities and financial analysis. The Board also 

has unrestricted access to the President and CEO, the CFO, 

management and the Company Secretary as well as the 

internal and external auditors and the risk management team. 

The Board can also seek independent professional advice if 

deemed necessary. 

Level and Mix of Remuneration 

Disclosure on Remuneration (Principles 7, 8 and 9) 

The Executive Resource & Compensation Committee (ERCC) 

performs the role of the Remuneration Committee. The 

Committee comprises Mr Peter Seah as Chairman, Dr Philip 

Pillai and Mr Venkatachalam Krishnakumar. The majority of 

members of the ERCC have held senior positions in large 

organisations and are experienced in the area of executive 

remuneration. 

All the ERCC members are non executive directors. 

Apart from Mr Peter Seah, the other members of the ERCC 

are independent directors. 

The ERCC has access to professional advice from appropriate 

external advisors where necessary. The ERCC may meet with 

these external advisors without the presence of management. 

All decisions at any meeting of the ERCC shall be decided by 

a majority of votes of the ERCC members present and voting 

(the decision of the ERCC shall at all times exclude the vote, 

approval or recommendation of any member who has a conflict 

of interest in the subject matter under consideration). 

The ERCC has been authorised by the Board to carry out the 

following key duties and responsibilities: 

• Review and establish executive remuneration policy 

• Approve the remuneration package and service terms 

for senior executives 

• Set targets for senior executives and approve equity based 

incentive share plans and the granting of performance 

share awards 

• Approve non executive director remuneration structure

37 


The ERCC met four times in 2006. Its key activities 

were centred on the assessment and development of the 

management team, target setting, and the determination of 

their compensation and incentive awards. In determining 

the overall remuneration package, the ERCC assesses 

executives’ contribution to the Group relative to preset targets, 

the performance of the Group, and the compensation and 

employment conditions of various industries. 

During the year, the ERCC reviewed and approved the 

granting of share options. In accordance with the rules of 

the ST Engineering Share Option Plan (ESOP), share options 

are priced at market value, on a volume-weighted average for 

the shares on the Singapore Exchange (SGX) over the three 

consecutive trading days immediately preceding the date of 

grant. The computation is referenced against the daily official 

list of the SGX and verified by Finance. The subscription 

price of the share options granted cannot be modified 

during the term of the options, except for adjustments 

arising from variations to the share capital, as the ERCC 

considers appropriate. 

As standing procedure, the ERCC, as the Plan Administrator, 

has determined that share options shall be granted twice a 

year on fixed dates following the release of the audited FY 

end results and first half year results, respectively. In the event 

that any announcement on any matter of an exceptional nature 

involving price-sensitive information is made, the ESOP rules 

require that options be granted on or after the fourth market 

day following release of the announcement. 

During the year, the ERCC decided on conditional performance 

share awards under ST Engineering’s approved share plans 

as well as Economic Value Added-based incentives for 

senior executives. 

The following information relates to remuneration of directors of ST Engineering: 

NUMBER OF DIRECTORS IN REMUNERATION BANDS 2006 2005 

Remuneration Bands 

$500,000 and above 1 1 

$250,000 to $499,999 – – 

Below $250,000 10 10 

Total 11 11



Summary compensation table for the year ended 31 December 2006 (Group): 

STOCK 

OPTIONS 

DIRECTORS’ GRANTED EXERCISE 

NAME OF DIRECTOR SALARY * BONUS * FEES TOTAL IN 2006 PRICE EXERCISABLE PERIOD 

$ $ $ $ $ 

Peter Seah Lim Huat – – 182,000 182,000 44,500 3.01 10.2.2007 to 9.2.2011 

44,500 2.84 11.8.2007 to 10.8.2011 

Tan Pheng Hock 1,090,275 1,711,991 # 2,802,266 200,000 3.01 10.2.2007 to 9.2.2016 

200,000 2.84 11.8.2007 to 10.8.2016 

Koh Beng Seng – – 94,000 94,000 27,500 3.01 10.2.2007 to 9.2.2011 

27,500 2.84 11.8.2007 to 10.8.2011 

LG Ng Yat Chung – – 10,000 ✣ 10,000 – – – 

Dr Tan Kim Siew – – 10,000 ✣ 10,000 – – – 

Professor Lui Pao Chuen – – 97,500 † 97,500 29,000 3.01 10.2.2007 to 9.2.2011 

Winston Tan Tien Hin – – 142,000 † 142,000 37,000 3.01 10.2.2007 to 9.2.2011 

37,000 2.84 11.8.2007 to 10.8.2011 

Lucien Wong Yuen Kuai – – 86,000 86,000 21,500 3.01 10.2.2007 to 9.2.2011 

21,500 2.84 11.8.2007 to 10.8.2011 

Dr Philip Nalliah Pillai – – 123,000 † 123,000 33,000 3.01 10.2.2007 to 9.2.2011 

33,000 2.84 11.8.2007 to 10.8.2011 

Quek Poh Huat – – 128,000 † 128,000 33,000 3.01 10.2.2007 to 9.2.2011 

33,000 2.84 11.8.2007 to 10.8.2011 

Venkatachalam 

Krishnakumar – – 116,000 116,000 25,500 3.01 10.2.2007 to 9.2.2011 

25,500 2.84 11.8.2007 to 10.8.2011 

BG Bernard Tan Kok 

Kiang (Alternate to 

LG Ng Yat Chung) – – – – – – – 

1,090,275 1,711,991 988,500 3,790,766 873,000 

* The salary and bonus amount shown is inclusive of allowances, CPF and performance shares earned. 

✣ Fees for public sector Directors are payable to government agencies. 

† Includes fees for directorship in subsidiary(ies). 

# Fees payable to Mr Tan Pheng Hock of $168,750 includes fees for directorship in subsidiaries and are payable to Singapore Technologies Engineering Ltd.

39 


Remuneration Data for Year 2006 

Remuneration data for employees earning $100,000 and above per annum (as at 31 Dec 2006). 

TOTAL COMPENSATION BANDS ($) TOTAL NO. OF EMPLOYEES TOTAL DOLLAR VALUES ($) 

100,000 to 149,999 843 100,059,481 

150,000 to 199,999 252 43,235,882 

200,000 to 249,999 81 17,950,249 

250,000 to 499,999 91 30,606,716 

500,000 to 749,999 10 5,789,157 

750,000 to 999,999 5 4,380,433 

1,000,000 to 1,249,999 1 1,116,074 

1,250,000 to 1,499,999 3 4,086,785 

1,500,000 to 1,749,999 1 1,611,420 

=> 1,750,000 4 7,934,048 

Total 1,291 216,770,245 

Note: Total compensation comprises all staff salaries (including CPF for Singapore staff), overtime pay, variable bonuses, special bonuses, annual wage supplement 

(13th month), dollar contribution by the Group under the Employees’ Share Ownership Scheme, benefi ts-in-kind plus overseas postees’ cost of living allowance. 

The Board has delegated authority to the ERCC to determine 

the remuneration of the President and CEO and the senior 

management. The remuneration package for non executive 

directors is reviewed by the Board annually and the fees to 

be paid to Board members are subject to approval at the AGM. 

A revised directors’ fee policy commensurate with the increased 

responsibilities of the Board was endorsed by the Board. 

The Group has set out a group-wide cross section of 

executives’ remuneration by number of employees from 

$100,000 upwards in bands of $50,000 up to $250,000. 

The Senior Human Resource Committee, chaired by Mr Peter 

Seah, comprises Mr Tan Pheng Hock, LG Ng Yat Chung 

and Dr Tan Kim Siew. The Committee reviewed the talent 

management and leadership development for the organisation 

and its senior staff. Through its support for and direction of 

the Group’s talent management and leadership initiatives, the 

Committee has helped to enhance the process of identification 

and development of talents to be groomed for senior positions. 

The Committee has also reviewed the succession plans for 

key positions in the Group. Another significant initiative that 

has materialised from the Committee’s support and direction 

is the establishment of the inaugural ST Engineering Overseas 

Scholarship and ST Engineering Scholarship in China. 

Accountability (Principle 10) 

In September 2006, the SGX introduced a new requirement 

for directors to issue a Negative Assurance Statement 

to accompany its interim financial results announcement, 

confirming that nothing has come to the attention of the 

Board that may render the interim financial results to be false 

or misleading. Certain internal procedures have been put in 

place that enable each member of the Board reviewing the 

interim financial statements to immediately raise any material 

information known to him which would impact the accuracy 

of the statements prior to their release to SGX. Should 

there be any significant adverse issue(s) raised by the Audit 

Committee (AC) or Board member which may affect the 

results in a material way, the scheduled date of the results 

announcement will be postponed to allow time for investigation 

or further review. 

The re-appointment of auditors is subject to approval at each 

AGM. In making its recommendations to shareholders on the 

appointment and re-appointment of auditors, the Board relies 

on the review and recommendations of the AC.



During the year, the Board convened an EGM to adopt 

new Articles of Association updating changes made to the 

Companies Act (Chapter 50). 

Directors and key senior executives of the Group are prohibited 

from dealing in ST Engineering shares two weeks before the 

announcement of ST Engineering’s first quarter, half year, third 

quarter and full year results up to the date of the announcement 

of the results. Additionally, all directors of the Group and its 

employees are reminded not to trade in situations where the 

insider trading laws and rules would prohibit trading. 

The directors’ interests in shares of ST Engineering and its 

related companies during the year are found on pages 91 to 99 

of this Report. 

Audit Committee (Principle 11) 

The AC is supported in its work by the audit committees of the 

four main business sectors. The respective chairmen of the 

audit committees of the four business sectors are invited to 

attend the AC meetings of ST Engineering so as to have a clear 

understanding of policies made at the holding company level 

and to give feedback from the sectors’ audit committees. 

The AC has full authority to commission and review findings 

of internal investigations into matters where it is alerted of any 

suspected fraud or irregularity or failure of internal controls or 

infringement of any law likely to have a material impact on the 

listed Group’s operating results. It can investigate any matter 

within its terms of reference and with the full cooperation 

of management. 

During the year, the Board adopted a Whistle Blowing Policy 

with the objective of providing a process for staff to raise, 

in confidence and without fear of retaliation, incidents of 

possible wrongdoing or breach of applicable laws, regulations 

or policies to the respective chairmen of the audit committees 

in the Group. 

The AC comprises Mr Koh Beng Seng as Chairman, Dr Philip 

Pillai and Mr Venkatachalam Krishnakumar. All the members of 

the AC are independent directors. The AC held five meetings 

during the year, including a January 2006 session with the 

external and internal auditors, without management, to review 

the FY2005 results. 

During the year, the AC reviewed and recommended to the 

Board the release of the full year and half year financial 

statements, and considered and approved the 2006 Audit 

Plan and the 2006 Internal Audit (IA) Plan. It also reviewed 

the adequacy of internal control procedures, Interested 

Person transactions and the issues raised in IA reports with 

IA being given the authority to rate risk issues according to 

different risk levels, and to follow up with remedial actions by 

the management. 

During the year, the AC was briefed on the external auditors’ 

appointment of a US coordinating partner to coordinate the 

audit of the US group of companies with the local office partner 

who would be overall in charge of both the local and overseas 

companies’ audits. 

The AC also focused on the need to bring new acquisitions 

into alignment with policies in the ST Engineering Group and 

to integrate practices and activities with the Group 

post acquisition. 

The AC reviewed the level of non audit services performed 

by its external auditors to satisfy itself that non audit 

services performed by the auditors did not compromise 

their independence under regulatory requirements. 

Having been delegated authority by the Board, the AC approved 

the release of the financial results for the first quarter and third 

quarter of 2006. 

In February 2007, the AC reviewed the audit observations on 

the financial statements for FY2006 audit with the external 

auditors. The AC also met with the external and internal 

auditors, without management, to review 2006 results. There 

were no major issues highlighted and the auditors confirmed 

that they would provide an unqualified report. 

The AC also reviewed the performance of the external auditors. 

It recommended to the Board the re-appointment of Ernst & 

Young as auditors for FY2007, after having been satisfied with 

its standard of audit, independence and objectivity.

41 


Internal Controls (Principle 12) 

Internal Audit (Principle 13) 

The AC oversees and appraises the quality of the audit effort of 

the Company’s IA function. 

The Board, through the AC, the President and CEO and the 

CFO, considers that the Group’s framework of internal controls 

and procedures is adequate to provide reasonable assurance of 

the integrity, confidentiality and availability of critical information, 

and the effectiveness and efficiency of operations, safeguarding 

of assets and compliance with applicable rules and regulations. 

It is also satisfied that problems are identified on a timely basis 

and there is in place a process for best practices and follow up 

actions to be taken promptly to minimise unnecessary lapses 

and for the identification and containment of business risks. 

The IA supports the AC in reviewing the adequacy of the 

Company’s internal control system. 

Staffed by qualified auditors, IA has unrestricted direct access 

to the AC. The Head of IA’s primary line of reporting is to the 

Chairman of the AC, although he reports administratively to the 

CFO of the Company. 

IA plans its internal audit schedules in consultation with, but 

independently of, management and its IA Plan is submitted 

to the AC for approval at the beginning of each year. The AC 

also meets with IA at least once a year without the presence 

of management to gather feedback on management’s level 

of cooperation and other matters that warrant AC’s attention. 

All audit reports are submitted to the AC for deliberation 

with copies of these reports extended to the relevant senior 

management, for prompt corrective actions, as recommended. 

Furthermore, IA’s summary of findings, recommendations and 

updates on management’s actions taken are discussed at the 

quarterly AC meetings. There were no significant control issues 

highlighted by IA in 2006. 

During the year, IA briefed the AC on its plan to carry out 

surprise audits across the Group. The IA continued with its 

system of rating a company at the end of an internal audit for 

the purpose of differentiating the high risk issues which require 

more serious attention. 

As part of the Group’s effort to continually improve on its 

control framework, IA has also introduced a quarterly Control 

Self Assessment Declaration for all auditable entities to sign off 

and declare that Management has reviewed and complied with 

all the requirements and that there are no material matters or 

issues that have not been highlighted. 

On an ongoing basis, IA ensures that good practices are shared 

within the Group. 

Risk Management 

The Risk Review Committee, chaired by Mr Winston 

Tan, comprises LG Ng Yat Chung, Mr Lucien Wong, Mr 

Venkatachalam Krishnakumar, Mr Tan Pheng Hock and 

Mr Chang See Hiang, a co-opted member and Board 

Director of ST Aerospace. The Committee oversees the risk 

management framework and reviews key risk exposures, 

including business continuity management. 

The Committee met four times during the year to review the 

key risks and the measures put in place as well as the key risk 

indicators of each sector. Emerging risk perspectives facing the 

Group were also discussed. 

Budget and Finance 

Chaired by Mr Lucien Wong, the Budget and Finance 

Committee members include Mr Tan Pheng Hock, Mr Quek Poh 

Huat and Dr Tan Kim Siew. 

Budgets prepared by the respective subsidiaries are 

consolidated at the ST Engineering level and presented to the 

Budget and Finance Committee for review and recommendation 

to the Board for approval. 

During the year, the Budget and Finance Committee held 

three meetings to review the FY2006 budget assumptions and 

forecast. The Committee also met to review the 2007 Plan and 

recommended to the Board for approval.



Business Investment and Divestment Committee 

The Business Investment and Divestment Committee comprises 

Mr Peter Seah as Chairman, Mr Tan Pheng Hock, LG Ng Yat 

Chung, Mr Winston Tan and Mr Quek Poh Huat. 

During the year, the Business Investment and Divestment 

Committee held two meetings to consider major investments 

by the Group. 

Communication with Shareholders (Principle 14) 

Greater Shareholder Participation (Principle 15) 

The Group has a comprehensive investor programme aimed at 

providing existing and potential investors with comprehensive 

and prompt information to enable them to have a better 

understanding of the Group’s businesses, direction and 

performance. ST Engineering maintains a regularly updated 

website which provides a chronology of the latest press 

releases and highlights of corporate events of each of 

its sectors and their respective capabilities. 

Board members attended the AGM and EGM in 2006 where 

shareholders present were given an opportunity to seek 

clarification or question the Board on issues pertaining to 

the resolutions proposed before they were voted on. The 

external auditors were also present at the AGM to assist the 

directors in answering questions on audit related matters from 

shareholders. The Group fully supports the Code’s principle to 

encourage active shareholder participation. More on Investor 

Relations can be found on pages 46 to 49. 

Financial and other information are made available on the 

Company’s website at http://www.stengg.com and these are 

regularly updated. 

In 2006, ST Engineering hosted more than 300 investor 

meetings, including participation in 11 international investor 

roadshows and conferences in 25 cities. ST Engineering is 

committed to timely disclosures to ensure that the investing 

community receives a balanced and updated view of the 

Group’s performance and businesses.

43 


COMPLIANCE DIRECTORY 

CODE PRINCIPLE 

REFERENCE 

PAGES 

CODE PRINCIPLE 

REFERENCE 

PAGES 

1 The Board’s Conduct of its Affairs 

Every company should be headed by an 

effective Board to lead and control the 

company. The Board is collectively responsible 

for the success of the company. The Board 

works with management to achieve this and the 

management remains accountable to the Board. 

2 Board Composition and Guidance 

There should be a strong and independent 

element on the Board, which is able to exercise 

objective judgement on corporate affairs 

independently, in particular, from management. 

No individual or small group of individuals 

should be allowed to dominate the Board’s 

decision making. 

3 Chairman and Chief Executive Officer 

There should be a clear division of 

responsibilities at the top of the company 

– the working of the Board and the executive 

responsibility of the company’s business 

– which will ensure a balance of power and 

authority, such that no one individual represents 

a considerable concentration of power. 

33 

34 and 35 

34 and 35 

8 Level and Mix of Remuneration 

The level of remuneration should be appropriate 

to attract, retain and motivate the directors 

needed to run the company successfully but 

companies should avoid paying more than 

is necessary for this purpose. A significant 

proportion of executive directors’ remuneration 

should be structured so as to link rewards to 

corporate and individual performance. 

9 Disclosure on Remuneration 

Each company should provide clear disclosure 

of its remuneration policy, level and mix of 

remuneration, and the procedure for setting 

remuneration in the company’s annual report. 

It should provide disclosure in relation to its 

remuneration policies to enable investors to 

understand the link between remuneration 

paid to directors and key executives, and 

performance. 

10 Accountability 

The Board should present a balanced and 

understandable assessment of the company’s 

performance, position and prospects. 

36 and 39 

36 to 39 

39 and 40 

4 Board Membership 

There should be a formal and transparent 

process for the appointment of new directors 

to the Board. 

34 and 35 

11 Audit Committee 

The Board should establish an Audit Committee 

with written terms of reference which clearly 

set out its authority and duties. 

40 

5 Board Performance 

There should be a formal assessment of 

the effectiveness of the Board as a whole 

and the contribution by each director to the 

effectiveness of the Board. 

36 

12 Internal Controls 

The Board should ensure that the management 

maintains a sound system of internal controls 

to safeguard the shareholders’ investments and 

the company’s assets. 

41 and 42 

6 Access to Information 

In order to fulfil their responsibilities, Board 

members should be provided with complete, 

adequate and timely information prior to board 

meetings and on an ongoing basis. 

7 Procedures for Developing Remuneration 

Policies 

There should be a formal and transparent 

procedure for developing policy on executive 

remuneration and for fixing the remuneration 

packages of individual directors. No director 

should be involved in deciding his own 

remuneration. 

36 

36 

13 Internal Audit 

The company should establish an internal audit 

function that is independent of the activities it 

audits. 

14 Communication with Shareholders 

Companies should engage in regular, effective 

and fair communication with shareholders. 

15 Communication with Shareholders 

Companies should encourage greater 

shareholder participation at AGMs, and allow 

shareholders the opportunity to communicate 

their views on various matters affecting 

the company. 

41 

42 

42


Corporate Social Responsibility 

TOUCHING LIVES IN THE COMMUNITY 

An integral part of cultivating a winning spirit entails the 

inculcation of a passion to contribute to society. As a 

responsible corporate citizen, ST Engineering proactively 

participates in community activities, devoting time and effort 

to the less fortunate and promoting arts and education. 

For the second successive year, the Safety@Work Creative 

Awards inspired tertiary students to spread the message of 

safety in a multimedia art competition. Over 200 entries were 

received, with increased participation from students of ten out 

of 13 key tertiary institutions in Singapore. The Group is also a 

sponsor of the NUS Yong Siew Toh Conservatory of Music. 

In 2006, the Group’s companies joined hands to launch 

various charity drives, which included an auction and a cross 

country run, to raise $250,000 for the President’s Challenge 

in Singapore. This was the third consecutive year that 

ST Engineering had supported this worthy cause. 

The Group continued to be involved in its adopted homes and 

charities, through donations, visits and organised activities. 

These organisations included the Moral Home for the Disabled 

and the Spastic Children’s School. 

Advancing the Creation and Transfer of Knowledge 

Apart from charity, ST Engineering is committed to education 

programmes and platforms that spark the exchange of 

knowledge and ideas. During the year, the Group supported 

prominent conferences such as the IE Forum 2006, organised 

by International Enterprise Singapore; the Global Entrepolis 

@ Singapore, organised by the Economic Development Board; 

and the Shangri-La Dialogue, a leading event for defence and 

security diplomacy in Asia Pacific by the International Institute 

for Strategic Studies. 

ST Engineering is a pioneer sponsor of the Securities 

Investors Association (Singapore) and for the past six years, 

has supported its seminars and workshops to educate 

retail investors, enabling them to make informed investment 

decisions. In addition, the Group is a sponsor of the Temasek 

Defence Systems Institute – a centre for postgraduate 

education in defence technology and systems for Singapore 

and international students; and the Lee Kuan Yew School of 

Public Policy – an academic study and research centre in the 

areas of public policy and public management. 

(from left to right) 

Staff of ST Aerospace subsidiary 

SASCO and children from the 

Moral Home enjoying the games at 

the Fiesta by the Sea – SASCO’s 

Family Day on 24 June 2006. 

Staff of ST Marine participating in 

Clean up the World at Sungei Buloh 

Wetland Reserve.

45 

Environment, Health and Safety 

ADOPTING A HOLISTIC APPROACH 

ST Engineering maintains a holistic approach in meeting the 

diverse needs of its stakeholders – from shareholders and 

customers to employees, partners and the community. While 

it continues its work on delivering economic value, the Group 

considers its corporate responsibility with regards to the 

Environment, Health and Safety (EHS) a top priority. 

The Group’s efforts on EHS issues are focused on five 

areas: a wise and balanced conservation of resources, waste 

minimisation, leveraging on environmentally-friendly technology, 

the active involvement of all its people, and a focus on 

safety first. 

In line with its efforts to promote EHS issues within the Group, 

ST Engineering has, since 2004, organised the annual 

ST Engineering EHS Awards to laud exemplary contributions. 

Today, almost all the Group’s business units are ISO 14001 

Environmental Management System and/or OHSAS 18001 

Occupational Health and Safety Management System certified. 

Across the Group, ST Engineering has won industry awards 

for its ongoing improvements to health and safety standards 

(see chart). 

Environment 

ST Engineering adopts environmentally-friendly practices where 

feasible, including the use of green products, throughout its 

operations. Efforts to conserve the environment are 

evident in its processes – reducing, reusing and recycling 

wherever possible. 

Some of these practices include reducing electrical 

consumption, preventing wastage of electricity through the 

use of motion sensors and timers, working towards a ‘paperless’ 

working environment, employing machines to maximise the 

use of raw materials, and minimising wastage from the 

production process. 

For ease of recycling, reusable items like photocopy paper, print 

cartridges, cardboard, aluminium, wooden pallets, crates and 

metal containers are collected and segregated according to the 

materials recycling process. 

Procedures are also in place to ensure proper disposal of 

industrial waste. 

Health and Safety 

ST Engineering puts a premium on ensuring a healthy and safe 

working environment for its employees. From the onset, each 

new employee undergoes a safety induction course as part of 

the orientation to the organisation. Regular health checks and 

talks are organised to raise awareness and educate staff on 

health and safety issues. 

The senior management is actively involved in planning, 

monitoring and implementing health and safety standards, 

which range from monthly inspections, internal and external 

audits, to safety seminars and talks conducted both internally 

and externally. All health and safety incidents and near misses 

are promptly reported, investigated and learning points shared 

to prevent similar incidents from recurring. 

ST Engineering will continue to benchmark itself against 

evolving international standards on EHS issues, and inculcate a 

corporate culture that constantly seeks to excel in these areas. 

SBA / SBU 

ISO 

9001 

ISO 

14001 

OHSAS 

18001 

SASCO ✓ ✓ 

STA Engineering ✓ ✓ 

STA Engines ✓ ✓ 

STA Systems ✓ ✓ 

STA Supplies ✓ ✓ 

ST Electronics ✓ ✓ 

ST Electronics (Satcom & 

Sensor Systems) 

✓ ✓ 

Kinetics Integrated 

Manufacturing 

✓ ✓ ✓ 

Kinetics Design & 

Development 

✓ ✓ ✓ 

Kinetics Integrated Services ✓ ✓ ✓ 

Allied Ordnance of Singapore ✓ ✓ ✓ 

Advanced Material 

Engineering 

✓ ✓ ✓ 

STA Inspection ✓ 

Singapore Test Services ✓ ✓ 

ST Marine 

VT Miltope 

✓ 

VT Halter Marine 

✓ 

* International Safety Rating System 

OTHERS 

ISRS*


Investor Relations 

ENGAGING THE INVESTMENT COMMUNITY 

Investor relations at ST Engineering is aimed at cultivating 

a long term and synergistic relationship with current and 

potential investors, and analysts. 

By broadening and deepening communication channels, 

ST Engineering is primed to keep investors and analysts 

abreast of the Group’s developments and communicate its 

strategic direction and operations, while at the same time, 

garner invaluable feedback and insights. 

With the Group’s diverse institutional investors largely from key 

markets in the US, Europe and Hong Kong as well as Australia, 

Japan and the Middle East, the Group’s investor relations 

initiatives are planned and customised to suit the varying 

investment philosophies and needs of these investors. 

In response to investors’ requests for more frequent meetings, 

ST Engineering stepped up its investors relations efforts. 

In 2006, it hosted more than 300 one-on-one investor 

meetings, over 70% of which were with overseas institutions 

as part of 11 investor roadshows and conferences in 25 cities 

around the world. Several of these were in new financial 

markets. This was about three times more than the number 

of meetings conducted two years ago. 

The Group also hosted visits to its Aerospace, Land Systems 

and Marine facilities, a luncheon at its exhibition pavilion at 

Asian Aerospace 2006, four quarterly results briefings and 

an AGM. 

In March 2006, the Group launched its Chinese language 

website with an investor relations section, thus opening a new 

communication channel to its Chinese stakeholders. 

Recognising that investors rely on independent sources for 

information on the Group, ST Engineering is also committed to 

maintaining regular communication with analysts from about 

20 securities firms who actively provide coverage on the Group, 

and helping them better understand the Group’s strategies 

and operations. 


ST Engineering’s Board of Directors listened and addressed 

investors’ issues and feedback at the AGM. 

ST Aerospace hosted a facility tour for analysts and fund managers in 

June, where management showcased various aerospace operations 

including the MD-11 freighter conversion programme. 

Analysts and fund managers visited ST Marine in November, and 

gained a better understanding of its shipyard operations, including 

a close up view of the Republic of Singapore Navy’s new stealth 

frigates and other commercial vessels under construction.

47 


ST ENGINEERING WEB DIRECTORY 

ITEM WEBSITE REMARKS 

Homepage www.stengg.com Latest news updates, results and share 

price of the Group 

Chinese homepage www.stengg.com/cn/home/home.aspx Newly launched in 2006 

Share price 

performance 

Quarterly results and 

presentations 

Quarterly results 

webcasts 

www.stengg.com/investorelations/stockperformance.aspx 

www.stengg.com/investorelations/webcasts.aspx 

www.stengg.com/investorelations/webcasts.aspx 

Charts historical share price performance 

with daily updates 

Files available for downloading, typically 

within half an hour of announcement 

Broadcast live; archive version available 

within four hours of the event 

Annual reports www.stengg.com/investorelations/annualreports.aspx Electronic versions of current and previous 

annual reports dating back to FY2000 

Investor relations 

calendar 

Mailing list 

subscription 

Frequently Asked 

Questions (FAQs) 

www.stengg.com/investorelations/ircalendar.aspx 

www.stengg.com/mediacentre/mailinglistsubscribe.aspx 

www.stengg.com/investorelations/faq.aspx 

Calendar of past and upcoming 

investor relations events of the Group, 

including dividend payment and results 

announcement dates 

For news and updates of the Group, 

disseminated via e-mail to investors 

Answers to FAQs 

Feedback www.stengg.com/contact/feedback.aspx Accepts feedback online



INVESTOR RELATIONS CALENDAR 2006 

1st Quarter 2006 

• Webcast media and analysts’ briefing of FY2005 results 

• Post results investor lunch 

• Analyst Lunch @ Asian Aerospace 2006 

• Release of Annual Report 2005 

• Macquarie Singapore Corporate Day – New York/Boston/ 

San Francisco 

• Europe Investor Roadshow 

• CSFB Asian Investment Conference – Hong Kong 

• Annual and Extraordinary General Meetings 

2nd Quarter 2006 

• Payment of first and final tax exempt (one-tier) dividend 

of 4.0 cents per share and a special tax exempt (one-tier) 

dividend of 9.6 cents per share for the year ended 31 

December 2005 

• Webcast media and analysts’ briefing of 1Q2006 results 


• Citigroup Singapore Conference – Tokyo 

• Fund managers and analysts’ visit to ST Aerospace 

FINANCIAL CALENDAR 2007 

Date* 

Event 

13 Feburary Announcement of FY2006 results 

May 

Announcement of 1Q2007 results 

27 April Proposed Ex-Date for dividend entitlement 

18 May Proposed payment of first and final tax 

exempt (one-tier) dividend of 4.0 cents per 

share and a special tax exempt (one-tier) 

dividend of 11.11 cents per share for the year 

ended 31 December 2006 

August 

November 



* The dates are indicative and subject to change. 

Please refer to ST Engineering website, www.stengg.com, for the 

latest updates. 

3rd Quarter 2006 



• CLSA Investors’ Forum – Hong Kong 

• JP Morgan Asia Pacific Equity Conference – New York 

• US Investor Roadshow 

4th Quarter 2006 

• Australia Investor Roadshow 



• Europe Investor Roadshow 

• Fund managers and analysts’ visit to ST Marine 

• Morgan Stanley Asia Pacific Summit – Singapore 

• Japan Investor Roadshow

49 

Share Price Performance 

ST ENGINEERING SHARE PRICE AND TRADING VOLUME IN 2006 

Trading volume 

(millions) 

45 

40 

35 

30 

25 

20 

15 

10 

5 

Share price 

($) 

3.4 

3.3 

3.2 

3.1 

3.0 

2.9 

2.8 

2.7 

2.6 

2.5 

0 

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 

2.4 

Share price 

Trading volume 

Source: Bloomberg 

ST ENGINEERING SHARE PRICE COMPARED TO THE STRAITS TIMES INDEX IN 2006 

Share price 

($) 

3.4 

3.3 

3.2 

3.1 

3.0 

2.9 

2.8 

2.7 

2.6 

Ex-Date for the payment of declared 

dividends of 13.6 cents per share 

Index 

3,100 

3,000 

2,900 

2,800 

2,700 

2,600 

2,500 

2,400 

2,300 

2.5 

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 

2,200 

ST Engineering Straits Times Index Source: Bloomberg 

ST ENGINEERING SHARE PRICE HISTORY 

YEAR 2006 2005 2004 2003 2002 

High $3.30 $2.86 $2.33 $2.06 $2.56 

Low $2.62 $2.33 $1.89 $1.47 $1.55 

Average* $2.95 $2.52 $2.09 $1.83 $1.99 

* Defi ned as the average closing prices of active trading days for the year.

51 

Human Resources 

HARNESSING THE POWER OF PEOPLE 

Nurturing a Winning Spirit 

In an age of globalisation and rapid change, companies 

need to remain innovative and adaptable to maintain 

their competitiveness. 

Given that people are its most valued resource, 

ST Engineering’s intent is for its employees to internalise the 

winning spirit so that the Group can conquer new challenges 

and continue to succeed in a business landscape marked by 

uncertainty and global competition. 

Achieving this requires a clear focus and direction on the 

part of management, supported by a cohesive, passionate 

and motivated workforce. ST Engineering’s five core values 

form the compass that guides the organisation and breathes 

life and meaning to it. They are the software that drives 

ST Engineering’s thinking process, which is further expressed 

through the Group’s strategic objectives and thrusts. 

A critical component of a winning spirit is a “can-do” attitude 

among staff. This involves nurturing a mindset which 

perseveres against the odds, ventures to take calculated risks 

and views setbacks as learning experiences, not failures. 

Grooming Leaders through Holistic Development 

Developing people and helping them gain the required skill 

sets and competencies to succeed in these competitive 

times are key areas of focus. In any organisation, leaders 

play critical roles. In ST Engineering, the development of 

leaders and optimising their potential at all levels receive 

the utmost attention. 

Over the past few years, eight leadership competencies have 

been identified, following consultation with and feedback from 

key staff. These leadership competencies are aligned with the 

Group’s core values and business strategies, and they underpin 

the process of identifying and grooming potential leaders for 

growth and succession in critical roles. 

The competencies are mapped out in a formal framework 

which forms the basis for leadership development within 

ST Engineering. Behavioural indicators for each of the 

competencies are tailored to leaders at different levels so 

as to guide their growth and development. 

The Group continues to cultivate a corporate culture which 

empowers and engages its employees. A key initiative is 

its interactive online system, the Leadership EnhAncement 

Portal (LEAP), which enables staff to take ownership of their 

own learning by assessing themselves against the leadership 

competencies, discovering their learning styles, selecting 

the options for development and formulating a personal 

development action plan. 

ST Engineering adopts an open approach to staff development, 

to cater to the varied learning styles and needs of employees. 

Apart from structured learning programmes, other avenues for 

staff development include on-the-job learning, participation 

in special projects, overseas postings and job rotation. Staff 

are also encouraged to seek like-minded learning partners for 

mutual motivation and encouragement. 

At the same time, ST Engineering strives to develop a culture 

of mentorship and coaching. This is done through its mentoring 

scheme which has been introduced to leverage on the wealth 

of experience within the organisation, and to provide a channel 

for the effective transfer of knowledge, skills and experiences 

among staff.



WORKFORCE ANALYSIS (as at 31 December 2006) Total: 17,245 

SECTOR 

ST Aerospace (6,517) 38% 

ST Electronics (3,491) 20% 

Land Systems (5,508) 32% 

ST Marine (1,412) 8% 

Others (317) 2% 

JOB GROUP 

Managerial (819) 5% 

Engineering (4,592) 27% 

Corporate Function/Admin (2,177) 12% 

Sales & Marketing (404) 2% 

Technical & Others (9,253) 54% 

EDUCATIONAL QUALIFICATION 

Degree & Equivalent (4,236) 24% 

Diploma & Equivalent (4,827) 28% 

“O”/“A” Levels & Equivalent (2,687) 16% 

Secondary Level & Lower (1,395) 8% 

Trade Certificates (4,100) 24% 

NATIONALITY 

Singaporean/PR (9,098) 53% 

American (3,015) 17% 

British (36) 1% 

PRC/Hong Kong (2,769) 16% 

Indian (124) 1% 

Malaysian (236) 2% 

Others (1,967) 10%

53 


Motivating Through Rewards & Recognition 

ST Engineering’s reward and compensation system is 

performance based. Every year, Key Performance Indicators 

(KPIs) are established for each business area, and staff are 

measured and rewarded according to the KPIs, Economic Value 

Added achieved and individual performance. 

A variety of other reward and recognition schemes is also used. 

These include short and long term monetary incentives, such as 

salary increments, promotions, special bonuses, cash awards 

and share options. This remuneration model lays the ground for 

fair, objective and competitive compensation. 

awards. Staff are also recognised and rewarded for innovative 

excellence and for patents secured. Special acknowledgement 

letters are presented to employees for outstanding 

contributions or compliments received from the public. 

Having a motivated workforce is a pivotal part of nurturing a 

winning spirit within the organisation. By developing effective 

policies and practices which cultivate a “can-do” attitude, 

grooming people to their fullest potential and rewarding them, 

ST Engineering aims to spur its employees to optimise their 

contribution to the organisation. 

Acknowledging that motivation at work cannot be purely 

attributed to monetary incentives, ST Engineering recognises 

performance with a holistic range of non monetary incentives. 

Awards are conferred for exemplary performance, such as the 

model employee, long service, safety, housekeeping and Kaizen


Awards and Commendations 

RECOGNISING EXCEPTIONAL ACHIEVEMENT 

Finishing the race first is only second to running the race well. 

It is the journey that helps to gel the organisation together. 

This is the guiding principle for ST Engineering – to inculcate 

a winning spirit in its people to not only emerge ahead of the 

competition, but also attain personal bests. 

In 2006, ST Engineering was recognised for its outstanding 

achievement in various spheres, ranging from business 

excellence, quality and safety to corporate social responsibility, 

employee welfare, people and investor relations. 

Business Excellence 

ST Engineering was among the top 20 companies in the 

Singapore International 100 Ranking 2006, organised by 

International Enterprise Singapore. This ranks Singapore’s 

top 100 companies by their overseas revenues. 

The Group’s Electronics sector was conferred several awards 

for its innovation. These included the inaugural Asia Brand 

– Ten Most Prospective Brands Award, jointly organised 

by government agencies and media in China to recognise 

companies which have shown innovation in developing and 

marketing quality products, technologies and businesses in Asia. 

It was also a recipient of the National Infocomm Award (Merit) 

in the Most Innovative Infocomm Product/Service category 

by the Infocomm Development Authority of Singapore, for 

the Intelligent Transport Management System, as well as 

the Innovation in Engineering Award by the Institution of 

Engineering and Technology (IET), UK, and the Merit Award of 

the Asia Pacific InfoComm Technology Alliance Awards 2006, 

both in the Security category, for its StegMark ImageLite and 

Compact Flash products respectively. 

The Group’s US satcom operations was awarded the Frost & 

Sullivan Product Innovation of the Year, for its GSM capable 

VSAT Hub. It also clinched the Marketing Campaign of the 

Year award by the American Marketing Association, for its 

groundbreaking 2005 campaign, No Constraints. 

ST Engineering’s Marine and Land Systems sectors were each 

awarded the Defence Technology Prize 2006 Team Award by 

the Singapore Ministry of Defence (MINDEF). 

Quality 

Subsidiaries of the Aerospace sector – SASCO, STA Engines, 

STA Systems – were recognised for their efforts in upholding 

high quality standards. They were awarded the Star, Gold 

and Silver awards respectively by SPRING Singapore at the 

National Innovation Quality Circles. 

The Group’s Land Systems sector and its subsidiaries, 

Ordnance Development & Engineering Company and Advanced 

Material Engineering, received the Meritorious Defence Partner 

Award (Employers) from MINDEF. The sector was also 

awarded MINDEF’s Meritorious Defence Partner Award 

(Civil Resource Owners). 

STAR Automotive Centre, a subsidiary of the Land Systems 

sector in China, was recognised for its Guangzhou and 

Zhejiang operations. 

Its Guangzhou operations won the Customers Satisfactory 

Brand Award for Automotive Services in China, jointly awarded 

by the China Corporations Value Promotion League, the China 

Association of Small and Medium Business Enterprises and the 

Ren Ming Daily Press; as well as the 2006 Auto Industry Oscar 

Award for Outstanding Reliability & Service Excellence, awarded 

by the Guangzhou Nan Fang Daily and Xin Jin Press. 

Its Zhejiang operations received the Quality Award for Reliability 

and Satisfactory Services in Zhejiang Province, which is a joint

55 

Awards and Commendations 

award by the Zhejiang Industry & Economic Commission, the 

Zhejiang Corporation League, the Zhejiang Association of 

Enterprises and the Zhejiang Daily Press. 

Safety 

Subsidiaries of the Group’s Aerospace sector, STA Engines 

and STA Engineering, achieved the Silver and Bronze 

respectively at the I-4-OSH Awards by the Singapore 

Ministry of Manpower (MOM). 

STA Engines and Advanced Material Engineering, subsidiaries 

of the Aerospace and Land Systems sectors respectively, both 

received the Annual Safety & Health Performance Award 2006 

(Silver) from MOM. 

The Land Systems sector was a recipient of the Occupational 

Safety and Health Best Practices Awards 2006 (Outstanding 

Achievement Award – Safety Solutions), also awarded by MOM. 

Corporate Social Responsibility 

The Aerospace, Electronics and Land Systems sectors, with 

their subsidiaries – Advanced Material Engineering, SASCO, 

STA Engineering, STA Engines, STA Systems, STA Supplies and 

ST Electronics (Info-Software Systems) – as well as the Marine 

sector, received the SHARE Platinum Award by the Community 

Chest of Singapore. 

Subsidiaries of the Group’s Electronics and Land Systems 

sectors – Allied Ordnance of Singapore, Chartered Pyrotechnics 

Industries, Ordnance Development & Engineering Company, 

Singapore Test Services, STA Inspection and ST Electronics 

(Training & Simulation Systems) – received the SHARE 

Gold Award. Allied Ordnance of Singapore and Ordnance 

Development & Engineering Company were also recipients 

of the 5-Year and 15-Year Outstanding SHARE Award 

respectively. 

Employee Welfare 

The Group’s Aerospace subsidiary, STA Systems, received the 

SAF Award for Employer – Distinguished Defence Partner 

from MINDEF. 

ST Electronics (Info-Software Systems), Ordnance 

Development & Engineering Company, subsidiaries of the 

Electronics and Land Systems sectors, received the MHA 

Award for NSMen’s Employers (Commendation), conferred by 

the Singapore Ministry of Home Affairs (MHA). In addition, ST 

Electronics (Info-Comm Systems) was one of five recipients of 

the Special Award for NSmen’s Employers 2006 from MHA, 

in appreciation and recognition of employers’ support and 

contributions towards National Service activities. 

For promoting a healthy lifestyle at the workplace, the Group’s 

Land Systems sector and subsidiaries of the Aerospace sector 

– STA Engineering, SASCO, STA Engines, STA Systems and 

STA Supplies – received the Singapore HEALTH Award 2006 

(Gold) by the Health Promotion Board, Singapore Ministry 

of Health, while the Aerospace sector received the Platinum 

award. The Aerospace sector was also a recipient of the 

Sporting Singapore Inspiration Awards 2006 by the Singapore 

Sports Council. 

The Group’s Land Systems sector was also one of six winners 

of the Lifelong Learners Award 2006 (Corporate Productivity), 

which recognised employers who provide a work environment 

that encourages learning. This was awarded by SPRING 

Singapore, Singapore Workforce Development Agency, National 

Trades Union Congress (NTUC), Mediacorp and Ernst &Young. 

People 

The Group’s Aerospace subsidiary, STA Systems, received the 

NTUC Model Worker Award 2006 and the SLF Educational 

Tour Award for Model Workers. 


The Group received the silver award for Best Annual Report 

2005 at the Singapore Corporate Awards 2006. 


ST Aerospace and its subsidiaries, STA Engineering, 

STA Engines, STA Systems and SASCO, were presented 

the SHARE Platinum Award by the Community Chest of 

Singapore at the Istana in October. 

ST Electronics’ subsidiary received the Innovation in 

Engineering Award at the IET award ceremony in October. 

The team from ST Kinetics received the Defence Technology 

Prize 2006 Team Award. 

ST Electronics (Info-Comm Systems) received the National 

Infocomm Awards 2006 (Merit) in the Most Innovative 

Infocomm Product/Service category for its i-Transport System.

57 

Operating Financial Review 

GROUP OVERVIEW 

Group History and Overview 

ST Engineering was formed in December 1997 through 

the merger of four public listed companies – ST Aerospace, 

ST Electronics, ST Automotive and ST Marine – within the 

then Singapore Technologies Group. In early 2000, the Group 

acquired the Chartered Industries of Singapore group of 

companies and merged it with ST Automotive to form 

ST Kinetics. 

Each of these entities has over 30 years of operating history 

and is a leading and established player in its respective industry. 

As a Group, ST Engineering is a well recognised provider of 

integrated defence and engineering systems and solutions, 

dedicated to meeting the needs of global customers. 

Headquartered in Singapore, ST Engineering today has a staff 

strength of over 17,000, most of whom are located in Singapore 

and the US. It has also established a strong presence in other 

parts of the world, offering a comprehensive range of products 

and services through its four sectors, namely Aerospace, 

Electronics, Land Systems and Marine. 

GROUP VISION, MISSION & OBJECTIVES 

GROUP VISION 

To be a global defence and engineering group 

GROUP MISSION 

To bring value to its customers and partners by delivering 

total integrated quality solutions and support 

STRATEGIC OBJECTIVES 

• Enlarge Strategic Capabilities 

• Expand Global Networks 

• Embrace Partnerships 

• Enhance Business Excellence 

STRATEGIC THRUSTS 

• Customer Focus 

• Safety & Quality First 

• People Excellence 

• Technology Edge 

• Operational Excellence 

• Financial Strength 

Key Performance 

Indicators 

• New products/services 

and capabilities introduced 

• Sales and profit growth 

• Return on equity 

• Economic Value Added 

• R&D expenditure and 

deliverables



GROWING THE GLOBAL FOOTPRINT 

Cementing Presence in the US 

The ST Engineering Group’s US headquarters, Vision 

Technologies Systems (VT Systems), has today established 

operations in 20 locations throughout the US, Canada and 

Central America, with a total workforce of almost 4,000. 

For 2006, VT Systems represented about 28% of the Group’s 

revenues compared to 13% in 2001 when it was incorporated. 

VT Systems has successfully completed seven acquisitions, 

contributing to the overall growth of the Group’s four sectors. 

Acquisition of leading businesses has strengthened the Group’s 

presence in the Americas through a pioneering range of 

solutions by the VT Systems group of companies. 

VT Miltope continues to support the US military programme 

by delivering various models of its rugged computer notebook, 

which can withstand the rigours of field use and extreme 

temperatures. iDirect’s ground-based satellite communications 

platform was used as a primary means of communications 

immediately following Hurricane Katrina in 2005, when 

terrestrial communications were disrupted. iDirect’s products 

are also used in a tsunami warning system offered by the 

Survey of India. 

VT Halter Marine’s four fisheries survey vessels built for the 

National Oceanic and Atmospheric Administration (NOAA) are 

equipped with low acoustic signatures and are able to conduct 

multiple types of research in a single deployment – a combined 

capability unavailable in the private sector. VT SVC is America’s 

leader in emergency response vehicles, combining innovative 

body design with integrated advanced communications systems. 

VT Systems has also forged various teaming agreements and 

alliances aimed at organic growth, facilitating the access of 

engineering excellence from affiliates in Singapore to the US 

market. VT Systems’ aerospace arm is part of a global network 

and a leading US third party provider of Maintenance, Repair 

and Overhaul (MRO) services for a wide range of commercial 

aircraft, bringing value to operators, OEMs and lessors through 

its broad range of capabilities. Moving forward, VT Systems 

will continue to align operations and leverage complementary 

capabilities, not only among its US-based operating companies 

but also with the operations in Singapore and affiliates in other 

parts of the world. Initiatives to bring products to new markets, 

such as VT LeeBoy’s specialty vehicles into China, and the 

sourcing of raw materials and components through bundling of 

demand across business units as well as low cost sources, are 

but three initiatives to synergise across platforms and borders. 

Through acquisitions, partnerships and collaborations, VT 

Systems has grown to be the Group’s largest presence outside 

of Singapore. VT Systems will continue to pursue profitable 

and growing companies with strong management teams that 

offer a strategic fit with ST Engineering’s core business sectors, 

working towards the ultimate aim of spearheading the Group’s 

long term business growth in the Americas. 

Expanding in China 

ST Engineering has firm presence in the booming China market, 

with representative offices in Beijing, Chengdu, Hong Kong, 

Guangzhou, Shanghai, Shenyang, Shenzhen and Yi Chun. With 

a China staff strength of almost 3,000, it has invested about 

US$100m in the Aerospace, Electronics and Land Systems 

sectors there. These include an aircraft MRO facility and 

electronics R&D centre in Shanghai, a software development 

centre in Shenzhen, commercial automotive maintenance 

facilities in Guangzhou and Hangzhou, and production plants 

for construction and mining vehicles in Beijing and Guiyang and 

electronics systems manufacturing in Beijing and Chengdu. 

The Group’s current projects in China include rail and 

transportation work in Guangzhou, Suzhou and Beijing. 

In Beijing, the Group is installing an integrated traffic command 

centre system for the efficient management of major rail lines 

in the Chinese capital, making it the first Singapore company 

to win a major contract related to the 2008 Olympics. 

ST Engineering is currently looking to expand its current 

presence in 16 cities, targeting upcoming second tier cities 

such as Nanjing, Ningbo, Suzhou and Wuxi.

59 


PERFORMANCE OF THE GROUP 

a) Half yearly performance 

2006 2005 

IN $m EXCEPT PER SHARE AMOUNTS 1H 2H FY 1H 2H FY 

Turnover 2,070 2,416 4,486 1,530 1,808 3,338 

EBITDA 259.5 333.9 593.4 216.0 254.1 470.1 

EBIT 205.3 252.3 457.6 176.9 212.6 389.5 

Profit before tax 259.4 304.9 564.3 244.5 258.7 503.2 

Profit after tax and minority interests 198.3 246.8 445.1 189.4 206.9 396.3 

Basic earnings per share (cents) 6.8 8.4 15.2 6.5 7.1 13.6 

Net asset value per share (cents) 45.4 53.1 53.1 43.4 51.2 51.2 

The Group’s turnover for 2H2006 increased by 17% or 

$346m compared to the first half. All sectors reported 

higher turnover in the second half vis-à-vis the first half. 

The Group’s Profit Before Tax (PBT) for 2H2006 increased 

by 18% or $45.5m over the first half. All sectors reported 

higher PBT in the second half vis-à-vis the first half. 

06 

2nd half year $2,416m 

06 

1st half year $2,070m 

05 

2nd half year $1,808m 

05 

1st half year $1,530m 

HALF YEARLY TURNOVER ($m) 

06 

2nd half year $304.9m 

06 

1st half year $259.4m 

05 2nd half year $258.7m 

05 

1st half year $244.5m 

HALF YEARLY PROFIT BEFORE TAX ($m)



b) Full year performance 

Turnover 

The Group’s turnover of $4,486m for FY2006 was higher 

than that of FY2005 by 34% or $1,148m. All sectors 

reported higher turnover. 

Earnings Per Share (EPS) 

The Group’s basic and diluted EPS for FY2006 were 15.15 

cents and 15.00 cents respectively (FY2005: 13.64 cents 

and 13.54 cents respectively). The higher EPS was a result 

of higher profit after tax for FY2006. 

15.15 

FY2006 

TURNOVER 

BY SECTORS 

11.47 

11.29 

12.26 

04 

13.64 

05 

06 

02 

03 

Aerospace 37% 

Electronics 21% 

Land Systems 22% 

Marine 16% 

Others 4% 

EARNINGS PER SHARE (CENTS) 

Profit 

Group PBT for FY2006 of $564.3m was higher than 

that achieved in FY2005 by 12% or $61.1m. All sectors, 

except Marine sector, recorded higher PBT. 

Economic Value Added (EVA) 

The Group’s EVA for FY2006 was $327.8m, an increase of 

13% or $37.2m over FY2005. The Weighted Average Cost 

of Capital was 6.6% for 2006 (2005: 6.1%). 

59% 

FY2006 

PROFIT BEFORE 

TAX BY SECTORS 

21% 

Aerospace 54% 

Electronics 19% 

Land Systems 12% 

Marine 14% 

Others 1% 

10% 

FY2006 EVA CONTRIBUTION BY SECTOR (%) 

15% 

(5%) 

Aerospace Electronics Land Systems 

Marine Others

61 


Capital Expenditure 

The Group incurred capital expenditure of $197.1m in FY2006. The addition of new hangars and related equipment and 

programme-related purchases such as engines for new capability setup and rotables by the Aerospace sector accounted for the 

bulk of the capital expenditure for the year. The details are shown in Note 7 to the Financial Statements. 

CAPITAL EXPENDITURE BY SECTOR ($m) 

06 

05 

0 20 40 60 80 100 120 140 160 180 200 

Aerospace Electronics Land Systems Marine Others 

Total Assets 

As at end December 2006, total assets of the Group amounted to $5.51b compared to $4.57b as at end December 2005. 

The deployment of assets is as follows: 

DEPLOYMENT 

OF ASSETS – 2006 

DEPLOYMENT 

OF ASSETS – 2005 

Property, Plant and Equipment 17% 

Associated Companies & Investments 6% 

Intangible Assets 10% 

Deferred Tax Assets 2% 

Stocks & WIP 20% 

Debtors, Deposits & Prepayments 30% 

Funds under Management 4% 

Bank Balance & Other Liquid Funds 11% 

Property, Plant and Equipment 10% 

Associated Companies & Investments 8% 

Intangible Assets 7% 

Deferred Tax Assets 2% 

Stocks & WIP 19% 

Debtors, Deposits & Prepayments 40% 

Funds under Management 7% 

Bank Balance & Other Liquid Funds 7%

AEROSPACE SECTOR 

ELECTRONICS SECTOR 

CORE CAPABILITIES 

• Aircraft Maintenance & Modification 

– Line and base maintenance 

– Technical services and maintenance planning 

– Modifications, conversions and refurbishment 

– Design, development and technology integration 

• Component & Engine Total Support 

– Engine maintenance, repair and overhaul 

– Aircraft mechanical and avionics component repair 

– Materials and spares support and management 

FACTS 

• Offers Total Aviation Support in a wide range of services – airframe, 

engine and component maintenance; engineering design and technical 

services; and aviation materials and management services 

• Ranked by Overhaul & Maintenance 2005 as the world’s largest 

airframe maintenance provider with 6.7m commercial airframe manhours 

in 2004 

• Worldwide network of facilities with diverse global customer base that 

includes many of the world’s leading airlines, airfreight operators and 

military aircraft operators 

• 6,517 staff 

MAJOR DEVELOPMENTS IN 2006 

• Completed acquisition of SAS Component stake and subsequently 

merged it with Airline Rotables Ltd, increasing total shareholding 

to 71.3% 

• Signed lease agreement for new facility in Panama 

• Secured contracts with Airbus and other new start-up airlines for Total 

Aviation Support programmes 

• Redelivered 2,500 th aircraft to long term customer, FedEx Express 

• Added capacity to Changi and Seletar facilities in Singapore 


• Large-Scale Systems Group 

– Intelligent transportation systems 

– Intelligent building management systems 

– Combat systems integration 

• Communication & Sensor Systems Group 

– e-Government communications and infocomm technologies solutions 

– Satellite communications systems 

– Communications, microwave, radar and sensor systems 

– Intelligent traffic and fleet management systems 

– Info-security solutions 

– Electro-optics systems 

• Software Systems Group 

– e-Government solutions 

– Digital animation and media 

– Mobile realtime and homeland security systems 

– Training and simulation systems 

FACTS 

• Specialises in rail transportation systems and solutions with projects in 

China, the Philippines, Singapore, Taiwan and Thailand 

• One of the world’s leading providers of satellite communications systems 

and solutions as well as multi-channel multipoint distribution systems 

• Provides tracking and management systems for more than 50,000 

vehicles in the region 

• Provides e-Government systems and solutions for governments 

internationally 

• Filed 50 patents, of which 25 have been granted since 1998 

• 3,491 staff 


• Acquired 80% of MÄK Technologies – a US specialist in simulation 

software and toolkits 

• Acquired 70% of PM-B – a mission-critical environment specialist based 

in Singapore 

• Expanded operations into new markets in Albania, Qatar, Dubai and new 

regions in China 

• Won contracts to provide rail solutions in Guangzhou and Beijing, China 

• Launched exclusive collaboration agreement with SingTel to provide 

high-speed two-way broadband connectivity to the maritime industry 

• Partnered Hewlett-Packard in a consortium shortlisted for Singapore’s 

$2b e-Government project 

• Launched battlefield management system commissioned by the 

Singapore Armed Forces for its 3rd Generation networked fighting force 

on the Bionix II platform 

REVENUE IN $m 

REVENUE IN $m 

FY 06 

FY 05 

1,673 

FY 06 

FY 05 

951 

1,236 

701 

PROFIT BEFORE TAX IN $m 


FY 06 

FY 05 

305 

255 

FY 06 

FY 05 

105 

76

LAND SYSTEMS SECTOR 

MARINE SECTOR 


• Integrated Design 

– Multi role military platforms 

– Weapon systems and advanced munitions 

– Surveillance, remote operations, vetronics and fleet 

management systems 

– Military and homeland security protection solutions 

– Emergency response, commercial and specialty vehicles 

• Integrated Operations and Support 

– Maintenance, repair and overhaul of vehicles, weapons and material 

handling equipment 

– Accident repair and vehicle inspection 

– Engineering analysis and industrial test services 

– Asset preservation and spares management 

– Training and agency representation 

• Integrated Production 

– Contract manufacturing 

– Industrial services 

FACTS 

• Produces over 120 different types of specialty vehicles, including 

construction and mining equipment, multi-temperature trucks, distribution 

trailers and bodies 

• World’s largest manufacturer of commercial class asphalt pavers and 

beverage trucks 

• Offers defence products that are geared for network-centricity and 

increased connectivity 

• One of few manufacturers in the world to offer both 40mm weapon 

systems and a wide range of supporting ammunition 

• 37 patents granted to date, with 56 patents filed 

• 5,508 staff 


• Added VT LeeBoy, a leading US manufacturer of road construction and 

maintenance equipment, to its stable of specialty vehicles companies 

• Formed Advanced Technology Research Centre, a 50-50 joint venture 

company with DSO National Laboratories, to undertake research and 

technology development in advanced materials for both defence and 

commercial applications 

• Secured a three-year agreement from the Texas Government permitting 

any governmental or non-profit agency in Texas to purchase emergency 

vehicles from VT SVC without competitive bids 

• The Bionix II infantry fighting vehicle entered into service with the 

Singapore Armed Forces 


• Project Management 

– Turnkey shipbuilding 

– Ship upgrading and conversion 

– Weapon systems integration and installation 

• Inhouse Design Expertise 

– Custom designed naval and commercial vessels using inhouse 

CAD/CAM facilities 

– Lightweight ship design 

– Stealth technology 

• Shipbuilding 

– Extensive water jet expertise 

– Thin gauge steel and aluminium construction for naval vessels 

• Maintenance 

– Overhaul and maintenance of high performance marine engines 

• Shiprepair 

– Upgrading and retrofitting 

– Conversion of commercial vessels 

FACTS 

• Five shipyard facilities – two in Singapore and three in the US 

• Track record in the design and construction of sophisticated naval and 

commercial vessels as well as high engineering content shiprepair 

services including ship conversions 

• Designs and develops a variety of vessels including landing ship tanks, 

patrol vessels, feeder container vessels, platform supply vessels, fisheries 

survey vessels, articulated tug barges, and pure car truck carriers 

• 1,412 staff 


• Delivered two locally built stealth frigates, RSS Intrepid and 

RSS Steadfast, and launched the fifth and final stealth frigate, 

RSS Supreme, for the Republic of Singapore Navy 

• US operations secured contracts worth US$649m to build a 

fisheries survey vessel, articulated tug barges, a SWATH vessel and 

a T-AGM(R) vessel 

• Singapore operations secured contracts worth $177m to build two 

RoRo vessels, two seismic research vessel conversions, a cutter suction 

dredger modification and a platform supply vessel conversion 

• Launched the first two of four 1030 TEU container vessels 

REVENUE IN $m 

REVENUE IN $m 

FY 06 

FY 05 

1,002 

FY 06 

FY 05 

702 

660 

600 



FY 06 

FY 05 

70 

65 

FY 06 

FY 05 

80 

88

ST Engineering 

at a Glance

67 

Aerospace 

FLYING HIGH WITH TOTAL SUPPORT 

In 2006, ST Aerospace maintained its leading position 

as the world’s largest commercial airframe Maintenance, 

Repair and Overhaul (MRO) provider through the global 

expansion of existing airframe MRO operations. It also 

broadened its spectrum of aircraft components and engines 

maintenance capabilities. 

To enhance the integration of its operations, ST Aerospace 

reorganised its core operations under two business segments 

– Aircraft Maintenance & Modification (AMM), which now 

includes the engineering and development capabilities; and 

Component & Engine Total Support (CETS), which includes 

the integration of components and engines MRO with rotables 

management and support. 

Aircraft Maintenance & Modification (AMM) 

In 2006, ST Aerospace’s AMM business continued to extend 

its relationship with its core customers. New customers, both 

large and small, were added. It secured more work with key 

customers in Asia, Europe and the US, such as All Nippon 

Airways, FedEx Express, Japan Airlines, Northwest Airlines, 

UPS as well as Asiana Airlines, Copa Airlines, TransAsia 

Airways and many others. 

During the year, ST Aerospace entered into a three-year 

agreement with Airbus that allowed Airbus to directly procure 

aircraft MRO services from any of ST Aerospace’s global 

network of facilities. 

Key milestones were also reached with long term customers as 

ST Aerospace celebrated the redelivery of the 2,500th aircraft 

to FedEx Express, 330th to Northwest Airlines, 300th to UPS, 

and 100th to Japan Airlines. 

ST Aerospace’s strategic partnership with the Republic of 

Singapore Air Force (RSAF) continued to grow through the 

extension of its range of support. Following the success of the 

Transport Wings Course programme, the RSAF committed to 

a 20-year Rotary Wing Course (RWC) with ST Aerospace for 

the provision and maintenance of its helicopters. Through this 

RWC agreement, ST Aerospace acquired a fleet of six EC120 

helicopters, began modifications to the aircraft and received 

certification from the Civil Aviation Authority of Singapore. 

In the engineering and development arena, the group forged 

ahead with its engineering expertise in both technical services 

as well as design and development activities. Developing 

technical services capabilities enables ST Aerospace to 

undertake total support requirements for airlines under its 

Total Aviation Support. Its repertoire of technical services 

competencies includes maintenance planning, maintenance 

control, design and reliability engineering. This enhances 

civil aircraft operators’ aircraft and equipment performance 

and lifecycle supportability, thus reducing customers’ overall 

maintenance costs. 

On the military engineering front, ST Aerospace continued 

to build on its range of proficiencies to undertake major 

engineering enhancements to military aircraft. It took to market 

its integrated suite of tactical enhancements for fixed and 

rotary-winged platforms. Featuring its military aircraft upgrade 

capabilities on board the Super Puma at Asian Aerospace 

2006, the group demonstrated solutions that included 

systems and equipment such as a centralised communications, 

navigation and sensor management system, a digital moving 

map, a door gun system and an aircraft ship integrated secure 

and traverse system. The latter two were equipment designed 

and installed by ST Aerospace. 

ST Aerospace also continued with developments on its 

indigenous FanTail and Skyblade unmanned platforms, 

which are now expanded into families of scalable mini 

Unmanned Aerial Vehicles (UAV) for use in home defence 

and other applications. 

ST Aerospace, world’s largest commercial 

airframe MRO, offers Total Aviation Support 

from its spectrum of airframe, components, 

engines and engineering capabilities.


Aerospace 

Component & Engine Total Support (CETS) 

In 2006, the CETS segment continued to add to its spectrum 

of repair and overhaul capabilities for both engines 

and components. 

It completed the acquisition of SAS Component in March 

as part of its strategy to provide a spectrum of components 

support, particularly in Europe. This enabled CETS to develop a 

more holistic Total Aviation Support proposition and components 

track record. 

The group made strides in maintenance capabilities for 

the CFM56-3 and CFM56-7B engines and completed the 

capability setup for the CFM56-7B. It also started developing 

the CFM56-5B MRO capability, including the construction of a 

new engine test cell. Its subsidiary, STA Engines, secured long 

term contracts from operators of the Boeing 737NG and 

Airbus A320, as well as military customers from as far as 

South America. 

During the year, CETS added some 402 new repair capabilities, 

primarily on pneumatic, hydraulic, electrical and avionics 

components for commercial and military aircraft. To further 

add value to its components MRO activities, its subsidiary, STA 

Systems, embarked on an initiative to build its own designated 

engineering representative library. 

The group maintained the confidence of major customers 

such as FedEx Express, Japan Airlines, UPS and many other 

air forces and airlines. Customers added include Adam Sky 

Connection Airlines (Adam Air), Aloha Airlines, Bangladesh 

Air Force, Peru Air Force, Shanghai Airlines, Xiamen Airlines 

and other airlines from China. ST Arospace has also set up 

service centres through collaborations with Original Equipment 

Manufacturers (OEM) such as Parker Aerospace, Eaton and 

Hamilton Sundstrand. 

The newly formed CETS offers Maintenance-By-the-Hour 

(MBH) and Free2Fly services to customers. MBH TM is a 

trademarked service through STA Systems and STA Supplies 

in Singapore while Free2Fly is a trademarked material supply 

programme by SAS Component, the group’s newly acquired 

European components business. Customers around the world 

can draw on capabilities within both groups, depending on 

their needs. 

PERFORMANCE OF THE AEROSPACE SECTOR 

Half Yearly Performance 

Turnover of the Aerospace sector in 2H2006 of $854m 

was $35m higher compared to 1H2006. The increase 

in turnover came from the three business groups namely, 

AMM, Component/Engine Repair & Overhaul (CERO) and 

Engineering & Materials Services (EMS). The higher turnover 

in AMM was contributed by higher redeliveries in ST Aviation 

Services Co (SASCO). In CERO, higher sales were due to six 

months of sales from the newly acquired SAS Component in 

2H2006 versus four months of sales included in 1H2006. 

In EMS, the turnover increase was due mainly to project 

milestone completions. 

Compared to 1H2006, PBT for 2H2006 at $168.9m was 

$32.6m higher. AMM and EMS registered higher profits. 

The higher PBT in AMM was due to higher turnover and 

improved profitability, while the increased profit in EMS was 

due to maturity of funds under management as well as higher 

dividend income. The profit increase in these two business 

groups was partially offset by lower contributions from CERO 

as a result of post-acquisition business alignment initiatives and 

closure of the Stavanger facility at SAS Component. 


In 2006, ST Aerospace inducted a new wide-body hangar 

at SASCO’s Changi location. 

ST Aerospace advanced on its engineering expertise to 

enhance customers’ aircraft and equipment performance 

and life cycle supportability. 

ST Aerospace made strides in maintenance capabilities 

for the B737 with the completed setup of its CFM56-7B 

MRO capability. 

Newly acquired SAS Component merged with ARL for a 

more holistic Total Aviation Support proposition.

69 

Aerospace 

Full Year Performance 

Aerospace sector’s FY2006 turnover at $1,673m was higher 

than that of FY2005 by 35% or $437m. The higher turnover 

was due to higher redeliveries in AMM as well as the inclusion 

of sales from SAS Component in CERO, but these were 

partially offset by fewer project milestone completions and 

lower material sales in EMS. 

Compared to FY2005, the Aerospace sector’s FY2006 PBT of 

$305.3m was higher by 20% or $49.9m. The higher PBT was 

mainly attributable to improved profitability and higher turnover 

in AMM, but this was partially offset by lower contribution from 

CERO due to post-acquisition business alignment initiatives and 

closure of the Stavanger facility at SAS Component. 

Major Acquisitions 

2006 saw the integration of Airline Rotables Limited (ARL) 

with the newly acquired SAS Component, when ST Aerospace 

transferred its stake in Airline Rotables (UK Holdings) to SAS 

Component for US$22.5m (about $35.5m). The transaction 

raised ST Aerospace’s shareholding in SAS Component from 

67% to 71.3%. 

Major Projects 

ST Aerospace maintained a healthy order book in 2006 that 

included Passenger-To-Freighter (PTF) aircraft conversions, 

maintenance activities and engineering programmes. 

Conversions for the MD-11 progressed steadily in 2006 for 

customers including FedEx Express and UPS. To date, the 

Aerospace sector has redelivered 42 converted MD-11 aircraft, 

with 12 completed in 2006. 

Engineering achievements in 2006 included the initiation of 

engineering development efforts for the Boeing 757-200 PTF 

conversion programme for the Royal New Zealand Air Force. 

Designs for the required multi mission platform were reviewed 

and approved in 2006 for work to commence in 2007. 

Maintaining its leadership in MRO services among Low Cost 

Carriers (LCC) and start-up airlines, ST Aerospace clinched 

contracts from five of six emerging airlines in China and added 

programmes by other major LCCs. Of notable mention was 

the award of a US$635m (about $1b) agreement with Airbus 

to provide Total Aviation Support (including aircraft line and 

light maintenance, components management and support, 

engineering and technical services) for Skybus Airlines’ fleet 

of 65 Airbus A320 family of aircraft over a period of 12 years. 

Skybus Airlines is a new LCC in the US. 

Expanding into new markets, ST Aerospace signed a 

Memorandum of Understanding (MOU) to set up an airframe 

MRO centre in Panama. A lease agreement with the Agencia 

del Área Económica Especial Panamá-Pacífico was signed 

for a new facility to commence operations in 2007. This latest 

addition of Panama Aerospace Engineering (PAE) would 

complement the sector’s MRO centres in Mobile and San 

Antonio, as well as enhance the group’s global network in 

the US, Europe and Asia Pacific. PAE would initially perform 

commercial aircraft maintenance and modification works on 

narrow-body aircraft and aim to progressively build a capacity 

of more than 1.2m manhours and a workforce of 1,000 skilled 

engineers and technicians. 

Its China facility, STARCO, has been operational for two 

years and has successfully completed major works on over 

120 aircraft for China Eastern Airlines, and other Chinese 

and international carriers. Within its first year of operations, 

STARCO was the first non Chinese MRO company to attain a 

certification from the US Federal Aviation Administration for 

the A310, A319/A320 and A330. In 2006, STARCO gained 

more approvals from the European Aviation Safety Agency 

and the Australian Civil Aviation Safety Authority, in addition to 

certification from the Chinese airworthiness authorities.

71 

Electronics 

TRANSFORMING THE WORLD WITH 

INTELLIGENT SOLUTIONS 

Established in 1969, ST Electronics is a leading electronics and 

Information Communications Technology (ICT) systems house 

in the region. Currently marketing to more than 60 countries, 

the sector identified growth areas in e-Government and ICT, 

satellite communications and digital media. 

Its Homeland Security (HLS) solutions, digital animation 

capability, intelligent building management and intelligent 

transportation solutions for infrastructure build up have become 

internationally accepted. In 2006, ST Electronics continued 

to extend its market reach into Qatar, Dubai, Albania and new 

regions in China. 

Leveraging on China’s growth, ST Electronics has set up 

operations in more than eight cities in China, including Beijing, 

Chengdu, Guangzhou, Yichun, Hong Kong, Shanghai, Shenyang 

and Shenzhen. It now targets second tier cities such as 

Nanjing, Ningbo, Suzhou and Wuxi. A production plant was set 

up by its Chengdu office and it is seeking new opportunities 

in the central-western region. ST Electronics also continued 

to tap on infrastructural opportunities in Dongbei, Huadong, 

Huanan and Huabei, as cities in these areas start to develop. 

ST Electronics is part of a consortium with Hewlett-Packard, 

Cisco Systems, Microsoft and Accenture, that was shortlisted by 

the Infocomm Development Authority of Singapore for its $2b 

IT outsourcing Standard ICT Operating Environment project for 

60,000 civil servants, expected to be awarded in 2007. 

ST Electronics’ core business activities are organised into three 

key business groups. 

Large-Scale Systems Group (LSG) 

Over the years, ST Electronics has won rail transportation 

projects in China, the Philippines, Singapore, Taiwan and 

Thailand. This year, it further strengthened its foothold in China 

with new rail projects. 

In the area of intelligent building management and security 

systems, ST Electronics won international contracts for the 

Grand Indonesia Jakarta, Thai Airways Building in Bangkok 

and a parking guidance system in Sydney. Recent awards for 

building security systems were for CCTV, fire protection and 

camera surveillance systems for Doha’s old Souq for the 2006 

Asian Games. 

On the homefront, ST Electronics secured contracts for various 

combat systems for the Singapore Navy’s frigates programme. 

Communication & Sensor Systems Group (CSG) 

ST Electronics continued to lend its transport management 

expertise in international events. Its cetrac ® fleet telematics 

solution was used by buses to ferry delegates during Singapore 

2006 in September. The highlight of this event was the annual 

meetings of the Boards of Governors of the International 

Monetary Fund and World Bank Group. 

Together with iDirect, ST Electronics will support SingTel in its 

newly launched maritime satcom solutions for the Asian market. 

iDirect was selected to provide a communications platform for 

600 sites in Mexico for Farmacias Similares’ pharmacy chain. 

The Full Mission Ship Handling 

Simulator can be confi gured to 

handle all types of vessels.


Electronics 

VT Miltope received a contract for the F/A-22 integrated 

maintenance information system portable maintenance aid for 

the US Air Force. 

Software Systems Group (SSG) 

ST Electronics’ e-Government and ICT solutions surged ahead 

during the year. It will be providing an information network 

system to the 16-member Regional Cooperation Agreement 

On Combating Piracy And Armed Robbery Against Ships In 

Asia (ReCAAP) – the first regional government-to-government 

agreement to combat piracy in Asia. 

Together with CrimsonLogic, ST Electronics will be 

implementing the TradeXchange – a neutral and secure 

trade platform facilitating the exchange of information within 

Singapore’s trade and logistics community. 

The state-owned Qatar Security Services Company appointed 

ST Electronics to provide HLS consultancy. 

The Electronics sector’s digital animation focus has earned 

recognition from renowned names like Nelvana, Promenade 

Pictures and Weta. The Ten Commandments, its jointly 

produced digital animation movie with Promenade Pictures, will 

be launched in the US in 2007. 

PERFORMANCE OF THE ELECTRONICS SECTOR 


The turnover of $527m recorded in 2H2006 was higher than 

that of 1H2006 by 24% or $103m. All three business groups, 

namely LSG, CSG and SSG, contributed to the increased 

turnover. 

The PBT of $59.7m for 2H2006 was higher than that of 

1H2006 by 33% or $14.8m. At the business group level, the 

increase in profit was contributed by LSG due mainly to higher 

sales and better overall performance of overseas subsidiaries. 

CSG’s profit was higher due mainly to higher sales, but this 

was partially offset by lower investment income. The increased 

profit for SSG was in line with its higher sales. 


FY2006 turnover of $951m for the Electronics sector was 

higher than that of FY2005 by 36% or $250m. All three 

business groups contributed to the higher turnover with major 

contribution from CSG for the sales of satellite communication 

products and electro-optics equipment. Turnover for SSG 

was higher with the delivery and installation of educational 

multimedia laboratory systems in Kazakhstan and the milestone 

completions of a command and control system project, while 

milestone completions of the Land Transport Authority’s (LTA) 

Circle Line project and Taipei and Kaohsiung MRT projects 

accounted for the higher turnover in LSG. 

The Electronics sector’s PBT for FY2006 at $104.6m was 

38% or $28.6m higher than that of FY2005. Both CSG and 

SSG recorded higher PBT, while LSG had a lower PBT in 

FY2006 vis-à-vis FY2005. The higher PBT in CSG was due 

to increased turnover and investment income, while the higher 

PBT in SSG was in line with its higher turnover. LSG’s lower 

PBT was due to higher loss incurred by an overseas subsidiary. 

Overall, the sector recorded higher investment and interest 

income in FY2006 vis-à-vis FY2005. 


ST Electronics acquired 80% of US-based MÄK Technologies, 

Inc in a bid to strengthen its simulation and digital media 

capability. MÄK’s tools and toolkit will allow ST Electronics to 

market its simulation solutions for desktop training and digital 

animation games.

73 

Electronics 

ST Electronics acquired the remaining stake in TranSys to 

widen its transportation system capability. STELCOMMS 

was set up with the objective of growing its HLS business for 

communications systems in Asia Pacific. Fifty-one percent 

owned Brightspot Interactive Learning will provide an avenue 

for online e-training business in China and the region, while 

70% owned PM-B will offer mission-critical and command 

and control capabilities for command/data centres, business 

continuity and disaster recovery sites. 


ST Electronics continued to secure projects in new markets. 

These include an integrated tower information system and 

navigational aids for Kukes Airport of Albania, in addition to 

security systems in Qatar and China. 

Its foothold in the Chinese rail market has expanded with two 

new contracts. A first-of-its-kind integrated traffic command 

centre system will enable the efficient management of major 

rail lines in Beijing, making ST Electronics the first Singapore 

company to win a major Beijing Olympics related contract. 

In December, it won a contract to provide automatic fare 

collection systems for Guangzhou MRT Lines 2 and 8 and 

Line 4 North extensions. 

In Singapore, Comfort Transportation Pte Ltd appointed 

ST Electronics to provide a new wireless GPRS-based 

telematics system for its fleet of 15,300 taxis. This new system 

will be integrated into an existing system used by its CityCab 

fleet, implemented by ST Electronics in 2003. 

The Singapore Prison Service will realise its long term goal of 

centralising all prison institutions network infrastructure for its 

new Changi Prison Complex Cluster B by 2008 with a system 

to be provided by ST Electronics. It will also be providing the 

Ministry of Home Affairs with electro-optics payloads for its 

Police Coast Guard vessels to aid in the surveillance of waters 

around Singapore. 

The Singapore Civil Defence Force appointed ST Electronics 

to develop a HazMat incident management system, which will 

facilitate secured communications between fixed sites, mobile 

command posts, commanders and first responders on scenes to 

ensure comprehensive response to chemical threats. 

ST Electronics was awarded a contract to deliver a 360-degree 

virtual aerodrome control simulator to the Singapore Aviation 

Academy, the training arm of the Civil Aviation Authority 

of Singapore. 

In defence, the Electronics sector was instrumental in 

transforming the Singapore Armed Forces into a 3rd Generation 

networked fighting force. Its pioneering, multi role advanced 

combat simulator system was commissioned by the Republic of 

Singapore Air Force, enabling its pilots to train as an integrated 

force. ST Electronics’ Battle Management System (BMS), 

which has been deployed on the BXII platform, was also 

commissioned this year. The BMS networks the fighting forces, 

providing a network-centric wireless communications systems 

for a truly 3rd Generation networked force. 


HazMat management systems facilitate vital and secured 

communications for comprehensive response to chemical threats. 

ST Electronics provides electronics systems and solutions for 

major rail systems in China, the Philippines, Singapore, Taiwan and 

Thailand. 

iDirect’s solutions augment the group’s end-to-end satcom offerings. 

The Battlefield Management System deployed in the BXII provides 

better situational awareness for engagement.

75 

Land Systems 

BREAKING NEW GROUND IN SPECIALTY VEHICLES 

AND TECHNOLOGIES 

ST Kinetics is one of South East Asia’s largest defence 

companies, with a growing portfolio of products and services for 

the defence, homeland security and commercial markets. 

The year saw the Land Systems sector expanding its markets 

and range of products, and actively aligning business operations 

to consolidate its commercial specialty vehicles business. 

It continued to serve the evolving needs of the defence and 

homeland security markets. 

ST Kinetics is in two strategic business segments. 

Integrated Systems and Services 

ST Kinetics achieved several milestones in 2006, chief of 

which was the commissioning of its Bionix II (BXII) infantry 

fighting vehicle by the Singapore Armed Forces (SAF). The 

BXII was designed with greater lethality, survivability and 

enhanced connectivity, enabling better response in today’s fastmoving 

battlefield. ST Kinetics also showcased its integrated 

system of systems solutions at two major exhibitions, namely 

Asian Aerospace in Singapore and Eurosatory in France. Its 

joint participation with the Defence Science and Technology 

Agency, DSO National Laboratories (DSO) and the SAF at 

such events, under the banner of “Task Force Singapore”, 

demonstrated how the Singapore defence ecosystem can 

come together to leverage emerging technologies in support 

of a 3rd Generation SAF. 

Internationally, ST Kinetics forged further alliances with major 

Original Equipment Manufacturers (OEM) to establish a 

foothold in key markets around the world. These included 

partnership agreements with Cornell University of the US and 

Metal Storm of Australia, and a joint venture with Kalyani Group 

in India. Through such collaborations, ST Kinetics expanded 

its product range and strengthened its capabilities in areas 

like unmanned technologies and advanced 40mm ammunition 

products, reinforcing its position as one of the few OEMs in the 

world to offer a comprehensive suite of 40mm weapon systems 

and their supporting ammunition. 

Responding to the growing needs for homefront security, 

ST Kinetics engaged with civil and law enforcement agencies, 

both locally and in the region, to offer solutions for window 

and wall protection, emergency response vehicles as well as 

perimeter defence. Through partnerships, it imported unique 

technologies and commercialised them for the security market. 

An example is the People Portal, which uses a patented non 

intrusive detection capability belonging to EMIT Technologies, 

a partner from the US. 

Specialty Vehicles and Services 

The Land Systems sector is harnessing its engineering 

expertise and growing network in China and the US to realise 

its vision of becoming a major specialty vehicles player. It is 

tapping on its value engineering inputs, and ability to aggregate 

resources and seek cheaper sources of supply, to enhance 

its efficiency and competitive edge. In 2006, an international 

procurement centre was formed to tap on China’s global subcomponents 

supplier status to reduce product costs for ST 

Kinetics worldwide. The formation of a sales and distribution 

group enabled ST Kinetics to promote and market itself globally. 

ST Kinetics stayed focused in China and the US, given their 

market size and growth potential. In China, ST Kinetics’ joint 

venture companies, Beijing Zhonghuan Kinetics (BZK) and 

Guizhou Jonyang Kinetics (GJK), launched new dump trucks 

and excavator products to meet the rising demand for higher 

grade specialty construction vehicles. 

The newly commissioned BXII 

infantry fi ghting vehicle demonstrates 

enhanced lethality, survivability and 

operational performance for today’s 

fast-moving battlefield.


Land Systems 

The newly acquired US-based VT LeeBoy, with its leadership 

position in commercial class asphalt pavers, brooms and related 

road construction and maintenance equipment, has significantly 

boosted the Land Systems sector’s product range and strategic 

position in the construction market. The opening of its new 

and expanded production facility in Lincolnton, North Carolina, 

will provide ST Kinetics the capacity to meet its domestic and 

international growth needs in the years to come. Another 

US-based wholly-owned subsidiary, VT Specialized Vehicles 

Corporation (VT SVC), secured several contracts in 2006. It is 

the preferred or exclusive supplier to 15 of the top 20 US food 

service distributors with its range of multi-temperature trucks 

and trailer bodies. VT SVC expanded its homeland security 

offerings by selling a record number of emergency rescue 

bodies and trailers for municipal rescue departments. 

In the automotive repairs business, ST Kinetics’ STAR 

automotive centres in Guangzhou and Zhejiang responded 

well to the increased demand for quality after-sales service 

coupled with a growing car population in China. Both 

centres achieved authorised quality repair workshop status 

for the top five insurance companies in China and serve as 

independent damage assessment centres. In addition, STAR 

Automotive Centre (Zhejiang) secured a licence to import and 

export automotive spare parts in China for trading and repair, 

giving it an advantage over its competitors. In Guangzhou, 

STAR secured a major fleet maintenance contract from the 

Construction Bank of China. 

PERFORMANCE OF THE LAND SYSTEMS SECTOR 


Compared to 1H2006, 2H2006 turnover increased by 48% or 

$194m to $598m. This was largely due to higher delivery of 

Bronco and BXII as well as higher weapon export and specialty 

vehicles sales. 

Compared to 1H2006, 2H2006 PBT increased by 53% or 

$14.6m to $42.3m. This was attributable mainly to higher 

turnover, but this was partially offset by higher operating 

expenses. 


The Land Systems sector’s FY2006 turnover of $1,002m was 

higher than that of FY2005 by 67% or $402m. The higher 

turnover was largely contributed by Automotive (Auto) and 

Munitions & Weapon (M&W). The higher turnover in Auto 

was the result of higher specialty vehicles sales, while higher 

weapon export and munitions sales accounted for the higher 

turnover in M&W. 

Compared to FY2005, the Land Systems sector’s PBT of $70m 

for FY2006 was higher by 8% or $5m. This was mainly due to 

higher PBT in M&W, but this was partially offset by lower PBT 

in Auto and Services, Trading and Others (S&T). M&W’s higher 

profit was in line with higher turnover, while the lower PBT in 

Auto was due to product mix and lower investment income, 

but this was partially offset by contribution from its specialty 

vehicles business. For S&T, the lower profit was due to the 

share of lower profits from an associated company, CityCab, 

but this was partially offset by increased contribution from 

higher turnover.

77 

Land Systems 


Through VT Land Systems, ST Kinetics acquired B. R. Lee 

Industries at an enterprise value of US$135m ($212m). 

The acquired entity, renamed VT LeeBoy, is a leader in the 

road construction and maintenance equipment market and the 

number one OEM in the US by unit volume for commercial 

class asphalt pavers and brooms. 

The joint venture with Kalyani Group to collaborate in research, 

development and manufacture of military land-based products 

and solutions, specifically in the area of large calibre guns and 

small arms, marked ST Kinetics’ entry into the Indian defence 

market. ST Kinetics holds a 26% stake while Kalyani’s unit, 

BF Utilities, holds the remaining 74% stake. 

ST Kinetics also established Advanced Technology Research 

Centre, a 50-50 joint venture company with DSO, for further 

research and technology development in advanced materials 

for defence and commercial applications. 

In addition, ST Kinetics enlarged its stake in its STAR 

automotive centre in Zhejiang to 86.24%, increasing the total 

capital injection to RMB13m (about $2.6m), in line with the 

business growth in China. 

Another defence milestone was ST Kinetics’ successful 

demonstration of a range of low velocity 40mm electrically 

ignited munitions jointly developed with Metal Storm. It also 

unveiled an array of products and competencies during Asian 

Aerospace that included a light armoured multi role vehicle, all 

terrain vehicle, multi role unmanned ground vehicle, new 40mm 

ammunition products and the People Portal, among others. 

On the commercial front, specialised truck bodies and trailers, 

off-road dump trucks and excavators, road construction 

and maintenance equipment were successfully delivered to 

international customers. 

ST Kinetics showcased its range of specialty vehicles 

at BAUMA, one of the world’s largest exhibitions for the 

construction industry, held in Shanghai. It launched new dump 

trucks and excavators from BZK and GJK respectively, and 

introduced VT LeeBoy to the Chinese market. ST Kinetics 

also developed a new commercial articulated vehicle catered 

to search and rescue, mining, forestry as well as oil and gas 

industries around the world. 


2006 saw the contractual delivery of major projects such as 

Bronco, BXII, SAR 21, Primus, Pegasus and munition products 

to the SAF. ST Kinetics also secured and delivered various 

munition and weapon contracts from overseas customers, 

penetrating new markets in the African continent and 

Latin America. 


ST Kinetics’ commercial articulated vehicle made its 

debut to potential customers in the mining, oil, gas, 

forestry, and search and rescue industries around 

the world. 

International partnerships with major OEMs like 

the Kalyani Group of India enable ST Kinetics to 

establish a foothold in key overseas markets and 

expand its product range. 

The acquisition of VT LeeBoy, with its leadership 

position in commercial class asphalt pavers and 

brooms, enhanced ST Kinetics’ range of specialty 

vehicle products for the construction industry.

79 

Marine 

RAISING THE BAR ON SHIPBUILDING 

AND SHIPREPAIR 

ST Marine has been providing turnkey shipbuilding, ship 

conversion and shiprepair services to a worldwide customer 

base in the naval and commercial markets for over three 

decades. It has operations in Singapore and the US, under 

VT Halter Marine. 

The year for the Marine sector was highlighted by new products, 

expanding business from existing customers, and shiprepair 

projects requiring more engineering expertise. Collectively, 

these included customers like the Republic of Singapore Navy, 

US Army, National Oceanic and Atmospheric Administration, 

Crowley Maritime, Baggermaatschappij Boskalis BV, and China 

National Petroleum Corporation. 

The wide ranging nature of the Marine sector’s shipbuilding 

and shiprepair competencies allows it to attract quality projects, 

leveraging on its design and engineering expertise to customise 

ship design to meet the specific needs of customers. Some key 

new customers that have placed shipbuilding orders are the US 

Navy, Shreyas World Navigation, Louis Dreyfus Armateurs SAS 

and Hoegh Autoliners. 

Shipbuilding 

The sector continued its efforts to secure high value added 

contracts, capitalising on its knowledge and skills in designing 

and building sophisticated vessels, as well as project 

management skills acquired through highly complex and tightly 

scheduled projects such as the frigates programme. 

In September 2006 alone, there were repeat orders for its 

US operations from existing customers amounting to about 

US$450m ($735m), attesting to the level of confidence and 

trust that customers have in VT Halter Marine. 

Shiprepair 

During the year, ST Marine’s shiprepair business was 

highlighted by projects which required higher engineering 

expertise in both repairs and conversions, reflecting its 

reputation for customisation and design capabilities. 

It also saw expanding business from blue chip maritime 

customers all over the world, particularly established European 

shipowners from the Netherlands, Belgium and Germany and 

customers from the US and Asia. The sector maintained its 

presence as a key player in the Singapore shiprepair market, 

especially for tankers, containers and dredgers. 

PERFORMANCE OF THE MARINE SECTOR 


The Marine sector’s turnover for 2H2006 at $365m increased 

by 8% or $28m over 1H2006 turnover of $337m due mainly to 

higher Shipbuilding turnover. 

PBT for 2H2006 at $41.9m increased by 11% or $4.3m over 

1H2006 due mainly to the higher turnover and other income. 


FY2006 turnover of $702m for the Marine sector increased 

by 6% or $42m compared to FY2005, largely contributed by 

Shipbuilding and Shiprepair. The higher Shipbuilding turnover 

was mainly contributed by the US operations, VT Halter Marine, 

while the higher Shiprepair turnover was the result of a more 

active shiprepair market. 

The Marine sector’s PBT of $79.5m in FY2006 was lower 

than that of FY2005 by 10% or $8.4m. The lower PBT was 

due mainly to lower gross margins as a result of a different 

sales mix. 

The fi rst of the four feeder container 

vessels for the Transworld Group, 

OEL Singapore, was launched in 

June 2006.


Marine 


In 2006, ST Marine delivered two of the five locally built 

frigates, RSS Intrepid and RSS Steadfast, to the Republic of 

Singapore Navy and launched the last frigate in the series, 

RSS Supreme. 

ST Marine was awarded a $120m contract for two high 

end RoRo vessels to transport Airbus A380 sections and 

components for assembly in Toulouse, France. The customers 

are Seaplane One and Seaplane Two SAS, a joint venture 

company of Louis Dreyfus Armateurs SAS of France and Leif 

Hoegh & Co AS (LH) of Norway. 

Its US operations won a US$199m (about $315m) contract 

from the US Navy to construct a missile range instrumentation 

ship T-AGM(R). This is the first US Navy contract awarded to 

VT Halter Marine after it joined the ST Engineering Group. 

The shipyard was commissioned to build a fourth fisheries 

survey vessel, worth US$30m (about $50m), for the National 

Oceanic and Atmospheric Administration. It has delivered two 

vessels so far. This customer also awarded VT Halter Marine a 

US$15m (about $23.7m) contract for a small waterplane area 

twin hull coastal mapping vessel. 

It was also contracted to build four additional articulated tug 

barge units for Crowley Maritime worth about US$240m 

($378m), bringing the total order from Crowley Maritime to ten 

vessels, two of which were delivered this year. 

In November 2006, VT Halter Marine was awarded a US$165m 

(about $262.7m) contract by the US Navy to procure long 

lead time materials and equipment for the Egyptian Navy’s fast 

missile craft project. This is in addition to an earlier contract of 

US$28.8m (approximately $49m) for ship design and brings 

the amount awarded for this project to date to US$194m. The 

total amount for this project, for which VT Halter Marine is the 

prime contractor, could exceed US$450m after Phase II is 

added to the contract. 

In shiprepair, the Marine sector clinched two contracts to 

convert existing vessels to seismic research vessels. One was 

a $17m contract to convert a fishing trawler for China National 

Petroleum Corporation‘s BGP, one of the world’s leading 

onshore geophysical service contractors in China, and the other 

was a $8m contract to convert a platform supply vessel for 

Seabird Exploration Norway AS. 

It also won a $32m contract for the modification and upgrading 

of a cutter suction dredger from its existing customer, 

Baggermaatschappij Boskalis BV, and launched the first 

two of the four feeder container vessels for Transworld Group. 

The last of the series of fi ve locally 

built frigates, RSS Supreme, was 

launched by Dr Ivy Ng (wife of Dr Ng 

Eng Hen, Minister for Manpower & 

2nd Minister for Defence).

81 


DYNAMICS AND RISK FACTORS OF THE BUSINESS 

INDUSTRY REVIEW 

As the ST Engineering Group expands its global presence, 

more influencers come into play and with varying impact. 

A negative development in one country may open doors in 

another. This off-setting of influencers lends stability to the 

Group and diversifies its earnings base, while the spread of 

businesses buffers each other, moderating extreme gyrations. 

Oil Prices 

Although oil prices eased to below US$60 level in late 2006, 

they remained high relative to previous years and continued 

to exert pressure on bottom lines, particularly in the aviation 

industry. Many major airlines, some still recovering from 

9/11, also face a proliferation of Low Cost Carriers (LCC), 

which intensifies the competitive landscape. As a result, 

they may increase outsourcing as part of cost containment 

measures. This, together with the rise of LCCs, which generally 

do not have inhouse resources, benefits third party aircraft 

Maintenance, Repair and Overhaul (MRO) operators like 

ST Aerospace. Business from the low cost segment could 

augment work from the major airlines; the longer term concern 

is how the latter could further cap overheads. 

For the specialty vehicles business, high oil prices could 

similarly have a dampening effect. While there are no 

immediate pressures on profit margins, should this trend 

continue, there could be a cutback on infrastructural 

development, such as the construction of roads. In addition, 

oil is one of the components of asphalt, which is used in road 

paving, and this could lead to higher raw material costs, further 

exacerbating potential for reduced demand. 

Any slowdown in the US economy, combined with higher 

interest rates and oil prices, may have far reaching implications 

across industries, ranging from reduced infrastructure and 

property development to a shrinking of the aviation industry. 

High oil prices, however, do benefit oil producers who would 

have greater need for offshore support vessels and tankers, 

and this may benefit the Marine sector. 

Interest Rates 

The effect of interest rates on ST Engineering’s business is 

similar to that of oil. The Fed rates have been hovering at the 

5.25% level since the second half of 2006, and any further 

hike would add to the cost of doing business. As the cost of 

doing business goes up, there could be cutbacks in investments 

or less appetite for business expansion. These could affect 

the demand for some of the Group’s products, such as road 

construction vehicles, and food and beverage vehicles. 

Given the Group’s net cash position, the negative impact of the 

higher borrowing interest rates is largely mitigated by the higher 

bank deposit rates. 

Raw Materials 

Like oil, the cost of steel eased in 2006. The prices of steel 

and related materials, such as aluminium, could impact the 

Marine and specialty vehicles businesses. Locking in prices 

ahead of schedule, as well as capping our price offers based 

on a range of commodity prices, helps to mitigate the impact. 

Currency Fluctuations 

Fluctuations in the currencies of USD and Euro will be most felt 

as these are the Group’s export currencies. 

For USD denominated exports, weakness in USD relative to 

SGD could result in lower revenue. This negative impact would 

be partially cushioned by the lower SGD cost for materials and 

parts imports denominated in USD. Overall, this would have a 

negative impact on the bottom line. The currency fluctuation 

risk of the Group is mitigated by the Group’s diversified portfolio 

of operating units located in different countries with different 

functional currencies. It follows that losses from movements 

in one currency could be offset by gains from movements in 

another currency and vice versa. 

The Group’s newly acquired components business in Denmark 

and Norway, SAS Component, conducts business in Euros. 

The strength of the Euro could have a negative impact on 

the demand of components which SAS Component supplies, 

however, a stronger Euro could contribute to higher Group 

earnings when translated into SGD.



Labour Supply 

Skilled labour is a concern in the Aerospace sector as there is 

a high demand for skilled technicians both in the US and in the 

growing China aviation industries. Training, manpower retention 

incentives and alternative sources of supply are some ways in 

which the Group overcomes this skilled labour shortage. 

Defence Spending 

Defence spending in Singapore has generally been increasing 

year on year. However, this does not necessarily translate into 

more orders from the Singapore Armed Forces (SAF). Like 

the armed forces of other countries, the SAF is purchasing in 

smaller quantities to keep pace with technological change. 

Technological advances also mean that new equipment, such 

as fighter jets and the ever more efficient commercial aircraft, 

require less maintenance in their early years. 

The Singapore government has introduced private-public 

partnerships, where public projects and services are 

outsourced to the private sector. This development brings new 

opportunities for the Group, particularly with its strong record in 

defence, government and public projects, ranging from transport 

and subway systems to homeland security and defence 

solutions. With emphasis on lowering total cost of ownership, 

the Group’s commercial business helps to bring commercially 

available technologies and practices into the defence business. 

In the US, the defence budget has also grown, in view of global 

geo-political unrest and the war on terror, including expenditure 

on homeland security. The US Navy has proposed increasing its 

current fleet to over 300 vessels, with US$8.9b requested for 

building seven new ships*, and the US Coast Guard‘s budget for 

2007 has allocated US$1.06b to the 25-year long Deepwater 

programme to upgrade its fleet.** 

Training in the defence sector is also employing simulation 

techniques and programmes, in addition to ground combat 

exercises. 

* source: American Shipbuilders dated March 2006 

** source: Defence News dated 9 October 2006 

Homeland Security 

As terrorism continues to be the scourge of world communities, 

governments are increasingly aware of the need for homeland 

protection technologies. This awareness will take time to be 

translated into budgets and implementation and, in the longer 

term, presents opportunities for sensor, biometrics, surveillance 

and monitoring technologies, as well as patrol vessels and fast 

interceptors to guard coastal waters. 

Similarly, some of the Group’s defence and homeland security 

products and technologies can be used in disaster recovery. 

Emerging Markets 

The Group’s continued global expansion and inroad into new 

markets – South America, Africa, the Middle East, Central 

Asia – will further diversify its business, making the Group less 

dependent on traditional markets. The new markets can also 

serve as lower cost manufacturing or procurement bases for the 

Group. They are also potential new businesses for the Group 

in terms of infrastructure, such as transportation networks and 

intelligent buildings. 

Free Trade Agreements, like the one between the Panama 

and Singapore governments, will further widen the scope of 

collaboration and economic exchange at various levels 

between nations. 

Disasters 

Being in new markets also exposes the Group to other risks, 

such as natural disasters and terrorism. For example, the 

Group’s Aerospace and Marine’s operations located along the 

Gulf Coast of the US are on hurricane watch each year from 

June to November, requiring preparedness and robust business 

continuity planning. 

In the aftermath of a disaster, recovery operations often field 

emergency response equipment and vehicles. Post disaster 

operations see the rebuilding of infrastructure as people’s 

lives slowly return to normal. New buildings, such as housing 

and schools, roads and other transportation systems benefit 

providers of expertise and equipment in these areas. 

RISK MANAGEMENT 

As the Group drives towards globalisation to expand its market, 

much effort has also been focused on the Group’s aim to build 

a robust risk management practice. Such practice allows the 

Group to align its risk appetite and strategy; to identify, manage 

and monitor key risks; and to allocate resources more efficiently. 

A clearer understanding of risks also enables risks to be taken 

knowingly and optimally. This would not only minimise surprises 

and losses, but also enhance the Group’s performance and 

competitiveness when faced with opportunities. The Group will

83 


continue to build a strong risk management culture as well as 

strengthen its existing risk management practices. 

• Risk Management Governance: The Group’s Risk Review 

Committee works with the management to ensure that the 

Group has adequately prioritised and addressed the risk 

management issues within the Group. 

• Risk Reporting Dashboard: A structured dashboard 

that provides an overview of risk profile as well as key 

risk indicators and risk incidents to management and the 

Risk Review Committee. It enables the monitoring of key 

risks and appropriate mitigating actions being taken on a 

timely basis. 

• Risk Management Infrastructure: Various enabling 

policies, methodologies, guides, checklists and IT 

applications are constantly being developed and improved 

in order to support the practice of risk management at both 

Group and business unit level. 

a) Strategic and Operational Risk 

The Group operates in 20 countries spread across the Asia 

Pacific, Europe, and North and South America. As part of the 

Group’s plan to grow its business internationally, it will continue 

to focus on increasing its operating activities and presence 

in Europe, Greater China and the US. In 2006, 23% of the 

Group’s assets were in the US (2001: 5%). Revenue from 

customers located outside Asia increased from 26% of Group 

revenue in 2001 to 47% in 2006. 

As part of its business strategy, the Group seeks to increase the 

proportion of its international business and customers, thereby 

achieving greater geographical diversification. Likewise, the 

Group also plans to raise the proportion of its commercial 

business while maintaining strong support towards the local 

defence business. The commercial business helps to bring 

commercially available technology and practices into the 

defence business, thereby allowing for more cost effective 

systems and solutions. A more diversified base of commercial 

and military customers will reduce the risk of customer 

concentration. 

b) Investment Risk 

The Group seeks to grow its businesses on three fronts: 

through organic growth of its existing capabilities and 

capacities; through development of new capabilities; and 

through acquisition or joint ventures of business entities or 

operating assets. 

Investment activities, ranging from the identification of targets 

to conducting due diligence, are supported by a dedicated 

team of investment professionals and augmented by external 

professionals for specialised services. The business proposals 

are guided by a given set of internal investment criteria, 

evaluated by senior management and endorsed by a Business 

Investment and Divestment Committee before seeking final 

Board approval. 

c) Interest Rate Risk 

The Group’s cash balances are placed with reputable banks, 

financial institutions and a related corporation. The Group 

manages its interest rate risk on its interest income by placing 

the cash balances in varying maturities and interest rate terms. 

For loans taken by the Group, long term interest rate swaps are 

taken to mitigate short term interest rate risk. 

06 47% 

01 26% 

06 23% 

01 5% 

Assets located in US 

Revenue from customers located outside Asia



d) Foreign Exchange (FX) Risk 

The Group’s FX risk arises both from its subsidiaries operating 

in foreign countries, which generate revenue and incur costs 

denominated in foreign currencies, and from operations of its 

local subsidiaries which are transacted in foreign currencies. 

The Group enters into forward FX contracts to hedge against 

its FX risk resulting from anticipated sale and purchase 

transactions denominated in foreign currencies, primarily in 

Euro and USD. 

FOREIGN EXCHANGE 

1.90 

1.85 

1.80 

1.75 

1.70 

1.65 

1.60 

1.55 

1.50 

Jan 02 

Mar 02 

May 02 

Jul 02 

Sep 02 

Nov 02 

Jan 03 

Mar 03 

May 03 

Jul 03 

Sep 03 

Nov 03 

Jan 04 

Mar 04 

USD/SGD 

May 04 

Jul 04 

Sep 04 

Nov 04 

Jan 05 

Mar 05 

May 05 

Jul 05 

Sep 05 

Nov 05 

Jan 06 

Mar 06 

May 06 

Jul 06 

Sep 06 


e) Derivative Financial Instrument Risk 

The Group uses forward FX and options to hedge its net 

foreign currency exposures in the management of FX risk. 

These derivative instruments are used for hedging and not for 

speculative transactions in foreign exchange. 

f) Market Risk 

The Group has investments in quoted equity shares and placed 

funds with fund management companies, with investments 

in quoted equity shares and bonds. The market value of 

these investments will fluctuate with market conditions. To 

mitigate market risk, the Group’s funds with fund managers are 

guaranteed 95% to 100% of their principal values at the end of 

the fund management period. Also, before a fund manager is 

allocated funds for management, its management capability and 

financial strength are carefully considered. 

Nov 06 

g) Liquidity Risk 

To manage liquidity risk, the Group monitors its net operating 

cash flow and maintains an adequate level of cash and cash 

equivalents and has secured committed funding facilities from 

financial institutions. In assessing the adequacy of these 

facilities, management reviews its working capital requirements. 

h) Credit Risk 

Credit risk, or the risk of counterparties defaulting, is managed 

through the application of credit approvals, credit limits and 

monitoring procedures. Where appropriate, the Company or its 

subsidiaries obtain collateral from customers or arrange master 

netting agreements. Cash terms, advance payments and letters 

of credit or bank guarantees are required for customers of 

lower credit standing. 

i) Acts of God and/or War Risk 

The Group manages this risk through the development of 

business continuity plans so as to ensure quick recovery and 

resumption of critical business functions after a disruption. 

These plans have been communicated and the management 

has gone through simulated exercise of these plans. Regular 

reviews of these plans are performed to ensure that they stay 

relevant. Most contracts signed also include force majeure 

clauses to mitigate risk from Acts of God. 

j) Legal and/or Political Risk 

Legal risk is managed through standardised contracts with 

terms and conditions that are pre-approved. Any deviation 

will be vetted and approved by appropriate party level of 

management. The management also vigilantly monitors the 

respective country’s business practices, environmental issues, 

political impact on the projects and overall business. 

k) Reputation Risk 

Recognising the importance of providing timely and key 

information to our stakeholders, the Group put in place a 

communications programme to ensure effective communication 

with our stakeholders at all times.

85 


SENSITIVITY ANALYSIS 

a) Interest Rate 

The Group’s cash and cash equivalents as well as funds under 

management are largely invested in fixed deposits and fixed 

income securities. Movements in interest rates will therefore 

have an impact on the interest and investment income for the 

Group. Based on the Group’s cash and cash equivalents of 

$1.2b as at end 2006, a one percentage point movement in 

effective fixed deposit rates is estimated to result in an annual 

$12m change in interest income for the Group. Likewise, a 

one percentage point movement in effective borrowing rate 

is estimated to result in an annual $8.9m change in interest 

expense, based on the Group’s borrowings of $890m as at 

end 2006. 

SHAREHOLDER RETURN 

Return On Equity 

The Return On Equity (ROE) improved 1.9 percentage points 

to 28.4% in 2006, as a result of higher profit after tax and 

minority interests. 

02 

04 26.1% 

03 24.6% 

22.8% 

05 

06 

26.5% 

28.4% 

6 

INTEREST RATE (%) 

5 

RETURN ON EQUITY 

4 

3 

2 

1 

0 

Jan 02 

Apr 02 

Jul 02 

Oct 02 

Jan 03 

Apr 03 

Jul 03 

Oct 03 

Jan 04 

USD SIBOR (3 months) 

SGD SIBOR (3 months) 

Apr 04 

Jul 04 

Oct 04 

Jan 05 

Apr 05 

Jul 05 

Oct 05 

Jan 06 

Apr 06 

Jul 06 

Oct 06 


Dividend Per Share (DPS) and Earnings Per Share (EPS) 

The proposed dividend for 2006 of $445.1m is higher than 

the 2005 dividend of $399.5m paid in April 2006. The 

recommended 2006 dividend took into consideration the 

Group’s present cash position, positive cash flow generated 

from operations, and projected capital requirements. Payment 

of the dividends is subject to the approval of the shareholders 

of the Company at the coming AGM. The proposed 2006 

dividend of $445.1m represents 100% of the earnings 

for FY2006. 

b) Gross Profit Margin 

At the 2006 turnover of $4.49b, a one percentage point 

movement in the gross profit margin of the Group will lead 

to a $44.9m change in gross profit for the Group. The many 

different programmes undertaken across the Group, with their 

accompanying variations in margin, have the effect of reducing 

the Group-wide impact of specific project fluctuations. 

c) Others 

Other risk factors that have an impact on turnover and net 

profits tend to be sector or project specific. Hence, it is not 

practical to perform a sensitivity analysis in such instances. 

DIVIDEND/EARNINGS PER SHARE 

20 18.50 

15.11 

16 

11.30 12.39 

13.60 

12 

15.15 

12.26 

13.64 

11.47 11.29 

8 

4 

0 

02 03 04 05 06 

DPS EPS



Total Shareholder Return for ST Engineering Shares 

In 2006, ST Engineering shares generated a total shareholder 

return of 12.8% for its shareholders. This consists of 5.1% of 

dividend yield and 7.7% of capital gain for the period. Over the 

last four years, ST Engineering has been able to consistently 

generate good total shareholder returns for its shareholders 

with more than 5% of dividend yield and healthy appreciation 

in its share price. 

In 2007, the ST Engineering Board will adopt a dividend policy, 

which is based on a half yearly ordinary dividend payout, and 

plans to declare a first interim ordinary dividend payout 

starting from the announcement of the half year results 

ending 30 June 2007. 

To maximise shareholder value, management will continue 

its policy of paying a high level of dividends to return excess 

cash generated from the operations, provided the cash is not 

required for major investments in the future. These investments 

may include potential mergers and acquisitions and the 

building of new facilities and capabilities to expand the 

existing operations. 

Share Purchase Mandate 

In the coming EGM, the Company will again seek shareholders’ 

approval to renew the Share Purchase Mandate for the 

purchase of up to 10% of the number of ordinary shares in 

the capital of the Company. The share purchase can be 

effected either through market purchases or off market 

purchases. The financial impact of various share purchase 

scenarios will be presented in a circular to members. 

The purpose of the Share Purchase Plan is to give the 

Company the flexibility to undertake the share purchase 

exercise expeditiously. The Share Purchase Plan provides the 

Company an alternate avenue to reward shareholders apart 

from the traditional dividend payment route. 

FINANCIAL REVIEW 

Treasury Policy and Capital Structure 

The Group’s Treasury Unit seeks to minimise the Group’s 

financial risk, to ensure sufficient liquidity to meet day-to-day 

operational needs and to invest the cash and cash equivalents 

within the guidelines approved by the Board of Directors. 

% 

30 

5.2% 

25 

22.7% 

20 

15 

5.7% 

14.2% 

10 

5 

0 

04 05 06 

Capital Gain Dividend Yield 

5.1% 

7.7% 

Cash and Foreign Exchange Management 

The Group adopts the strategy of centralised cash 

management, where the excess cash of its business entities 

are swept to the Treasury Unit, which centrally manages the 

investment of the funds. Similarly, the FX requirements of the 

business entities are managed centrally. The business entities 

hedge their material FX exposures arising from sales and/or 

purchases in currencies other than the functional currencies. 

Their FX requirements are matched internally by the Treasury 

Unit where feasible and this procedure enables the Group to 

offset and minimise FX risk within the Group. The Treasury 

Unit then hedges unmatched FX requirements with external 

counterparties. 

The aim of the Treasury Unit’s cash management and FX 

management strategies is to maximise the returns of the 

Group’s cash resources and to minimise FX exposures and 

associated costs. The most common financial instruments used 

to manage the FX exposures are forward FX contracts and 

currency options.

87 


Insurance 

Where appropriate, the Group manages its insurance risks 

on a Group basis to leverage its position with the general 

insurance market. 

The Group reviews its insurable risk profile continually 

and makes the necessary adjustments on risk retention to 

optimise the coverage and cost. This is done with advice 

and support from selected insurance brokers. Major group 

insurance policies include Industrial Special Risk, Liabilities 

and Workmen Compensation, designed to protect the Group 

against properties risk, liabilities for its products and services, 

and workplace accidents respectively. The aviation and marine 

businesses have specialised insurance programmes. 

The Group adopts a proactive strategy with advice and 

recommendations from insurance brokers to manage the 

insurance risk with specific risk management programmes 

covering the prevention of fire and the adoption of behaviour 

based safety practices, among others. 

Funding and Borrowings 

The Group funds its investments and operations through 

a mixture of shareholders’ funds, advance payments from 

customers, and some borrowings. Its borrowings amounted to 

$890m, about 57% of its shareholders’ funds. 

Long term borrowings amounted to $282m and the balance 

is of a short term nature. The long term borrowings comprise 

mainly terms loans taken by SAS Component and an Industrial 

Revenue Bond, issued by ST Mobile Aerospace Engineering, 

to fund the initial purchase of plant and machinery for the 

facilities located at Mobile, Alabama in 1990; both entities are 

subsidiaries of the Aerospace sector. The short term loans are 

denominated in USD at a floating rate that commensurates with 

the Group’s Aaa credit rating from Moody’s. The rationale of 

borrowing in USD is to create a natural currency hedge position 

for the Group’s investments denominated in the currency. 

The Group’s interest cover stays at a healthy 13 times, with a 

gross debt-to-equity ratio of 0.57. 

BORROWINGS ($m) 

608 

340 

282 

16 

06 05 06 05 06 05 

CASH FLOWS AND LIQUIDITY 

890 

356 

ST Borrowings LT Borrowings Total Borrowings 

Operating Activities 

In 2006, the net cash generated from operating activities 

amounted to $460m. In 2005, the net cash generated from 

operating activities amounted to $303m. The improvement of 

$158m in FY2006 in net cash from operating activities was 

largely due to higher operating profits and favourable working 

capital movements, with positive variances in trade debtors, 

advance payments to suppliers and other creditors, accruals 

and provisions, but these were partially offset by the negative 

variance in stocks and work-in-progress. 

Investing Activities 

The $369m net cash used in investing activities in FY2006 

was lower by $66m compared to FY2005. This was mainly 

the result of much higher proceeds from the sale and maturity 

of investments, but these were partially offset by a higher cash 

outflow for the purchase of property, plant and equipment. 

Financing Activities 

The $143m net cash used in financing activities in FY2006 

was lower than that of $184m in FY2005 by $41m. This was 

largely due to a higher cash inflow from bank loans, but this 

was partially offset by a higher cash outflow for the payment 

of dividend to shareholders and interest expense.



CASH FLOW ($m) 

460 

303 

06 05 06 05 

East remain and the high oil prices are likely to persist and 

continue to be volatile. The risk of economic slowdown in the 

US and the re-emerged threat of a bird-flu pandemic continue 

to cause uncertainties in the global economy. As the Group 

continues its expansion into the global market, the impact 

of external risks on overall performance remains. Barring 

unforeseen circumstances, the Group expects to achieve a 

higher turnover and PBT in 2007. 

06 05 

Operating 

Activities 

Cash and Cash Equivalents 

As at 31 December 2006, the Group’s cash and cash 

equivalents stood at $1.2b, comparable to that of FY2005. 

The cash and cash equivalents are centrally managed by the 

Treasury Unit and the majority of the funds were invested 

in liquid assets such as fixed deposits and placements with 

a related corporation. The cash and cash equivalents as at 

yearend is adequate to fund the committed and planned capital 

expenditure, as well as to service the Group’s borrowings. 

Notwithstanding the Group’s current positive cash and cash 

equivalents position, it has established short term financing 

facilities with various financial institutions for bridging finance. 

Such liquidity facilities can be tapped when requirements 

arise, in particular, for financing significant merger and 

acquisition deals. 

ACCOUNTING POLICIES 

The Group’s significant accounting policies are presented in 

Notes to the Financial Statements, Note 2 (pg 112 to 126). 

The Group has applied the same accounting policies and 

methods of computation in the preparation of the financial 

statements for the current reporting period compared with the 

audited financial statements as at 31 December 2005. 

PROSPECT FOR 2007 

(369) (435) 

(143) (184) 

Investing 

Activities 

Financing 

Activities 

The global economy in 2006 was shrouded with uncertainties 

caused by the high and volatile oil prices and the risk of a US 

economic slowdown. Fortunately, the economy ended the 

year relatively unscathed. Financial markets around the world 

started positively in 2007, with many stock market indices 

reaching record highs. The geo-political tensions in the Middle 

In the Aerospace sector, high fuel prices and intense 

competition, especially from LCCs, will continue to exert 

pressure on the cost structure of the aviation industry. This 

could facilitate MRO outsourcing trend, as legacy airlines are 

compelled to improve operating cost efficiency. The sector will 

focus on airframe heavy maintenance and modification work, 

Total Aviation Support and implementing the recently secured 

seven-year FedEx Express Passenger-to-Freighter conversion 

contract. It will set up the required capabilities to support 

the operation of Skybus Airlines in the US. Through SAS 

Component in Europe and the expanding component support 

operations, the sector will continue its efforts to increase 

its presence in the global components and material 

services market. 

With the enhanced simulation and digital media capabilities 

following the acquisition of MÄK Technologies, the Electronics 

sector will strengthen its market position and further broaden 

its customer base in 2007. iDirect will continue to extend the 

sector’s presence in the US and enable the sector to offer a full 

suite of satellite communications services globally. 

The Land Systems sector will continue its strategy of growing 

its international businesses by expanding its sales and 

distribution network, developing niche products and fostering 

local partnerships in the global market. The sector will 

continue to apply its engineering capabilities to its commercial 

automotive businesses, and create synergies and operating 

efficiencies from its specialty vehicles companies in the US 

and China. 

The Marine sector succeeded in securing a few large contracts 

last year. Coupled with ongoing projects, these will keep the 

yards in Singapore and the US well utilised in 2007. The US 

yards had resumed full operations in 2006 after the disruption 

caused by Hurricane Katrina in August 2005. Apart from 

seeking new contracts and developing new products, the 

sector will concentrate on delivering its commitments to the 

customers and continue to pursue business opportunities in the 

naval and government industries, and niche segments of the 

commercial market.


Directors’ Report AS AT 31 DECEMBER 2006 

(Currency – Singapore dollars unless otherwise stated) 

We, the undersigned directors, on behalf of all the directors of the Company, submit this annual report to the members together with 

the audited financial statements of the Group and of the Company for the financial year ended 31 December 2006. 

DIRECTORS 

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

Peter Seah Lim Huat 

Tan Pheng Hock 

Koh Beng Seng 

LG Ng Yat Chung 

Dr Tan Kim Siew 

Professor Lui Pao Chuen 

Winston Tan Tien Hin 

Lucien Wong Yuen Kuai 

Dr Philip Nalliah Pillai 

Quek Poh Huat 

Venkatachalam Krishnakumar 

BG Bernard Tan Kok Kiang 

(Chairman) 

(President and Chief Executive Officer) 

(Alternate Director to LG Ng Yat Chung) 

ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE SHARES OR DEBENTURES 

Except for the Singapore Technologies Engineering Executives’ Share Option Scheme, Singapore Technologies Engineering Share 

Option Plan and Singapore Technologies Engineering Performance Share Plan (collectively the “ST Engineering Share Plans”), 

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. 

DIRECTORS’ INTERESTS IN SHARES OR DEBENTURES 

Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares or debentures 

of the Company or of related corporations either at the beginning (or date of appointment, if later) or at the end of the financial year. 

There were no changes in any of the directors’ interests in the Company between the end of the financial year and on 21 January 

2007.

91 



DIRECTORS’ INTERESTS IN SHARES OR DEBENTURES (continued) 

According to the register kept by the Company for the purposes of Section 164 of the Singapore Companies Act, Chapter 50, 

particulars of interests of directors who held office at the end of the financial year in shares or debentures in the Company and its 

related corporations were as follows: 

HOLDINGS IN THE NAME OF THE DIRECTOR, 

SPOUSE OR INFANT CHILDREN 

1 JANUARY 2006 OR DATE OF 

APPOINTMENT IF LATER 31 DECEMBER 2006 

The Company 

Ordinary Shares 

Tan Pheng Hock 85,864 173,364 

Professor Lui Pao Chuen 181,444 181,444 

Winston Tan Tien Hin 200,000 *1 315,000 *1 

Lucien Wong Yuen Kuai – 75,000 

Dr Philip Nalliah Pillai – 75,000 

Quek Poh Huat 763,228 813,728 

BG Bernard Tan Kok Kiang 9,164 9,164 

Related Corporations 

CEI Electronics Pte Ltd 


Winston Tan Tien Hin 47,520 47,520 

Chartered Semiconductor Manufacturing Ltd 



Koh Beng Seng 44,074 44,074 

Dr Tan Kim Siew 25,000 – 

Winston Tan Tien Hin – 20,000 

Global Crossing Limited 

Common Stock of US$0.01 each 

Peter Seah Lim Huat 750 1,785 

SembCorp Industries Ltd 


Peter Seah Lim Huat 140,000 N.A. *2 

Professor Lui Pao Chuen 66,189 N.A. *2 

Quek Poh Huat 34,676 N.A. *2 

BG Bernard Tan Kok Kiang 3,951 N.A. *2 

SembCorp Logistics Ltd 


Professor Lui Pao Chuen 105,070 N.A. *2 

SembCorp Marine Ltd 


Professor Lui Pao Chuen 60,000 N.A. *2









SIA Engineering Company Limited 



Singapore Airlines Limited 



Winston Tan Tien Hin 4,000 – 

Venkatachalam Krishnakumar 4,000 4,000 


Singapore Airport Terminal Services Ltd 



Singapore Computer Systems Limited 


Quek Poh Huat 15,000 15,000 


Singapore Food Industries Limited 



Singapore Telecommunications Limited 


Peter Seah Lim Huat 3,180 3,040 


Koh Beng Seng 1,600 1,520 

LG Ng Yat Chung 1,430 1,360 

Dr Tan Kim Siew 2,990 2,850 



Lucien Wong Yuen Kuai 4,800 4,580 

Dr Philip Nalliah Pillai 49,800 47,320 

Quek Poh Huat 3,370 5,210 

BG Bernard Tan Kok Kiang 380 380 

SMRT Corporation Ltd 


Quek Poh Huat 8,000 8,000

93 








SP AusNet 

Stapled Securities 

Quek Poh Huat 206,000 206,000 

SNP Corporation Ltd 



StarHub Ltd 




Venkatachalam Krishnakumar 20,000 17,144 

TeleChoice International Limited 




Vertex Technology Fund Ltd 


Winston Tan Tien Hin 10 10 

Vertex Technology Fund (II) Ltd 


Tan Pheng Hock 5 † 5 † 

Koh Beng Seng 15 15 


Redeemable Preference Shares 

Koh Beng Seng 15 15 


Vertex Investment (II) Ltd 


Professor Lui Pao Chuen 20 20





1 JANUARY 2006 

OR DATE OF 

APPOINTMENT 31 DECEMBER EXERCISE 

IF LATER 2006 PRICE EXERCISABLE PERIOD 

$ 

The Company 

Options to Subscribe for Ordinary Shares 

Peter Seah Lim Huat 89,000 89,000 1.92 13.8.2003 to 12.8.2007 

44,500 44,500 1.79 7.2.2004 to 6.2.2008 

40,500 40,500 1.86 12.8.2004 to 11.8.2008 

44,500 44,500 2.09 10.2.2005 to 9.2.2009 

44,500 44,500 2.12 11.8.2005 to 10.8.2009 

44,500 44,500 2.37 8.2.2006 to 7.2.2010 


– 44,500 3.01 10.2.2007 to 09.2.2011 

– 44,500 2.84 11.8.2007 to 10.8.2011 

Tan Pheng Hock 5,000 5,000 1.29 8.8.2000 to 7.8.2008 

400,000 400,000 1.418 10.2.2001 to 9.2.2009 

5,000 5,000 2.00 11.8.2001 to 10.8.2009 

400,000 400,000 2.26 10.2.2002 to 9.2.2010 

225,000 225,000 2.72 20.2.2002 to 19.2.2011 

227,500 227,500 2.68 11.8.2002 to 10.8.2011 

175,000 175,000 2.29 8.2.2003 to 7.2.2012 

175,000 175,000 1.92 13.8.2003 to 12.8.2012 

200,000 200,000 1.79 7.2.2004 to 6.2.2013 

200,000 200,000 1.86 12.8.2004 to 11.8.2013 

200,000 200,000 2.09 10.2.2005 to 9.2.2014 

200,000 200,000 2.12 11.8.2005 to 10.8.2014 



– 200,000 3.01 10.2.2007 to 9.2.2016 

– 200,000 2.84 11.8.2007 to 10.8.2016 

Koh Beng Seng 19,500 19,500 2.09 10.2.2005 to 9.2.2009 

19,500 19,500 2.12 11.8.2005 to 10.8.2009 



– 27,500 3.01 10.2.2007 to 9.2.2011 

– 27,500 2.84 11.8.2007 to 10.8.2011 

Professor Lui Pao Chuen 21,500 21,500 1.79 7.2.2004 to 6.2.2008 

21,500 21,500 1.86 12.8.2004 to 11.8.2008 

21,500 21,500 2.09 10.2.2005 to 9.2.2009 

25,250 25,250 2.12 11.8.2005 to 10.8.2009 


– 29,000 3.01 10.2.2007 to 9.2.2011

95 





OR DATE OF 



$ 

The Company 


Winston Tan Tien Hin 115,000 – 2.72 20.2.2002 to 19.2.2006 

105,000 105,000 2.29 8.2.2003 to 7.2.2007 

56,500 56,500 1.79 7.2.2004 to 6.2.2008 

46,500 46,500 1.86 12.8.2004 to 11.8.2008 

48,500 48,500 2.09 10.2.2005 to 9.2.2009 



– 37,000 3.01 10.2.2007 to 9.2.2011 

– 37,000 2.84 11.8.2007 to 10.8.2011 

Lucien Wong Yuen Kuai 75,000 – 2.72 20.2.2002 to 19.2.2006 

59,000 59,000 2.29 8.2.2003 to 7.2.2007 

23,500 23,500 1.79 7.2.2004 to 6.2.2008 

19,500 19,500 1.86 12.8.2004 to 11.8.2008 

19,500 19,500 2.09 10.2.2005 to 9.2.2009 

19,500 19,500 2.12 11.8.2005 to 10.8.2009 



– 21,500 3.01 10.2.2007 to 9.2.2011 

– 21,500 2.84 11.8.2007 to 10.8.2011 

Dr Philip Nalliah Pillai 75,000 – 2.72 20.2.2002 to 19.2.2006 

62,000 62,000 2.29 8.2.2003 to 7.2.2007 

31,000 31,000 1.79 7.2.2004 to 6.2.2008 

29,000 29,000 1.86 12.8.2004 to 11.8.2008 

31,000 31,000 2.09 10.2.2005 to 9.2.2009 

31,000 31,000 2.12 11.8.2005 to 10.8.2009 



– 33,000 3.01 10.2.2007 to 9.2.2011 

– 33,000 2.84 11.8.2007 to 10.8.2011 

Quek Poh Huat 43,000 12,750 1.92 13.8.2003 to 12.8.2007 

35,000 14,750 1.79 7.2.2004 to 6.2.2008 

33,000 33,000 1.86 12.8.2004 to 11.8.2008 

33,000 33,000 2.09 10.2.2005 to 9.2.2009 

33,000 33,000 2.12 11.8.2005 to 10.8.2009 



– 33,000 3.01 10.2.2007 to 9.2.2011 

– 33,000 2.84 11.8.2007 to 10.8.2011






OR DATE OF 



$ 

Venkatachalam Krishnakumar 25,250 25,250 2.37 8.2.2006 to 7.2.2010 


– 25,500 3.01 10.2.2007 to 9.2.2011 

– 25,500 2.84 11.8.2007 to 10.8.2011 

Related Corporations 

Chartered Semiconductor Manufacturing Ltd 



46,887 46,887 1.86 30.8.2003 to 30.8.2007 

40,000 40,000 0.72 28.2.2004 to 28.2.2008 

45,000 45,000 1.10 29.8.2004 to 29.8.2008 

85,000 85,000 1.70 27.2.2005 to 27.2.2009 


– 95,000 1.21 25.8.2007 to 25.8.2011 

Koh Beng Seng 5,860 – 4.05 28.3.2002 to 28.3.2006 

11,721 – 4.26 15.8.2002 to 15.8.2006 

29,304 29,304 1.86 30.8.2003 to 30.8.2007 


Options to Purchase Common Shares of US$0.01 each 


PT Indosat Tbk 

Options to Subscribe for Ordinary Shares of Rp100 each 

Peter Seah Lim Huat 150,000 – 3702.6 1.8.2005 to 31.7.2006 

SembCorp Industries Ltd 


Peter Seah Lim Huat 140,000 N.A. *2 1.50 20.4.2002 to 19.4.2006 

70,000 N.A. *2 1.54 8.5.2003 to 7.5.2007 

70,000 N.A. *2 0.93 18.10.2003 to 17.10.2007 

70,000 N.A. *2 1.09 3.6.2004 to 2.6.2008 

70,000 N.A. *2 1.24 19.11.2004 to 18.11.2008 

70,000 N.A. *2 1.30 18.5.2005 to 17.5.2009 

70,000 N.A. *2 1.47 23.11.2005 to 22.11.2009 

70,000 N.A. *2 2.68 2.7.2006 to 1.7.2010 

70,000 N.A. *2 2.67 22.11.2006 to 21.11.2010

97 





OR DATE OF 



$ 

SembCorp Marine Ltd 


Tan Pheng Hock 20,000 N.A. *2 0.66 28.9.2002 to 27.9.2006 

40,000 N.A. *2 0.90 8.11.2003 to 7.11.2007 

50,000 N.A. *2 0.99 9.8.2004 to 8.8.2008 

50,000 N.A. *2 1.04 11.8.2005 to 10.8.2009 

35,000 N.A. *2 2.96 12.8.2006 to 11.8.2010 

StarHub Ltd 


Peter Seah Lim Huat 37,500 – 0.88 30.11.2003 to 29.11.2007 

18,750 – 0.88 31.5.2004 to 30.5.2008 

18,750 6,250 0.88 29.11.2004 to 28.11.2008 

18,750 6,250 0.96 3.4.2005 to 2.4.2009 

18,750 12,500 0.985 27.11.2005 to 26.11.2009 


STT Communications Ltd 


Peter Seah Lim Huat 2,000 – 0.50 29.6.2003 to 28.6.2012 

19,500 9,750 0.57 30.7.2004 to 29.7.2013 

130,000 65,000 1.08 29.7.2005 to 28.7.2014 



Quek Poh Huat 60,000 – 1.42 9.9.2003 to 9.9.2007 


OR DATE OF 

APPOINTMENT 

31 DECEMBER 

IF LATER 2006 VESTING PERIOD 


Restricted Stock Units of US$0.01 each 

Peter Seah Lim Huat 6,750 5,625 8.3.2005 to 8.3.2009 

– 3,294 15.8.2007









The Company 

Conditional Award of 250,000 performance 

shares to be delivered after 2005 

Tan Pheng Hock 0 to 500,000 #1 – 


shares to be delivered after 2006 

Tan Pheng Hock 0 to 500,000 #2 0 to 500,000 #2 



Tan Pheng Hock 0 to 375,000 #3 0 to 375,000 #3 



Tan Pheng Hock – 0 to 375,000 #4 

*1 Includes deemed interest in 200,000 shares held in the name of Winmark Investments Pte Ltd, a company in which Winston 

Tan Tien Hin has a 50% interest. 

*2 SembCorp Industries Ltd, SembCorp Logistics Ltd and SembCorp Marine Ltd ceased to be related corporations of Temasek 

Holdings (Private) Limited during the financial year. 

*3 Includes deemed interest in 100,000 shares in Singapore Telecommunications Limited, held by Winmark Investments Pte Ltd, 

a company in which Winston Tan Tien Hin has a 50% interest. 

*4 Includes deemed interest in 133,000 shares in Singapore Telecommunications Limited, held by Winmark Investments Pte Ltd, 

a company in which Winston Tan Tien Hin has a 50% interest. 

*5 Includes deemed interest in 366 shares in SNP Corporation Ltd, held by Winmark Investments Pte Ltd, a company in which 

Winston Tan Tien Hin has a 50% interest. 

† Held in trust by a trustee company on behalf of a director. 

#1 The actual number of shares to be delivered will depend on the achievement of set targets over a three-year period from 2003 

to 2005. Achievement of targets below 80% target level will mean no performance shares will be delivered, while achievement 

up to 200% will mean up to twice the number of performance shares can be delivered. For this period, Mr Tan Pheng Hock 

was awarded 87,500 new shares on 20 February 2006 upon partial achievement of targets set. The balance of the conditional 

performance shares award covering the period from 2003 to 2005 has thus lapsed. 

#2 The actual number delivered will depend on the achievement of set targets over a three-year period from 2004 to 2006. 

Achievement of targets below 80% target level will mean no performance shares will be delivered, while achievement up to 

200% will mean up to twice the number of performance shares can be delivered.

99 




#3 A minimum threshold performance over a three-year period from 2005 to 2007 is required for any performance shares to be 

released and the actual number of performance shares to be released is capped at 150% of the conditional award. 

#4 A minimum threshold performance over a three-year period from 2006 to 2008 is required for any performance shares to be 

released and the actual number of performance shares to be released is capped at 150% of the conditional award. 

DIRECTORS’ INTERESTS IN CONTRACTS 

Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than a benefit 

or any fixed salary of a full-time employee of the Company included in the aggregate amount of emoluments shown in the financial 

statements, or any emoluments received from related corporations and share options granted pursuant to the ST Engineering Share 

Plans) by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is 

a member, or with a company in which the director has a substantial financial interest, except for professional fees paid to a firm of 

which a director is a member as shown in the financial statements. 

SHARE PLANS 

The Executive Resource and Compensation Committee (“ERCC”) is responsible for administering the Singapore Technologies 

Engineering Share Option Plan (“ESOP”), the Singapore Technologies Engineering Performance Share Plan (“PSP”) and the 

Singapore Technologies Engineering Restricted Stock Plan (collectively “Share Plans”). 

The Committee members are Mr Peter Seah Lim Huat (Chairman), Mr Venkatachalam Krishnakumar and Dr Philip Nalliah Pillai. 

Following approval of the new Share Plans by shareholders at the Extraordinary General Meeting held on 23 November 2000, the 

Singapore Technologies Engineering Executives’ Share Option Scheme (“ESOS”) was terminated. 

As at 31 December 2006, no options have been granted to controlling shareholders of the Company or associates of the Company 

and no employees have received 5% or more of the total options available under the Share Plans. 

The number of options granted and accepted under the ESOP and the number of conditional awards under the PSP is within the 

15% limit allowed under the Share Plans. 

During the financial year, except as disclosed below, there were no options granted by the Company to any person to take up 

unissued shares of the Company: 

(a) 

Options granted under the ESOS/ESOP 

(i) During the financial year, the following options were granted under the ESOP: 

NO. OF SHARES 

GRANTED UNDER 

DATE OF GRANT EXERCISABLE PERIOD OPTIONS EXERCISE PRICE 

$ 

9.2.2006 10.2.2007 to 9.2.2016 15,148,936 3.01 

9.2.2006 10.2.2007 to 9.2.2011 504,250 3.01 

10.8.2006 11.8.2007 to 10.8.2016 16,313,523 2.84 

10.8.2006 11.8.2007 to 10.8.2011 402,000 2.84




SHARE PLANS (continued) 

(a) Options granted under the ESOS/ESOP (continued) 

(ii) The options granted to directors under the ESOS/ESOP are as follows: 

AGGREGATE OPTIONS 

GRANTED AND AGGREGATE OPTIONS 

OPTIONS GRANTED ACCEPTED SINCE EXERCISED SINCE AGGREGATE OPTIONS 

AND ACCEPTED DURING COMMENCEMENT OF COMMENCEMENT OF OUTSTANDING AS 

THE FINANCIAL YEAR ESOS/ESOP TO END ESOS/ESOP TO END AT END OF 

NAME OF PARTICIPANT UNDER REVIEW OF FINANCIAL YEAR OF FINANCIAL YEAR FINANCIAL YEAR 

Director of the Company 

ESOS 

Tan Pheng Hock – 1,699,864 889,864 810,000 

ESOP 

Peter Seah Lim Huat 89,000 441,000 – 441,000 

Tan Pheng Hock 400,000 2,402,500 – 2,402,500 

Koh Beng Seng 55,000 149,000 – 149,000 

Professor Lui Pao Chuen 29,000 147,750 – 147,750 

Winston Tan Tien Hin 74,000 519,500 115,000 404,500 

Lucien Wong Yuen Kuai 43,000 298,000 75,000 223,000 

Dr Philip Nalliah Pillai 66,000 387,000 75,000 312,000 

Quek Poh Huat 66,000 309,000 50,500 258,500 

Venkatachalam Krishnakumar 51,000 101,500 – 101,500 

(iii) In respect of options granted to employees of related corporations, no options were granted during the financial year. 

The total options granted from the commencement of the ESOS/ESOP to the end of the financial year is 631,479. 

(iv) The options granted by the Company do not entitle the holders of the options, by virtue of such holdings, to any right to 

participate in any share issue of any other company. 

(v) No share options had been offered at a discount during the financial year ended 31 December 2006. 

(b) 

(c) 

Issue of shares under option 

During the financial year, 30,953,004 ordinary shares in the Company were issued pursuant to the exercise of options to take 

up unissued shares of the Company. 

PSP 

The PSP is established with the objective of motivating senior executives to strive for sustained long-term growth and 

performance in ST Engineering and its subsidiaries (“the ST Engineering Group”). Awards of performance shares are granted 

conditional on performance targets set based on the ST Engineering Group corporate objectives. 

Pursuant to the PSP, the ERCC has decided to grant awards on an annual basis, conditional on targets set for a performance 

period, currently prescribed to be a three-year performance period. The performance shares will only be released to the 

recipient at the end of the performance qualifying period. A specified number of performance shares shall be released by the 

ERCC to the recipient and the actual number of performance shares will depend on the achievement of set targets over the 

respective performance period. For achievements that are below 80% of these targets, no performance shares will be given 

while for achievements that exceed targets by more than 100%, more performance shares than the original award will be 

delivered up to a maximum of 200% of the conditional award.

101 



SHARE PLANS (continued) 

(c) PSP (continued) 

The medium-term stretched targets measured over a three-year performance period are set based on ST Engineering Group 

corporate objectives. The performance measures used in PSP grant up to financial year 2004 are ST Engineering Group Total 

Shareholders’ Return (“TSR”) against the MSCI Asia Pacific ex Japan Industrial Index, Value Added per Employment Cost and 

EVA Spread. 

Pursuant to the PSP for the financial year 2006, conditional awards aggregating 2,450,000 performance shares were 

made to 40 key executives of the ST Engineering Group, as part of the incentives plan to motivate key executives of the ST 

Engineering Group. The key executives include Mr Tan Pheng Hock, an executive Director of the Board, who was conditionally 

awarded 250,000 performance shares. This conditional award is for the performance qualifying period of 2006 to 2008. 

With effect from financial year 2005, the performance measures are ST Engineering Group TSR against the MSCI Asia Pacific 

ex Japan Industrial Index, EVA Spread and EPS Growth. 

A minimum threshold performance is required for any performance share to be released and the actual number of 

performance shares to be released is capped at 150% of the conditional award. 

On 20 February 2006, 805,000 new shares were awarded upon the partial achievement of one of the three targets set for 

a grant of conditional award relating to the performance cycle from 2003 to 2005. The balance of the conditional award 

covering the period from 2003 to 2005 has thus lapsed. 

The total number of shares in the remaining awards which are granted conditionally for the performance periods 2004 to 

2006, 2005 to 2007 and 2006 to 2008 respectively, not due to be released yet, total 6,740,000. Depending on the actual 

performance, the total release of awards will range from zero to a maximum of 11,175,000 shares. 

AUDIT COMMITTEE 

The Audit Committee comprises three independent non-executive directors, one of whom is also the Chairman of the Committee. 

The members of the Audit Committee at the date of this report are as follows: 

Koh Beng Seng 

Dr Philip Nalliah Pillai 

Venkatachalam Krishnakumar 

(Chairman) 

The financial statements, accounting policies and system of internal accounting controls are the responsibility of the Board of 

Directors acting through the Audit Committee. The Audit Committee met during the year to review the scope of the internal 

audit functions and the scope of work of the statutory auditors, and the results arising therefrom, including their evaluation of the 

system of internal controls. The Audit Committee also reviewed the assistance given by the Company’s officers to the auditors. 

The consolidated financial statements of the Group and the financial statements of the Company were reviewed by the Audit 

Committee prior to their submission to the directors of the Company for adoption. 

In addition, the Audit Committee has reviewed the requirements for approval and disclosure of interested person transactions, 

reviewed the procedures set up by the Group and the Company to identify and report and where necessary, seek approval for 

interested person transactions and, with the assistance of the internal auditors, reviewed interested person transactions. 

The Audit Committee has recommended to the Board of Directors that the auditors, Ernst & Young, be nominated for 

re-appointment as auditors at the forthcoming Annual General Meeting of the Company.




AUDITORS 

Ernst & Young have expressed their willingness to accept re-appointment as auditors of the Company. 

On behalf of the Board of Directors 


Director 


Director 

Singapore 

13 February 2007

103 

Statement by Directors 

We, Peter Seah Lim Huat and Tan Pheng Hock, being directors of Singapore Technologies Engineering Ltd, do hereby state that, 

in the opinion of the Directors: 

(a) 

(b) 

the financial statements set out on pages 105 to 195 are drawn up so as to give a true and fair view of the state of affairs of 

the Company and of the Group as at 31 December 2006, and changes in equity of the Company and of the Group, the results 

of the business and cash flows of the Group for the year ended on that date; and 

at the date of this statement there are reasonable grounds to believe that the Company will be able to pay its debts as and 

when they fall due. 

On behalf of the Board of Directors 


Director 


Director 


13 February 2007


Independent Auditors’ Report 

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF SINGAPORE TECHNOLOGIES ENGINEERING LTD 

We have audited the accompanying financial statements of Singapore Technologies Engineering Ltd (the “Company”) and its 

subsidiary companies (collectively the “Group”) set out on pages 105 to 195, which comprise the balance sheets of the Group and the 

Company as at 31 December 2006, the statements of changes in equity of the Group and the Company, and the statement of profit 

and loss and cash flow statement of the Group for the year then ended, and a summary of significant accounting policies and other 

explanatory notes. 

Directors’ responsibility for the financial statements 

The Company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with 

Singapore Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control 

relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to 

fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in 

the circumstances. 

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 whether the financial statements are free of 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 and fair presentation of the financial statements 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 

directors, 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, 

(a) 

(b) 

the consolidated financial statements of the Group and the balance sheet and statement of changes in equity of the Company 

are properly drawn up in accordance with the provisions of the Singapore Companies Act, Chapter 50 (the “Act”) and Singapore 

Financial Reporting Standards 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 2006 and changes in equity of the Group and of the Company, the results and cash flows of the Group for the 

financial year ended on that date; and 

the accounting and other records required by the Act to be kept by the Company and by those subsidiary companies 

incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act. 

ERNST & YOUNG 

Certified Public Accountants 


13 February 2007

105 

Balance Sheets AS AT 31 DECEMBER 2006 

(Currency – Singapore dollars) 

GROUP 

COMPANY 

NOTE 2006 2005 2006 2005 

$’000 $’000 $’000 $’000 

(Restated) 

Share capital and reserves 

Share capital 3 474,926 291,450 474,926 291,450 

Share premium – 117,197 – 117,197 

Capital reserve 4 115,948 115,948 – – 

Other reserves 5 13,973 52,957 11,917 1,974 

Unappropriated profit 6 960,654 915,246 530,676 396,815 

1,565,501 1,492,798 1,017,519 807,436 

Minority interests 142,883 49,058 – – 

1,708,384 1,541,856 1,017,519 807,436 

Property, plant and equipment 7 952,209 475,197 657 741 

Subsidiaries 8 – – 544,209 406,692 

Associated companies and joint ventures 9 294,145 281,963 50 50 

Investments 10 27,858 101,347 – – 

Intangible assets 11 556,711 344,682 – – 

Long-term receivables 12 5,203 15,329 – – 

Deferred tax assets 13 117,637 110,872 – – 

Current assets 

Stocks and work-in-progress 14 1,103,417 812,186 – – 

Trade debtors 15 858,211 665,466 – – 

Due from related corporations 16 516,440 898,703 238,783 275,133 

Advances and other debtors 17 229,039 242,562 199,172 122,530 

Long-term receivables, current 12 476 698 – 1 

Amounts under fund management 18 228,173 311,062 – – 

Bank balances and other liquid funds 19 624,723 306,328 145,655 47,406 

3,560,479 3,237,005 583,610 445,070 

Current liabilities 

Advance payments from customers, current 582,234 460,623 – – 

Creditors and accruals 22 1,338,928 1,142,937 50,078 38,023 

Provisions 23 184,911 177,064 – – 

Progress billings in excess of work-in-progress 14 298,938 291,304 – – 

Provision for taxation 213,931 208,764 6,644 6,904 

Short-term bank loans (unsecured) 24 595,850 323,594 – – 

Lease obligations, current 25 2,137 2,391 – – 

Long-term bank loans, current 29 6,859 9,430 – – 

Other loans, current 30 1,217 3,512 – – 

Bank overdrafts 1,737 731 – – 

3,226,742 2,620,350 56,722 44,927 

Net current assets 333,737 616,655 526,888 400,143 

Non-current liabilities 

Advance payments from customers, non-current 277,764 377,918 – – 

Deferred income 27 4,101 2,303 – – 

Deferred tax liabilities 28 15,190 7,751 285 190 

Lease obligations, non-current 25 9,113 12,201 – – 

Long-term bank loans, non-current 29 270,525 1,138 – – 

Other loans, non-current 30 2,423 2,878 – – 

Due to a subsidiary 31 – – 54,000 – 

1,708,384 1,541,856 1,017,519 807,436 

The accompanying notes are an integral part of the fi nancial statements.


Statement of Profit and Loss FOR THE YEAR ENDED 31 DECEMBER 2006 


GROUP 

NOTE 2006 2005 

$’000 $’000 

Turnover 32 4,485,758 3,337,895 

Cost of sales (3,453,961) (2,621,679) 

Gross profit 1,031,797 716,216 

Other operating income 33 88,134 54,847 

Distribution and selling expenses (116,635) (54,399) 

Administrative expenses (383,034) (226,546) 

Other operating expenses (74,501) (45,775) 

Profit from continuing operations before taxation, 

other income and financial expenses 34 545,761 444,343 

Other income, net 37 9,340 20,921 

Financial expenses 38 (42,252) (7,952) 

512,849 457,312 

Share of results of associated companies and joint ventures 51,490 45,933 

Profit from continuing operations before taxation 564,339 503,245 

Taxation 39 (108,895) (91,993) 

Profit from continuing operations after taxation 455,444 411,252 

Attributable to: 

Shareholders of the Company 445,127 396,308 

Minority interests 10,317 14,944 

455,444 411,252 

Earnings per share (cents) 41 

Basic 15.15 13.64 

Diluted 15.00 13.54 


107 

Statements of Changes in Equity FOR THE YEAR ENDED 31 DECEMBER 2006 


SHARE SHARE CAPITAL OTHER RETAINED MINORITY TOTAL 

CAPITAL PREMIUM RESERVE RESERVES EARNINGS TOTAL INTERESTS EQUITY 

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 

The Group 

At 1.1.2005 289,217 76,602 115,948 47,545 878,840 1,408,152 37,936 1,446,088 

Net fair value changes on 

available-for-sale financial assets – – – (1,931) – (1,931) – (1,931) 


cash flow hedges – – – (2,550) – (2,550) – (2,550) 

Foreign currency translation 

differences – – – 1,223 – 1,223 (61) 1,162 

Net income recognised directly 

in equity – – – (3,258) – (3,258) (61) (3,319) 

Net profit for the year – – – – 396,308 396,308 14,590 410,898 

Total recognised net income 

for the year – – – (3,258) 396,308 393,050 14,529 407,579 

Issue of shares 2,233 40,595 – – – 42,828 – 42,828 

Dilution of interest in a subsidiary – – – – – – (3,440) (3,440) 

Acquisition of subsidiaries – – – – – – 1,016 1,016 

Capital contribution – – – – – – 10,703 10,703 

Cost of share-based payment – – – 8,537 – 8,537 3 8,540 

Dividends (Note 40) – – – – (359,769) (359,769) (11,689) (371,458) 

Transfer from unappropriated 

profit to statutory reserve – – – 133 (133) – – – 

At 31.12.2005 291,450 117,197 115,948 52,957 915,246 1,492,798 49,058 1,541,856 

At 1.1.2006 291,450 117,197 115,948 52,957 915,246 1,492,798 49,058 1,541,856 

Transfer from share premium 

account to share capital upon 

implementation of the 

Companies (Amendment) 

Act 2005 117,197 (117,197) – – – – – – 


available-for-sale financial assets – – – (14,542) – (14,542) – (14,542) 


cash flow hedges – – – (879) – (879) – (879) 


differences – – – (33,321) – (33,321) 4,196 (29,125) 

Net income recognised directly 

in equity – – – (48,742) – (48,742) 4,196 (44,546) 

Net profit for the year – – – – 445,127 445,127 10,038 455,165 

Total recognised net income 

for the year – – – (48,742) 445,127 396,385 14,234 410,619 

Issue of shares 66,279 – – – – 66,279 – 66,279 

Acquisition of subsidiaries – – – – – – 89,616 89,616 

Acquisition of additional interest 

in a subsidiary – – – – – – 80 80 

Capital contribution – – – – – – 4,971 4,971 

Cost of share-based payment – – – 9,431 – 9,431 80 9,511 

Dividends (Note 40) – – – – (399,473) (399,473) (15,191) (414,664) 

Revaluation surplus – – – 81 – 81 35 116 

Transfer from unappropriated profit 

to statutory reserve – – – 246 (246) – – – 

At 31.12.2006 474,926 – 115,948 13,973 960,654 1,565,501 142,883 1,708,384


Statements of Changes in Equity FOR THE YEAR ENDED 31 DECEMBER 2006 


SHARE-BASED 

SHARE SHARE PAYMENT RETAINED 

CAPITAL PREMIUM RESERVE EARNINGS TOTAL 

$’000 $’000 $’000 $’000 $’000 

The Company 

At 1.1.2005 289,217 76,602 526 358,914 725,259 

Net profit for the year – – – 397,670 397,670 

Total recognised net income for the year – – – 397,670 397,670 

Issue of shares 2,233 40,595 – – 42,828 

Cost of share-based payment – – 1,448 – 1,448 

Dividends (Note 40) – – – (359,769) (359,769) 

At 31.12.2005 291,450 117,197 1,974 396,815 807,436 

At 1.1.2006 291,450 117,197 1,974 396,815 807,436 

Transfer from share premium account to share 

capital upon implementation of the 

Companies (Amendment) Act 2005 117,197 (117,197) – – – 

Net profit for the year – – – 533,334 533,334 

Total recognised net income for the year – – – 533,334 533,334 

Issue of shares 66,279 – – – 66,279 

Cost of share-based payment – – 9,943 – 9,943 

Dividends (Note 40) – – – (399,473) (399,473) 

At 31.12.2006 474,926 – 11,917 530,676 1,017,519 


109 

Consolidated Statement of Cash Flows FOR THE YEAR ENDED 31 DECEMBER 2006 



$’000 $’000 

Cash flows from operating activities 

Profit before taxation including share of results of associated companies and joint ventures 564,339 503,245 

Adjustments: 

Share of results of associated companies and joint ventures (51,490) (45,933) 

Depreciation of property, plant and equipment 130,676 79,092 

Provision for impairment in value of investments 8,428 3,905 

Provision for impairment in value of associated companies and joint ventures 4,865 700 

Property, plant and equipment written off 10,942 372 

Impairment of property, plant and equipment 297 12,213 

Gain on disposal of property, plant and equipment (11) (1,241) 

Gain on dilution of interest in an associated company (571) – 

Gain on disposal of investments (35,701) (13,199) 

Short-term loans from minority shareholders forgiven (2,766) – 

Profit on maturity of amounts under fund management (6,491) (6,947) 

Negative goodwill written off (615) – 

Write-back of provision for loan to an investee company – (821) 

Share-based payment expense 9,885 8,540 

Changes in fair value of financial instruments and hedged items 155 (657) 

Interest expense 42,252 7,952 

Interest income (40,151) (30,610) 

Dividends from investments (10,291) (3,012) 

Impairment of goodwill 8,135 4,483 

Amortisation of other intangible assets 5,135 1,522 

Impairment/(write-back of impairment) of other intangible assets 818 (234) 

Operating profit before working capital changes 637,840 519,370 

(Increase)/decrease in: 

Stocks and work-in-progress (172,836) (82,942) 

Progress billings in excess of work-in-progress 7,634 49,502 

Assets held for disposal – 17,374 

Trade debtors (78,653) (123,228) 

Advance payments to suppliers 26,613 (5,181) 

Other debtors, deposits and prepayments (427) (24,263) 

Holding company and related corporations balances 1,150 2,430 

Associated companies (185) (5,537) 

Joint ventures 18,912 (3,567) 

Trade creditors 4,287 (4,648) 

Advance payments from customers 17,309 10,624 

Other creditors, accruals and provisions 47,461 3,095 

Loans to staff and third parties, net of repayments 97 5,792 

Cash generated from operations 509,202 358,821 

Interest received 40,905 29,491 

Income tax paid (95,193) (83,416) 

Deferred income 1,798 243 

Exchange difference on operating activities 3,690 (1,626) 

Net cash from operating activities 460,402 303,513





$’000 $’000 

Cash flows from investing activities 

Proceeds from sale of property, plant and equipment 1,709 1,614 

Dividends from associated companies 48,237 45,262 

Dividends from investments 10,291 3,012 

Proceeds from sale and maturity of investments 166,545 15,714 

Proceeds from convertible loan/promissory note redemption – 4,872 

Purchase of property, plant and equipment (197,143) (117,535) 

Purchase of investments (880) (73,695) 

Proceeds from capital redemption of investments 170 238 

Loan to an investee company (140) (1,136) 

Additional investment/acquisition of associated companies and joint ventures (34,258) (12,293) 

Acquisition of other intangible assets (3,466) (10) 

Acquisition of subsidiaries (363,534) (298,471) 

Acquisition of additional interest in subsidiaries (1,669) – 

Dilution of interest in subsidiaries – (963) 

Loans to associated companies and joint ventures (1,235) (185) 

Exchange difference on investing activities 6,600 (1,542) 

Net cash used in investing activities (368,773) (435,118) 

Cash flows from financing activities 

Capital contribution from minority shareholders of subsidiaries 233 2,231 

Proceeds from issue of shares 65,905 42,781 

Loan from minority shareholders 43 1,549 

Repayment of other loans (923) (79) 

Repayment of lease obligations, net (2,245) (476) 

Proceeds from bank loans, net 261,082 147,208 

Dividend paid to shareholders of the Company (399,473) (359,769) 

Dividend paid to minority shareholders of subsidiaries (15,191) (11,689) 

Interest paid (36,979) (7,556) 

Exchange difference on financing activities (15,102) 1,762 

Net cash used in financing activities (142,650) (184,038) 

Net decrease in cash and cash equivalents (51,021) (315,643) 

Cash and cash equivalents at beginning of year 1,198,248 1,515,661 

Exchange difference on cash and cash equivalents at beginning of year (12,757) (1,770) 

Cash and cash equivalents at end of year (Note 43) 1,134,470 1,198,248

111 



Summary of Effect on Acquisition of Interest in Subsidiaries: 

In 2006, the fair value of the identifiable assets and liabilities of the subsidiaries acquired (as disclosed in Note 8(b)) and the effect 

thereof as at the date of acquisition were as follows: 

CARRYING 

RECOGNISED ON AMOUNT BEFORE 

ACQUISITION COMBINATION 

$’000 $’000 

Property, plant and equipment 406,526 406,526 

Deferred tax assets 18,783 16,675 

Intangible assets 46,572 18,585 

Stocks and work-in-progress 115,970 115,849 

Debtors, deposits and prepayment 136,863 136,539 

Cash and cash equivalents 64,132 64,132 

Other non-current assets 312 312 

789,158 758,618 

Creditors and accruals (197,635) (195,494) 

Provisions (2,369) (2,369) 

Provision for taxation (973) (973) 

Deferred tax liabilities (10,771) (136) 

Other non-current liabilities (259,580) (259,580) 

(471,328) (458,552) 

Net identifiable assets 317,830 300,066 

Goodwill arising on consolidation 207,479 

Negative goodwill written off (615) 

524,694 

Minority interests (89,616) 

Total purchase consideration 435,078 

Cost of acquisitions: 

Cash paid in prior year 912 

Reclassification from investment in a joint venture 6,500 

Cash paid in current year 427,666 

435,078 

Cash outflow on acquisitions: 

Cost of acquisitions (427,666) 

Net cash acquired with the subsidiaries 64,132 

Net cash outflow on acquisition (363,534) 

Included in the carrying amount before combination are the assets and liabilities of SAS Component Group A/S, VT LeeBoy, 

Inc., MÄK Technologies, Inc. and the group of companies under Brightspot Interactive Learning Pte. Ltd. and PM-B Pte Ltd. The 

purchase price allocation of these subsidiaries to goodwill, intangible assets (excluding goodwill) and other assets is currently being 

assessed and is expected to be finalised within 12 months from the date of acquisition in Note 8(b). 

From the dates of acquisitions, the acquired subsidiaries have contributed $3.5 million in losses to the net profit of the Group. If the 

acquisitions had taken place at the beginning of the year, the turnover and net profit of the Group would have been $4.6 billion and 

$447.4 million respectively. 



Notes to the Financial Statements 31 DECEMBER 2006 


These notes form an integral part of and should be read in conjunction with the accompanying financial statements. 

1. GENERAL 

The Company is a public limited company domiciled and incorporated in Singapore. The address of the Company’s registered 

office and principal place of business is 51 Cuppage Road #09-08, StarHub Centre, Singapore 229469. 

The Company’s immediate and ultimate holding company is Temasek Holdings (Private) Limited, a company incorporated in 

Singapore. 

The principal activities of the Company, are those of an investment holding company and the provision of engineering and 

related services. The principal activities of the subsidiaries are set out in Note 8 to the financial statements. 

The financial statements of Singapore Technologies Engineering Ltd and the consolidated financial statements of Singapore 

Technologies Engineering Ltd and its subsidiaries as at 31 December 2006 and for the year then ended were authorised and 

approved by the Board of Directors for issuance on 13 February 2007. 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

(a) Basis of financial statements preparation 

The financial statements are prepared in accordance with Singapore Financial Reporting Standards (“FRS”) as required by 

the Singapore Companies Act, Chapter 50. 

The financial statements have been prepared on the historical cost convention, except for derivative financial instruments 

and held for trading and available-for-sale financial assets that have been measured at their fair values. 

The carrying values of recognised assets and liabilities that are designated as hedged items in a fair value hedge are 

adjusted to record the gain or loss on the hedged items attributable to the hedged risks. 

The financial statements are presented in Singapore dollars and all values are rounded to the nearest thousand ($’000) 

except when otherwise indicated. 

The accounting policies have been consistently applied by the Company and the Group and except for changes in 

accounting policies discussed in Note 2(z), are consistent with those used in the previous year. 

(b) Basis of consolidation 

(i) Subsidiaries 

A subsidiary is an entity over which the Group has the power to govern the financial and operating policies so as to 

obtain benefits from its activities. The Group generally has such power when it, directly or indirectly, holds more than 

50% of the issued share capital, or controls more than half of the voting power, or controls the composition of the 

board of the directors. 

In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less impairment 

losses. 

(ii) The consolidated financial statements include the financial statements of the Company and its subsidiaries made up to 

the end of the financial year. The results of subsidiaries acquired or disposed of during the financial year are included 

from the effective date of acquisition or up to the effective date of disposal. All significant inter-company balances and 

transactions are eliminated on consolidation. 

In the consolidated financial statements, subsidiaries are accounted for using the purchase method, except for 

the Company’s interests in Singapore Technologies Aerospace Ltd, Singapore Technologies Electronics Limited, 

Singapore Technologies Kinetics Ltd, and Singapore Technologies Marine Ltd [collectively referred to as the “Scheme 

Companies”] which resulted from the amalgamation of the Scheme Companies pursuant to a scheme of arrangement 

under Section 210 of the Companies Act, Chapter 50 in 1997.

113 



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 

(b) Basis of consolidation (continued) 

As the amalgamation of the Scheme Companies constitutes a uniting of interests, the pooling of interests method has 

been adopted in the preparation of the consolidated financial statements in connection with the amalgamation. 

Under the pooling of interests method, the combined assets, liabilities and reserves of the pooled enterprises are 

recorded at their existing carrying amounts at the date of amalgamation. The excess or deficiency of amount recorded 

as share capital issued (plus any additional consideration in the form of cash or other assets) over the amount 

recorded for the share capital acquired is recorded as merger reserve. The merger reserve had been utilised in prior 

years to partially write off the goodwill on acquisition of Founders Industries Pte Ltd and its subsidiaries. 

Minority interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group. They are 

presented in the consolidated balance sheet within equity, separately from the parent shareholders’ equity, and are 

separately disclosed in the consolidated statement of profit and loss. 

(iii) The Group adopts the equity method to account for its interests in associated companies and joint ventures. 

The Group’s share of the post-acquisition results of associated companies and joint ventures is included in the 

consolidated statement of profit and loss. The Group’s share of the post-acquisition accumulated profits and reserves 

of associated companies and joint ventures is included in the carrying value of the investments in the consolidated 

balance sheet. 

For this purpose, the audited financial statements of the associated companies and joint ventures are used. Where 

audited financial statements are not available, the share of results is arrived at from the last audited financial 

statements available and unaudited management financial statements to the end of the accounting period. 

(iv) Goodwill or reserve on consolidation represents the excess or deficiency of the purchase consideration over the fair 

value (assigned by the directors) of the underlying net assets of the subsidiaries, associated companies and joint 

ventures at the date of acquisition. Following initial recognition, goodwill is measured at cost less any accumulated 

impairment losses. Goodwill is reviewed for impairment, annually or more frequently if events or changes in 

circumstances indicate that the carrying value may be impaired. 

For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, 

allocated to each of the Group’s cash-generating units, or groups of cash-generating units, that are expected to 

benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are 

assigned to those units or groups of units. Each unit or group of units to which the goodwill is so allocated: 

• represents the lowest level within the Group at which the goodwill is monitored for internal management purposes; 

and 

• is not larger than a segment based on the Group’s reporting format determined in accordance with FRS 14 

Segment Reporting. 

Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of cash-generating 

units), to which the goodwill relates. Where the recoverable amount of the cash-generating unit (group of cashgenerating 

units) is less than the carrying amount, an impairment loss is recognised. Impairment losses recognised 

in respect of cash-generating unit (group of cash-generating units) are allocated first to reduce the carrying amount 

of any goodwill allocated to cash-generating unit (group of cash-generating units) and then, to reduce the carrying 

amount of the other assets in the cash-generating unit (group of cash-generating units) on a pro-rata basis.





(b) Basis of consolidation (continued) 

Where goodwill forms part of a cash-generating unit (group of cash-generating units) and part of the operation 

within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying 

amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this 

circumstance is measured based on the relative values of the operation disposed of and the portion of the cashgenerating 

unit retained. 

Any excess of the Group’s interest in the net fair value of identifiable assets, liabilities and contingent liabilities over 

the cost of business combination is recognised in the statement of profit and loss on the date of acquisition. 

(v) In the preparation of the consolidated financial statements, the balance sheets of foreign subsidiaries, associated 

companies and joint ventures are translated into Singapore dollars at rates of exchange ruling at the balance sheet 

date except for share capital and reserves which are translated at historical rates of exchange. Operating results 

are translated at average rates of exchange for the year. Translation differences are taken to the Foreign Currency 

Translation Reserve. 

Goodwill and fair value adjustments arising from the acquisition of a foreign subsidiary are treated as assets or 

liabilities and translated at exchange rates ruling at the balance sheet date. 

(c) Investments in associated companies and joint ventures 

The Group’s investment in its associated companies and joint ventures is accounted for under the equity method of 

accounting. 

An associated company is a company not being a subsidiary or joint venture, in which the Group has a substantial interest 

of not less than 20 percent of the equity and in whose financial and operating policy decisions the Group exercises 

significant influence. 

A joint venture is a company, not being a subsidiary or associated company, in which the Group has a long-term interest of 

not more than 50 percent of the equity and has joint control over the investee company’s financial and operating policies. 

Under the equity method, the investment in the associated company/joint venture is carried in the balance sheet at cost 

plus post-acquisition changes in the Group’s share of net assets of the associated company/joint venture. Goodwill 

relating to an associated company is included in the carrying amount of the investment and is not amortised. After 

application of the equity method, the Group determines whether it is necessary to recognise any additional impairment 

loss with respect to the Group’s net investment in the associated company/joint venture. The statement of profit and loss 

reflects the share of the results of operations of the associated company/joint venture. Where there has been a change 

recognised directly in the equity of the associated company/joint venture, the Group recognises its share of any changes 

and discloses this, where applicable, in the statement of changes in equity. 

The reporting dates of the associated company/joint venture and the Group are identical and the accounting policies 

conform to those used by the Group for like transactions and events in similar circumstances.

115 




(d) Impairment of non-financial assets 

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such 

indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s 

recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less 

costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash 

inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an 

asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In 

assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate 

that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses 

of continuing operations are recognised in the statement of profit and loss in those expense categories consistent with the 

function of the impaired asset. 

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment 

losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A 

previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the 

asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the 

asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have 

been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal 

is recognised in profit or loss unless the asset is carried at revalued amount, in which case the reversal is treated as a 

revaluation increase. After such a reversal the depreciation charged is adjusted in future periods to allocate the asset’s 

revised carrying amount, less any residual value, on a systematic basis over its remaining useful life. 

The Group does not reverse in a subsequent period any impairment loss recognised for goodwill. 

(e) Investments and other financial assets 

Financial assets within the scope of FRS 39 are classified as either financial assets at fair value through profit or loss, 

loans and receivables, or available-for-sale financial assets, as appropriate. When financial assets are recognised initially, 

they are measured at fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable 

transaction costs. The Group determines the classification of its financial assets after initial recognition and, where allowed 

and appropriate, re-evaluates this designation at each financial year-end. 

All regular way purchases and sales of financial assets are recognised on the trade date i.e., the date that the Group 

commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that 

require delivery of assets within the period generally established by regulation or convention in the marketplace. 

(i) Financial assets at fair value through profit or loss 

Financial assets classified as held for trading are included in the category ‘financial assets at fair value through profit 

or loss’. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near 

term. Derivatives are also classified as held for trading unless they are designated as effective hedging instruments. 

Gains or losses on investments held for trading are recognised in income. 

(ii) Loans and receivables 

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted 

in an active market. Such assets are carried at amortised cost using the effective interest method. Gains and losses 

are recognised in income when the loans and receivables are derecognised or impaired, as well as through the 

amortisation process.





(e) Investments and other financial assets (continued) 

(iii) Available-for-sale financial assets 

Available-for-sale financial assets are those non-derivative financial assets that are designated as available-for-sale or 

are not classified in any of the two preceding categories. After initial recognition, available-for-sale financial assets are 

measured at fair value with gains or losses being recognised as a separate component of equity until the investment is 

derecognised or until the investment is determined to be impaired at which time the cumulative gain or loss previously 

reported in equity is included in the statement of profit and loss. 

The fair value of investments that are actively traded in organised financial markets is determined by reference to 

quoted market prices at the close of business on the balance sheet date. For investments where there is no active 

market, fair value is determined using valuation techniques. Such techniques include using recent arm’s length market 

transactions; reference to the current market value of another instrument, which is substantially the same; discounted 

cash flow analysis and option pricing models. 

For investments where there is no active market and where fair value cannot be reliably measured, they are measured 

at cost. 

(f) Amounts under fund management 

Amounts under fund management are classified as available-for-sale investments and the recognition criteria is as stated 

in Note 2(e)(iii) above, except for the impairment assessment. 

Provision for impairment in value is made up to the non-guaranteed returns of the principal sums by the fund managers 

when the market value of the fund is below cost. 

(g) Property, plant and equipment and depreciation 

Property, plant and equipment are stated at cost or valuation, net of depreciation and any impairment loss. Depreciation is 

provided on the straight-line basis so as to write off the cost of these assets over their estimated useful lives as follows: 

Freehold land and buildings – 15 to 30 years 

Leasehold land and buildings – Over the period of the lease of between 5 to 60 years 

Buildings on rented properties – 30 years 

Improvements to premises – 3 to 30 years 

Wharves and slipways – 10 to 16 years 

Syncrolift and floating docks – 5 to 10 years 

Boats and barges – 5 years 

Plant and machinery – 2 to 20 years 

Production tools and equipment – 3 to 10 years 

Furniture, fittings, office equipment and computers – 1 to 5 years 

Transportation equipment and vehicles – 4 to 5 years 

Aircraft and aircraft engines – 5 to 15 years 

Construction-in-progress is not depreciated until each stage of development is completed and becomes operational. 

Assets purchased specifically for projects are depreciated over the useful life of the class of assets or the duration of the 

project, whichever is shorter. 

The residual value, useful life and depreciation method are reviewed at each financial year-end to ensure that the amount, 

method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the 

future economic benefits embodied in the items of property, plant and equipment. 

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are 

expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in the statement of 

profit and loss in the year the asset is derecognised.

117 




(h) Stocks and work-in-progress 

Stocks are stated at the lower of cost (principally on the first-in, first-out basis) and net realisable value. Allowance is made 

for deteriorated, damaged, obsolete and slow-moving stocks. 

Work-in-progress is valued at cost less progress payments received and receivable. Cost includes all direct material 

and labour costs, equipment and sub-contracting services, together with appropriate overhead expenses. Provision for 

foreseeable losses on uncompleted contracts is made in the year in which such losses are determined. 

(i) Trade and other debtors 

Trade and other debtors are classified as loans and receivables under FRS 39. The accounting policy for this category of 

financial assets is stated in Note 2(e). 

An allowance is made for uncollectible amounts when there is objective evidence that the Group will not be able to collect 

the debt. Known bad debts are written off. Further details on the accounting policy for impairment of financial assets are 

stated in Note 2(k). 

(j) Cash and cash equivalents 

Cash consists of cash on hand and cash with banks or financial institutions, including fixed deposits. Cash equivalents 

are short-term, highly liquid investments and short-term loans to related corporations that are readily convertible to known 

amounts of cash and that are subject to insignificant risk of changes in value. 

For the purposes of the statement of cash flows, cash and cash equivalents are shown net of outstanding bank overdrafts. 

Cash and cash equivalents carried in the balance sheets are classified as loans and receivables under FRS 39. The 

accounting policy for this category of financial assets is stated in Note 2(e). 

(k) Impairment of financial assets 

The Group assesses at each balance sheet date whether a financial asset or group of financial assets is impaired. 

(i) Assets carried at amortised costs 

If there is objective evidence that an impairment loss on loans and receivables carried at amortised cost has been 

incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present 

value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the 

financial asset’s original effective interest rate (i.e., the effective interest rate computed at initial recognition). The 

carrying amount of the asset shall be reduced either directly or through use of an amortisation account. The amount of 

the loss shall be recognised in profit or loss. 

The Group first assesses whether objective evidence of impairment exists individually for financial assets that are 

individually significant, and individually or collectively for financial assets that are not individually significant. If it is 

determined that no objective evidence of impairment exists for an individually assessed financial asset, whether 

significant or not, the assets is included in a group of financial assets with similar credit risk characteristics and that 

group of financial assets is collectively assessed for impairment. Assets that are individually assessed for impairment 

and for which an impairment loss is or continues to be recognised are not included in a collective assessment of 

impairment. 

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively 

to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed. 

Any subsequent reversal of an impairment loss is recognised in the statement of profit and loss, to the extent that the 

carrying value of the asset does not exceed its amortised cost at the reversal date.





(k) Impairment of financial assets (continued) 

(ii) Assets carried at costs 

If there is objective evidence that an impairment loss on an unquoted equity instrument that is not carried at fair 

value because its fair value cannot be reliably measured, or on a derivative asset that is linked to and must be settled 

by delivery of such an unquoted equity instrument has been incurred, the amount of the loss is measured as the 

difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at 

the current market rate of return for a similar financial asset. The loss recognised is not reversed in future periods. 

(iii) Available-for-sale financial assets 

If an available-for-sale asset is impaired, an amount comprising the difference between its cost (net of any principal 

payment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, 

is transferred from equity to the statement of profit and loss. Reversals in respect of equity instruments classified as 

available-for-sale are not recognised in profit or loss. Reversals of impairment losses on debt instruments are reversed 

through profit or loss, if the increase in fair value of the instrument can be objectively related to an event occurring 

after the impairment loss was recognised in profit or loss. 

(l) Trade and other creditors 

Trade and other creditors are initially recognised at fair value and subsequently measured at amortised cost using the 

effective interest method. 

Gains and losses are recognised in the statement of profit and loss when the liabilities are derecognised as well as 

through the amortisation process. 

(m) Borrowings 

Borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs. 

After initial recognition, borrowings are subsequently measured at amortised cost using the effective interest method. 

Gains and losses are recognised in the statement of profit and loss when the liabilities are derecognised as well through 

the amortisation process. 

Borrowing costs are recognised as expenses in the period in which they are incurred. 

(n) Provisions 

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of past events, it is 

probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable 

estimate can be made of the amount of the obligation. 

(i) Warranties 

The warranty provision represents the best estimate of the Group’s contractual obligations at the balance sheet date. 

The provision is based on past experience and industry averages for defective products. The majority of the costs is 

expected to be incurred over the applicable warranty periods. 

(ii) Liquidated damages 

Provision for liquidated damages is made in respect of anticipated claims from customers on contracts of which 

deadlines are overdue or not expected to be completed on time in accordance with contractual obligations. The 

utilisation of provisions is dependent on the timing of claims. 

(o) Income taxes 

(i) Current tax 

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be 

recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those 

that are enacted or substantively enacted by the balance sheet date.

119 




(o) Income taxes (continued) 

(ii) Deferred taxation 

Deferred taxation is provided, using the liability method, on all temporary differences at the balance sheet date 

between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred 

tax assets and liabilities are measured using the tax rates expected to apply to taxable income in the years in which 

those temporary differences are expected to be recovered or settled based on tax rates enacted or substantively 

enacted at the balance sheet date. 

Deferred tax liabilities are recognised for all taxable temporary differences associated with investments in subsidiaries, 

associated companies and interests in joint ventures, except where the timing of the reversal of the temporary 

difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. 

Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and 

unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible 

temporary differences, carry-forward of unused tax assets and unused tax losses can be utilised. 

At each balance sheet date, the Group re-assesses unrecognised deferred tax assets and the carrying amount of 

deferred tax assets. The Group recognises a previously unrecognised deferred tax asset to the extent that it has 

become probable that future taxable profit will allow the deferred tax asset to be recovered. The Group conversely 

reduces the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient taxable 

profit will be available to allow the benefit of part or all of the deferred tax asset to be utilised. 

(p) Employee benefits 

(i) Employee equity compensation benefits 

Pursuant to the ST Engineering Share Option Plan, certain directors and employees are granted non-transferable 

options to purchase the Company’s shares. The fair value of options granted is determined using a binomial model 

and 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. In 

valuing the share option, no account is taken of any performance condition, other than market conditions, if any. The 

cumulative expense recognised for share options at each reporting date until the vesting date reflects the extent to 

which the vesting period has expired and the Group’s best estimate of the number of share options that will ultimately 

vest. The charge or credit to the statement of profit and loss for a period represents the movement in cumulative 

expense recognised as at the beginning and end of that period. 

The proceeds received are credited to share capital when the options are exercised. 

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of earnings per 

share. 

Pursuant to the ST Engineering Performance Share Plan, the Company’s shares can be awarded to certain employees 

and directors of the Group. The details of the Performance Share Plan are described in Note 3. 

The performance shares cost is amortised and recognised in the statement of profit and loss on a straight-line 

basis over the three-year performance period. The fair value of the performance shares is determined at conditional 

grant date using the Monte Carlo simulation model which takes into account the market conditions and non-market 

conditions. 

(ii) Pensions 

The Group participates in the national pension schemes as defined by the laws of the countries in which it has 

operations. In particular, the Singapore companies in the Group make contributions to the Central Provident Fund 

scheme in Singapore, a defined contribution pension scheme. Contributions to national pension schemes are 

recognised as an expense in the period in which the related service is performed.





(q) Income recognition 

Income is recognised using the following methods: 

(i) Income from sale of goods and services rendered is recognised upon delivery of goods/services and acceptance by 

customers. 

(ii) Income from long-term contracts is recognised by reference to stage of completion which is measured by either: 

(a) the percentage of costs incurred to estimated total costs to complete the contracts; or 

(b) when goods and services, representing part of a contract, are delivered; or 

(c) upon completion of designated phases of a contract. 

Provision for foreseeable losses on uncompleted contracts is made as soon as such losses are determinable. 

(iii) Dividend income is recognised when the shareholder’s rights to receive payment is established. 

(iv) Management fee income is recognised on an accrual basis upon which management services are rendered. 

(v) For certain subsidiaries, the first 15 percent of the total commission receivable for each contract is treated as 

downpayment and is deferred and taken up in the statement of profit and loss only upon the discharge of specified 

contractual obligations. Commission income in respect of each contract in excess of the first 15 percent of the total 

amount receivable is taken up in the statement of profit and loss as and when it is billed. For certain back to back 

contracts, commission income is recognised upon delivery of goods and services. 

(vi) Any surplus arising from amounts under fund management can only be determined at the end of the relevant fund 

management period. Such surplus, if any, will be recognised as income then. 

(vii) Finance charges from hire purchase financing is recognised based on the sum of digits method over the finance 

period. 

(viii) Interest income is recognised on an accrual basis. 

(r) Foreign currency transactions/translation 

(i) Foreign currency transactions 

Transactions in foreign currencies are measured in the respective functional currencies of the Company and 

its subsidiary companies and are recorded on initial recognition in the functional currencies at exchange rates 

approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies 

are translated at the closing rate of exchange ruling at the balance sheet date. Non-monetary items that are measured 

in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial 

transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates 

at the date when the fair value was determined. 

Exchange differences arising on the settlement of monetary items or on translating monetary items at the balance 

sheet date are recognised in the statement of profit and loss except for exchange differences arising on monetary 

items that form part of the Group’s net investment in foreign subsidiary companies, which are recognised initially 

in a separate component of equity as foreign currency translation reserve in the consolidated balance sheet and 

recognised in the consolidated statement of profit and loss on disposal of the subsidiary. In the Company’s separate 

financial statements, such exchange differences are recognised in the statement of profit and loss. 

Differences on foreign currency borrowings that provide a hedge against a net investment in a foreign operation are 

also taken directly to the foreign currency translation reserve until the disposal of the net investment, at which time 

they are recognised in the statement of profit and loss. Tax charges and credits attributable to exchange differences 

on those borrowings are also dealt with in the foreign currency translation reserve.

121 




(r) Foreign currency transactions/translation (continued) 

(ii) Foreign currency translation 

The results and financial position of foreign subsidiaries are translated into Singapore dollars using the following 

procedures: 

• Assets and liabilities for each balance sheet presented are translated at the closing rate ruling at that balance sheet 

date; and 

• Income and expenses for each income statement are translated at average exchange rates for the year, which 

approximates the exchange rates at the dates of the transactions. 

All resulting exchange differences are recognised in a separate component of equity as foreign currency translation 

reserve. 

Goodwill and fair value adjustments arising on the acquisition of foreign subsidiaries on or after 1 January 2005 are 

treated as assets and liabilities of the foreign subsidiaries and are recorded in the functional currency of the foreign 

subsidiaries and translated at the closing rate at the balance sheet date. 

On disposal of a foreign subsidiary, the cumulative amount of exchange differences deferred in equity relating to that 

foreign subsidiary is recognised in the statement of profit and loss as a component of the gain or loss on disposal. 

(s) Intangible assets 

Intangible assets acquired separately are measured on initial recognition at costs. The cost of intangible assets acquired 

in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are 

carried at cost less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible 

assets are not capitalised and the expenditure is charged against profits in the year in which the expenditure is incurred. 

The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are 

amortised over the economic useful life and assessed for impairment whenever there is an indication that the intangible 

asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life 

is reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption 

of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as 

appropriate, and treated as changes in accounting estimates. The amortisation expense on intangible asset with finite lives 

is recognised in the statement of profit and loss in the expense category consistent with the function of the intangible 

asset. 

Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash-generating 

unit level. Such intangibles are not amortised. The useful life of an intangible asset with an indefinite life is reviewed 

annually to determine whether indefinite life assessment continues to be supportable. If not, the change in the useful life 

assessment from indefinite to finite is made on a prospective basis. 

(i) Research and development expenditure 

Research and development expenditure is charged to the statement of profit and loss as and when incurred. 

(ii) Commercial and intellectual property rights 

Costs relating to intellectual property rights, which are acquired are capitalised and amortised on a straight-line basis 

over its estimated economic useful lives. 

(iii) Other intangible assets 

Costs relating to dealer network, which are acquired are capitalised and amortised on a straight-line basis over its 

estimated economic useful lives.





(t) Hire purchase and finance leases 

(i) Assets acquired on hire purchase arrangements are capitalised in the financial statements and the corresponding 

obligations treated as a liability. The total interest, being the difference between the total instalments payable and the 

capitalised amount, is charged to the statement of profit and loss over the period of such hire purchase arrangements 

in equal monthly instalments to produce a constant rate of charge on the balance of capital repayments outstanding. 

(ii) Finance leases are those leasing agreements which effectively transfer to the Group substantially all the risks and 

benefits incidental to ownership of the lease items. Assets financed under such leases are treated as if they had been 

purchased outright at the present value of the minimum lease payments and the corresponding leasing commitments 

are shown as obligations to the lessors. Lease payments are treated as consisting of capital and interest elements and 

interest is charged to the statement of profit and loss over the period of the lease to produce a constant rate of charge 

on the balance of capital repayments outstanding. 

(iii) Assets acquired on hire purchase and finance lease arrangements are depreciated in accordance with the policy set 

out in Note 2(g) above. 

(u) Operating leases 

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased asset, are 

classified as operating leases. Operating lease payments are recognised as an expense in the statement of profit and loss 

on a straight-line basis over the lease term. 

The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease 

term on a straight-line basis. 

(v) Government grants 

Grants in recognition of specific expenses are taken to income in the same year as the relevant expenses. Grants related 

to depreciable assets are deferred and allocated to income over the period in which such assets are depreciated and used 

in the projects subsidised by the grants. 

(w) Derivative financial instruments and hedging 

The Group uses derivative financial instruments such as forward currency contracts and interest rate swaps to hedge 

its risks associated with foreign currency and interest rate fluctuations. Such derivative financial instruments are initially 

recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair 

value. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative. 

Any gains or losses arising from changes in fair value on derivatives that do not qualify for hedge accounting are taken 

directly to profit or loss for the year. 

The fair value of forward currency contracts is calculated by reference to current forward exchange rates for contracts 

with similar maturity profiles. The fair value of interest rate swap contracts is determined by reference to market values for 

similar instruments. 

The Group uses cash from time to time as a hedging instrument to hedge its risk associated with foreign currency 

fluctuations. 

For the purpose of hedge accounting, hedges are classified either as fair value hedge or cash flow hedge.

123 




(w) Derivative financial instruments and hedging (continued) 

At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which the 

Group wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The 

documentation includes identification of the hedging instrument, the hedge item or transaction, the nature of the risk being 

hedged and how the entity will assess the hedging instrument’s effectiveness in offsetting the exposure to changes in the 

hedged item’s fair value or cash flows attributable to the hedged risk. Such hedges are expected to be highly effective 

in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they 

actually have been highly effective throughout the financial reporting periods for which they were designated. 

Hedges which meet the strict criteria for hedge accounting are accounted for as follows: 

(i) Fair value hedges 

For fair value hedges, the carrying amount of the hedged item is adjusted for gains and losses attributable to the risk 

being hedged, the hedging instrument is remeasured at fair value and gains and losses from both are taken to profit or 

loss. 

For fair value hedges relating to items carried at amortised cost, the adjustment to carrying value is amortised through 

profit or loss over the remaining term to maturity. Any adjustment to the carrying amount of a hedging instrument for 

which the effective interest method is used is amortised to profit or loss. 

Amortisation may begin as soon as an adjustment exists and shall begin no later than when the hedged item ceases to 

be adjusted for changes in its fair value attributable to the risk being hedged. 

When an unrecognised firm commitment is designated as a hedged item, the subsequent cumulative change in the fair 

value of the firm commitment attributable to the hedged risk is recognised as an asset or liability with a corresponding 

gain or loss recognised in profit or loss. The changes in the fair value of the hedging instrument are also recognised in 

profit or loss. 

The Group discontinues fair value hedge accounting if the hedging instrument expires or is sold, terminated or 

exercised, the hedge no longer meets the criteria for hedge accounting or the Group revokes the designation. Any 

adjustment to the carrying amount of a hedging instrument for which the effective interest method is used is amortised 

to profit or loss. Amortisation may begin as soon as an adjustment exists and shall begin no later than when the 

hedged item ceases to be adjusted for changes in its fair value attributable to the risk being hedged. 

(ii) Cash flow hedges 

For cash flow hedges the effective portion of the gain or loss on the hedging instrument is recognised directly in 

equity, while the ineffective portion is recognised in profit or loss. 

Amounts taken to equity are transferred to the statement of profit and loss when the hedged transaction affects 

profit or loss, such as when hedged financial income or financial expense is recognised or when a forecast sale or 

purchase occurs. When the hedged item is the cost of a non-financial asset or liability, the amounts taken to equity are 

transferred to the initial carrying amount of the non-financial asset or liability. 

If the forecast transaction is no longer expected to occur, amounts previously recognised in equity are transferred to 

profit or loss. If the hedging instrument expires or is sold, terminated, or exercised without replacement or rollover, or 

if its designation as a hedge is revoked, amounts previously recognised in equity remain in equity until the forecast 

transaction occurs. If the related transaction is not expected to occur, the amount is taken to profit or loss.





(x) Segments 

For management purposes, the Group is organised on a worldwide basis into four major operating businesses which is the 

basis on which the Group reports its primary segment information. 

Segment revenue, expenses and results include transfers between business segments and between geographical 

segments. Such transfers are accounted for on an arm’s length basis. 

(y) Derecognition of financial assets and liabilities 

(i) Financial assets 

A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is 

derecognised where: 

• The contractual rights to receive cash flows from the asset have expired; 

• The Group retains the contractual rights to receive cash flows from the assets, but has assumed an obligation to 

pay them in full without material delay to a third party under a “pass-through” arrangement; or 

• The Group has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially 

all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and 

rewards of the asset, but has transferred control of the asset. 

When the Group has transferred its rights to receive cash flows from an asset and has neither transferred nor retained 

substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the 

extent of the Group’s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee 

over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum 

amount of consideration that the Group could be required to repay. 

Where continuing involvement takes the form of a written and/or purchased option on the transferred asset, the 

extent of the Group’s continuing involvement is the amount of the transferred asset that the Group may repurchase, 

except that in the case of a written put option on an asset measured at fair value, the extent of the Group’s continuing 

involvement is limited to the lower of the fair value of the transferred asset and the option exercise price. 

On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of (a) the 

consideration received (including any new asset obtained less any new liability assumed) and (b) any cumulative gain 

or loss that has been recognised directly in equity is recognised in the statement of profit and loss. 

(ii) Financial liabilities 

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. 

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the 

terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition 

of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is 

recognised in the statement of profit and loss. 

(z) Changes in accounting policies 

(i) Adoption of new and revised FRS 

With effect from 1 January 2006, the Group has adopted all the new and revised FRS that are mandatory for financial 

years beginning on or after 1 January 2006. The adoption of these FRS has no significant impact to the Group.

125 




(z) Changes in accounting policies (continued) 

(ii) FRS and INT FRS not yet effective 

The Group has not applied the following FRS and INT FRS that have been issued but not yet effective: 

EFFECTIVE DATE 

(ANNUAL PERIODS 

BEGINNING ON OR 

AFTER) 

FRS 1 : Amendment to FRS 1 (revised), 1 January 2007 

Presentation of financial statements 

(Capital Disclosures) 

FRS 40 : Investment Property 1 January 2007 

FRS 107 : Financial Instruments: Disclosures 1 January 2007 

INT FRS 107 : Applying the Restatement Approach 1 March 2006 

under FRS 29, Financial Reporting in 

Hyperinflationary Economics 

INT FRS 108 : Scope of FRS 102, Share-based Payment 1 May 2006 

INT FRS 109 : Reassessment of Embedded Derivatives 1 June 2006 

INT FRS 110 : Interim Financial Reporting and Impairment 1 November 2006 

The Group expects that the adoption of the above pronouncements will not have a significant impact on the financial 

statements in the period of initial application. 

(aa) Significant accounting estimates and judgements 

Estimates and assumptions concerning the future are made in the preparation of the financial statements. They affect 

the application of the Group’s accounting policies, reported amounts of assets, liabilities, income and expenses, and 

disclosures made. They are assessed on an ongoing basis and are based on experience and relevant factors, including 

expectations of future events that are believed to be reasonable under the circumstances. 

(i) Key sources of estimation uncertainty 

The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, 

that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the 

next financial year are discussed below. 

• Impairment of goodwill 

The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the 

value-in-use of the cash-generating units to which the goodwill is allocated. Estimating the value-in-use requires 

the Group to make an estimate of the expected future cash flows from the cash-generating unit and also to 

choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of 

the Group’s goodwill at 31 December 2006 was $494,818,000 (2005: $307,821,000). More details are provided 

in Note 11. 

• Depreciation of property, plant and equipment 

Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives. 

Management estimates the useful lives of these property, plant and equipment to be within 1 to 60 years. The 

carrying amount of the Group’s property, plant and equipment at 31 December 2006 was $952,209,000 (2005: 

$475,197,000). Changes in the expected level of usage and technological developments could impact the 

economic useful lives and the residual values of these property, plant and equipment, therefore future depreciation 

charges could be revised.





(aa) Significant accounting estimates and judgements (continued) 

• Income taxes 

The Group has exposure to income taxes in numerous jurisdictions. Significant judgement is involved in 

determining the group-wide provision for income taxes. There are certain transactions and computations for which 

the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities 

for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of 

these matters is different from the amounts that were initially recognised, such differences will impact the income 

tax and deferred tax provisions in the period in which such determination is made. The carrying amount of the 

Group’s tax payables at 31 December 2006 was $213,931,000 (2005: $208,764,000). 

(ii) Critical judgements made in applying accounting policies 

In the process of applying the Group’s accounting policies, management has made certain judgements, apart from 

those involving estimations, which have significant effect on the amounts recognised in the financial statements. 

3. SHARE CAPITAL 

• Impairment of investments and financial assets 

The Group follows the guidance of FRS 39 on determining when an investment or financial asset is other-thantemporarily 

impaired. This determination requires significant judgement, the Group evaluates, among other factors, 

the duration and extent to which the fair value of an investment or financial asset is less than its cost; and the 

financial health of and near-term business outlook for the investment or financial asset, including factors such as 

industry and sector performance, changes in technology and operational and financing cash flow. 

GROUP AND COMPANY 


$’000 $’000 

Issued and fully paid: 

At beginning of the year 

2,914,495,627 (2005: 2,892,164,909) ordinary shares 291,450 289,217 

Transfer from share premium account 117,197 – 

Issued during the year 

31,758,004 (2005: 22,330,718) ordinary shares 66,279 2,233 

At end of the year 

2,946,253,631 (2005: 2,914,495,627) ordinary shares 474,926 291,450 

Included in share capital is a special share issued to the Minister for Finance (Incorporated). The special share enjoys all the 

rights attached to the ordinary shares. In addition, the special share carries the right to approve any resolution to be passed by 

the Company, either in general meeting or by its Board of Directors, on certain matters specified in the Company’s Articles of 

Association. The special share may be converted at any time into an ordinary share. 

The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares 

carry one vote per share without restriction. 

On 30 January 2006, in accordance with the Companies (Amendment) Act 2005, the concepts of “par value” and “authorised 

capital” were abolished and on that date, the shares of the company ceased to have a par value. The amount standing to the 

credit of the Company’s share premium account became part of the Company’s share capital. 

The Singapore Technologies Engineering Share Option Plan (“ESOP”) and the Singapore Technologies Engineering 

Performance Share Plan (“PSP”) of the Company were approved by its members at an Extraordinary General Meeting held 

on 23 November 2000. The ESOP and PSP are administered by the Executive Resource and Compensation Committee 

(“ERCC”) comprising three directors, Mr Peter Seah Lim Huat, Mr Venkatachalam Krishnakumar and Dr Philip Nalliah Pillai.

127 



3. SHARE CAPITAL (continued) 

Singapore Technologies Engineering Share Option Plan (“ESOP”) 

Information regarding ESOP is as follows: 

(a) The exercise price of the options is equal to volume-weighted average price for the shares on the Singapore Exchange 

over the three consecutive trading days immediately preceding the date of grant. 

(b) The options are exercisable at the end of the first year after date of grant, in accordance with a vesting schedule to be 

determined by ERCC and are settled in cash. 

(c) The options granted expire after five years for non-executive directors, and 10 years for the employees of the Company 

and its subsidiaries. 

During the financial year, the Company issued 30,953,004 (2005: 22,230,518) ordinary shares for cash at the respective 

price per share upon the exercise of options granted by the Company under ESOS and ESOP: 

GRANT NO. NO. OF ORDINARY SHARES ISSUED PRICE PER ORDINARY SHARE 

$ 

96R1 43,138 0.905 

96R5 257,698 0.373 

96R6 174,668 0.465 

97R1 35,000 0.422 

97R2 8 0.629 

98R1 574,250 1.390 

98R3 50,000 1.290 

99R1 1,718,730 1.418 

9902 803,100 2.000 

2001 6,203,973 2.260 

2002 529,740 1.808 

2003 771,371 2.390 

0102N 2,021,490 2.720 

0102ND 745,000 2.720 

0108N 2,818,209 2.680 

0202N 2,121,876 2.290 

0202ND 97,750 2.290 

0208N 2,380,149 1.920 

0208ND 30,250 1.920 

0302N 2,664,988 1.790 

0302ND 30,250 1.790 

0302P 10,000 1.790 

0308N 2,273,621 1.860 

0308ND 10,436 1.860 

0402N 1,847,610 2.090 

0402ND 11,225 2.090 

0408N 1,407,637 2.120 

0408ND 8,850 2.120 

0502N 959,798 2.370 

0502ND 7,125 2.370 

0508N 342,189 2.570 

0508ND 2,875 2.570





At the end of the financial year, unissued ordinary shares of the Company under options granted to eligible employees and 

directors of the Company are as follows: 

(i) Options outstanding under the ESOS/ESOP 

NUMBER OF SHARES 


ESOS 

At beginning of the year 40,533,204 53,425,717 

Exercised (11,161,676) (12,490,195) 

Lapsed (95,400) (402,318) 

At end of the year 29,276,128 40,533,204 

Exercisable at end of year 29,276,128 40,533,204 

ESOP 

At beginning of the year 117,256,385 99,799,055 

Granted and accepted 31,361,732 30,691,575 

Exercised (19,791,328) (9,740,323) 

Lapsed (3,734,148) (3,493,922) 

At end of the year 125,092,641 117,256,385 

Exercisable at end of year 45,687,091 48,001,526 

(ii) Details of share options 

2006 

Details of share options to subscribe for ordinary shares pursuant to ESOS are as follows: 

BALANCE 

AS AT 

1.1.2006 NO. OF 

OR DATE BALANCE HOLDERS 

DATE OF OF GRANT OPTIONS OPTIONS AS AT AT EXERCISE 

GRANT IF LATER LAPSED EXERCISED 31.12.2006 31.12.2006 PRICE EXERCISABLE PERIOD 

$ 

6.12.1997 43,138 – 43,138 – – 0.905 18.5.1999 to 3.4.2006 



6.12.1997 367,981 – 35,000 332,981 3 0.422 18.5.1999 to 2.4.2007 

6.12.1997 8 – 8 – – 0.629 18.5.1999 to 7.4.2007 

6.12.1997 262,002 – – 262,002 2 0.492 18.5.1999 to 24.4.2007 

6.12.1997 92,471 – – 92,471 2 0.720 11.9.1999 to 9.9.2007 

29.4.1998 2,155,000 – 574,250 1,580,750 33 1.390 30.4.2000 to 29.4.2008 

7.8.1998 265,000 – 50,000 215,000 40** 1.290 8.8.2000 to 7.8.2008 

9.2.1999 6,383,590 – 1,718,730 4,664,860 88** 1.418 10.2.2001 to 9.2.2009 

10.8.1999 1,894,500 5,000 803,100 1,086,400 169* 2.000 11.8.2001 to 10.8.2009 

9.2.2000 24,986,953 51,400 6,203,973 18,731,580 336** 2.260 10.2.2002 to 9.2.2010 

9.2.2000 1,779,865 15,000 529,740 1,235,125 39 1.808 10.2.2002 to 9.2.2010 

6.9.2000 1,870,330 24,000 771,371 1,074,959 35 2.390 7.9.2002 to 6.9.2010 

Total 40,533,204 95,400 11,161,676 29,276,128

129 





Details of share options to subscribe for ordinary shares pursuant to ESOP are as follows: 

BALANCE 

AS AT 

1.1.2006 NO. OF 



GRANT IF LATER LAPSED EXERCISED 31.12.2006 31.12.2006 PRICE EXERCISABLE PERIOD 

$ 

19.2.2001 9,297,650 69,099 1,796,490 7,432,061 633** 2.720 20.2.2002 to 19.2.2011 



10.8.2001 452,500 452,500 – – – 2.680 11.8.2002 to 10.8.2006 

10.8.2001 12,498,029 92,201 2,818,209 9,587,619 657** 2.680 11.8.2002 to 10.8.2011 

7.2.2002 9,408,471 32,127 2,121,876 7,254,468 616** 2.290 8.2.2003 to 7.2.2012 

7.2.2002 593,750 – 97,750 496,000 11 # 2.290 8.2.2003 to 7.2.2007 

12.8.2002 8,055,308 94,893 2,380,149 5,580,266 718** 1.920 13.8.2003 to 12.8.2012 

12.8.2002 132,000 – 30,250 101,750 2 # 1.920 13.8.2003 to 12.8.2007 

6.2.2003 9,247,254 148,476 2,664,988 6,433,790 969** 1.790 7.2.2004 to 6.2.2013 

6.2.2003 348,750 – 30,250 318,500 16 # 1.790 7.2.2004 to 6.2.2008 

6.2.2003 24,972 – 10,000 14,972 2 1.790 7.2.2004 to 6.2.2013 

11.8.2003 10,446,835 226,885 2,273,621 7,946,329 1,016** 1.860 12.8.2004 to 11.8.2013 

11.8.2003 330,500 – 10,436 320,064 17 # 1.860 12.8.2004 to 11.8.2008 

11.8.2003 28,754 – – 28,754 2 1.860 12.8.2004 to 11.8.2013 

9.2.2004 11,554,310 270,907 1,847,610 9,435,793 995** 2.090 10.2.2005 to 9.2.2014 

9.2.2004 325,325 – 11,225 314,100 16 # 2.090 10.2.2005 to 9.2.2009 

9.2.2004 31,426 – – 31,426 2 2.090 10.2.2005 to 9.2.2014 

21.6.2004 100,000 – – 100,000 1 2.000 22.6.2005 to 21.6.2014 

10.8.2004 12,988,412 454,008 1,407,637 11,126,767 1,129** 2.120 11.8.2005 to 10.8.2014 

10.8.2004 286,325 – 8,850 277,475 16 # 2.120 11.8.2005 to 10.8.2009 

10.8.2004 31,426 – – 31,426 2 2.120 11.8.2005 to 10.8.2014 

7.2.2005 14,035,878 589,074 959,798 12,487,006 1,171** 2.370 8.2.2006 to 7.2.2015 

7.2.2005 355,750 – 7,125 348,625 17 # 2.370 8.2.2006 to 7.2.2010 

7.2.2005 31,426 – – 31,426 2 2.370 8.2.2006 to 7.2.2015 

10.8.2005 15,312,742 721,566 342,189 14,248,987 1,313** 2.570 11.8.2006 to 10.8.2015 

10.8.2005 337,166 – 2,875 334,291 17 # 2.570 11.8.2006 to 10.8.2010 

10.8.2005 31,426 – – 31,426 2 2.570 11.8.2006 to 10.8.2015 

9.2.2006 14,802,585 ## 510,627 – 14,291,958 1,417** 3.010 10.2.2007 to 9.2.2016 

9.2.2006 377,500 ## – – 377,500 18 # 3.010 10.2.2007 to 9.2.2011 

10.8.2006 15,810,147 ## 71,785 – 15,738,362 1,550** 2.840 11.8.2007 to 10.8.2016 

10.8.2006 371,500 ## – – 371,500 18 # 2.840 11.8.2007 to 10.8.2011 

Total 148,618,117 3,734,148 19,791,328 125,092,641 

* Includes 1 executive Director and 1 past Director of the Company 

** Includes 1 executive Director of the Company 

# 

Includes Directors of the Company and its subsidiaries 

## 

These numbers relate to options granted and accepted in 2006





2005 

Details of share options to subscribe for ordinary shares pursuant to ESOS are as follows: 

BALANCE 

AS AT 

1.1.2005 NO. OF 

OR DATE OPTIONS BALANCE HOLDERS 

DATE OF OF GRANT LAPSED OPTIONS AS AT AT EXERCISE 

GRANT IF LATER ADJUSTMENTS EXERCISED 31.12.2005 31.12.2005 PRICE EXERCISABLE PERIOD 

$ 

6.12.1997 34,723 1 34,722 – – 0.905 18.5.1999 to 2.6.2005 

6.12.1997 90,113 – 90,113 – – 0.422 18.5.1999 to 17.6.2005 

6.12.1997 72,056 – 72,056 – – 0.357 18.5.1999 to 6.12.2005 

6.12.1997 54,089 (15,000) 25,951 43,138 2 0.905 18.5.1999 to 3.4.2006 

6.12.1997 315,396 – 57,698 257,698 2 0.373 18.5.1999 to 30.8.2006 

6.12.1997 174,668 – – 174,668 3 0.465 18.5.1999 to 16.10.2006 

6.12.1997 407,981 – 40,000 367,981 3 0.422 18.5.1999 to 2.4.2007 

6.12.1997 16 – 8 8 2 0.629 18.5.1999 to 7.4.2007 

6.12.1997 262,002 – – 262,002 2 0.492 18.5.1999 to 24.4.2007 

6.12.1997 169,530 – 77,059 92,471 2 0.720 11.9.1999 to 9.9.2007 

29.4.1998 2,899,750 – 744,750 2,155,000 43 1.390 30.4.2000 to 29.4.2008 

7.8.1998 355,000 5,000 85,000 265,000 86** 1.290 8.8.2000 to 7.8.2008 

9.2.1999 8,653,160 – 2,269,570 6,383,590 104** 1.418 10.2.2001 to 9.2.2009 

10.8.1999 2,652,236 15,000 742,736 1,894,500 290* 2.000 11.8.2001 to 10.8.2009 

9.2.2000 29,667,132 317,107 4,363,072 24,986,953 393** 2.260 10.2.2002 to 9.2.2010 

9.2.2000 1,250,000 – 1,250,000 – – 2.260 10.2.2002 to 9.2.2005 

9.2.2000 4,143,865 – 2,364,000 1,779,865 50 1.808 10.2.2002 to 9.2.2010 

6.9.2000 2,224,000 80,210 273,460 1,870,330 63 2.390 7.9.2002 to 6.9.2010 

Total 53,425,717 402,318 12,490,195 40,533,204

131 




2005 

Details of share options to subscribe for ordinary shares pursuant to ESOP are as follows: 

BALANCE 

AS AT 

1.1.2005 NO. OF 



GRANT IF LATER LAPSED EXERCISED 31.12.2005 31.12.2005 PRICE EXERCISABLE PERIOD 

$ 

19.2.2001 9,644,703 333,646 13,407 9,297,650 859** 2.720 20.2.2002 to 19.2.2011 

19.2.2001 225,000 – – 225,000 1*** 2.720 20.2.2002 to 19.2.2006 

19.2.2001 745,000 – – 745,000 14 # 2.720 20.2.2002 to 19.2.2006 

10.8.2001 452,500 – – 452,500 1*** 2.680 11.8.2002 to 10.8.2006 

10.8.2001 13,064,234 497,912 68,293 12,498,029 922** 2.680 11.8.2002 to 10.8.2011 

7.2.2002 10,995,574 235,578 1,351,525 9,408,471 985** 2.290 8.2.2003 to 7.2.2012 

7.2.2002 611,000 – 17,250 593,750 15 # 2.290 8.2.2003 to 7.2.2007 

12.8.2002 10,757,119 218,423 2,483,388 8,055,308 1,007** 1.920 13.8.2003 to 12.8.2012 

12.8.2002 132,000 – – 132,000 2 # 1.920 13.8.2003 to 12.8.2007 

6.2.2003 11,888,051 258,037 2,382,760 9,247,254 1,026** 1.790 7.2.2004 to 6.2.2013 

6.2.2003 351,625 – 2,875 348,750 16 # 1.790 7.2.2004 to 6.2.2008 

6.2.2003 27,944 – 2,972 24,972 2 1.790 7.2.2004 to 6.2.2013 

11.8.2003 12,776,927 374,750 1,955,342 10,446,835 1,077** 1.860 12.8.2004 to 11.8.2013 

11.8.2003 333,375 – 2,875 330,500 17 # 1.860 12.8.2004 to 11.8.2008 

11.8.2003 31,672 – 2,918 28,754 2 1.860 12.8.2004 to 11.8.2013 

9.2.2004 12,879,933 443,892 881,731 11,554,310 1,064** 2.090 10.2.2005 to 9.2.2014 

9.2.2004 328,200 – 2,875 325,325 16 # 2.090 10.2.2005 to 9.2.2009 

9.2.2004 31,426 – – 31,426 2 2.090 10.2.2005 to 9.2.2014 

21.6.2004 100,000 – – 100,000 1 2.000 22.6.2005 to 21.6.2014 

10.8.2004 14,102,146 544,497 569,237 12,988,412 1,215** 2.120 11.8.2005 to 10.8.2014 

10.8.2004 289,200 – 2,875 286,325 16 # 2.120 11.8.2005 to 10.8.2009 

10.8.2004 31,426 – – 31,426 2 2.120 11.8.2005 to 10.8.2014 

7.2.2005 14,505,761 ## 469,883 – 14,035,878 1,272** 2.370 8.2.2006 to 7.2.2015 

7.2.2005 355,750 ## – – 355,750 17 # 2.370 8.2.2006 to 7.2.2010 

7.2.2005 31,426 ## – – 31,426 2 2.370 8.2.2006 to 7.2.2015 

10.8.2005 15,430,046 ## 117,304 – 15,312,742 1,420** 2.570 11.8.2006 to 10.8.2015 

10.8.2005 337,166 ## – – 337,166 17 # 2.570 11.8.2006 to 10.8.2010 

10.8.2005 31,426 ## – – 31,426 2 2.570 11.8.2006 to 10.8.2015 

Total 130,490,630 3,493,922 9,740,323 117,256,385 

* Includes 1 executive Director and 1 past Director of the Company 

** Includes 1 executive Director of the Company 

*** Includes 1 past Director of the Company 

# 

Includes Directors of the Company and its subsidiaries 

## 

These numbers relate to options granted and accepted in 2005





(iii) Details of share options exercised 

PROCEEDS 

EXERCISE FROM SHARE SHARE 

NO. OF SHARES PRICE ISSUE PRICE 

$ $’000 $ 


January to March 21,715,361 0.373 – 2.720 46,736 2.88 – 3.12 

April to June 3,454,019 1.390 – 2.720 7,417 2.63 – 3.30 

July to September 2,403,556 0.373 – 2.720 4,580 2.66 – 2.98 

October to December 3,380,068 1.290 – 2.720 7,172 2.94 – 3.20 

30,953,004 

2005 

January to March 11,128,494 0.357 – 2.680 21,126 2.35 – 2.59 

April to June 2,824,879 0.422 – 2.680 5,261 2.40 – 2.57 

July to September 4,315,761 1.290 – 2.680 8,622 2.48 – 2.63 

October to December 3,961,384 0.357 – 2.720 7,772 2.46 – 2.86 

22,230,518 

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 binomial model, taking into 

account the terms and conditions upon which the options were granted. The following table lists the inputs to the model used 

for the years ended 31 December 2006 and 2005. 


Expected dividend yield (%) (-- Management’s forecast in line with dividend policy --) 

Expected volatility (%) 17.02 – 23.31 18.66 –19.20 

Risk-free interest rate (%) 2.71 – 3.19 1.90 – 2.38 

Expected life of option (years) 2.49 – 5.25 2.50 – 5.25 

Exercise price ($) 2.84 – 3.01 2.37 – 2.57 

Weighted average share price ($) 2.80 – 3.01 2.37 – 2.57 

The expected life of the options is based on historical data and therefore not necessarily indicative of exercise patterns that 

may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may 

also not necessarily be the actual outcome. 

No other features of options were incorporated into the measurement of fair value.

133 




Singapore Technologies Engineering Performance Share Plan (“PSP”) 

Performance shares are granted on an annual basis, conditional on targets set for a performance period, currently prescribed 

to be a three-year performance period. The performance shares will only be released to the recipient at the end of the 

performance qualifying period. The final number of performance shares given will depend on the level of achievement of those 

targets over the three-year performance period. A specified number of performance shares shall be released by the ERCC to 

the recipient at the end of the performance period, provided a minimum threshold performance is achieved. 

DATE OF GRANT 

26 JANUARY 2006 5 AUGUST 2005 8 JULY 2004 TOTAL 

Number of performance shares 

At grant date 2,450,000 2,160,000 2,130,000 6,740,000 

Lapsed – – – – 

Outstanding as at 31.12.2006 2,450,000 2,160,000 2,130,000 6,740,000 

During the year, performance shares amounting to 805,000 ordinary shares were awarded in respect of grants made in 2003. 

The fair value of the performance shares is determined at conditional grant date using the Monte Carlo simulation 

methodology. 

The significant inputs to the model used for the conditional grants in 2004 to 2006 are as follows. 

DATE OF GRANT 

26 JANUARY 2006 5 AUGUST 2005 8 JULY 2004 

Market conditions 

Volatility of MSCI Index (%) 14.69 13.80 20.14 

Volatility of the Company’s shares (%) 15.22 17.44 22.84 

Correlation of volatility of MSCI vs the Company (%) 26.46 31.62 39.60 

Risk-free rate (%) 3.09 2.20 1.66 

Share price ($) 2.93 2.56 2.10 

Dividend yield (-- Management’s forecast in line with dividend policy --) 

Non-market conditions 

(Best estimate* of number of shares expected to vest at end of three-year performance period) 

– EVA Spread (%) 61 79 – 

– EPS Growth 63 64 – 

* Subject to revision when new information is available 

4. CAPITAL RESERVE 

This amount relates to share premium of the respective pooled enterprises, namely Singapore Technologies Aerospace Ltd, 

Singapore Technologies Electronics Limited, Singapore Technologies Kinetics Ltd and Singapore Technologies Marine Ltd 

classified as capital reserve upon the pooling of interests during the financial year ended 31 December 1997.




5. OTHER RESERVES 

FOREIGN 

CURRENCY FAIR SHARE-BASED ASSET 

TRANSLATION STATUTORY VALUE PAYMENT REVALUATION 

RESERVE RESERVE RESERVE RESERVE RESERVE TOTAL 

$’000 $’000 $’000 $’000 $’000 $’000 

The Group 

At 1.1.2005 (7,594) 333 49,221 5,585 – 47,545 


differences 1,223 – – – – 1,223 


available-for-sale financial assets – – (1,931) – – (1,931) 


cash flow hedges – – (2,550) – – (2,550) 

Total net income recognised directly 

in equity and for the year 1,223 – (4,481) – – (3,258) 

Cost of share-based payment – – – 8,537 – 8,537 


profit to statutory reserve – 133 – – – 133 

At 31.12.2005 (6,371) 466 44,740 14,122 – 52,957 

At 1.1.2006 (6,371) 466 44,740 14,122 – 52,957 


differences (33,321) – – – – (33,321) 


available-for-sale financial assets – – (14,542) – – (14,542) 


cash flow hedges – – (879) – – (879) 

Total net income recognised directly 

in equity and for the year (33,321) – (15,421) – – (48,742) 

Cost of share-based payment – – – 9,431 – 9,431 

Revaluation surplus – – – – 81 81 


profit to statutory reserve – 246 – – – 246 

At 31.12.2006 (39,692) 712 29,319 23,553 81 13,973 

GROUP 


$’000 $’000 

Net fair value changes on available-for-sale financial assets arises from: 

– Net gain on fair value changes during the year 9,795 5,016 

– Recognised in the statement of profit and loss (24,337) (6,947) 

(14,542) (1,931) 

Foreign currency translation reserve 

The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial 

statements of foreign subsidiaries whose functional currencies are different from that of the Group’s presentation currency.

135 



5. OTHER RESERVES (continued) 

Statutory reserve 

Subsidiaries in the People’s Republic of China follow the accounting principles and relevant financial regulations of the 

People’s Republic of China (“PRC GAAP”) applicable to wholly foreign-owned enterprises and Sino-foreign equity joint venture 

enterprises in the preparation of the accounting records and statutory financial statements, and the appropriation of the profit 

arrived at under PRC GAAP for each year to a statutory reserve. 

Fair value reserve 

Fair value reserve records the cumulative fair value changes of available-for-sale financial assets until they are derecognised 

or impaired as well as the portion of the fair value changes on the derivative financial instruments designated as hedging 

instruments in cash flow hedges that is determined to be an effective hedge. 

Share-based payment reserve 

Share-based payment reserve represents the equity-settled share options and performance shares granted to employees. The 

reserve is made up of the cumulative value of services received from employees recorded on grant of equity-settled share 

options and performance shares. The expense for services received will be recognised over the vesting period. 

Asset revaluation reserve 

The asset revaluation reserve records increases in the fair value of freehold land and buildings and decreases to the extent 

that such decrease relates to an increase on the same asset previously recognised in equity. 

6. UNAPPROPRIATED PROFIT 

GROUP 


$’000 $’000 

Retained by: 

The Company 530,676 396,815 

Subsidiaries 335,670 422,686 

Associated companies and joint ventures 94,308 95,745 

960,654 915,246




7. PROPERTY, PLANT AND EQUIPMENT 

VALUATION/COST 

ARISING ARISING 

FROM 

FROM 

ACQUISITION OF DILUTION OF 

AS AT INTEREST IN INTEREST IN RECLASSI- TRANSLATION AS AT 

1.1.2005 ADDITIONS* DISPOSALS SUBSIDIARIES SUBSIDIARIES FICATIONS DIFFERENCE 31.12.2005 

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 

The Group 

At 1972 Valuation 

Leasehold land and buildings 1,919 – – – – – – 1,919 

Wharves and slipways 1,490 – – – – – – 1,490 

Syncrolift and floating docks 4,603 – – – – – – 4,603 

Plant and machinery 1,694 – – – – – – 1,694 

Furniture, fittings, office 

equipment and 

computers 279 – – – – – – 279 

At Cost 

Freehold land and buildings 50,366 – – 14,294 – – 614 65,274 

Leasehold land and 

buildings 416,344 7,278 (35) – – – 532 424,119 

Buildings on rented 

properties 50,248 6,502 – – – 4,128 – 60,878 

Improvements to premises 29,360 1,365 (72) 504 (107) 31 129 31,210 

Wharves and slipways 19,825 – – – – – 1 19,826 

Syncrolift and floating docks 68,781 75 (75) – – – 1 68,782 

Boats and barges 5,458 5 – – – (30) 22 5,455 

Plant and machinery 344,853 43,049 (6,798) 3,450 (138) 50 832 385,298 

Production tools and 

equipment 135,670 15,288 (1,129) 524 – – 126 150,479 


equipment and 

computers 131,444 12,923 (7,732) 4,416 (155) (31) (55) 140,810 

Transportation equipment 

and vehicles 10,886 1,727 (521) 196 – (20) 19 12,287 

Aircraft and aircraft engines 40,339 22,427 – – – – – 62,766 

Construction-in-progress 4,645 16,753 – 21 – (4,128) (311) 16,980 

1,318,204 127,392 (16,362) 23,405 (400) – 1,910 1,454,149

137 



7. PROPERTY, PLANT AND EQUIPMENT (continued) 

VALUATION/COST 

ARISING 

ELIMINATION OF 

FROM 

ACCUMULATED 

ACQUISITION OF 

DEPRECIATION 

AS AT INTEREST IN RECLASSI- ON TRANSLATION AS AT 

1.1.2006 ADDITIONS* DISPOSALS SUBSIDIARIES REVALUATION FICATIONS REVALUATION DIFFERENCE 31.12.2006 

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 

The Group 

At Valuation 

Freehold land 

and buildings – – – 1,874 116 – (40) – 1,950 

Leasehold land 

and buildings 1,919 – – – – – – – 1,919 

Wharves and 

slipways 1,490 – – – – – – – 1,490 

Syncrolift and 

floating docks 4,603 – – – – – – – 4,603 

Plant and machinery 1,694 – – – – – – – 1,694 

Furniture, fittings, 

office equipment 

and computers 279 – – – – – – – 279 

At Cost 

Freehold land 

and buildings 65,274 407 (117) – – 630 – (4,830) 61,364 

Leasehold land 

and buildings 424,119 22,446 (50) 1,412 – 4,179 – (4,501) 447,605 

Buildings on 

rented 

properties 60,878 10,165 – – – – – – 71,043 

Improvements to 

premises 31,210 3,698 (2,520) 7,712 – 4,573 – (1,462) 43,211 

Wharves and 

slipways 19,826 5,310 – – – 3,592 – (15) 28,713 

Syncrolift and 

floating docks 68,782 – – – – – – – 68,782 

Boats and barges 5,455 – – – – – – (167) 5,288 

Plant and 

machinery 385,298 99,608 (30,121) 378,464 – 4,888 – 17,150 855,287 

Production tools 

and equipment 150,479 19,787 (1,992) 9,399 – (101) – (1,834) 175,738 

Furniture, fittings, 

office equipment 

and computers 140,810 16,698 (7,483) 3,350 – 1,506 – (1,928) 152,953 

Transportation 

equipment 

and vehicles 12,287 1,612 (903) 1,193 – – – (153) 14,036 

Aircraft and 

aircraft engines 62,766 – – – – – – – 62,766 

Construction-inprogress 

16,980 22,415 (273) 3,122 – (19,267) – (1,203) 21,774 

1,454,149 202,146 (43,459) 406,526 116 – (40) 1,057 2,020,495 

* Additions during the year included property, plant and equipment of: 

(i) $5,003,339 (2005: $4,062,000) contributed by minority shareholders as part of capital injection; and 

(ii) $nil (2005: $5,795,000) offset against the net investment in a joint venture.





ACCUMULATED DEPRECIATION 

ARISING 

FROM 

DEPRECIATION 

DILUTION OF 

AS AT CHARGE FOR IMPAIRMENT INTEREST IN RECLASSI- TRANSLATION AS AT 

1.1.2005 THE YEAR LOSS SUBSIDIARIES DISPOSALS FICATIONS DIFFERENCE 31.12.2005 

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 

The Group 

At 1972 Valuation 






equipment and computers 279 – – – – – – 279 

At Cost 

Freehold land and buildings 7,070 1,537 11,890 – – – 75 20,572 


buildings 221,199 16,958 – – (35) – 145 238,267 


properties 19,416 2,227 – – – – – 21,643 

Improvements to premises 12,474 3,761 – (16) (72) – (4) 16,143 

Wharves and slipways 14,512 1,063 – – – – – 15,575 

Syncrolift and floating 

docks 57,482 3,644 – – (10) – (65) 61,051 

Boats and barges 4,619 470 352 – – – 14 5,455 

Plant and machinery 292,612 20,736 (29) (22) (6,267) (73) 382 307,339 


equipment 114,938 11,199 – – (1,106) 73 75 125,179 


equipment and 

computers 116,346 10,857 – (49) (7,632) – (12) 119,510 


and vehicles 8,385 1,010 – – (495) – 27 8,927 


902,714 79,092 12,213 (87) (15,617) – 637 978,952

139 





ELIMINATION 

OF 

DEPRECIATION 

ACCUMULATED 

CHARGE 

DEPRECIATION 

AS AT FOR IMPAIRMENT RECLASSI- ON TRANSLATION AS AT 

1.1.2006 THE YEAR LOSS DISPOSALS FICATIONS REVALUATION DIFFERENCE 31.12.2006 

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 

The Group 

At Valuation 

Freehold land and buildings – 40 – – – (40) – – 






equipment and computers 279 – – – – – – 279 

At Cost 

Freehold land and buildings 20,572 1,096 – (54) – – (1,523) 20,091 


buildings 238,267 18,276 33 (22) – – (1,885) 254,669 


properties 21,643 1,941 – – – – – 23,584 

Improvements to premises 16,143 5,308 – (2,452) – – (630) 18,369 

Wharves and slipways 15,575 1,495 – – – – (8) 17,062 

Syncrolift and floating docks 61,051 3,648 – – – – – 64,699 

Boats and barges 5,455 124 – – (280) – (170) 5,129 

Plant and machinery 307,339 59,386 264 (19,048) 353 – (4,026) 344,268 


equipment 125,179 15,943 – (1,420) (101) – (1,084) 138,517 


equipment and 

computers 119,510 15,744 – (7,096) 28 – (1,557) 126,629 


and vehicles 8,927 1,357 – (531) – – (93) 9,660 


978,952 130,676 297 (30,623) – (40) (10,976) 1,068,286





NET BOOK VALUE 


$’000 $’000 

The Group 

At Valuation 

Freehold land and buildings 1,950 – 

Leasehold land and buildings – – 

Wharves and slipways – – 

Syncrolift and floating docks – – 

Plant and machinery – – 

Furniture, fittings, office equipment and computers – – 

At Cost 

Freehold land and buildings 41,273 44,702 

Leasehold land and buildings 192,936 185,852 

Buildings on rented properties 47,459 39,235 

Improvements to premises 24,842 15,067 

Wharves and slipways 11,651 4,251 

Syncrolift and floating docks 4,083 7,731 

Boats and barges 159 – 

Plant and machinery 511,019 77,959 

Production tools and equipment 37,221 25,300 

Furniture, fittings, office equipment and computers 26,324 21,300 

Transportation equipment and vehicles 4,376 3,360 

Aircraft and aircraft engines 27,142 33,460 

Construction-in-progress 21,774 16,980 

952,209 475,197 

The Company 

AT COST 

AS AT 1.1.2005 ADDITIONS AS AT 31.12.2005 

$’000 $’000 $’000 

Furniture, fittings, office equipment and computers 871 499 1,370 

Transportation equipment and vehicles 298 – 298 

1,169 499 1,668 


DEPRECIATION 

CHARGE FOR 

AS AT 1.1.2005 THE YEAR AS AT 31.12.2005 

$’000 $’000 $’000 

Furniture, fittings, office equipment and computers 712 150 862 

Transportation equipment and vehicles 5 60 65 

717 210 927

141 




The Company 

AT COST 

AS AT 1.1.2006 ADDITIONS AS AT 31.12.2006 

$’000 $’000 $’000 

Furniture, fittings, office equipment and computers 1,370 251 1,621 

Transportation equipment and vehicles 298 – 298 

1,668 251 1,919 


DEPRECIATION 

CHARGE FOR 

AS AT 1.1.2006 THE YEAR AS AT 31.12.2006 

$’000 $’000 $’000 

Furniture, fittings, office equipment and computers 862 276 1,138 

Transportation equipment and vehicles 65 59 124 

927 335 1,262 



$’000 $’000 

Furniture, fittings, office equipment and computers 483 508 

Transportation equipment and vehicles 174 233 

657 741 

The Group 

(a) Property, plant and equipment at valuation 

As at 1 January 2006, property, plant and equipment which are shown at valuation are stated at values arrived at by an 

independent firm of professional valuers on 30 November 1972, on the basis of open market value for existing use. There 

is no fixed frequency of revaluation. Revaluation will be performed as and when deemed appropriate by the Directors. 

These property, plant and equipment are fully depreciated as at 31 December 2006 and 2005. 

During the year, a freehold building was valued by an independent firm of professional valuers on 8 January 2007 on the 

basis of open market value for existing use. The net book value of the building as at 31 December 2006 is $1,950,000. 

(b) Property, plant and equipment pledged as security 

(i) Freehold land and buildings and leasehold buildings of subsidiaries with a carrying amount of $7,442,000 (2005: 

$4,854,000) are pledged as security for long-term loans. 

(ii) Plant and machinery of a subsidiary with carrying value of $223,358,000 (2005: $nil) are subject to a floating charge 

of Euro 210 million to secure two of the subsidiary’s bank loans.





(c) Property, plant and equipment under lease obligations 

Included in the above are property, plant and equipment acquired under lease obligations with a net book value of: 

GROUP 


$’000 $’000 

Leasehold land and buildings 2,927 3,680 

(d) The major properties of the Group comprise: 

(i) Freehold land and buildings 


LOCATION DESCRIPTION LAND AREA 2006 2005 

(SQ. M.) $’000 $’000 

Malaysia 

Awana Chalet 8th mile, Genting Highlands, Staff recreation and 58 2 98 

69000 Genting Highlands, Pahang apartment unit 

USA 

47889 South K Street Tulare, California Industrial buildings 88,949 2,801 3,100 

13442 Emerson Road Kidron, Ohio Industrial buildings 68,351 1,441 1,606 

300 Hackney Ave, Independence, Kansas Industrial buildings 117,358 2,071 2,318 

400 Hackney Ave, Washington, North Carolina Industrial buildings 39,942 2,248 2,517 

914 Saegers Station Drive, Montgomery, 

Pennsylvania Industrial buildings 122,659 4,389 4,854 

7801 Trinity Drive, Escatawpa, Mississippi Shipyard and buildings 839,564 4,896 5,102 

5801 Elder Ferry Rd, Moss Point, Mississippi Shipyard and buildings 227,151 4,497 4,703 

900 Bayou Casotte Parkway, Pascagoula, 

Mississippi Shipyard and buildings 331,803 13,258 14,304 

3800 Richardson Road South, Hope Hull, 

Alabama Production facility 8,361 4,197 4,717 


159 Sin Ming Road Amtech Building #04-05 Warehouse and office building 575 1,950 –

143 




(ii) Leasehold land, buildings and improvements 


LOCATION DESCRIPTION TENURE LAND AREA 2006 2005 

(SQ. M.) $’000 $’000 


501 Airport Road Factory and office 20 years from 1.6.1993 23,899 3,158 3,664 

building 

503 Airport Road Factory and office 20 years from 1.6.1993 7,175 890 1,023 

building 

540 Airport Road Warehouse and office 30 years from 15.8.1985 5,850 1,354 1,508 

building 

Hangar and office 30 years from 1.1.1984 18,918 3,936 4,443 

building 

8 Changi North Way Hangar and office 30 years from 1.1.1992 75,713 37,292 39,778 

building 

Hangar and office 22.5 years from 16.6.1999 14,860 3,605 3,845 

building 

Hangar and office 16.3 years from 20.8.2005 9,764 15,012 – 

building 

24 Ang Mo Kio Industrial and 30 years from 1.12.1982, 23,970 11,384 12,028 

Street 65 commercial buildings renewable to 2042 

100 Jurong East Industrial and 30 years from 1.11.1988, 11,232 9,227 9,563 

Street 21 commercial buildings renewable to 2048 

70 Ubi Crescent Factory 60 years from 5.7.1997 730 1,103 – 

Ubi Techpark #01-12 

5 Portsdown Road Industrial and 3 years from 1.12.2005, 88,400 472 827 

commercial buildings renewable to 2010 

5 Ubi Close Car showroom cum 30 years from 1.8.1994 6,274 15,491 16,761 

workshop 

33 Tuas Avenue 2 Factory and office 30 years from 1.4.1996 6,669 2,820 2,967 

building 

16 Benoi Crescent Industrial and 30 years from 16.7.1989 6,981 3,388 3,662 

commercial buildings 

249 Jalan Boon Lay Industrial and 27 years from 1.10.2001 120,000 6,851 7,678 

commercial buildings to 31.12.2028 

(renewable to 10.10.2065)





(ii) Leasehold land, buildings and improvements (continued) 



(SQ. M.) $’000 $’000 


2D Ayer Rajah Crescent Industrial and 3 years from 1.4.2004 29,904 – – 

commercial buildings to 31.3.2007 

16 Tuas Avenue 7 Industrial buildings 30 years from 16.8.1983 12,029 1,294 1,479 

601 Rifle Range Road Industrial buildings Renewable every year * 1,380,983 1,724 2,584 

15 Chin Bee Drive Industrial buildings 60 years from 1.8.1973 39,640 4,101 4,534 

7 Benoi Road Buildings, foreshore 56 years from 1.6.1969 103,802 17,961 19,557 

and workshops 

60 Tuas Road Buildings, foreshore 30 years from 1.12.1992 125,262 6,265 6,927 

and workshops 

16 Benoi Road Administrative offices 56 years from 1.6.1969 20,244 – – 

30/36 Kian Teck Workers’ dormitory 30 years from 1.9.1995 3,908 5,454 5,746 

Avenue 

USA 

2100 9th Street Hangar and 22 years from 1.1.1991 103,825 22,294 23,382 

Brookley Complex, office building 

Mobile, Alabama 

9800 John Saunders Hangar and 16 7 / 12 years from 195,663 8,848 10,622 

Road, San Antonio, office building 1.6.2002 

Texas 

People’s Republic of China 

555 Kanghua Road, Industrial buildings 50 years from 12.6.2003 15,890 3,538 3,987 

Kangqiao Industrial to 27.7.2052 

Zone, Shanghai 

97 Zhong Cao Road Industrial and 41 years from 1.10.2005 276,633 6,094 – 

Guiyang, Guizhou commercial buildings to 30.9.2045 

Europe 

405, Blazer Court, Residential apartment 130 years from 1.1.1998 74 395 – 

St John’s Wood Road, 

London NW 8 

* This relates to buildings constructed by a subsidiary on properties rented from the Ministry of Defence on leases which 

are renewable every year. In view of the relationship between the landlord and the subsidiary, the cost of the buildings is 

depreciated over 30 years.

145 




(iii) Buildings on rented properties 



(SQ. M.) $’000 $’000 


540 Airport Road Hangars and 3 years lease from 1.7.2006 48,882 28,891 30,239 

office building 

540 Airport Road Hangars and 3 years lease from 5.10.2004 10,956 8,850 8,996 


Seletar West Camp Hangars and 3 years lease from 12.9.2006 4,714 9,718 – 


The buildings on rented properties relate to buildings constructed by one of the subsidiaries on properties rented from the 

Ministry of Defence on leases which are renewable every three years. In view of the relationship between the landlord and 

the subsidiary, the cost of the buildings on rented properties, except for the hangar in Seletar West Camp, is depreciated 

over 30 years. The hangar in Seletar West Camp is depreciated over 10 years. 

8. SUBSIDIARIES 

COMPANY 


$’000 $’000 

Unquoted shares, at cost: 

Singapore Technologies Aerospace Ltd 90,114 90,114 

Singapore Technologies Electronics Limited 26,982 26,982 

Singapore Technologies Kinetics Ltd 61,938 61,938 

Singapore Technologies Marine Ltd 56,000 56,000 

Vision Technologies Systems, Inc. 297,494 168,166 

Singapore Technologies Dynamics Pte Ltd 6,000 6,000 

ST Synthesis Pte Ltd 2,156 2,156 

FusionTech Pte. Ltd. 1,000 1,000 

Kaz-ST Engineering Bastau Limited Liability Partnership 578 336 

542,262 412,692 

Provision for impairment (7,000) (6,000) 

Carrying amount after provision for impairment 535,262 406,692 

Capital contribution in form of share options and 

performance shares issued to employees of subsidiaries 8,947 – 

544,209 406,692




8. SUBSIDIARIES (continued) 

Details of the subsidiaries are as follows: 

EFFECTIVE EQUITY 

INTEREST HELD 

BY THE GROUP 


% % 

(a) Singapore Technologies Aerospace Ltd and its subsidiaries 100 100 

ST Aerospace Engineering Pte Ltd and its subsidiaries: 100 100 

ST PAE Holdings Pty Ltd 100 100 

Pacific Flight Services Pte Ltd 100 100 

ST Aerospace Engines Pte Ltd 100 100 

ST Aerospace Systems Pte Ltd 100 100 

ST Aerospace Supplies Pte Ltd and its subsidiary: 100 100 

iShopAero Pte Ltd 100 100 

ST Aerospace International Structures Pte Ltd 100 100 

ST Aviation Resources Pte Ltd and its subsidiary: 100 100 

ST Aviation Resources 1 Limited 100 100 

ST Aviation Services Co Pte Ltd 80 80 

Visiontech Investment Pte Ltd 100 100 

Singapore Technologies Engineering (Europe) Ltd 100 100 

Singapore Aerospace Kabushiki Kaisha 100 100 

Visiontech Engineering Pte Ltd 51 51 

ST Airport Ground Services Pte Ltd 100 100 

Bournemouth Aviation Services Company Limited 81 81 

Singapore British Engineering Pte Ltd 51 51 

SAS Component Group A/S and its subsidiary: 71.3 – 

Airline Rotables (UK Holdings) Limited (formerly 

known as ST Aerospace (UK) Limited) and its subsidiary: 71.3 100 

Airline Rotables Limited 71.3 100 

Panama Aerospace Engineering Inc. 100 – 

(b) Singapore Technologies Electronics Limited and its subsidiaries 100 100 

SEEL Electronic & Engineering Sdn Bhd 100 100 

ST Electronics (Info-Software Systems) Pte. Ltd. and its subsidiaries: 100 100 

INFA Systems Limited 70 70 

ST Electronics (Software Services) Limited 

(formerly known as Xinke Information Systems Ltd) 100 100 

PM-B Pte Ltd and its subsidiaries: 70 – 

PMB Project Management Business Sdn Bhd 70 – 

PT PM-B Indonesia 70 – 

Beijing Tong Fang Shi Cheng Ki Ji Pte Ltd 70 – 

ST Electronics (Training & Simulation Systems) Pte. Ltd. and its subsidiaries: 100 100 

ST Electronics (Digital Media) Pte. Ltd. 

(formerly known as Interactive Visual Laboratory Pte. Ltd.) 100 100 

ST Education & Training Private Limited and its subsidiaries: 70 70 

STET Maritime Education Pte. Ltd. 70 70 

STET Maritime Bureau Pte. Ltd. 70 70 

Brightspot Interactive Learning Pte. Ltd. and its subsidiary: 51 16 

Brightspot Interactive Learning Inc. 51 16

147 





INTEREST HELD 

BY THE GROUP 


% % 

(b) Singapore Technologies Electronics Limited and its subsidiaries (continued) 

ST Electronics (Info-Comm Systems) Pte. Ltd. and its subsidiaries: 100 100 

ST Electronics (Info-Security) Pte. Ltd. 

(formerly known as DigiSAFE Pte Ltd) and its subsidiary: 100 100 

DataMark Technologies Pte Ltd 61.12 61.12 

STELCOMMS Pte. Ltd. 100 – 

ST Electronics (Satcom & Sensor Systems) Pte. Ltd. and its subsidiary: 100 100 

ST Electronics (Sichuan) Co., Ltd 100 100 

ST Electronics (Shanghai) Co., Ltd and its subsidiary: 100 100 

ST Electronics-PCI Co., Ltd 51 51 

iTS Technologies Pte Ltd 100 100 

ST Electronics (Taiwan) Limited 100 100 

Intelect Technologies, Incorporated 78.57 78.57 

Ripple Systems Pty Ltd 70 70 

STELOP Pte. Ltd. (formerly known as Chartered Electro-Optics Pte Ltd) 50.05 50.05 

TranSys Pte Ltd 100 @ 50 

(c) Singapore Technologies Kinetics Ltd and its subsidiaries 100 100 

Singapore Ordnance Engineering Pte. Ltd. 100 100 

Mobility Systems Pte Ltd and its subsidiaries: 100 100 

Silvatech Global Systems Limited 100 50** 

Silvatech Systems Corporation Pte Ltd and its subsidiaries: 100 50** 

Kinetics Drive Solutions Inc. (formerly known as Int. Silvatech Industries Inc.) 100^^ 50** 

Silvatech Systems Marketing Inc. –^^ 50** 

STA Inspection Pte Ltd and its subsidiary: 100 100 

JuzclickCar.com Pte Ltd 90 90 

Singapore Commuter Private Limited 100 100 

ST Automotive Industrial Pte Ltd 100 100 

STA Investment Pte Ltd 100 100 

ST Automotive (Vietnam) Pte Ltd 100 100 

STA Detroit Diesel-Allison (Singapore) Pte Ltd 100 100 

Shanghai Elite Electric Vehicles Co., Ltd 100 100 

Expert Systems Pte Ltd 100 100 

Singapore Test Services Private Limited and its subsidiary: 100 100 

SAO Industrial Services Pte Ltd 100 100 

Advanced Material Engineering Pte. Ltd. and its subsidiary: 100 100 

Advanced Pyrotechnic Materials Private Limited 

(formerly known as Chartered Pyrotechnic Industries Private Limited) 51 51 

Unicorn International Pte Limited 100 100 

Allied Ordnance of Singapore (Pte) Limited 100 100 

Ordnance Development and Engineering Company of Singapore (1996) Private Limited 100 100 

Autonomous Technology Pte Ltd and its subsidiary: 100 100 

Guizhou Jonyang Kinetics Co., Ltd. 60 60 

Kinetics Systems (Shanghai) Co., Ltd. 100 100 

Founders Industries Pte Ltd and its subsidiary: 100 100 

Ordnance Development and Engineering Company of Singapore (Private) Limited – 100 

STAR Automotive Center (Zhejiang) Co., Ltd. 86.24 70






INTEREST HELD 

BY THE GROUP 


% % 

(d) Singapore Technologies Marine Ltd and its subsidiary 100 100 

STSE Engineering Services Pte Ltd 100 100 

(e) Vision Technologies Systems, Inc. and its subsidiaries 100 100 

Singapore Technologies Engineering (USA) Inc. 100 100 

SA Supplies (USA) Inc. 100 100 

VT Systems, Inc. 100 100 

Vision Technologies Aerospace, Incorporated and its subsidiaries: 100 100 

ST Mobile Aerospace Engineering, Inc. 100 100 

DalFort Aerospace GP, Inc. 100 100 

DalFort Aerospace, L.P. 100 100 

San Antonio Aerospace GP, LLC 100 100 

San Antonio Aerospace LP 100 100 

Vision Technologies Electronics, Inc. and its subsidiary: 100 100 

iDirect, Inc. and its subsidiaries: 100 100 

iDirect Hong Kong Limited 100 100 

iDirect UK Limited 100 100 

iDirect Italy srl 100 100 

iDirect International Corporation and its subsidiary: 100 100 

iDirect Singapore Pte. Ltd. 100 – 

Vision Technologies Kinetics, Inc. and its subsidiaries: 100 100 

Miltope Corporation 100 100 

MÄK Technologies, Inc. 80 – 

Vision Technologies Land Systems, Inc. and its subsidiaries: 100 100 

VT Dimensions, Inc. 100 100 

VT LeeBoy, Inc. 100 – 

VT Specialized Vehicles Corporation (formerly known as Specialized Vehicles Corporation) 100 100 

Vision Technologies Marine, Inc. and its subsidiary: 100 100 

VT Halter Marine, Inc. 100 100 

(f) Singapore Technologies Dynamics Pte Ltd 100 100 

(g) ST Synthesis Pte Ltd 100 100 

(h) FusionTech Pte. Ltd. 100 100 

(i) Kaz-ST Engineering Bastau Limited Liability Partnership 51 51 

@ 

During the year, following an additional acquisition of interest, TranSys Pte Ltd had become a subsidiary of the Group. 

** The Group owns 50% plus one share in these companies. 

^^ These entities were amalgamated as one company under the name Kinetics Drive Solutions Inc. during the year.

149 




Further details of the subsidiaries are as follows: 

COUNTRY OF 

INCORPORATION/ 

PLACE OF 

NAME OF SUBSIDIARY PRINCIPAL ACTIVITIES BUSINESS 

Singapore Technologies Aerospace Ltd Investment holding and provision of engineering, Singapore 

marketing and engineering support services 

ST Aerospace Engineering Pte Ltd Repair, maintenance and servicing of aircraft Singapore 

ST PAE Holdings Pty Ltd Investment holding Australia 

Pacific Flight Services Pte Ltd Providing air transport services Singapore 

ST Aerospace Engines Pte Ltd Repair and overhaul of aircraft engines Singapore 

ST Aerospace Systems Pte Ltd Service, repair and overhaul of aircraft components Singapore 

ST Aerospace Supplies Pte Ltd Trading, Maintenance-By-The-Hour services for Singapore 

component and repair management and warehousing 

services for aircraft equipment, parts and components 

iShopAero Pte Ltd Trading, e-commerce and information technology Singapore 

related services for the aerospace industry 

ST Aerospace International Designing, developing and manufacturing aircraft, Singapore 

Structures Pte Ltd 

engines, equipment, accessories, components and 

such other parts 

ST Aviation Resources Pte Ltd Investment holding Singapore 

ST Aviation Resources 1 Limited # Investment holding and aircraft leasing business British Virgin 

Islands 

ST Aviation Services Co Pte Ltd Repair, maintenance, modification and servicing of Singapore 

commercial aircraft 

Visiontech Investment Pte Ltd Investment holding and dealing Singapore 

Singapore Technologies Engineering Providing marketing and investment services UK 

(Europe) Ltd 

to the Group 

Singapore Aerospace Kabushiki Kaisha # Providing marketing services to the Group Japan 

Visiontech Engineering Pte Ltd Provision of engineering services for the repair, Singapore 

maintenance and modification of aircraft, aircraft 

equipment and components 

ST Airport Ground Services Pte Ltd Investment holding and provision of airport ground Singapore 

cargo and passenger handling services





COUNTRY OF 


PLACE OF 


Bournemouth Aviation Services Repair and maintenance of aircraft UK 

Company Limited + 

Singapore British Engineering Pte Ltd Marketing and sale of a range of defence products and Singapore 

associated equipment and participating in the 

development of new products and systems 

SAS Component Group A/S Supply aircraft components, including purchase, Denmark 

maintenance and logistics services 

Airline Rotables (UK Holdings) Limited Investment holding UK 

(formerly known as ST Aerospace 

(UK) Limited) 

Airline Rotables Limited Providing component management and support UK 

services for aircraft 

Panama Aerospace Engineering Inc.^ Repair and maintenance of aircraft Republic of 

Panama 

Singapore Technologies Electronics Limited Design, development, supply, installation, integration Singapore 

and maintenance of transportation, intelligent building, 

defence electronic and communication systems 

SEEL Electronic & Engineering Sdn Bhd Sales of electronic instruments and equipment, Malaysia 

electronic engineering and systems integration services 

for infrastructure projects as well as maintenance and 

calibration of electronic equipment 

ST Electronics (Info-Software Systems) Design, development and supply of real-time/mission Singapore 

Pte. Ltd. 

critical systems and provision of related maintenance 

services 

INFA Systems Limited Provision for services in consulting, designing and Hong Kong 

developing systems integration, the maintenance and 

support of operational and computer systems and sales 

and distribution of system equipment 

ST Electronics (Software Services) Limited Providing IT outsourcing services, software applications People’s Republic 

(formerly known as Xinke Information development and turnkey solutions of China 

Systems Ltd) 

PM-B Pte Ltd Relate to mechanical, electrical and engineering works Singapore 

to design, build and provide facility management services 

for mission critical environments such as data centres, 

disaster recovery and business continuity sites

151 




COUNTRY OF 


PLACE OF 


PMB Project Management Business Relate to mechanical, electrical and engineering works Malaysia 

Sdn Bhd 



disaster recovery and business continuity sites 

PT PM-B Indonesia Relate to mechanical, electrical and engineering works Indonesia 




Beijing Tong Fang Shi Cheng Ki Ji Pte Ltd Relate to mechanical, electrical and engineering works People’s Republic 

to design, build and provide facility management services of China 



ST Electronics (Training & Simulation Design, development, supply, integration and Singapore 

Systems) Pte. Ltd. 

maintenance of training and simulation systems 

ST Electronics (Digital Media) Pte. Ltd. Design, development and manufacture of computers Singapore 

(formerly known as Interactive Visual and data processing systems, as well as provision of 

Laboratory Pte. Ltd.) 

services for the processing and maintenance of data 

and information 

ST Education & Training Private Limited Provision of education and training, management and Singapore 

consultancy services for operational and technical domains 

of maritime, aerospace and land services and industries 

STET Maritime Education Pte. Ltd. Provision of education and training for operational and Singapore 

technical domains of the maritime industry 

STET Maritime Bureau Pte. Ltd. 

Provision of marine audit, survey and consultancy services Singapore 

Brightspot Interactive Learning Pte. Ltd. Investment holding and provision of training services Singapore 

such as soft skills and management skills to corporations, 

and other courses to individuals through satellites 

broadcast 

Brightspot Interactive Learning Inc Provision of training services such as soft skills and People’s Republic 

management skills to corporations, and other courses of China 

to individuals through satellites broadcast 

ST Electronics (Info-Comm Systems) Design, development, systems integration, manufacturing Singapore 

Pte. Ltd. 

and sale of communication equipment, GPS-based fleet 

management system, traffic management system, 

info appliances and defence electronics





COUNTRY OF 


PLACE OF 


ST Electronics (Info-Security) Pte. Ltd. Design, development, sale and provision of technical Singapore 

(formerly known as DigiSAFE Pte Ltd) support for information security products, solutions 

and services 

DataMark Technologies Pte Ltd Develop and provide digital water marking and Singapore 

related solutions 

STELCOMMS Pte. Ltd. Design, development and sale of communication Singapore 

related products and subsystems 

ST Electronics (Satcom & Sensor Manufacture of microwave components and Singapore 

Systems) Pte. Ltd. 

sub-systems, system integration and provision of 

related repairs and maintenance for the 

telecommunications and defence electronics industries 

ST Electronics (Sichuan) Co., Ltd Maintenance of communication and other related People’s Republic 

apparatus and consultant service of telecommunication of China 

technology 

ST Electronics (Shanghai) Co., Ltd Development and manufacturing of computer control People’s Republic 

and management systems, microwave control systems, of China 

simulation and training systems, security systems, 

MRT passenger information systems, MRT autofare 

collection system, MRT platform screen door system 

and related software. Provision of related technical 

consultation and aftersales services and sale of 

in-house products. 

ST Electronics-PCI Co., Ltd Computer software and hardware R&D and manufacture, People’s Republic 

computer supervise and control management system, of China 

microwave system, simulation and training system, 

security management system and peripheral devices, 

selling in-house products, and offering relevant system 

integration and skill consultation and after-sales service. 

Electronic technologies, industry automatic equipment 

R&D, electronic consulting service, system integration 

and network engineering installation. 

iTS Technologies Pte Ltd Development, marketing and maintenance of advance Singapore 

simulation and training systems for the aircraft and 

other industries 

ST Electronics (Taiwan) Limited # Provide integration for large-scale system projects in Taiwan 

rail, expressway and intelligent building 

management solutions

153 




COUNTRY OF 


PLACE OF 


Intelect Technologies, Incorporated # Development and supply of a family of multi-access USA 

optical networking equipment 

Ripple Systems Pty Ltd Design, develop and implement innovative software Australia 

systems for technically challenging integration 

applications. Key markets for these applications are 

rail command and control (ISCS) and intelligent 

transport systems (ITS) for road infrastructure. 

STELOP Pte. Ltd. (formerly known as Design, development, manufacture and sale of electro- Singapore 

Chartered Electro-Optics Pte Ltd) 

optical and electronic products and systems and the 

provision of related services 

TranSys Pte Ltd Design, development, distribution, maintenance and Singapore 

marketing of railway related products 

Singapore Technologies Kinetics Ltd Provision of design and engineering services, Singapore 

manufacture, sales and knowhow transfer of military 

and commercial vehicles, automotive subsystems, 

armament, weapons, weapon systems, ammunition and 

explosives and the provision of engineering services 

for assembly, upgrading/modifications, maintenance, 

repair and overhaul of vehicles and weapon systems, 

and trading in motor vehicles, equipment, vehicle 

spares and related accessories 

Singapore Ordnance Engineering Pte. Ltd. Workshop and provision of engineering services Singapore 

Mobility Systems Pte Ltd Investment holding Singapore 

Silvatech Global Systems Limited # Owns the intellectual property rights to electro-hydraulic British Virgin 

drive, hydro-mechanical and electro-mechanical 

Islands 

continuously variable transmissions technologies, and 

equipment powered by such drives 

Silvatech Systems Corporation Pte Ltd Designing, manufacturing, marketing and managing Singapore 

licencees of technologies and products using electrohydraulic 

drive, hydro-mechanical and electro-mechanical 

continuously variable transmissions, and equipment 

powered by such drives, globally 

Kinetics Drive Solutions Inc. # Research and development, manufacturing and sales of Canada 

(formerly known as Int. Silvatech 

electro-hydraulic drive, hydro-mechanical and electro- 

Industries Inc.) 

mechanical continuously variable transmissions 

technologies, and equipment powered by such drives





COUNTRY OF 


PLACE OF 


STA Inspection Pte Ltd Inspection of heavy goods vehicles, light vehicles, Singapore 

motor cars, buses and motorcycles, provision of vehicle 

inspection project management, provision of independent 

damage assessment services as well as to act as the 

commission agent for the sale and purchase of motor 

vehicle spare parts mainly conducted online via 

the internet 

JuzclickCar.com Pte Ltd # Dormant Singapore 

Singapore Commuter Private Limited Dormant Singapore 

ST Automotive Industrial Pte Ltd Dormant Singapore 

STA Investment Pte Ltd Investment dealing Singapore 

ST Automotive (Vietnam) Pte Ltd # Dormant Singapore 

STA Detroit Diesel-Allison (Singapore) Assembling and marketing of diesel engines and Singapore 

Pte Ltd 

related products and the provision of technical services, 

field services, repair and maintenance services 

Shanghai Elite Electric Vehicles Co., Ltd Manufacture and sale of electric bicycles and provision People’s Republic 

of vehicle repairs and consultancy services 

of China 

Expert Systems Pte Ltd # Dormant Singapore 

Singapore Test Services Private Limited Provision of professional engineering consultancy, tests, Singapore 

inspection, certification and related services 

SAO Industrial Services Pte Ltd Dormant Singapore 

Advanced Material Engineering Pte. Ltd. Provision of design and engineering services, Singapore 

manufacture, sales, disposal and knowhow transfer 

of precision munitions, ammunition, armament, weapon 

systems, military equipment, explosives, hand-grenades, 

thunder-flashes, pyrotechnic products and gunpowder 

and the provision of engineering services for assembly, 

upgrading/modifications, maintenance, repair and 

overhaul of ammunition and weapon systems, and 

related services 

Advanced Pyrotechnic Materials Manufacture and sale of pyrotechnic products Singapore 

Private Limited (formerly known as 

Chartered Pyrotechnic Industries 

Private Limited) 

Unicorn International Pte Limited Trading and Marketing Singapore

155 




COUNTRY OF 


PLACE OF 


Allied Ordnance of Singapore (Pte) Limited Provision of design and engineering services, Singapore 

manufacture, sales and knowhow transfer of armament, 

weapons, weapon systems, ammunition, explosives, 

weapon magazines, military equipment, machines, tools, 

spares and components and the provision of engineering 

services for assembly, upgrading/modification, 

maintenance, repair and overhaul of guns and 

weapons systems, and related services 

Ordnance Development and Engineering Provision of design and engineering services, Singapore 

Company of Singapore (1996) 

manufacture, sales and knowhow transfer of armament, 

Private Limited 

weapons, weapon systems, ammunition, explosives, 

weapon magazines, military equipment, machines, tools, 

spares and components and the provision of engineering 

services for assembly, upgrading/modification, 

maintenance, repair and overhaul of guns and 

weapons systems, and related services 

Autonomous Technology Pte Ltd Investment holding Singapore 

Guizhou Jonyang Kinetics Co., Ltd. Design, manufacture, sales and services support of People’s Republic 

construction, engineering and industrial-related 

of China 

machinery and accessories, provide engineering 

consultancy services to engineering and manufacturing 

companies, be a contract manufacturer of construction, 

engineering and industrial-related machinery and 

accessories, as well as supplying of casting and forging 

parts for all industries, represent and sell other 

manufacturer’s construction, engineering, energy and 

industrial-related machinery and accessories in the 

domestic and international market. 

Kinetics Systems (Shanghai) Co. Ltd. Manufacture of vehicle drive systems, industrial drive People’s Republic 

motors, small external combustion engines, and sale of of China 

self manufactured products 

Founders Industries Pte Ltd* Dormant Singapore 

Ordnance Development and Engineering Dormant Singapore 

Company of Singapore (Private) Limited ** 

STAR Automotive Center (Zhejiang) Provide automotive services, including automotive fixing, People’s Republic 

Co., Ltd. maintaining, service, automotive examination and of China 

maintenance, damage fixing, automotive beautifying 

and decorating, trading and supplying of automotive spare 

parts, training, technology consultation, tow truck service 

and after sales technical support, etc.





COUNTRY OF 


PLACE OF 


Singapore Technologies Marine Ltd Construction and repair of naval and commercial vessels, Singapore 

design, integration, fabrication, installation of military and 

commercial engineering equipment and the provision of 

engineering consultancy and technical management 

services 

STSE Engineering Services Pte Ltd Contractor, developer and sub-contractor of engineering Singapore 

and engineering related works and provider of turnkey 

engineering solutions 

Vision Technologies Systems, Inc. # Investment holding USA 

Singapore Technologies Engineering 

(USA) Inc. # Dormant USA 

SA Supplies (USA) Inc. # Dormant USA 

VT Systems, Inc. # 

Investment holding and providing investment services 

to the Group 

USA 

Vision Technologies Aerospace, Investment holding and providing investment services USA 

Incorporated # 

ST Mobile Aerospace Engineering, Inc. Repair and maintenance of aircraft USA 

DalFort Aerospace GP, Inc. # Dormant USA 

DalFort Aerospace, L.P. + +# Dormant USA 

San Antonio Aerospace GP, LLC # Investment holding USA 

San Antonio Aerospace LP Repair and maintenance of aircraft USA 

Vision Technologies Electronics, Inc. # Investment holding USA 

iDirect, Inc. Design, develop and market two-way internet USA 

protocol - (IP) based broadband satellite networking 

solutions that deliver voice, data and video services 

to enterprise and government customer locations 

worldwide 

iDirect Hong Kong Limited Markets two-way internet protocol – (IP) based Hong Kong 

broadband satellite networking solutions 

iDirect UK Limited Markets two-way internet protocol – (IP) based UK 

broadband satellite networking solutions

157 




COUNTRY OF 


PLACE OF 


iDirect Italy srl Markets two-way internet protocol – (IP) based Italy 


iDirect International Corporation Markets two-way internet protocol – (IP) based USA 


iDirect Singapore Pte. Ltd. Markets two-way internet protocol- (IP) based Singapore 


Vision Technologies Kinetics, Inc. # Investment holding USA 

Miltope Corporation # Manufacturer of militarised and rugged computer USA 

equipment for military applications and commercial 

computer related products for the commercial 

aerospace market including in-flight entertainment 

systems and wireless local area network equipment 

MÄK Technologies, Inc. # 

Develop and supply software products and services 

for Networked Synthetic Environments 

USA 

Vision Technologies Land Systems, Inc. # Investment holding USA 

VT Dimensions, Inc. # Investment holding and licensing of intellectual USA 

properties 

VT LeeBoy, Inc. # Manufacture of asphalt paving and road maintenance USA 

equipment including LeeBoy branded asphalt pavers, 

motor graders, compactors, force feed loaders, asphalt 

maintainers/patchers, tack distributors, and Rosco 

branded asphalt distributors, street flushers, brooms 

and asphalt spray patchers 

VT Specialized Vehicles Corporation Manufacture and marketing of specialised aluminium USA 

(formerly known as Specialized 

drop-frame truck bodies, trailers, refrigerated truck 

Vehicles Corporation) # 

bodies and trailers and speciality vehicle cabs 

Vision Technologies Marine, Inc. # Investment holding and providing investment services USA 

to the Marine sector 

VT Halter Marine, Inc. # Construction and repair of naval and commercial USA 

vessels, design, integration, fabrication, installation 

of engineering equipment and provision of 

engineering services 

Singapore Technologies Dynamics Pte Ltd Technology development, advanced concept design Singapore 

and development and technology acquisition





COUNTRY OF 


PLACE OF 


ST Synthesis Pte Ltd Provision of one-stop total integrated logistic Singapore 

support services 

FusionTech Pte. Ltd. Investment holding Singapore 

Kaz-ST Engineering Bastau Limited Provision of IT, engineering defence and Kazakhstan 

Liability Partnership 

related services 

# 

Not required to be audited under the law in the country of incorporation. 

+ 

This entity ceased operations in December 2006. 

^ 

Newly incorporated during the year and not required to be audited. 

* This entity was under members’ voluntary liquidation in the prior year and has completed its liquidation in January 2007. 

** This entity was under members’ voluntary liquidation in the prior year and has completed its liquidation during the year. 

++ 

This entity ceased operations in October 2003. 

All subsidiaries that are required to be audited under the law in the country of incorporation are audited by Ernst & Young, 

Singapore except for the following: 

NAME OF SUBSIDIARY 

ST PAE Holdings Pty Ltd 

Airline Rotables (UK Holdings) Limited 

Singapore Technologies Engineering (Europe) Ltd 

Airline Rotables Limited 

Bournemouth Aviation Services Company Limited 

ST Mobile Aerospace Engineering, Inc 

SAS Component Group A/S 

San Antonio Aerospace LP 

SEEL Electronic & Engineering Sdn Bhd 

INFA Systems Limited 

ST Electronics (Sichuan) Co., Ltd 

ST Electronics (Shanghai) Co., Ltd 

ST Electronics-PCI Co., Ltd 

Ripple Systems Pty Ltd 

PMB Project Management Business Sdn Bhd 

PT PM-B Indonesia 

Beijing Tong Fang Shi Cheng Ki Ji Pte Ltd 

Brightspot Interactive Learning Inc. 

Shanghai Elite Electric Vehicles Co., Ltd 

Kinetics Systems (Shanghai) Co., Ltd. 

STAR Automotive Center (Zhejiang) Co., Ltd. 

Guizhou Jonyang Kinetics Co., Ltd 

Kaz-ST Engineering Bastau Limited Liability Partnership 

NAME OF ACCOUNTING FIRM 

Ernst & Young, Perth 

Ernst & Young, Cambridge 




Ernst & Young, Birmingham 

Ernst & Young, Denmark 

Ernst & Young, San Antonio 

Ernst & Young, Kuala Lumpur 

Ernst & Young, Hong Kong 

Ernst & Young, Shanghai 


Ernst & Young, Guangzhou 

Ernst & Young, Perth 

Ernst & Young, Kuala Lumpur 

Ernst & Young, Jakarta 

Ernst & Young, Beijing 

Ernst & Young, Beijing 





Ernst & Young, Kazakhstan

159 




(a) During the financial year, the Group incorporated the following subsidiaries: 

COUNTRY OF INCORPORATION 

DATE OF 

NAME OF COMPANY AND PLACE OF BUSINESS EQUITY INTEREST HELD INCORPORATION 

% 

Panama Aerospace Engineering Inc. Republic of Panama 100 27 May 2006 

iDirect Singapore Pte. Ltd. Singapore 100 31 July 2006 

(b) During the financial year, the Group acquired the following companies: 

NET TANGIBLE 

INTEREST ASSETS DATE OF 

NAME OF COMPANY ACQUIRED CONSIDERATION ACQUIRED ACQUISITION 

% $’000 $’000 

SAS Component Group A/S 71.3 155,926 244,441 15 March 2006 

PM-B Pte Ltd (and its subsidiaries) 70 20,160 7,184 20 January 2006 

STELCOMMS Pte. Ltd 100 1,020 1,015 3 January 2006 

Brightspot Interactive Learning 51 3,428 1,135 14 March 2006 

Pte. Ltd. (and its subsidiary) 

MÄK Technologies, Inc. 80 31,881 7,186 21 December 2006 

VT LeeBoy, Inc. 100 212,205 40,476 9 June 2006 

(c) During the financial year, the Group acquired additional equity interests in the following companies: 

NET TANGIBLE 

INTEREST INTEREST AFTER ASSETS 

NAME OF COMPANY ACQUIRED ACQUISITION CONSIDERATION ACQUIRED 

% % $’000 $’000 

TranSys Pte Ltd 50 100 – 615 

STAR Automotive Center (Zhejiang) Co., Ltd. 16.24 86.24 2,566 2,344 

Silvatech Systems Corporation Pte Ltd 50 100 – – 

(and its subsidiaries)




9. ASSOCIATED COMPANIES AND JOINT VENTURES 

GROUP 


$’000 $’000 

Quoted shares, at cost 24,800 43,650 

Unquoted shares, at adjusted cost 200,165 155,240 

Preference shares, at cost 238 238 

Goodwill on acquisition written off (1,737) (1,737) 

Share of net assets acquired 223,466 197,391 

Provision for impairment in value of investments (9,845) (4,973) 

Share of post-acquisition: 

Profits 94,308 95,745 

Reserves (13,784) (6,200) 

294,145 281,963 

The investment in associated company of $50,000 in the Company represents the cost of investment in 2006 JV Pte. Ltd. 

(formerly known as Asian Aerospace 2006 Pte. Ltd.). 

The Group has a call option to acquire up to 51% of one of the associated companies subject to certain terms and conditions. 

Provision for impairment in value of investments 

Movements in provision for impairment in value of investments during the year are as follows: 

At beginning of the year 4,973 5,271 

Charge to statement of profit and loss 4,865 442 

Impairment written off against provision – (742) 

Translation difference 7 2 

At end of the year 9,845 4,973 

During the year, the Group made an impairment provision of $4.4 million for one of its associated companies as it had been 

delisted from the Hong Kong Stock Exchange. The impairment provision was made based on its estimated recoverable 

amount at the end of the current year. 

Provision for impairment in value of a joint venture 

Movements in provision for impairment in value of a joint venture during the year are as follows: 

At beginning of the year – 2,999 

Charge to statement of profit and loss – 258 

Transfer to offset against the acquisition of property, plant and equipment – (3,257) 

At end of the year – – 

On 1 November 2005, a joint venture transferred its property, plant and equipment to its joint venture partners due to a 

restructuring of a loan agreement. The cost of the property, plant and equipment that was transferred to the Group amounted 

to $5,795,000 and was offset against the net investment in the joint venture.

161 



9. ASSOCIATED COMPANIES AND JOINT VENTURES (continued) 

The summarised financial information of the associated companies is as follows: 

GROUP 


$’000 $’000 

Results 

Turnover 2,892,730 2,523,005 

Net profit for the year 108,545 103,243 

Assets and liabilities 

Non-current assets 423,305 449,853 

Current assets 1,150,366 1,131,390 

Current liabilities (290,195) (715,258) 

Non-current liabilities (458,824) (102,693) 

824,652 763,292 

As at 31 December 2006, cumulative and current year’s unrecognised share of losses in associated companies amounted to 

$828,492 (2005: $696,146) and $448,049 (2005: $459,270) respectively. 

The Group’s share of the joint ventures’ results, assets and liabilities are as follows: 

Results 

Turnover 22,516 23,186 

Net profit for the year 228 1,993 

Assets and liabilities 

Non-current assets 5,362 4,241 

Current assets 34,500 27,945 

Current liabilities (21,253) (13,308) 

Non-current liabilities (172) (24) 

18,437 18,854





(a) Details of the associated companies are as follows: 

COUNTRY OF EFFECTIVE EQUITY 

INCORPORATION/ INTEREST HELD 

NAME OF ASSOCIATED COMPANY PRINCIPAL ACTIVITIES PLACE OF BUSINESS BY THE GROUP 


% % 

Aerospace Engineering Services Pty Ltd Maintenance and servicing Australia 50 50 

of aircraft 

Aerospace Engineering Services Pty Ltd Trustee of unit trust fund Australia 50 50 

Unit Trust 

1988 JV Pte. Ltd. Promoting and organising Singapore 50 50 

trade exhibitions in Singapore 

for systems, equipment, products 

and services in aerospace and 

defence-related applications on 

a biennial basis 

Composite Technology International Pte Ltd Repairing and rebuilding Singapore 33.33 33.33 

helicopter rotor blades 

Eurocopter South East Asia Private Limited Selling, maintaining and Singapore 25 25 

overhauling of helicopters 

Shanghai Technologies Aerospace Aircraft and component People’s Republic 49 49 

Company Limited maintenance, repair, overhaul of China 

and other related maintenance 

business 

Singapore Precision Repair and Overhaul Repair and overhaul of aircraft Singapore 50 50 

Pte Ltd 

and helicopter landing gears 

and its related components 

Turbine Coating Services Pte Ltd Repair, refurbishment and Singapore 24.5 24.5 

upgrading of aircraft jet engine 

turbine blades and vanes 

Turbine Overhaul Services Pte Ltd Repair and service of gas and Singapore 49 49 

steam turbine components 

Autoscan Technology Pte Ltd Computer consultancy, trading Singapore 25.8 25.8 

in computerised information 

retrieval equipment and related, 

rendering of technical support 

services and printing and trading 

of labels and book binding

163 








% % 

COMAT Training Services Pte Ltd Operating of a computer Singapore 45.47 45.47 

training school, providing training 

in computer software and 

applications 

ECS Holdings Limited Relating to investment holding Singapore 20.86 20.86 

and the distribution of information 

technology products 

Green Dot Internet Services Pte Ltd Web hosting services and Singapore 22.66 23.8 

development of e-commerce 

applications 

Infowave Pte Ltd Design, development and Singapore 43 43 

supply of mobile computing and 

wireless communications 

products and solutions 

iWOW Technology Pte Ltd To carry out research and Singapore 21.74 26.6 

development, consultancy 

services in telecommunication, 

electrical and related fields 

Knowledge Alive Pte. Ltd. Offer technologically-driven Singapore 45.47 45.47 

learning and knowledge solutions, 

products and services to corporate, 

tertiary and workforce markets 

Mobile Solutions and Payment Mobile-commerce and mobile- Singapore 21.57 21.57 

Services Pte Ltd @ 

commerce related activities 

mPayment Pte Ltd To provide internet and Singapore 31.78 31.78 

telecommunication related services 

and consultancy services in 

information technologies 

PM-B Project Management Business Relate to mechanical, electrical Thailand 34.3 – 

(Thailand) Ltd 

and engineering works to design, 

build and provide facility 

management services for mission 

critical environments such as data 

centres, disaster recovery and 

business continuity sites









% % 

PolarSat Inc ß Development, manufacturing and Canada 38.98 38.98 

marketing of multimedia VSAT 

(Very Small Aperture Terminals) 

and Satcom satellite networks 

Prescient Systems & Technologies Pte. Ltd. Business of developing, producing Singapore 47.84 47.84 

and marketing non-real time and 

real time instrumentation systems 

for defence and commercial 

applications 

RF Korea Inc. ß Manufacture and sell wireless Korea 22 22 

communication devices and 

related equipments 

Sandz Solutions (Singapore) Pte Ltd Providing enterprise computing Singapore 25 25 

solutions and trading in computer 

and peripherals 

Sandz Solutions (HK) Pte Ltd Provider of enterprise business Hong Kong 25 25 

IT solutions 

Sentry Technologies Pte Ltd * Design, development and sale Singapore 35 35 

of computer security products 

Sino Stride Technology (Holdings) Limited Development and provision of Cayman Islands 28.01 28.01 

system integration solutions 

ST LogiTrack Pte Ltd Development and sales of radio Singapore 39.06 50 

frequency identification 

applications in the logistics and 

related industries 

Trusted Hub Ltd Provision of an integrated Singapore 21.8 21.8 

trusted environment for secured 

transactions and e-commerce 

WizVision Pte. Ltd. Providing information technology Singapore 22.8 22.8 

services and trading of computer 

accessories 

WizVision (HK) Pte Limited Investment holding Hong Kong 22.8 22.8

165 








% % 

1699590 Ontario Inc ß Research and development Canada 49 – 

CIS-Oerlikon Pte Ltd ** Dormant Singapore – 50 

CityCab Pte Ltd Rental of taxis and provision Singapore 46.5 46.5 

of premier bus service, charge 

card facilities and travel related 

services 

Defence Electronics of Singapore Pte Ltd Manufacture of fuses Singapore 49 49 

Nusantara Technologies Sdn. Bhd. Provision of non-destructive Malaysia 49 49 

testing services, ultrasonic flaw 

detection and gauging survey 

and pressure gauge calibration 

Timoney Holdings Limited Design and prototyping services Republic of Ireland 25 25 

and component supply for the 

automotive and aerospace 

engineering sectors 

Anchorville Pte Ltd ## Dormant Singapore 30 30 

AquaGen International Pte Ltd ## Dormant Singapore 25 25 

PT SSE-Van der Horst Indonesia Provision of precision Indonesia 24 24 

engineering services 

2006 JV Pte. Ltd. (formerly known as Promoting and organising trade Singapore 50 50 

Asian Aerospace 2006 Pte. Ltd.) 

exhibitions in Singapore for 

systems, equipment, products 

and services in aerospace and 

defence-related applications on 

a biennial basis 

NanoScience Innovation Pte Ltd Research and development, Singapore 27.06 38.33 

manufacturing, distributing and 

trading of ultra fine structure, 

especially nano-scale, materials, 

devices, equipment and 

intellectual properties 

* During the year, this entity has made an application to the Accounting and Corporate Regulatory Authority (“ACRA”) for 

strike off from the Registrar. 

** During the year, this entity was struck off from the Registrar with ACRA. 

## 

These associated companies are under compulsory winding up by the Court. 

@ 

The company is under the process of members’ voluntary liquidation.





(b) Details of joint ventures are as follows: 



NAME OF JOINT VENTURE PRINCIPAL ACTIVITIES PLACE OF BUSINESS BY THE GROUP 


% % 

GFM Electronics S.A. de C.V. Distribution and sales of high Mexico 50 50 

technology systems, services and 

products in the communications 

area, as well as electronics 

systems, principally closed 

circuits and alarms for airports, 

malls, stadiums and highways 

ATREC Pte. Ltd. Research and technology Singapore 50 – 

development in advanced 

materials for both defence 

and commercial applications 

Beijing Zhonghuan Kinetics Develop, manufacture and sale People’s Republic 50 50 

Heavy Vehicles Co. Ltd. of specialised heavy-duty of China 

vehicles and sale of related 

spare parts and provision of 

relevant technical consultancy 

and after sale technical 

support services 

SMART Systems Pte Ltd Life systems integration of Singapore 50 50 

weapon system 

STAR Automotive Center (Guangzhou) Provide automotive services, People’s Republic 50 50 

Co., Ltd. including automotive fixing, of China 

maintaining, service, automotive 

examination and maintenance, 

damage fixing, automotive 

beautifying and decorating, 

trading and supplying of 

automotive spare parts, training, 

technology consultation, tow truck 

service and after sales technical 

support, etc. 

Takata CPI Singapore Pte Ltd Manufacture of pyrotechnic Singapore 49 49 

components for seatbelts and 

air bags used in motor vehicles 

Halter-Bollinger Joint Venture LLC To bid and secure US boat USA 50 50 

fabrication contracts for its 

shareholders

167 






NAME OF JOINT VENTURE PRINCIPAL ACTIVITIES PLACE OF BUSINESS BY THE GROUP 


% % 

Joint Shipyard Management Services Construction and managing Singapore 30 30 

Pte Ltd 

workers’ dormitories 

ß 

Not required to be audited under the law in the country of incorporation. 

All associated companies and joint ventures that are required to be audited under the law in the country of incorporation, are 

audited by Ernst & Young, Singapore, except for the following: 

NAME OF ASSOCIATED COMPANY/JOINT VENTURE 

NAME OF ACCOUNTING FIRM 

1988 JV Pte. Ltd. KPMG, Singapore 

Composite Technology International Pte Ltd 

Deloitte and Touche, Singapore 

Eurocopter South East Asia Private Limited 

KPMG, Singapore 

Shanghai Technologies Aerospace Company Limited Ernst & Young, Shanghai 

Turbine Coating Services Pte Ltd 

PricewaterhouseCoopers, Singapore 

Turbine Overhaul Services Pte Ltd 

PricewaterhouseCoopers, Singapore 

Autoscan Technology Pte Ltd 

Lee Seng Chan & Co 

COMAT Training Services Pte Ltd 

BDO Raffles 

ECS Holdings Limited 


GFM Electronics S.A. de C.V. 

PricewaterhouseCoopers, Mexico 

Green Dot Internet Services Pte Ltd 


Infowave Pte Ltd 

Lee Seng Chan & Co 

iWOW Technology Pte Ltd 

LW Ong & Co 

Knowledge Alive Pte. Ltd. 

BDO Raffles 

Mobile Solutions and Payment Services Pte Ltd 


mPayment Pte Ltd 

Thong & Lim 

PM-B Project Management Business (Thailand) Ltd SCI Audit Plus Limited 

Sandz Solutions (Singapore) Pte Ltd 

Jee Ah Chian & Co 

Sandz Solutions (HK) Pte Ltd 

Ting Ho Kwan & Chan 

Sino Stride Technology (Holdings) Limited 

Ernst & Young, Hong Kong 

ST LogiTrack Pte Ltd 


Trusted Hub Ltd 


WizVision Pte. Ltd. 

B H Gan & Co 

WizVision (HK) Pte Limited 

W.M Yuen & Co 

Beijing Zhonghuan Kinetics Heavy Vehicles Co. Ltd. Ernst & Young, Beijing 

CityCab Pte Ltd 

Deloitte and Touche, Singapore 

Nusantara Technologies Sdn. Bhd. 

Deloitte Kassimchan, Malaysia 

STAR Automotive Center (Guangzhou) Co., Ltd. 


Timoney Holdings Limited 

KPMG, Ireland 

PT SSE-Van der Horst Indonesia 

Kap Fitradewata Teramihardja, Bap, Indonesia 

2006 JV Pte. Ltd. KPMG, Singapore 

NanoScience Innovation Pte Ltd 

Wong Mun Piaw & Co




10. INVESTMENTS 

GROUP 


$’000 $’000 

Quoted investments (Available-for-sale) 

Equity shares, at fair value: 

Related corporations – 710 

Non-related corporations 19,044 51,925 

Total quoted investments 19,044 52,635 

Unquoted investments 

Equity shares 

Related corporations, at cost 955 956 

Non-related corporations, at cost 33,519 42,781 

Non-related corporations, at fair value 1,321 2,401 

35,795 46,138 

Venture capital funds and limited partnership, at fair value 4,079 5,539 

Convertible loans to non-related corporations # 1,258 882 

Short-term interest rate fund, at fair value – 20,109 

Loan to a related corporation 4,405 4,424 

Unit trust 42 – 

45,579 77,092 

Impairment in value of unquoted investments: 

Unquoted investments, stated at cost (36,765) (28,380) 

Total unquoted investments 8,814 48,712 

Total investments 27,858 101,347 

# 

During the current financial year, a subsidiary extended an interest-free convertible loan to an investee company at a 

nominal value of US$300,000. The subsidiary is entitled, at any time during the following five years from the date of 

disbursement of the loan, to convert from time to time into share equity of the investee company for the entire amount or 

such portion thereof on the basis of one ordinary share for every $1 of the loan amount. 

Included in the convertible loans is an amount of $700,000 (2005: $700,000) extended by a subsidiary to an investee 

company at an interest rate of 1% (2005: 1%) above bank prime rate per annum. This loan is convertible to shares in the 

investee company. 

The short-term interest rate fund in 2005 was the Fullerton Short-Term Interest Rate (“FSTIR”) Fund, an open end fund. FSTIR 

Fund is a pooled fund organised as a unit trust managed by Fullerton Fund Management Company Ltd, an indirect wholly 

owned subsidiary of Temasek Holdings (Private) Limited. Returns on FSTIR are benchmarked at 3-month Singapore Interbank 

bid (SIBID) rate. As at 31 December 2006, the investment has been fully redeemed.

169 



10. INVESTMENTS (continued) 

Impairment in value of unquoted investments 

Movements in impairment in value of unquoted investments during the year are as follows: 

GROUP 


$’000 $’000 


Charge to statement of profit and loss 8,428 3,905 

Translation difference (43) (2) 

Utilised – (54) 


11. INTANGIBLE ASSETS 

(a) Goodwill 

GROUP 


$’000 $’000 

(Restated) 

Cost 


Acquisition of subsidiaries in prior year, as previously reported – 305,763 

Finalisation of purchase price allocation – (49,647) 

Acquisition of subsidiaries in prior year, as restated – 256,116 

Acquisition of subsidiaries in current year 224,886 – 

Acquisition of additional interest in a subsidiary 222 – 

Adjustment of goodwill – 3,114 

Translation difference (29,952) (634) 


Impairment 


Impairment for the year 8,135 4,483 

Translation difference 24 (16) 


Net book value 494,818 307,821




11. INTANGIBLE ASSETS (continued) 

(b) Other intangible assets 

COMMERCIAL 

AND 

INTELLECTUAL CORPORATE OTHER 

DEFERRED PROPERTY CLUB INTANGIBLE 

EXPENDITURE* RIGHTS MEMBERSHIP ASSETS TOTAL 

$’000 $’000 $’000 $’000 $’000 

The Group 

Cost 

At 1.1.2005 – 5,101 – – 5,101 

Additions – 10 – – 10 

Acquisition of subsidiaries 1,076 – – – 1,076 

Translation difference – 46 – – 46 

Reclassified from investments – – 1,345 – 1,345 

As at 31.12.2005, as previously reported 1,076 5,157 1,345 – 7,578 

Finalisation of purchase price allocation # – 34,124 – – 34,124 

At 31.12.2005, as restated and at 1.1.2006 1,076 39,281 1,345 – 41,702 

Additions 4,742 520 – – 5,262 

Acquisition of subsidiaries 811 18,098 – 10,256 29,165 

Translation difference – (3,498) – (270) (3,768) 

At 31.12.2006 6,629 54,401 1,345 9,986 72,361 

Accumulated amortisation 

At 1.1.2005 – 2,589 – – 2,589 

Amortisation for the year 413 796 313 – 1,522 

Translation difference – 32 – – 32 

Impairment loss reclassified from investments – – 932 – 932 

Write-back of impairment loss – – (234) – (234) 

At 31.12.2005 and 1.1.2006 413 3,417 1,011 – 4,841 

Amortisation for the year 424 3,823 28 860 5,135 

Translation difference (1) (299) – (26) (326) 

Impairment loss + – 818 – – 818 

At 31.12.2006 836 7,759 1,039 834 10,468 

Net book value 

At 31.12.2006 5,793 46,642 306 9,152 61,893 

At 31.12.2005 663 35,864 334 – 36,861 

* Deferred expenditure includes a carrying amount of $4.6 million, of which amortisation has not commenced as the 

intangible asset has not begun to generate revenue. 

# 

These adjustments relate to the purchase price allocation to goodwill, intangible assets (excluding goodwill) and other 

assets for iDirect Inc., which was finalised during the current year. 

+ 

During the year, an impairment of $818,000 was recognised in respect of the commercial and intellectual property rights 

of a product for which sales prospects have become uncertain.

171 




(c) Total intangible assets 

GROUP 


$’000 $’000 

(Restated) 

Net book value 

– Related to subsidiaries 556,711 344,682 

Impairment testing of goodwill 

Goodwill acquired through business combinations has been allocated to the Group’s cash-generating units (“CGU”) identified 

according to each individual business unit, for impairment testing. Goodwill in relation to SAS Component Group A/S, the 

group of companies under Brightspot Interactive Learning Pte. Ltd. and PM-B Pte Ltd, MÄK Technologies, Inc. and VT LeeBoy, 

Inc. has been determined provisionally and has not been allocated for impairment testing. 

Carrying amount of goodwill allocated to each of the CGU: 

Bournemouth Aviation Services Company Limited – 1,389 

SAS Component Group A/S *^ 16,069 – 

ST Aviation Resources Pte Ltd – 615 

Brightspot Interactive Learning Pte. Ltd. and its subsidiary * 2,293 – 

DataMark Technologies Pte Ltd 124 124 

iDirect, Inc. 187,532 204,966 

MÄK Technologies, Inc. * 24,695 – 

PM-B Pte Ltd and its subsidiaries * 12,976 – 

Ripple Systems Pty Ltd – 2,375 

STELCOMMS Pte. Ltd. 5 – 

STELOP Pte. Ltd. 1,732 1,732 

Silvatech Group – 3,821 

VT Specialized Vehicles Corporation 42,565 48,841 

STAR Automotive Center (Zhejiang) Co., Ltd. 222 – 

VT LeeBoy, Inc. * 166,956 – 

Miltope Corporation 39,649 43,958 

494,818 307,821 

^ Included in the carrying amount is purchased goodwill of $19,045,000 and negative goodwill arising on consolidation of 

$2,976,000. 

* The purchase price allocation to goodwill, intangible assets (excluding goodwill) and other assets is currently being 

assessed and is expected to be finalised within 12 months from the date of acquisition as disclosed in Note 8(b). 

The recoverable amounts of the CGUs are determined based on value-in-use calculations, except for SAS Component Group 

A/S, the group of companies under Brightspot Interactive Learning Pte. Ltd. and PM-B Pte Ltd, MÄK Technologies, Inc. and 

VT LeeBoy, Inc. as described above. 

The value-in-use calculations use cash flow projections based on financial budgets approved by management. Management 

have considered and determined the factors applied in these financial budgets which include budgeted gross margins and 

average growth rates. The budgeted gross margins are based on past performance and its expectation of market development. 

Average growth rates used are consistent with forecasts included in industry reports. The discount rate applied is assumed at 

6.6% (2005: 6.1%) for value-in-use calculations, which is also the Group’s weighted average cost of capital.





During the year, the carrying goodwill relating to: 

– Bournemouth Aviation Services Company Limited was fully impaired as the company had gone under voluntary liquidation 

– ST Aviation Resources Pte Ltd was fully impaired due to the uncertainty in its future business developments 

– Ripple Systems Pty Ltd was fully impaired based on an assessment of its projected future cash flow 

– Silvatech Group was fully impaired due to the continued uncertainty in its business and operating environment 

12. LONG-TERM RECEIVABLES 

(a) Long-term receivables comprise: 

GROUP 

COMPANY 

2006 2005 2006 2005 

$’000 $’000 $’000 $’000 

Housing and car loans and advances to staff 975 1,171 – 1 

Trade debtors * 2,657 6,600 – – 

Other debtors 99 – – – 

Loans to: 

Associated company # 140 – – – 

Joint venture^ 1,808 8,256 – – 

Loans to third parties 11,090 12,097 – – 

Allowance for doubtful loans to third parties (11,090) (12,097) – – 

– – – – 

5,679 16,027 – 1 

Receivable: 

Within 1 year 476 698 – 1 

After 1 year 5,203 15,329 – – 

5,679 16,027 – 1 

* Long-term trade debtors are unsecured and charged with half-yearly interest rate at LIBOR plus 0.5% per annum (2005: 

LIBOR plus 0.5% per annum) 

# 

Loan to an associated company is unsecured and charged at an interest rate of 3% (2005: nil) per annum 

^ Loan to joint venture bears interest of 4% (2005: nil) per annum, is unsecured and is repayable by 31 August 2008. 

Movements in allowance for doubtful loans to third parties are as follows: 

GROUP 


$’000 $’000 


Write-back to statement of profit and loss (944) (1,702) 



Loans and receivables are carried at amortised cost and are subjected to impairment.

173 



12. LONG-TERM RECEIVABLES (continued) 

(b) Included in the loans to third parties are: 

(i) an amount of $2,010,000 (2005: $2,954,000) which is secured by the third party’s investment in a unit trust and 

the loan is repayable over a period of 12 years commencing from 1996. Interest is chargeable at 15% per annum 

calculated on the reducing balance basis. 

(ii) an amount of approximately $8,312,000 (2005: $8,312,000) secured by intellectual property rights of that entity 

and is not expected to be repaid within the next 12 months. Interest is repriced every month and chargeable at the 

US dollar prime rate plus 2% (2005: 2%) per annum, which is also the effective interest rate. The loan is convertible 

to shares of that entity, subject to certain terms and conditions. In the prior year, a notice was given to that entity to 

convert the loan to shares of that entity but the conversion has not been effected as at the end of the year. 

No interest income has been accrued for this financial year for the loans stated due to the uncertainty over the 

collectibility of the interest income. 

(iii) a bridging loan of $768,150 (US$500,000) (2005: $830,650 (US$500,000)) extended to a third party. The bridging 

loan is secured by way of a Deed of Debenture which creates a floating charge over the assets of the third party. 

This loan is treated as a net investment in the third party and is not expected to be repaid and is fully provided since 

financial year 2005. The loan is stated at cost and has been fully provided for due to uncertainty of collectibility. 

Therefore, it is not practicable to determine its fair value. 

13. DEFERRED TAX ASSETS 

GROUP 


$’000 $’000 

(Restated) 


(Write-back of provision)/provision during the financial year (4,613) 631 

Acquisition of subsidiaries in prior year, as previously reported – 4,905 

Finalisation of purchase price allocation – 15,523 

Acquisition of subsidiaries in prior year, as restated – 20,428 

Acquisition of subsidiaries in current year 18,783 – 

Translation differences (3,158) (219) 

Transfer (to)/from provision for taxation (3,190) 4,804 

Changes in fair value of available-for-sale financial assets (1,218) – 

Changes in fair value of derivative financial instruments designated in cash flow hedges 161 385 


The deferred tax assets arise as a result of: 

Unabsorbed capital allowances and unutilised tax losses 39,257 23,698 

Allowance for doubtful debts and stock obsolescence 24,585 23,955 

Provision for warranties 32,561 29,982 

Provision for liquidated damages 1,879 1,579 

Provision for foreseeable losses 7,804 9,834 

Intangible assets (19,109) – 

Other temporary differences 30,257 21,368 

Changes in fair value of derivative financial instruments designated in cash flow hedges 403 456 

117,637 110,872




14. STOCKS AND WORK-IN-PROGRESS 

GROUP 


$’000 $’000 

Stocks of equipment and spares 504,940 294,584 

Work-in-progress in excess of progress billings 

Work-in-progress, including profits recognised 1,887,083 1,828,880 

Progress billings (1,288,606) (1,311,278) 

598,477 517,602 

Total stocks and work-in-progress at lower of cost and net realisable value 1,103,417 812,186 

Progress billings in excess of work-in-progress 

Work-in-progress, including profits recognised 1,499,763 1,294,527 

Progress billings (1,798,701) (1,585,831) 

(298,938) (291,304) 

Stocks are stated after allowance for stock obsolescence of $106,230,000 (2005: $102,654,000) and work-in-progress in 

excess of progress billings are stated after provision for foreseeable losses of $26,311,000 (2005: $29,907,000). 

15. TRADE DEBTORS 

Trade debtors 872,270 660,539 

Allowance for doubtful debts (65,980) (75,091) 

806,290 585,448 

Unbilled receivables 51,921 80,018 

858,211 665,466 

Trade debtors denominated in currencies other than the functional currencies as at 31 December 2006 are as follows: 

• $222,880,000 (2005: $189,236,000) denominated in US dollars 

• $34,277,000 (2005: $63,447,000) denominated in Euro 

Movements in allowance for doubtful debts during the year are as follows: 


Write-back to statement of profit and loss (7,378) (12,426) 

Bad debts written off against allowance (2,401) (2,829) 

Arising from acquisition of subsidiaries 1,920 3,061 

Translation difference (1,252) 157 

At end of the year 65,980 75,091

175 



16. DUE FROM RELATED CORPORATIONS 

GROUP 

COMPANY 


$’000 $’000 $’000 $’000 

Due from: 

Related corporations 516,440 898,703 238,783 275,133 

Included in the amount due from related corporations are loans amounting to $511,484,000 (2005: $892,651,000) and 

$238,757,000 (2005: $275,107,000) from the Group and the Company respectively. 

These loans are guaranteed by Fullerton Management Pte Ltd (“Fullerton”), a wholly owned subsidiary of Temasek Holdings 

(Private) Limited and mature on varying periods within 3 months (2005: 2 months) from the financial year end. Interest rates 

range from 2.45% to 5.40% (2005: 1.37% to 4.37%) per annum, which are also the effective interest rates. 

17. ADVANCES AND OTHER DEBTORS 

GROUP 

COMPANY 


$’000 $’000 $’000 $’000 

Advance payments to suppliers 114,215 140,828 – – 

Other debtors, deposits and prepayments 20 91,890 67,887 1,413 3,782 

Due from: 

Subsidiaries – – 197,759 118,748 

Associated companies 21 7,416 9,796 – – 

Joint ventures 13,455 23,623 – – 

Derivative financial instruments 2,063 428 – – 

229,039 242,562 199,172 122,530 

Amount due from joint ventures is stated after deducting allowance for doubtful debts of $nil (2005: $1,330,000). 

18. AMOUNTS UNDER FUND MANAGEMENT 

GROUP 


$’000 $’000 

Principal sum of amounts under fund management, at market value 228,173 311,062 

Amounts under fund management are classified as available-for-sale financial assets with the fair value movements taken to 

equity. However, any deficiency in fair value below principal amount is recognised to the extent of the guaranteed amount. This 

applies to impairment assessment as well. 

The terms of the fund management agreements, which are for periods ranging from 2 to 3 years (2005: 2 to 3 years), provide 

for the following: 

(a) the guarantee of the return of the principal sums from 95% to 100% (2005: 95% to 100%) by the fund managers at the 

end of the relevant fund management period; 

(b) the fees payable to the fund manager include a share, in specified proportions, of any surplus (determined at the end of 

the relevant fund management period) arising from the management of the fund; and




18. AMOUNTS UNDER FUND MANAGEMENT (continued) 

(c) the Group can, pursuant to the terms, terminate the agreement by giving one month prior notice in writing to the fund 

managers. In the event of early termination, the guarantee of the return of the principal sum will not be applicable. 

Value of assets under fund management can be analysed as follows: 

GROUP 


$’000 $’000 

Quoted equity investments at market value 55,481 60,402 

Quoted bond investments at market value 167,220 223,283 

Cash 5,472 27,377 

228,173 311,062 

19. BANK BALANCES AND OTHER LIQUID FUNDS 

GROUP 

COMPANY 


$’000 $’000 $’000 $’000 

Fixed deposits with financial institutions 333,695 148,187 90,645 25,743 

Cash and bank balances 291,028 158,141 55,010 21,663 

624,723 306,328 145,655 47,406 

Fixed deposits with financial institutions mature on varying periods within 12 months (2005: 12 months) from the financial 

year end. Interest rates range from 1.71% to 5.55% (2005: 0.08% to 5.1%) per annum, which are also the effective interest 

rates. 

Cash and bank balances of $1,633,000 (2005: $nil) have been placed with banks as security for letters of credit issued to 

third party. 

20. OTHER DEBTORS, DEPOSITS AND PREPAYMENTS 

Deposits 6,875 8,259 168 167 

Prepayments 33,314 5,650 193 233 

Interest receivable 3,318 4,088 717 658 

Other recoverables 23,876 11,519 14 2,381 

Non-trade debtors 24,507 38,371 321 343 

91,890 67,887 1,413 3,782 

21. DUE FROM ASSOCIATED COMPANIES 

GROUP 


$’000 $’000 

Trade balances 7,566 9,750 

Non-trade balances 243 241 

Allowance for doubtful debts – trade (393) (195) 

7,416 9,796

177 



22. CREDITORS AND ACCRUALS 


$’000 $’000 $’000 $’000 

Trade creditors 545,766 495,229 – – 

Other creditors and accruals 26 787,469 641,189 49,458 37,189 

Due to: 

Subsidiaries – – 620 769 

Related corporations 2,670 3,263 – 65 

Associated companies 841 2,171 – – 

Joint ventures 2,114 722 – – 

Derivative financial instruments 68 363 – – 

1,338,928 1,142,937 50,078 38,023 

Trade creditors denominated in currencies other than the functional currencies as at 31 December 2006 are as follows: 

• $31,440,000 (2005: $31,572,000) denominated in US dollars 

• $32,210,000 (2005: $85,191,000) denominated in Euro 

23. PROVISIONS 

GROUP 


$’000 $’000 

Provision for: 

Warranties 162,806 149,910 

Liquidated damages 9,396 7,893 

Foreseeable losses 12,709 19,261 

184,911 177,064 

(a) Movements in provision for warranties during the year are as follows: 


Charge to statement of profit and loss 23,855 14,569 

Provision utilised (11,639) (8,593) 

Translation difference (1,689) 122 

Acquisition of subsidiaries 2,369 4,300 


(b) Movements in provision for liquidated damages during the year are as follows: 


Charge to statement of profit and loss 2,020 67 

Provision utilised (496) (193) 


Acquisition of subsidiaries – 43 





23. PROVISIONS (continued) 

(c) Movements in provision for foreseeable losses during the year are as follows: 

GROUP 


$’000 $’000 


Write-back to statement of profit and loss (448) (873) 

Provision utilised (6,104) (2,701) 

Translation difference – 2 


24. SHORT-TERM BANK LOANS (UNSECURED) 

EFFECTIVE 

GROUP 

INTEREST RATE MATURITY 2006 2005 

% $’000 $’000 

Bank loans 4.65% to 5.85% Within 1 year 595,850 323,594 

The bank loans are denominated in US dollars, Sterling pounds, Euro and Australian dollars. 

25. LEASE OBLIGATIONS 

A subsidiary leases certain land, buildings, and equipment from a foreign Airport Authority (the “Authority”) under a capital 

lease related to industrial revenue bonds issued by the Authority. Assets being leased are pledged as collateral against the 

bonds. The bonds have staggered maturity dates and the lease payments have been structured to coincide with the staggered 

maturities of the bonds with the final payment due on 1 November 2012, the expiration date of the lease. 

In connection with the bond issue, the subsidiary entered into a letter of credit agreement for approximately US$10,610,000, 

which is used to guarantee payments on the bonds in the event that the subsidiary is unable to make required lease payments. 

The letter of credit expires on 3 April 2007. 

The subsidiary also leases certain land, buildings, and equipment from the Authority under an operating lease. The lease term 

coincides with the term of the capital lease. 

The obligations under the finance lease to be paid by the subsidiary are as follows: 

MINIMUM 

PRESENT 

LEASE 

VALUE OF 

PAYMENT INTEREST PAYMENTS 

$’000 $’000 $’000 


1 to 5 years 11,109 (1,943) 9,166 

After 5 years 2,195 (96) 2,099 

Total 13,304 (2,039) 11,265 

Discount (15) – (15) 

13,289 (2,039) 11,250 

Repayable: 

Within 1 year 2,137 

After 1 year 9,113 

11,250

179 



25. LEASE OBLIGATIONS (continued) 

MINIMUM 

PRESENT 

LEASE 

VALUE OF 

PAYMENT INTEREST PAYMENTS 

$’000 $’000 $’000 

2005 

1 to 5 years 12,657 (2,366) 10,291 

After 5 years 4,647 (315) 4,332 

Total 17,304 (2,681) 14,623 

Discount (31) – (31) 

17,273 (2,681) 14,592 

Repayable: 

Within 1 year 2,391 

After 1 year 12,201 

14,592 

Lease terms do not contain restrictions concerning dividends, additional debt or further leasing. 

26. OTHER CREDITORS AND ACCRUALS 

GROUP 

COMPANY 


$’000 $’000 $’000 $’000 

Non-trade creditors 14,372 24,720 3,342 2,197 

Purchase of property, plant and equipment 1,209 45 – – 

Accrued operating expenses 755,170 615,288 46,116 34,992 

Accrued interest payable 6,375 1,136 – – 

Employee benefit liabilities 10,343 – – – 

787,469 641,189 49,458 37,189 

27. DEFERRED INCOME 

GROUP 


$’000 $’000 


Additions 1,975 3 

Acquisition of subsidiary – 508 

8,197 6,222 

Less: deferred income recognised to-date (4,096) (3,919) 


Movements in deferred income recognised to-date are as follows: 


Recognised in statement of profit and loss 132 268 

Translation difference 45 (5) 





28. DEFERRED TAX LIABILITIES 

GROUP 

COMPANY 


$’000 $’000 $’000 $’000 

At beginning of the year 7,751 8,554 190 161 

(Write-back of provision)/provision during the financial year (5,025) (2,563) 95 29 

Translation difference (433) 15 – – 

Acquisition of subsidiaries 10,771 2,791 – – 

Changes in fair value of available-for-sale financial assets 2,126 (1,046) – – 

At end of the year 15,190 7,751 285 190 

The deferred tax liabilities arise as a result of: 

Excess of net book value over tax written down value of 

property, plant and equipment 913 1,495 75 59 

Allowance for doubtful debts and stock obsolescence (271) (129) – – 

Unremitted offshore interest income – 10 – – 

Other temporary differences (48) 737 210 131 

Property, plant and equipment fair value adjustment arising 

from acquisition of subsidiaries 2,589 2,784 – – 

Changes in fair value of available-for-sale financial assets 2,126 2,854 – – 

Intangible assets 9,881 – – – 

15,190 7,751 285 190 

29. LONG-TERM BANK LOANS 

EFFECTIVE 

GROUP 

INTEREST RATE MATURITY 2006 2005 

% $’000 $’000 

Bank loans 3.955 – 8.25 Up to 2012 277,384 10,568 

Repayable: 

Within 1 year 6,859 9,430 

After 1 year 270,525 1,138 

277,384 10,568 

The bank loans are denominated in US dollars and Euro and secured by assets of subsidiaries. 

Loans amounting to $271,461,000 are at EURIBOR with margin ranging from 0.5% to 1.1% and secured by a floating 

charge over a subsidiary’s plant and machinery.

181 



30. OTHER LOANS 

Included in other loans are: 

(a) US dollar denominated term notes of $1.5 million (US$1.0 million) (2005: $1.7 million (US$1.0 million)) and $0.3 million 

(US$0.2 million) (2005: $0.4 million (US$0.2 million)) owing to the Pennsylvania Industrial Development Authority and 

the Industrial Properties Corporation, respectively, by a US entity of the Group. These notes are secured by assets of the 

entity and bear interest, respectively, at 2.75% and 4.0% (2005: 2.75% and 4.0%) per annum, which are also the effective 

interest rates, and are payable through 1 July 2019 and 28 June 2019, respectively. 

Another US dollar denominated term note of $0.6 million (US$0.4 million) (2005: $0.6 million (US$0.4 million)) is owed 

by the same entity to the Pennsylvania Department of Community and Economic Development. This note is unsecured, 

bears interest of 2.75% (2005: 2.75%) per annum, which is also the effective interest rate, and is payable through 

1 February 2012. 

(b) an amount of $194,000 (2005: $194,000) relating to a long-term loan from a minority shareholder of a subsidiary. The 

loan is unsecured, interest-free and the shareholder has indicated that they will not request for the repayment of the loan 

within the next 12 months. 

(c) Included in other loans in the prior year are the following: 

– an amount of $669,000 relating to a loan of an overseas subsidiary. The loan has been repaid during the year. 

– an amount of $2,843,000 relating to short-term loans from minority shareholders of a subsidiary. The loans were 

unsecured, bore interest at 7% per annum, which was also the effective interest rate. The loans were forgiven during 

the year. 

31. DUE TO A SUBSIDIARY 

Amount due to a subsidiary in the Company is unsecured, interest-free and is not repayable in the foreseeable future. 

32. TURNOVER 

Turnover represents invoiced value of sales/services less returns and discounts given and billings recognised on contracts as 

follows: 

GROUP 


$’000 $’000 

Sale of goods 2,495,426 1,330,439 

Service income 1,990,332 2,007,456 

4,485,758 3,337,895




33. OTHER OPERATING INCOME 

GROUP 


$’000 $’000 

Commission income 1,326 470 

Dividend income 

– quoted equity investments 506 2,136 

– unquoted equity investments 9,785 876 

Interest income 

– related corporations 24,287 19,483 

– bank deposits 14,638 10,212 

– staff loans 28 30 

– others 1,198 885 

Impairment in value of investments 

– unquoted investments 10 (8,428) (3,905) 

– associated companies 9 (4,865) (442) 

Gain on disposal of investments 35,701 13,199 

Profit on maturity of amounts under fund management 6,491 6,947 

Fair value changes of financial instruments 

– gain on forward currency contract designated as 

hedging instrument in a fair value hedge 1,256 20 

Fair value of hedged items (1,411) 637 

Gain on dilution of interest in an associated company 571 – 

Others 7,051 4,299 

88,134 54,847

183 



34. PROFIT FROM CONTINUING OPERATIONS 

Profit from continuing operations is arrived at: 

GROUP 


$’000 $’000 

After charging 

Auditors’ remuneration: 

– auditors of the Company 1,555 1,406 

– other auditors 2,929 1,477 

Non-audit fees: 

– auditors of the Company 330 190 

– other auditors 1,000 309 

Fees and remuneration of directors 3,960 3,085 

Fees paid to a firm of which a director is a member 193 194 

Personnel expenses 35 1,245,704 901,682 

Depreciation of property, plant and equipment 7 130,676 79,092 

Allowance/(write-back of allowance) for: 

Stock obsolescence 9,330 5,169 

Doubtful debts – trade 15 (7,378) (12,426) 

Loans receivable 12 (944) (1,702) 

Provision/(write-back of provision) for: 

Foreseeable losses 23 (448) (873) 

Liquidated damages 23 2,020 67 

Warranties 23 23,855 14,569 

Provision for impairment in value of investment in a joint venture 9 – 258 

Property, plant and equipment written off 10,942 372 

Research, design and development expenses incurred 58,435 37,480 

Operating lease expenses 22,412 30,016 

Amortisation of other intangible assets 11 5,135 1,522 

Impairment of goodwill 11 8,135 4,483 

Impairment loss – property, plant and equipment 7 297 12,213 

Impairment of commercial and intellectual property rights 11 818 – 

And crediting 

Grants and subsidies received 1,204 1,464 

Write-back of impairment in value of other intangible assets 11 – 234 

Deferred income recognised 27 132 268




35. PERSONNEL EXPENSES 

GROUP 


$’000 $’000 

Wages and salaries* 1,042,644 745,377 

Pension contributions 61,850 54,526 

Share-based payments 9,885 8,587 

Other personnel expenses 131,325 93,192 

* Includes directors’ remuneration of $2,802,266 (2005: $2,207,748). 

1,245,704 901,682 

36. KEY MANAGEMENT PERSONNEL COMPENSATION 

The key management personnel compensation are as follows: 

Short-term employee benefits 30,608 25,754 

Other long-term benefits 7 2 

Share-based payments 7,020 2,207 

37,635 27,963 

37. OTHER INCOME, NET 

Gain on disposal of property, plant and equipment 11 1,241 

Losses arising from the impact of Hurricane Katrina (41,908) (26,716) 

Proceeds received/receivable from insurers (Hurricane Katrina) 41,118 18,734 

Exchange loss, net (3,914) (1,806) 

Rental income 3,798 4,043 

Income from settlement of a legal suit – 12,452 

Gain on sale of other assets – 8,032 

Short-term loans from minority shareholders forgiven 2,766 – 

Service fee 2,201 – 

Others 5,268 4,941 

9,340 20,921 

38. FINANCIAL EXPENSES 

Interest expense: 

Bank loans and overdrafts 41,182 7,063 

Finance lease 711 680 

Loans from minority shareholders of a subsidiary – 84 

Others 359 125 

42,252 7,952

185 



39. TAXATION 

GROUP 


$’000 $’000 

Current income tax 

Current year 115,321 95,554 

Overprovision in respect of prior years (13,762) (9,095) 

Associated companies 7,748 8,728 

109,307 95,187 

Deferred income tax 

Current year 894 (2,151) 

Overprovision in respect of prior years (1,306) (1,043) 

108,895 91,993 

Deferred income tax related to items charged or credited directly to equity: 

Net change in fair value of available-for-sale financial assets 3,344 (1,046) 

Net change in fair value of derivative financial instruments designated in cash flow hedges (161) (385) 

3,183 (1,431) 

The Group 

As at 31 December 2006, subsidiaries of the Group have potential tax benefits of approximately $40,125,000 (2005: 

$36,885,000) arising from unutilised tax losses, unabsorbed wear and tear allowances and other temporary differences, which 

are available for set-off against future taxable profits. These tax benefits have not been recognised in the financial statements 

due to the uncertainty of its recoverability. The use of these potential tax benefits is subject to the agreement of the tax 

authorities and compliance with certain provisions of the tax legislation of the respective countries in which the subsidiaries 

operate. 

A reconciliation between tax expense and the product of accounting profit multiplied by the applicable corporate tax rate for 

the years ended 31 December is as follows: 


Taxation at statutory tax rate of 20% 112,868 100,649 

Adjustments : 

Income not subject to tax (21,892) (7,022) 

Expenses not deductible for tax purposes 20,264 6,608 

Higher effective tax rates of other countries 15,523 4,057 

Overprovision in prior years, net (15,068) (10,138) 

Income subject to concessionary tax rates (4,444) (3,010) 

Deferred tax assets not recognised 6,403 10,468 

Deferred tax assets previously not recognised now recognised (3,432) (6,304) 

Others (1,327) (3,315) 

Current financial year’s taxation charge 108,895 91,993




40. DIVIDENDS 

GROUP 


$’000 $’000 

Final tax exempt dividend paid in respect of the previous financial year 

of 4.0 cents (2005: 4.0 cents) per share 116,580 115,686 

Special tax exempt (one-tier) dividend paid in respect of the previous 

financial year of 9.6 cents (2005: 8.39 cents) per share 279,792 242,653 

396,372 358,339 

Additional final dividend paid in respect of the previous year due to issue 

of shares under ESOS/ESOP before books closure date 3,101 1,430 

399,473 359,769 

The directors propose a final tax exempt (one-tier) dividend of 4.0 cents per share (2005: 4.0 cents) amounting to $117,850,000 

(2005: $116,580,000) and a special tax exempt (one-tier) dividend of 11.11 cents per share (2005: 9.6 cents) amounting to 

$327,277,000 (2005: $279,792,000), in respect of the year ended 31 December 2006. The dividends have not been recognised 

as a liability as at year end as it is subject to approval at the Annual General Meeting of the Company. 

41. EARNINGS PER SHARE 

Basic earnings per share 

The calculation for basic earnings per share is based on: 

Consolidated profit after taxation and minority interests 445,127 396,308 

GROUP 


Number of shares (’000) 

The weighted average number of ordinary shares is arrived at as follows: 

Issued ordinary shares at beginning of the year 2,914,496 2,892,165 

Weighted average number of ordinary shares issued during the year 23,234 13,701 

Weighted average number of ordinary shares 2,937,730 2,905,866 

Diluted earnings per share 

When calculating diluted earnings per share, the weighted average number of shares is adjusted for the effect of all dilutive 

potential ordinary shares. The number of unissued shares under option granted under the ESOS/ESOP and their exercise 

prices are set out in Note 3. The average fair value of one ordinary share during the financial year ended 31 December 2006 

was $2.97 (2005: $2.54) per share. The weighted average number of ordinary shares adjusted for the unissued shares under 

option is as follows: 

Number of shares (’000) 

Weighted average number of ordinary shares (used in the calculation of 2,937,730 2,905,866 

basic earnings per share) 

Weighted average number of unissued shares under option 134,206 114,494 

Number of shares that would have been issued at fair value (104,474) (93,972) 

Weighted average number of ordinary shares (diluted) 2,967,462 2,926,388

187 



42. RELATED PARTY INFORMATION 

In addition to related party information disclosed elsewhere in the financial statements, the Group has significant transactions 

with fellow subsidiaries within Temasek Group on terms agreed between the parties as follows: 

GROUP 


$’000 $’000 

Sales and services rendered 7,978 32,984 

Purchases and services received 41,398 76,381 

Property, plant and equipment purchases 3,145 294 

Interest income 24,287 19,483 

Dividend income 525 826 

Loan – 1,085 

Rental income 3,239 – 

43. CASH AND CASH EQUIVALENTS 

Cash and cash equivalents comprise the following: 

Fixed deposits with financial institutions 333,695 148,187 

Cash and bank balances 291,028 158,141 

Short-term loans to related corporation 511,484 892,651 

Bank overdrafts (1,737) (731) 

1,134,470 1,198,248 

Cash and cash equivalents denominated in currencies other than the functional currencies as at 31 December are as follows: 

US dollars 115,699 158,429 

Euro 75,157 96,757 

44. COMMITMENTS 

(a) Capital commitments 

Capital expenditure contracted but not provided for in the financial statements 60,625 34,312 

Share of associate’s capital commitments in respect of property, plant and equipment 2,443 4,451 

(b) Leases 

Future minimum lease payments under non-cancellable operating leases are as follows: 

Within 1 year 25,188 164,620 

Within 2 to 5 years 66,190 108,619 

After 5 years 129,041 133,583 

220,419 406,822 

The Group has several operating lease agreements for leasehold land and buildings, office premises and computers. The 

lease for the leasehold land and buildings and office premises contain renewal options but not purchase options. Certain 

leases contain escalation clauses but do not provide for contingent rents. Lease terms do not contain restrictions on the 

Group activities concerning dividends, additional debt or further leasing.




44. COMMITMENTS (continued) 

(c) Operating lease commitments – As lessor 

The Group has entered into a commercial lease on two of its engines. The non-cancellable lease has an average lease 

team of about 3 to 10 years. 

Future lease payment receivable under non-cancellable operating lease as at 31 December 2006 is as follows: 

GROUP 


$’000 $’000 

Not later than one year 807 561 

Later than one year but not later than 5 years 1,206 981 

Later than 5 years 769 – 

2,782 1,542 

(d) Investments 

(i) As at 31 December 2006, the Group has outstanding commitments in respect of uncalled capital to the extent of $0.2 

million (2005: $7.8 million) in a subsidiary. 

(ii) As at 31 December 2006, the Group has outstanding commitments in respect of uncalled capital to the extent of 

$18.2 million (US$11.8 million) (2005: $47.1 million (US$28.2 million)) in an associated company. 

(iii) As at 31 December 2006, in respect of investments in unquoted equity shares of venture capital fund companies, 

there is uncalled capital contribution amounting to $0.6 million (2005: $0.7 million) for the Group. 

(iv) As at 31 December 2006, the Group has outstanding commitments in respect of uncalled capital to the extent of $2.4 

million (2005: $nil) in a joint venture. 

On 2 November 2006, an agreement was signed between Singapore Technologies Kinetics Ltd and BF Utilities 

Limited to form an Equity Joint Venture Company in Pune, India. The joint venture company will have a registered 

capital of US$6 million to be contributed by each party in the proportion of 26% and 74% respectively, which is to be 

contributed over three years. 

45. CONTINGENT LIABILITIES (UNSECURED) 

(a) Corporate guarantees given by the Company to banks in respect of loan facilities extended to certain US subsidiaries 

amounted to $753 million (US$490 million) (2005: $481.8 million (US$290 million)). 

(b) Guarantee given by subsidiaries in respect of banking facilities granted to subsidiaries as at 31 December 2006 

amounted to $59.5 million (2005: $41.9 million). 

(c) A subsidiary in the Aerospace sector has commenced arbitration proceedings against one of its suppliers for unpaid 

invoices of approximately $9.3 million to $13.6 million including interest (Euro 4.6 million to Euro 6.8 million including 

interest). The subsidiary received counter claims of estimated value of $8.4 million (Euro 4.2 million) from this supplier for 

damages based on non-performance. Arbitration proceedings are in progress. No provision against this claim has been 

made as the subsidiary is of the opinion that the likelihood of a loss is unlikely.

189 



45. CONTINGENT LIABILITIES (UNSECURED) (continued) 

(d) In April 2005, the Company entered into a Letter of Intent with ASA Management Aps (“ASA”) and a financial partner to 

form a consortium to explore an acquisition of SAS Component Group A/S. 

After the withdrawal of the financial partner sometime in end August 2005, the consortium broke up. ASA alleged that 

the Company had, in breach of the contract with ASA, concluded its acquisition of SAS Component Group A/S without 

involving ASA. 

ASA commenced arbitration in late November 2006, which arbitration will be heard in Paris, claiming for (i) Euro 

5,600,000 as compensation plus interest and (ii) future exit fee. The Company is disputing these claims. The Company is 

of the opinion that the claim will not have a material financial impact on the Group. 

46. SEGMENT INFORMATION 

(a) Analysis by business segments 

The Group is organised on a worldwide basis into four main operating segments, namely: 

(i) Aerospace 

Provides a spectrum of aerospace maintenance and engineering services for a wide range of military and commercial 

aircraft through its three operational divisions; Aircraft Maintenance & Modification, Component/Engine Repair & 

Overhaul, and Engineering & Materials Services. 

(ii) Electronics 

A leading provider of electronics and information communications technologies solutions in the region. Its core 

capabilities lie in its innovative design, development and integration of advanced electronics systems for commercial, 

industrial, defence and public services applications worldwide. 

(iii) Land Systems 

Provides integrated systems, specialty vehicles and their related services for defence, government and commercial 

applications. This includes design and development, systems integration, production, operations & support and life 

cycle management. 

(iv) Marine 

Provides turnkey shipbuilding, shipconversion and shiprepair services. The shipyard’s design capabilities give it the 

edge in providing sophisticated, highly customised solutions for a wide spectrum of naval and commercial vessels. 

Other operations include research and development, treasury, investment holding and provision of management, 

consultancy, warehousing and other support services. 

Inter-segment pricing is on an arm’s length basis.




46. SEGMENT INFORMATION (continued) 

LAND 

AEROSPACE ELECTRONICS SYSTEMS MARINE OTHERS ELIMINATION GROUP 

$’000 $’000 $’000 $’000 $’000 $’000 $’000 


Turnover 

External sales 1,673,209 951,336 1,001,847 701,520 157,846 – 4,485,758 

Inter-segment sales 2,284 14,421 12,052 1,348 580,253 (610,358) – 

1,675,493 965,757 1,013,899 702,868 738,099 (610,358) 4,485,758 

Segment results 241,983 91,818 63,940 72,823 538,661 (534,036) 475,189 

Investment income, net 28,271 11,930 388 733 (3,254) 1,693 39,761 

Interest income 9,805 5,107 7,952 9,123 31,500 (23,336) 40,151 

Operating profit 280,059 108,855 72,280 82,679 566,907 (555,679) 555,101 

Financial expenses (11,962) (8,879) (6,579) (3,519) (27,954) 16,641 (42,252) 


and joint ventures 37,183 4,674 4,270 340 – 5,023 51,490 

Profit from continuing operations 

before taxation 305,280 104,650 69,971 79,500 538,953 (534,015) 564,339 

Taxation (43,621) (26,515) (16,360) (11,677) (8,299) (2,423) (108,895) 

Minority interests (6,623) (1,817) (1,685) – – (192) (10,317) 

Net profit attributable to shareholders 255,036 76,318 51,926 67,823 530,654 (536,630) 445,127 

Assets 1,795,720 1,113,178 1,087,739 632,310 2,219,861 (1,783,104) 5,065,704 

Associated companies and joint ventures 111,781 61,573 114,667 290 1,670 4,164 294,145 

Unallocated assets 154,393 

Total assets 5,514,242 

Liabilities 1,308,067 1,047,341 1,053,419 526,140 815,520 (1,193,121) 3,557,366 

Unallocated liabilities 248,492 

Total liabilities 3,805,858 

Capital expenditure 172,804 58,078 181,980 11,845 2,806 – 427,513 

Depreciation and amortisation 84,384 15,520 17,236 16,391 2,280 – 135,811 

Impairment loss 621 15,187 5,174 – 1,561 – 22,543 

Other non-cash expenses 10,826 2 114 – – – 10,942

191 




LAND 

AEROSPACE ELECTRONICS SYSTEMS MARINE OTHERS ELIMINATION GROUP 

$’000 $’000 $’000 $’000 $’000 $’000 $’000 

2005 

Turnover 

External sales 1,235,641 701,368 599,722 659,671 141,493 – 3,337,895 

Inter-segment sales 270 10,855 4,925 176 450,424 (466,650) – 

1,235,911 712,223 604,647 659,847 591,917 (466,650) 3,337,895 

Segment results 195,425 73,455 46,388 83,406 430,878 (413,709) 415,843 

Investment income, net 12,347 3,154 3,073 1,322 (1,085) – 18,811 

Interest income 10,420 2,506 6,531 5,676 12,318 (6,841) 30,610 

Operating profit 218,192 79,115 55,992 90,404 442,111 (420,550) 465,264 

Financial expenses (919) (1,495) (702) (2,472) (6,915) 4,551 (7,952) 


and joint ventures 38,170 (1,598) 9,720 – (359) – 45,933 

Profit from continuing operations 

before taxation 255,443 76,022 65,010 87,932 434,837 (415,999) 503,245 

Taxation (32,239) (16,110) (16,093) (17,665) (30,810) 20,924 (91,993) 

Minority interests (12,910) (1,904) 80 – – (210) (14,944) 

Net profit attributable to shareholders 210,294 58,008 48,997 70,267 404,027 (395,285) 396,308 

Assets 1,262,941 980,168 871,969 657,295 1,653,131 (1,266,088) 4,159,416 

Associated companies and joint ventures 100,530 63,727 115,883 – 2,363 (540) 281,963 

Unallocated assets 125,016 

Total assets 4,566,395 

Liabilities 801,935 892,039 784,302 548,791 587,852 (810,527) 2,804,392 

Unallocated liabilities 220,147 

Total liabilities 3,024,539 

Capital expenditure 86,973 213,822 57,227 18,473 6,075 – 382,570 

Depreciation and amortisation 39,092 8,781 11,461 19,123 2,157 – 80,614 

Impairment (gain)/loss (431) 966 6,737 12,710 1,085 – 21,067 

Other non-cash expenses 54 29 9 280 – – 372





(b) Analysis by country of incorporation 

Turnover is based on the country of incorporation regardless of where the goods are produced or services rendered. 

Assets and additions to property, plant and equipment and intangibles are based on the location of those assets. 

CAPITAL 

TURNOVER ASSETS EXPENDITURE 

2006 2005 2006 2005 2006 2005 

$’000 $’000 $’000 $’000 $’000 $’000 

(Restated) 

Asia 2,836,921 2,644,277 3,498,380 3,644,028 138,785 90,497 

USA 1,240,985 616,218 1,263,959 845,464 210,507 289,939 

Europe 406,770 68,626 732,691 45,683 78,106 1,928 

Others 1,082 8,774 19,212 31,220 115 206 

4,485,758 3,337,895 5,514,242 4,566,395 427,513 382,570 

(c) Analysis by geographical areas 

Turnover is based on the location of customers regardless of where the goods are produced or services rendered. 

TURNOVER 


$’000 $’000 

Asia 2,365,334 2,216,400 

USA 1,478,907 836,683 

Europe 481,292 135,918 

Others 160,225 148,894 

4,485,758 3,337,895 

47. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES 

The Group’s principal financial instruments, other than derivatives, comprise bankers’ guarantees, performance bonds, bank 

loans and overdrafts, finance leases and hire purchase contracts, investments, funds under management, and cash and shortterm 

deposits. The Group has various other financial assets and liabilities such as trade receivables and trade payables, which 

arise directly from its operations. 

The Group also enters into derivative transactions, including principally interest rate swaps and forward currency contracts. The 

purpose is to manage the interest rate and currency risks arising from the Group’s operations and its sources of finance. 

The main risks arising from the Group’s financial instruments are interest rate, foreign exchange, market, liquidity and credit 

risks. The policies for managing each of these risks are summarised below. 

The Group’s accounting policies in relation to derivatives are set out in Note 2. It is the Group’s policy not to trade in derivative 

contracts for profit.

193 



47. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) 

Interest rate risk 

The Group has cash balances placed with reputable banks, financial institutions and a related corporation. The Group manages 

its interest rate risks on its interest income by placing the cash balances in varying maturities and interest rate terms. 

The Group’s debt includes bank borrowings and lease commitments. The Group seeks to minimise its interest exposure 

through options to refinance the debt instruments and/or enter into interest rate swaps, where appropriate, over the duration 

of its borrowings. 

Information relating to the Group’s interest rate exposure is also disclosed in the notes on the Group’s borrowings, investments 

and loan receivables, where applicable. 

Foreign exchange risk 

The Group’s foreign exchange risk arises both from its subsidiaries operating in foreign countries, which generate revenue 

and incur costs denominated in foreign currencies and from those operations of its local subsidiaries which are in foreign 

currencies. 

The Group enters into forward currency contracts to hedge against its foreign exchange risk resulting from anticipated sale 

and purchase transactions denominated in foreign currencies, primarily in US dollars and Euro. 

Market risk 

The Group has investments in quoted equity shares and bonds, and has placed funds with fund management companies. The 

market value of these investments will fluctuate with market conditions. To mitigate market risk, the Group’s funds placed with 

fund managers are guaranteed 95% to 100% of their principal values at the end of the fund management period. Also, before 

a fund manager is given funds for management, its financial strength is carefully considered. 

Liquidity risk 

To manage liquidity risk, the Group monitors its net operating cash flows and maintains an adequate level of cash and cash 

equivalents and secured committed funding facilities from financial institutions. In assessing the adequacy of these facilities, 

management reviews its working capital requirements. 

Credit risk 

Credit risk, or the risk of counterparties defaulting, is managed through the application of credit approvals, credit limits and 

monitoring procedures. Where appropriate, the Company or its subsidiaries obtain collaterals from customers or arrange 

master netting agreements. Cash terms, advance payments, and letters of credit or bank guarantees are required for 

customers of lower credit standing. 

Counterparties to financial instruments consist of prime financial institutions and related corporations, as disclosed in Notes 

10 and 16. 

As at 31 December 2006, there were no significant concentrations of credit risk, except for 37% (2005: 43%) of trade debts 

relating to three major customers of the respective subsidiaries. 

48. FAIR VALUE OF FINANCIAL INSTRUMENTS 

Fair value is defined as the amount at which the instrument could be exchanged in a current transaction between 

knowledgeable willing parties in an arm’s length transaction, other than in a forced or liquidation sale. Fair values are obtained 

from quoted market prices, discounted cash flow models and option pricing models as appropriate.




48. FAIR VALUE OF FINANCIAL INSTRUMENTS (continued) 

The following methods and assumptions are used to estimate the fair value of each class of financial instruments: 

Bank balances, other liquid funds and short-term receivables 

The carrying amounts approximate fair values due to the relatively short-term maturity of these instruments. 

Quoted and unquoted investments 

The fair values of quoted investments are estimated based on quoted market prices for these investments. For unquoted 

investments, it is not practicable to determine the fair values because of the lack of quoted market prices and the assumptions 

used in valuation models to value these investments cannot be reasonably determined. However, for unquoted investment in 

related and non-related corporations as stated in Note 10, the fair value is determined by reference to valuation provided by 

related and non-related corporations and fund managers. 

Loans receivable 

The fair values of loans receivable are estimated based on the expected cash flows discounted to present value, except as 

disclosed in Note 12. 

Short-term borrowings and other current payables 

The carrying amounts approximate fair values because of the short period to maturity of these instruments. 

Forward currency contracts 

As at 31 December 2006, the Group has the following forward currency contracts amounting to $135,485,000 (2005: 

$100,000,000) designated as hedges of confirmed sales in foreign currencies, firm purchase commitments in foreign 

currencies and accounts receivable in foreign currencies. 


CONTRACTUAL/ 

CONTRACTUAL/ 

NOTIONAL ESTIMATED NOTIONAL ESTIMATED 

NOTE AMOUNT FAIR VALUE AMOUNT FAIR VALUE 

$’000 $’000 $’000 $’000 

Cash flow hedges 

Forward currency contracts: 

– to hedge confirmed sales in foreign currencies (i) 4,918 15 2,419 149 

– to hedge firm purchase commitments in 

foreign currencies (i) 18,081 143 17,043 (319) 

Fair value hedges 

Forward currency contracts: 

– to hedge confirmed sales in foreign currencies (i) 98,571 1,599 60,263 465 

– to hedge accounts receivable in foreign currencies (i) 13,915 153 20,275 (146) 

(i) The maturity dates of the forward currency contracts approximate the timing of the expected cash flow of their respective 

hedged items, which are on varying periods up to 13 months from the financial year end. 

As at 31 December 2006, the Group has the following outstanding forward currency contracts amounting to $5,834,000 

(2005: $11,962,000) which are not designated as hedges of confirmed sales in foreign currencies and firm purchase 

commitments in foreign currencies. 

Forward currency contracts 

– purchase 1,489 28 9,792 (108) 

– sale 4,345 57 2,170 24

195 



49. COMPARATIVE FIGURES 

Comparatives in the financial statements have been changed from the previous year due to finalisation of the purchase price 

allocation to goodwill, intangible assets (excluding goodwill) and other assets for iDirect, Inc. during the current year. 

PREVIOUSLY 

RESTATED REPORTED 

2005 2005 

$’000 $’000 

Presented in the Balance Sheet 



Presented in the Notes to the Financial Statements 

Note 11: 

Goodwill 307,821 357,468 

Other intangible assets 36,861 2,737 

Note 13: 


50. SUBSEQUENT EVENT 

Increase in equity share of joint venture 

The Group has increased its interest in its joint venture company, STAR Automotive Center (Guangzhou) Co., Ltd. (“STAR GZ”) 

from 50% to 100% for a purchase consideration of RMB7.36 million ($1,470,000). Additionally, the Group has injected RMB4 

million ($800,000) to increase the registered capital of STAR GZ.


SGX Listing Manual Requirements 31 DECEMBER 2006 


1. INTERESTED PERSON TRANSACTIONS 

Interested person transactions carried out during the financial year pursuant to the Shareholders’ Mandate obtained under 

Chapter 9 of the Listing Manual of the Singapore Exchange Securities Trading Limited (“SGX”) by the Group are as follows: 

AGGREGATE VALUE 

OF ALL TRANSACTIONS 

EXCLUDING TRANSACTIONS 

CONDUCTED UNDER A 

SHAREHOLDERS’ MANDATE 

PURSUANT TO RULE 920 OF THE 

SGX LISTING MANUAL 




SHAREHOLDERS’ 

MANDATE PURSUANT 

TO RULE 920 OF THE 


Transactions for the Sale of Goods and Services 


$’000 $’000 $’000 $’000 

Keppel Corporation Ltd and its Associates – – – 1,297 

SembCorp Industries Ltd and its Associates – – 770 7,299 

SembCorp Logistics Ltd and its Associates – – – 952 

Singapore Airport Terminal Services Ltd 

and its Associates – – 252 – 


and its Associates – – 475 103 

Singapore Telecommunications Limited and 

its Associates – – 3,604 – 

StarHub Ltd and its Associates – – – 446 

Temasek Holdings (Private) Limited 

and its Associates – – 7,787 546 

– – 12,888 10,643 

Transactions for the Purchase of Goods and Services 

SembCorp Industries Ltd and its Associates – – – 19,386 

SembCorp Logistics Ltd and its Associates – – 101 748 

SembCorp Marine Ltd and its Associates – – 1,914 2,914 


and its Associates – – 2,389 3,203 


and its Associates – – 168 – 

StarHub Ltd and its Associates – – 130 – 



– – 19,019 32,542

197 

SGX Listing Manual Requirements 31 DECEMBER 2006 


1. INTERESTED PERSON TRANSACTIONS (continued) 



EXCLUDING TRANSACTIONS 


SHAREHOLDERS’ MANDATE 

PURSUANT TO RULE 920 OF THE 





SHAREHOLDERS’ 

MANDATE PURSUANT 

TO RULE 920 OF THE 


Investment/Divestment/Leasing Transactions 


$’000 $’000 $’000 $’000 


and its Associates 238 238 – – 

SMRT Corporation Ltd and its Associates 6,500 – – – 


and its Associates – 3,109 – 660 

6,738 3,347 – 660 

Treasury Transactions 



Total Interested Person Transactions 6,738 3,347 921,588 1,003,525


Shareholding Statistics AS AT 5 MARCH 2007 

SHARE CAPITAL 

Paid-Up Capital : $498,190,192.411 

Class of Shares : Ordinary Shares 

One Special Share held by the Minister for Finance (Incorporated) 

Voting Rights : One vote per ordinary share 

SHAREHOLDING HELD IN HANDS OF PUBLIC 

Based on the information available to the Company as at 5 March 2007, 31.3962% of the issued ordinary shares of the Company is 

held by the public and therefore, Rule 723 of the Listing Manual issued by SGX-ST is complied with. 

ANALYSIS OF SHAREHOLDINGS 

NO. OF 

NO. OF 

RANGE OF SHAREHOLDINGS SHAREHOLDERS % SHARES % 

1 – 999 1,732 6.76 521,305 0.02 

1,000 – 10,000 19,713 76.98 83,073,519 2.81 

10,001 – 1,000,000 4,131 16.13 156,211,320 5.28 

1,000,001 and above 34 0.13 2,717,758,687 91.89 

25,610 100.00 2,957,564,831 100.00 

NUMBER OF SHARES 

DIRECT DEEMED TOTAL 

SUBSTANTIAL SHAREHOLDERS INTEREST INTEREST INTEREST % 

Temasek Holdings (Private) Limited 1,474,168,719 122,509,855 (1) 1,596,678,574 53.99 

The Capital Group Companies, Inc. – 199,958,000 (2) 199,958,000 6.7609 

Aberdeen Asset Management PLC and its subsidiaries – 253,658,100 (3) 253,658,100 8.5766 

Notes: 

(1) Temasek Holdings (Private) Limited is deemed to have an interest in the following shares held by: 

Name of Company 

No. of Shares 

Temasek a/c with DBS custodian 107,410,855 

DBS Group Holdings Ltd 10,829,000 

Keppel Corporation Limited 4,032,000 

The Rohatyn Group Asia Opportunity Master Fund, Ltd. 238,000 

(2) The Capital Group Companies, Inc. is deemed to have an interest in the following shares held by: 

Name of Company 

No. of Shares 

Raffl es Nominees Pte. Ltd. 195,977,000 

Bank of Tokyo (Singapore) 278,000 

BBH Dublin 182,000 

Chase Manhattan Bank (Hong Kong) 80,000 

DBS Nominees Pte. Ltd. 1,992,000 

HongKong & Shanghai Banking Corp 439,000 

HSBC 129,000 

HSBC (Singapore) Nominees Pte. Ltd. 487,000 

Standard Chartered Bank (Hong Kong) 141,000 

State Street Australia Limited 46,000 

United Overseas Bank Nominees Pte. Ltd. 207,000 

(3) Details of their deemed interest are not available.

199 

Shareholding Statistics AS AT 5 MARCH 2007 

MAJOR SHAREHOLDERS LIST – TOP 20 

NO. NAME NO. OF SHARES HELD % 

1 Temasek Holdings (Private) Limited 1,474,168,719 49.84 

2 DBS Nominees Pte Ltd 382,838,815 12.95 

3 DBSN Services Pte Ltd 282,587,801 9.56 

4 HSBC (Singapore) Nominees Pte Ltd 243,744,891 8.24 

5 Raffles Nominees Pte Ltd 112,183,036 3.79 

6 Citibank Nominees Singapore Pte Ltd 105,668,858 3.57 

7 United Overseas Bank Nominees Pte Ltd 49,957,834 1.69 

8 UOB Kay Hian Pte Ltd 8,762,372 0.30 

9 OCBC Nominees Singapore Pte Ltd 4,955,960 0.17 

10 DB Nominees (S) Pte Ltd 4,797,964 0.16 

11 OCBC Securities Private Ltd 4,068,585 0.14 

12 KI Investments (HK) Limited 4,032,000 0.14 

13 Selected Holdings Pte Ltd 3,025,000 0.10 

14 Raffles Investments Limited 3,000,000 0.10 

15 Merrill Lynch (S’pore) Pte Ltd 2,885,196 0.10 

16 Phillip Securities Pte Ltd 2,666,634 0.09 

17 The Asia Life Assurance Society Ltd - Par Fund 2,401,809 0.08 

18 BNP Paribas Nominees S’pore Pte Ltd 2,378,528 0.08 

19 DBS Vickers Securities (S) Pte Ltd 2,143,956 0.07 

20 Shanwood Development Pte Ltd 2,077,000 0.07 

2,698,344,958 91.24


SECTORAL FINANCIAL REVIEW – AEROSPACE 

STATEMENT OF PROFIT AND LOSS 


$’000 $’000 

Turnover 1,675,493 1,235,911 

Cost of sales (1,287,577) (962,407) 

Gross profit 387,916 273,504 

Other operating income 41,433 24,562 

Distribution and selling expenses 5,489 946 



Profit from continuing operations before taxation, 

other income and financial expenses 278,513 219,052 

Other income/(expenses), net 1,546 (860) 

Financial expenses (11,962) (919) 

268,097 217,273 



Taxation (43,621) (32,239) 



Shareholders of the company 255,036 210,294 


261,659 223,204

201 


BALANCE SHEET 


$’000 $’000 

Share capital and reserves 417,680 463,025 


533,254 497,983 



Investments 4,173 32,153 


Long-term receivables 275 417 




Debtors, deposits and prepayments 441,372 485,382 

Long-term receivables, current 367 373 

Amounts under fund management 170,700 259,680 

Bank balances and other liquid funds 169,451 75,389 

1,053,356 984,385 


Advance payments from customers, current 152,324 113,940 

Creditors and accruals 642,160 460,825 

Provisions 53,106 47,372 

Progress billing in excess of work-in-progress 52,674 45,412 

Provision for taxation 103,212 96,004 

Short-term bank loans (unsecured) 24,223 2,845 

Long-term bank loans, current 5,571 – 

Lease obligations, current 1,567 1,628 

1,034,837 768,026 

Net current assets 18,519 216,359 


Advance payments from customers, non-current 63,936 66,066 

Deferred income 478 606 

Deferred tax liabilities 4,696 4,554 

Lease obligations, non-current 9,019 11,415 

Long-term bank loans, non-current 265,890 – 

Loans from related corporation 53,049 52,716 

397,068 135,357 

533,254 497,983



STATEMENT OF CASH FLOWS 


$’000 $’000 

Net cash from operating activities 291,335 183,811 


Proceeds from sale of property, plant and equipment 406 954 


Dividends from investments 9,637 187 

Proceeds from sale and maturity of investments 136,435 12,656 

Purchase of investments (155) (70,051) 


Acquisition of a subsidiary (119,538) – 

Acquisition of additional interest in subsidiaries (1,520) – 

Additional investment in an associated company (27,647) (3,588) 

Exchange difference on investment activities (18,420) (186) 


Capital contribution from minority shareholders of a subsidiary – 880 

Loans from/(to) related corporations 92,270 (48,090) 

Repayment of lease obligations (1,477) (1,505) 

Dividends paid to shareholders (299,699) (215,321) 

Dividends paid to minority shareholders of subsidiaries (14,204) (10,614) 

Interest paid (11,876) (908) 

Proceeds from short-term bank loans 3,243 – 

Exchange difference on financing activities 13,035 344 


Cash and cash equivalents at beginning of year 291,149 493,120 

Exchange difference on cash and cash equivalents at beginning of year (2,366) 173 

Cash and cash equivalents at end of year 224,865 291,149

203 


VALUE ADDED STATEMENT 

2006 2005 2004 2003 2002 

$’000 $’000 $’000 $’000 $’000 


Revenue earned 1,675,493 1,235,911 1,118,309 1,092,173 1,044,110 

Bought in materials and services (774,346) (567,862) (507,429) (473,460) (485,544) 

901,147 668,049 610,880 618,713 558,566 

Income from investments and interest 29,789 22,767 23,370 7,599 11,435 

Exchange gain/(loss) 935 (864) (770) (906) (2,606) 

Other non-operating income 12,255 1,799 8,235 7,490 9,884 


and joint ventures 37,183 38,170 37,475 34,047 39,333 

Total value added 981,309 729,921 679,190 666,943 616,612 


To employees in wages, salaries and benefits 588,048 437,014 404,562 375,946 342,724 

To government in income and other taxes 47,123 35,294 42,609 46,611 54,807 


• Interest paid on borrowings 11,962 919 965 972 2,307 

• Dividends to shareholder 299,699 215,321 183,719 174,912 156,774 

946,832 688,548 631,855 598,441 556,612 


Depreciation 84,366 39,092 34,117 39,604 38,734 

Impairment of assets 1,784 (431) 852 1,112 1,882 

Retained profits (68,764) (14,020) (10,961) (759) (5,116) 

17,386 24,641 24,008 39,957 35,500 


Bad debts (13,633) (5,171) 727 21,852 15,671 


Exchange gain/(loss) 935 (864) (770) (906) (2,606) 

17,091 16,732 23,327 28,545 24,500 

Total distribution 981,309 729,921 679,190 666,943 616,612



FINANCIAL HIGHLIGHTS 

2006 2005 2004 2003 2002 

$’000 $’000 $’000 $’000 $’000 

Turnover 1,675,493 1,235,911 1,118,309 1,092,173 1,044,110 

Profit before tax 305,280 255,443 235,400 225,189 212,993 

Profit after tax (before extraordinary items) 255,036 210,294 187,275 176,297 155,580 

Shareholders’ funds 417,680 463,025 452,329 456,130 458,962 

Total assets 1,965,159 1,401,366 1,373,110 1,431,936 1,434,821 

Net tangible assets 401,476 460,868 450,325 456,074 458,870 


Earnings per share (¢) 127.52 105.15 93.64 88.15 77.79 



Net tangible assets per share (¢) 200.7 230.4 225.2 228.0 229.4 

Productivity data 

Average staff strength (number) 5,880 5,057 4,869 4,877 4,716 



Employment costs 589,440 438,163 405,125 376,390 343,194 


Economic Value Added 194,390 175,200 136,694 149,843 118,054 



Value added 981,309 729,921 679,190 666,943 616,612 



Value added per $ of gross property, plant 

and equipment ($) 0.81 1.09 1.16 1.24 1.14 

Value added per $ of turnover ($) 0.59 0.59 0.61 0.61 0.59

205 

SECTORAL FINANCIAL REVIEW – ELECTRONICS 



$’000 $’000 

Turnover 965,757 712,223 

Cost of sales (664,529) (553,354) 

Gross profit 301,228 158,869 





Profit from continuing operations before taxation, other income and financial expenses 108,756 77,905 

Other income, net 99 1,210 

Financial expenses (8,879) (1,495) 

99,976 77,620 

Share of results of associated companies and joint ventures 4,674 (1,598) 


Taxation (26,515) (16,110) 





78,135 59,912



BALANCE SHEET 


$’000 $’000 

(Restated) 



114,174 141,025 





Long-term receivables 2,872 14,285 





Due from related corporations 66,201 99,705 


Advance payments to suppliers 21,642 15,481 



784,972 625,342 







Short-term bank loans (unsecured) 19,868 5,355 

Long-term bank loans, current 231 – 

Lease obligations, current 51 45 

Other loan, current 980 – 

Bank overdrafts 800 731 

720,915 588,545 




Loans from a related corporation 298,325 279,791 

Deferred income 76 142 

Deferred rent 736 508 

Deferred tax liabilities 5,351 2 

Lease obligations, non-current 89 146 

Long-term bank loans, non current 819 – 

365,886 327,956 

114,174 141,025

207 




$’000 $’000 




Dividends from associated companies 2,025 732 

Dividends from investments 378 1,999 

Proceeds from sale of investments 29,264 1,813 

Proceed from convertible loan/promissory note redemption – 4,872 

Proceed from capital redemption of an associated company 170 238 


Purchase of investments/convertible loan (725) (3,644) 

Investment in associated companies/joint venture (6,611) (6,654) 

Acquisition of subsidiaries (32,615) (261,143) 

Dilution of interest in subsidiary – (963) 

Loan to an investee company – (55) 

Loan to an associated company (140) - 

Net cash from financing activities 19,242 273,106 

Capital contribution from minority shareholders of a subsidiary – 133 

Repayment of lease obligations (51) (9) 

Proceeds from inter-company loans, net of repayment 98,040 327,437 

Proceeds from bank loans, net of repayment 2,591 5,355 

Dividends paid to shareholder (76,000) (58,300) 

Dividend paid to minority shareholders of a subsidiary (889) (1,075) 


Net increase in cash and cash equivalents 34,004 6,227 


Exchange difference on cash and cash equivalents at beginning of year (3,307) (818) 





2006 2005 2004 2003 2002 

$’000 $’000 $’000 $’000 $’000 


Revenue earned 965,757 712,223 636,681 621,100 579,376 


384,787 268,305 240,223 231,670 227,755 

Income from investments and interest 17,037 5,660 1,953 84 4,288 

Exchange gain/(loss) (726) 321 (263) 385 (76) 

Other operating income/(expenses) 637 (138) 209 22 – 

Other non-operating income 825 889 1,484 1,494 1,398 


and joint ventures 4,674 (1,598) 345 (269) (840) 

Amortisation of goodwill on acquisition of 

associated companies – – – (258) (73) 






• Interest paid on borrowings 8,879 1,495 113 48 5 


382,865 264,126 235,555 223,254 223,583 


Depreciation 15,520 8,781 8,750 7,884 8,332 

Retained profits (12,481) (4,059) (4,097) 969 (2,497) 

3,039 4,722 4,653 8,853 5,835 


Bad debts 5,019 (1,390) 2,053 552 (1,178) 

Income from investments and interest 17,037 5,660 1,953 84 4,288 

Exchange gain/(loss) (726) 321 (263) 385 (76) 

21,330 4,591 3,743 1,021 3,034 


209 



2006 2005 2004 2003 2002 

$’000 $’000 $’000 $’000 $’000 

Turnover 965,757 712,223 636,681 621,100 579,376 




Total assets 1,200,975 1,057,526 568,990 592,583 697,544 

Net tangible assets (182,493) (118,966) 103,297 99,894 99,968 





Net tangible assets per share (¢) (173.7) (113.3) 98.3 95.1 95.2 








Economic Value Added Spread (%) 12.5 25.6 28.7 27.0 13.8 


Value added 407,234 273,439 243,951 233,128 232,452 




and equipment ($) 3.00 2.00 2.10 2.22 2.31 



SECTORAL FINANCIAL REVIEW – LAND SYSTEMS 



$’000 $’000 

Turnover 1,013,899 604,647 

Cost of sales (808,188) (465,261) 

Gross profit 205,711 139,386 






Other income, net 5,896 5,828 

Financial expenses (6,579) (702) 

65,701 55,290 



Taxation (16,360) (16,093) 




Minority interests 1,685 (80) 

53,611 48,917

211 


BALANCE SHEET 


$’000 $’000 



126,779 183,431 





Long-term receivables 58,042 573 









Forward currency contracts 90 – 

706,366 715,019 






Forward currency contract 24 208 

Long-term loans, current 237 925 

Short-term bank loan 2,458 – 

Bank overdrafts 937 – 

Short-term loans from minority shareholders of a subsidiary – 2,843 

626,948 451,467 




Forward currency contract 39 – 

Loans from related corporation 302,310 97,395 

Due to a joint venture – 331 

Long-term loans 2,229 2,684 

Long-term loan from minority shareholder of a subsidiary 194 194 

Deferred income 2,811 1,047 

Deferred tax liabilities 4,843 3,005 

465,764 369,141 

126,779 183,431





$’000 $’000 



Proceeds from disposal of property, plant and equipment 919 1,102 

Distribution from unquoted long-term investment 250 – 

Dividends from unquoted long-term investments 138 414 



Purchase of commercial and intellectual property rights (517) – 

Investment in an associated company and a joint venture – (2,051) 

Acquisition of additional interest in a subsidiary (150) – 

Acquisition of a subsidiary (211,381) (37,328) 

Contribution from minority shareholders – 895 

Deconsolidation of a subsidiary – (92) 

Long-term loan to a joint venture (1,235) (573) 

Exchange difference on investing activities – 43 

Net cash from financing activities 94,036 1,583 


Proceeds from loans from minority shareholders 43 1,549 

Proceeds from long-term loans from related corporation 211,798 91,658 

Proceeds from short-term loans from related corporation 21,631 – 

Proceeds from short-term bank loan 2,510 – 

Proceeds from short-term loan from immediate holding company 20,000 – 

Long-term loan to immediate holding company (54,000) – 

Repayment of long-term bank loan – (30,861) 

Repayment of short-term loan – (11,914) 

Repayment of long-term loans (923) (43) 

Dividends paid to shareholder of the Company (103,173) (48,316) 

Dividends paid to minority shareholders of a subsidiary (98) – 

Exchange difference on financing activities – (388) 



Exchange difference on cash and cash equivalents at beginning of year (5,256) (1,240) 


213 



2006 2005 2004 2003 2002 

$’000 $’000 $’000 $’000 $’000 


Revenue earned 1,013,899 604,647 594,300 717,711 711,160 


306,318 175,775 170,818 230,300 267,744 


Exchange gain/(loss) (3,121) (329) (796) (806) (1,568) 



and joint ventures 4,270 9,720 20,576 11,970 3,123 




To government in income and other taxes 18,378 17,668 16,294 23,401 (2,243) 


• Interest paid on borrowings 6,579 702 85 29 110 


352,752 191,567 211,570 263,831 207,014 


Depreciation 15,489 10,740 10,594 15,560 17,603 

Retained profits (47,860) (3,780) (22,270) (35,588) 53,702 

(32,371) 6,960 (11,676) (20,028) 71,305 


Bad debts (543) (5,428) (3,862) 5,119 (4,067) 


Exchange gain/(loss) (3,121) (329) (796) (806) (1,568) 

4,676 3,847 (2,590) 14,224 5,531 





2006 2005 2004 2003 2002 

$’000 $’000 $’000 $’000 $’000 

Turnover 1,013,899 604,647 594,300 717,711 711,160 




Total assets 1,219,491 1,004,039 883,498 1,014,346 1,169,273 

Net tangible assets (115,549) 115,058 149,890 168,841 198,040 





Net tangible assets per share (¢) (95.8) 95.4 124.3 140.0 164.3 










Value added 325,057 202,374 197,304 258,027 283,850 




and equipment ($) 0.96 0.62 0.66 0.84 0.91 


215 

SECTORAL FINANCIAL REVIEW – MARINE 



$’000 $’000 

Turnover 702,868 659,847 

Cost of sales (602,581) (551,530) 

Gross profit 100,287 108,317 






Other income, net 481 2,644 

Financial expenses (3,519) (2,472) 

79,160 87,932 

Share of results of associated companies and joint ventures 340 – 


Taxation (11,677) (17,665) 




Minority interests – – 

67,823 70,267



BALANCE SHEET 


$’000 $’000 



Associated companies and joint ventures 290 – 


Intangible assets 171 181 

Long-term receivables 198 54 







Advance payments to suppliers 56,749 93,248 


Amounts under fund management 57,473 51,382 


572,468 584,029 







Lease obligations, current – 12 

458,902 484,815 



Loans from a related corporation 97,013 102,763 

Accrued staff benefits 2,607 3,205 

99,620 105,968 

124,345 111,992

217 




$’000 $’000 



Dividends from investments 138 412 

Proceeds from sale and maturity of investments 596 952 



Exchange difference on investing activities 3,354 (535) 


Dividends paid to shareholder of the Company (60,079) (70,249) 

Interest paid (3,519) (2,472) 

Proceeds from/(repayment of) loans from related corporation, net 1,648 (837) 

Repayment of lease obligations (12) (64) 

Repayment of loan by a joint venture – 388 

Exchange difference on financing activities (6,299) 827 

Net increase in cash and cash equivalents 25,714 5,222 


Exchange difference on cash and cash equivalents at beginning of year (463) 5 





2006 2005 2004 2003 2002 

$’000 $’000 $’000 $’000 $’000 


Revenue earned 702,868 659,847 484,364 387,323 281,231 


192,081 214,968 186,321 137,917 90,664 


Exchange (loss)/gain (59) (334) (231) 47 4 



and joint ventures 340 – – – – 






• Interest paid on borrowings 3,519 2,472 1,253 1,184 556 

• Dividends to shareholder 60,079 70,249 55,133 – 70,000 

182,821 196,923 178,964 105,688 138,311 


Depreciation 16,381 18,974 22,241 22,811 13,338 

Retained profits (2,043) 5,913 (9,105) 16,241 (58,826) 

14,338 24,887 13,136 39,052 (45,488) 


Bad debts (203) (1,542) 373 (2,422) 1,165 


Exchange (loss)/gain (59) (334) (231) 47 4 

9,594 5,122 8,086 12,145 19,192 


219 



2006 2005 2004 2003 2002 

$’000 $’000 $’000 $’000 $’000 

Turnover 702,868 659,847 484,364 387,323 281,231 


Profit after tax 67,823 70,267 53,741 30,808 29,201 


Total assets 682,867 702,775 664,556 594,272 530,419 

Net tangible assets 124,174 111,811 107,449 109,316 78,808 





Net tangible assets per share (¢) 63.5 57.2 54.9 55.9 40.3 

Productivity Data 









Value added 206,753 226,932 200,186 156,885 112,015 




and equipment ($) 0.67 0.75 0.70 0.54 0.39 



Group Structure – Singapore Technologies Engineering Ltd 

SUBSIDIARIES AND ASSOCIATED COMPANIES (AS AT 28 FEBRUARY 2007) 

Singapore Technologies Aerospace Ltd 

(100%) 

Singapore Technologies Electronics Limited 

(100%) 

Singapore Technologies Kinetics Ltd 

(100%) 

Singapore Technologies Marine Ltd 

(100%) 

Singapore Technologies Dynamics Pte Ltd 

(100%) 

ST Synthesis Pte Ltd 

(100%) 

FusionTech Pte. Ltd. 

(100%) 

2006 JV Pte. Ltd. (formerly known as Asian 

Aerospace 2006 Pte. Ltd.) 

(50%) 

KAZ-ST Engineering Bastau Limited 

Liability Partnership 

(51%) 

Vision Technologies Systems, Inc. 

(100%) 

NanoScience Innovation Pte Ltd 

(38.33%) 

SA Supplies (USA) Inc. 

(100%) 

Singapore Technologies Engineering (USA) Inc. 

(100%) 

Vision Technologies Aerospace, Incorporated 

(100%) 

San Antonio Aerospace GP, LLC 

(100%) 

Vision Technologies Electronics, Inc 

(100%) 

Vision Technologies Kinetics, Inc. 

(100%) 

Vision Technologies Marine, Inc. 

(100%) 

VT Systems, Inc. 

(100%) 

Vision Technologies Land Systems, Inc. 

(100%) 

+ Ceased operations in 2003 

* Balance 1% held by DalFort Aerospace GP, Inc. 

** Balance 1% held by San Antonio Aerospace GP, LLC 

Italics Indicates Associated Companies. Others are Subsidiaries 

(both directly and indirectly held) 

San Antonio Aerospace LP 

(99%)** 

ST Mobile Aerospace Engineering, Inc. 

(100%) 

DalFort Aerospace GP, Inc. + 

(100%) 

DalFort Aerospace, L.P. + 

(99%)* 

iDirect, Inc. 

(100%) 

Miltope Corporation 

(100%) 

MÄK Technologies, Inc. 

(80%) 

VT Halter Marine, Inc. 

(100%) 

Halter-Bollinger Joint Venture LLC 

(50%) 

VT Dimensions, Inc. 

(100%) 

VT Specialized Vehicles Corporation 

(100%) 

Lee Holding Company 

(100%) 

iDirect UK Limited 

(100%) 

iDirect Italy srl 

(100%) 

iDirect Hong Kong Limited 

(100%) 

iDirect Canada, Inc 

(49%) 

iDirect International Corporation 

(100%) 

iDirect Singapore Pte. Ltd. 

(100%) 

VT LeeBoy, Inc 

(100%) 

LeeBoy Rents, Inc 

(100%) 

Rosco Manufacturing Company 

(100%) 

Force Feed Loader Parts, Inc. 

(100%)

221 

Group Structure – Singapore Technologies Aerospace Ltd 


ST Aerospace Engineering Pte Ltd 

(100%) 

Pacifi c Flight Services Pte Ltd 

(100%) 

ST PAE Holdings Pty Ltd 

(100%) 

Composite Technology International Pte Ltd 

(33.33%) 

Aerospace Engineering Services Pty Ltd Unit Trust 

(50%) 

Aerospace Engineering Services Pty Ltd 

(50%) 

Eurocopter South East Asia Private Limited 

(25%) 

ST Aerospace Engines Pte Ltd 

(100%) 

ST Aerospace International Structures Pte Ltd 

(100%) 

ST Aerospace Systems Pte Ltd 

(100%) 

ST Aerospace Supplies Pte Ltd 

(100%) 

Singapore Precision Repair and Overhaul Pte Ltd 

(50%) 

iShopAero Pte Ltd 

(100%) 

ST Airport Ground Services Pte Ltd 

(100%) 

ST Aviation Resources Pte Ltd 

(100%) 

ST Aviation Resources 1 Limited 

(100%) 

Visiontech Investment Pte Ltd 

(100%) 

Panama Aerospace Engineering Inc. 

(100%) 

Singapore Aerospace Kabushiki Kaisha 

(100%) 

Singapore Technologies Engineering (Europe) Ltd 

(100%) 

SAS Component Group A/S 

(71.3%) 

Bournemouth Aviation Services Company Limited + 

(81%) 

ST Aviation Services Co Pte Ltd 

(80%) 

Airline Rotables (UK Holdings) Limited 

(formerly known as ST Aerospace (UK) Limited) 

(100%) 

Airline Rotables Limited 

(100%) 

Singapore British Engineering Pte Ltd 

(51%) 

Visiontech Engineering Pte Ltd 

(51%) 

1988 JV Pte. Ltd. 

(50%) 

Shanghai Technologies Aerospace 

Company Limited 

(49%) 

Turbine Overhaul Services Pte Ltd 

(49%) 

Turbine Coating Services Pte Ltd 

(24.5%) 

+ Ceased operations in 2006 


(both directly and indirectly held)


Group Structure – Singapore Technologies Electronics Limited 


ST Electronics (Satcom & Sensor Systems) 

Pte. Ltd. 

(100%) 

ST Electronics (Info-Comm Systems) Pte. Ltd. 

(100%) 

ST Electronics (Sichuan) Co., Ltd 

(100%) 

Polarsat Holdings Inc. 

(formerly known as PolarSat Inc) 

(38.98%) 

ST Electronics (Info-Security) Pte. Ltd. 

(formerly known as DigiSAFE Pte Ltd) 

(100%) 

STELCOMMS Pte. Ltd. 

(100%) 

Infowave Pte Ltd 

(43%) 

Sentry Technologies Pte Ltd 

(35%)* 

DataMark Technologies Pte Ltd 

(61.12%) 

Autoscan Technology Pte Ltd 

(60%) 

mPayment Pte Ltd 

(31.78%) 

ST Electronics (Shanghai) Co., Ltd 

(100%) 

iTS Technologies Pte Ltd 

(100%) 

ST Electronics (Training & Simulation Systems) 

Pte. Ltd. 

(100%) 

ST Electronics (Taiwan) Limited 

(100%) 

SEEL Electronic & Engineering Sdn Bhd 

(100%) 

TranSys Pte Ltd 

(100%) 

ST Electronics (Info-Software Systems) Pte. Ltd. 

(100%) 

Intelect Technologies, Incorporated 

(78.57%) 

Ripple Systems Pty Ltd 

(70%) 

STELOP Pte. Ltd. 

(50.05%) 

ST LogiTrack Pte Ltd 

(39.06%) 

GFM Electronics S.A. de C.V. 

(50%) 

Sino Stride Technology (Holdings) Limited 

(28%) 

RF Korea Inc. 

(22%) 

Trusted Hub Ltd 

(21.8%) 

iWOW Technology Pte Ltd 

(21.74%) 

ST Electronics-PCI Co., Ltd 

(51%) 

Prescient Systems & Technologies Pte. Ltd. 

(47.84%) 

ST Electronics (Digital Media) Pte. Ltd. (formerly 

known as Interactive Visual Laboratory Pte. Ltd.) 

(100%) 

ST Education & Training Private Limited 

(70%) 

Brightspot Interactive Learning Pte. Ltd. 

(51%) 

Knowledge Alive Pte. Ltd. 

(45.47%) 

ST Electronics (Software Services) Limited 

(formerly known as Xinke Information Systems Ltd) 

(100%) 

ST Electronics (e-Services) Pte. Ltd. 

(100%) 

PM-B Pte Ltd 

(70%) 

INFA Systems Limited 

(70%) 

Sandz Solutions (Singapore) Pte Ltd 

(25%) 

WizVision Pte. Ltd. 

(22.8%) 

ECS Holdings Limited 

(20.86%) 

STET Maritime Bureau Pte. Ltd. 

(100%) 

STET Maritime Education Pte. Ltd. 

(100%) 

Comat Training Services Pte Ltd 

(100%) 

Sandz Solutions (HK) Pte Ltd 

(100%) 

WizVision (HK) Pte Limited 

(100%) 

Mobile Solutions and Payment Services Pte Ltd 

(21.57%) 

* In the process of striking-off 



223 

Group Structure – Singapore Technologies Kinetics Ltd 


Advanced Material Engineering Pte. Ltd. 

(100%) 

Advanced Pyrotechnic Materials Private Limited 

(formerly known as Chartered Pyrotechnic 

Industries Private Limited) 

(51%) 

SMART Systems Pte Ltd 

(50%) 

Takata CPI Singapore Pte Ltd 

(49%) 

Autonomous Technology Pte Ltd 

(100%) 

Allied Ordnance of Singapore (Pte) Limited 

(100%) 

Guizhou Jonyang Kinetics Co., Ltd. 

(60%) 

Defence Electronics of Singapore Pte Ltd 

(49%) 

Expert Systems Pte Ltd 

(100%) 

Kinetics Systems (Shanghai) Co. Ltd. 

(100%) 

Mobility Systems Pte Ltd 

(100%) 

Ordnance Development and Engineering Company 

of Singapore (1996) Private Limited 

(100%) 

Shanghai Elite Electric Vehicles Co., Ltd 

(100%) 

Singapore Commuter Private Limited 

(100%) 

Silvatech Systems Corporation Pte Ltd 

(100%) 

Silvatech Global Systems Limited 

(100%) 

Timoney Holdings Limited 

(25%) 

Kinetics Drive Solutions Inc. 

(100%) 

Singapore Ordnance Engineering Pte. Ltd. 

(100%) 

Singapore Test Services Private Limited 

(100%) 

ST Automotive Industrial Pte Ltd 

(100%) 

ST Automotive (Vietnam) Pte Ltd 

(100%) 

SAO Industrial Services Pte Ltd 

(100%) 

Nusantara Technologies Sdn. Bhd. 

(49%) 

STA Detroit Diesel-Allison (Singapore) Pte Ltd 

(100%) 

STA Inspection Pte Ltd 

(100%) 

STA Investment Pte Ltd 

(100%) 

JuzclickCar.com Pte Ltd 

(90%) 

Unicorn International Pte Limited 

(100%) 

STAR Automotive Center (Guang Zhou) Co., Ltd. 

(100%) 

STAR Automotive Center (Zhejiang) Co., Ltd. 

(86.24%) 

ATREC Pte. Ltd. 

(50%) 

Beijing Zhonghuan Kinetics Heavy Vehicles 

Co. Ltd. 

(50%) 

CityCab Pte Ltd 

(46.5%) 

Italics 

Indicates Associated Companies. Others are Subsidiaries 



Group Structure – Singapore Technologies Marine Ltd 


STSE Engineering Services Pte Ltd 

(100%) 

PT SSE-Van der Horst Indonesia 

(24.4%) 

Anchorville Pte Ltd* 

(30%) 

AquaGen International Pte Ltd* 

(25%) 

Joint Shipyard Management Services Pte Ltd 

(30%) 

* In Compulsory Winding Up by the Court 

Italics Indicates Associated Companies. Others are subsidiaries 


225 

CORPORATE INFORMATION 

BOARD OF DIRECTORS 

Mr Peter SEAH Lim Huat (Chairman) 

Mr TAN Pheng Hock (President and CEO) 

Mr KOH Beng Seng (Director) 

Lieutenant-General NG Yat Chung (Director) 

Dr TAN Kim Siew (Director) 

Professor LUI Pao Chuen (Director) 

Mr Winston TAN Tien Hin (Director) 

Mr Lucien WONG Yuen Kuai (Director) 

Dr Philip Nalliah PILLAI (Director) 

Mr QUEK Poh Huat (Director) 

Mr Venkatachalam KRISHNAKUMAR (Director) 

Brigadier-General Bernard TAN Kok Kiang (Alternate Director 

to Lieutenant-General NG Yat Chung) 

COMPANY SECRETARY 

Mrs CHUA Su Li 

REGISTERED OFFICE 

51 Cuppage Road #09-08 

StarHub Centre 

Singapore 229469 

Tel : (65) 6722 1818 

Fax : (65) 6720 2293 

http : //www.stengg.com 

SHARE REGISTRAR 

M & C Services Private Limited 

138 Robinson Road #17-00 

The Corporate Office 


AUDITORS 

Ernst & Young 

One Raffles Quay 

North Tower, Level 18 


Mr TAN Wee Khim (Partner-in-charge) 

(Date of Appointment: 01/07/2005) 

PRINCIPAL BANKERS 

Calyon 

168 Robinson Road 

#22-01 Capital Tower 


Citibank N.A. 

3 Temasek Avenue 

#17-00 Centennial Towers 


The Development Bank of Singapore Ltd 

6 Shenton Way 

DBS Building Tower One 


Oversea-Chinese Banking Corporation Limited 

65 Chulia Street 

#10-00 OCBC Centre 


United Overseas Bank Limited 

80 Raffles Place 

UOB Plaza 1 

Singapore 048624

SINGAPORE TECHNOLOGIES ENGINEERING LTD 

(INCORPORATED IN THE REPUBLIC OF SINGAPORE) 

(Regn No: 199706274H) 

235 

Notice of Tenth Annual General Meeting 

NOTICE IS HEREBY GIVEN THAT the Tenth Annual General 

Meeting of the Company will be held at Crystal Suite, Level 2, 

Holiday Inn Park View Singapore, 11 Cavenagh Road, Singapore 

229616 on Wednesday, 25 April 2007 at 2.30 p.m. to transact the 

following business: 

AS ORDINARY BUSINESS 

Resolution 1 

To receive and adopt the Directors’ Report and Audited Accounts 

for the year ended 31 December 2006 and the Auditors’ Report 

thereon. 

Resolution 2 

To declare a first and final tax exempt (one-tier) dividend of 4.0 

cents per share and a special tax exempt (one-tier) dividend of 

11.11 cents per share for the year ended 31 December 2006. 

Resolution 3 

(a) To re-elect the following Directors, each of whom will retire by 

rotation pursuant to Article 98 of the Articles of Association 

of the Company and who, being eligible, will offer themselves 

for re-election. 

(b) 

(i) Mr Koh Beng Seng* 

(ii) Dr Tan Kim Siew 

(iii) Mr Lucien Wong Yuen Kuai 

* Mr Koh Beng Seng will, upon re-election as a Director of the 

Company, continue as Chairman of the Audit Committee. Mr Koh is 

considered an independent director for the purpose of Rule 704(8) 

of the Singapore Exchange Securities Trading Limited (“SGX-ST”) 

Listing Manual. 

To record the retirement of LG Ng Yat Chung, a Director 

retiring by rotation pursuant to Article 98 of the Articles 

of Association of the Company, who has decided not to 

seek re-election. 

Resolution 4 

To approve the sum of $866,000 as Directors’ fees for the year 

ended 31 December 2006. (2005: $630,111) 

Resolution 5 

To re-appoint Ernst & Young as Auditors of the Company and to 

authorise the Directors to fix their remuneration. 

AS SPECIAL BUSINESS 

To consider and, if thought fit, to pass with or without modifications, 

the following resolutions which will be proposed as Ordinary 

Resolutions: 

Resolution 6 

That authority be and is hereby given to the Directors to: 

(a) 

(b) 

(i) issue shares in the capital of the Company (“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 

(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: 

(1) 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 per cent. of the issued shares in the 

capital of the Company (as calculated in accordance with 

paragraph (2) 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 per cent. of the issued 

shares in the capital of the Company (as calculated in 

accordance with paragraph (2) below); 

(2) (subject to such manner of calculation as may be prescribed 

by the SGX-ST) for the purpose of determining the aggregate 

number of shares that may be issued under paragraph (1) 

above, the percentage of issued shares shall be based on the 

number of issued shares in the capital of the Company at the 

time this Resolution is passed, after adjusting for: 

(i) 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 

(ii) any subsequent consolidation or subdivision of shares; 

(3) 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



(Regn No: 199706274H) 

236 

Notice of Tenth Annual General Meeting 

(4) (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. 

Resolution 7 

THAT approval be and is hereby given to the Directors to: 

(a) 

(b) 

offer and grant options in accordance with the provisions 

of the Singapore Technologies Engineering Share Option 

Plan (“Share Option Plan”) and/or to grant awards in 

accordance with the provisions of the Singapore Technologies 

Engineering Performance Share Plan (“Performance Share 

Plan”) and/or the Singapore Technologies Engineering 

Restricted Stock Plan (“Restricted Stock Plan”) (the Share 

Option Plan, the Performance Share Plan and the Restricted 

Stock Plan, together the “Share Plans”); and 

allot and issue from time to time such number of ordinary 

shares in the capital of the Company as may be required to 

be issued pursuant to the exercise of options under the Share 

Option Plan and/or such number of fully paid shares as may 

be required to be issued pursuant to the vesting of awards 

under the Performance Share Plan and/or the Restricted 

Stock Plan, 

provided that the aggregate number of ordinary shares to be issued 

pursuant to the Share Plans shall not exceed fifteen per cent. 

(15%) of the total number of issued shares in the capital of the 

Company from time to time. 

STATEMENT PURSUANT TO ARTICLE 60 OF THE ARTICLES 

OF ASSOCIATION OF THE COMPANY 

Resolution No. 6 is to empower 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 a number not 

exceeding in total fifty per cent. (50%) of the issued shares in the 

capital of the Company, with a sub-limit of twenty per cent. (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 shares shall be based on the 

number of issued shares in the capital of the Company at the time 

that Resolution No. 6 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 Resolution No. 6 is passed, and (b) 

any subsequent consolidation or subdivision of shares. 

Engineering Performance Share Plan and Singapore Technologies 

Engineering Restricted Stock Plan (collectively the “Share Plans”). 

Approval for the adoption of the Share Plans was given by 

shareholders at an Extraordinary General Meeting of the Company 

held on 23 November 2000. The grant of options and awards 

under the respective Share Plans will be made in accordance with 

their respective provisions. The aggregate number of ordinary 

shares which may be issued pursuant to the Share Plans is limited 

to fifteen per cent. (15%) of the total number of issued shares in 

the capital of the Company over the 10-year duration of the 

Share Plans. 

BY ORDER OF THE BOARD 

CHUA SU LI (Mrs) 

Company Secretary 

Singapore, 2 April 2007 

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. A proxy need not 

be a member of the Company. 

2. The instrument appointing a proxy must be lodged at the 

registered office of the Company at 51 Cuppage Road, 

#09-08, StarHub Centre, Singapore 229469 not less 

than 48 hours before the time appointed for the Annual 

General Meeting. 

BOOKS CLOSURE AND DIVIDEND PAYMENT DATES 

Duly completed transfers in respect of ordinary shares in the 

capital of the Company together with all relevant documents of 

title received by the Company’s share registrar, M & C Services 

Private Limited, 138 Robinson Road, #17-00, The Corporate 

Office, Singapore 068906 up to the close of business at 5.00 

p.m. on 2 May 2007 (the “Books Closure Date”) will be registered 

to determine members’ entitlements to the proposed dividends, 

subject to approval of members to the proposed dividends at the 

Tenth Annual General Meeting to be convened on 25 April 2007. 

Subject as aforesaid, members 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 Books Closure 

Date will be entitled to the dividends. The Register of Members and 

Share Transfer Books will be closed on 3 May 2007 for the purpose 

of determining members’ entitlements to the proposed dividends. 

The proposed dividends, if so approved by members, will be paid on 

18 May 2007. 

Resolution No. 7 is to empower the Directors to offer and grant 

options and/or grant awards and to issue ordinary shares in the 

capital of the Company pursuant to the Singapore Technologies 

Engineering Share Option Plan, Singapore Technologies

SINGAPORE TECHNOLOGIES 

ENGINEERING LTD 


(Regn No: 199706274H) 

PROXY FORM 

IMPORTANT 

1. For investors who have used their CPF moneys 

to buy ordinary shares in the capital of Singapore 

Technologies Engineering Ltd, the 2006 Annual Report is 

forwarded to them at the request of their CPF Approved 

Nominees and is sent solely FOR INFORMATION ONLY. 

2. This Proxy Form is not valid for use by CPF investors 

and shall be ineffective for all intents and purposes if 

used or purported to be used by them. 

I I/We, NRIC/Passport Number 

of 

II 

(a) 

being a member/members of the abovenamed Company, hereby appoint 

Name Address NRIC/Passport Number 

Proportion of 

Shareholdings (%) 

(b) 

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 Tenth Annual 

General Meeting of the Company to be held at Crystal Suite, Level 2, Holiday Inn Park View Singapore, 11 Cavenagh Road, 

Singapore 229616 on Wednesday, 25 April 2007 at 2.30 p.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 Ordinary 

Resolutions as set out in the Notice of the 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.) 

III No Ordinary Resolutions For Against 

Ordinary Business 

1 Adoption of Accounts and Reports 

2 

3 (a) 

Declaration of First and Final Tax Exempt (one-tier) Dividend and Special Tax Exempt 

(one-tier) Dividend 

Re-election of Directors retiring by rotation pursuant to Article 98 of the Articles of 

Association of the Company 

(i) 

(ii) 

(iii) 

Mr Koh Beng Seng 

Dr Tan Kim Siew 

Mr Lucien Wong Yuen Kuai 

4 Approval of Directors’ Fees 

5 Re-appointment of Ernst & Young as Auditors 

Special Business 

6 Authority for Directors to issue shares 

7 

Authority for Directors to offer and grant options and/or grant awards and allot shares, 

pursuant to the Singapore Technologies Engineering Share Option Plan, Singapore 

Technologies Engineering Performance Share Plan and Singapore Technologies Engineering 

Restricted Stock Plan 

Dated this day of 2007 

Total Number of Shares held 

Signature(s) of Member(s) or Common Seal 

IMPORTANT 

PLEASE READ NOTES OVERLEAF

2 fold this dotted line > 

Postage will be 

paid by 

addressee. 

For posting in 

Singapore only. 

BUSINESS REPLY SERVICE 

PERMIT NO. 07705 

(077055) 

Singapore Technologies Engineering Ltd 

51 Cuppage Road 

#09-08 StarHub Centre 


(Regn No: 199706274H) 

< 1 fold this dotted line > 

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 defi ned in Section 130A of the Companies Act, Chapter 50 

of Singapore), you should insert that number of shares. If you 

have shares registered in your name in the Register of Members, 

you should insert that number of shares. If you have shares 

entered against your name in the Depository Register and shares 

registered in your name in the Register of Members, you should 

insert the aggregate number of shares entered against your name 

in the Depository Register and registered in your name in the 

Register of Members. If no number is inserted, the instrument 

appointing a proxy or proxies shall be deemed to relate to all the 

shares held by you. 

2 A member of the Company entitled to attend and vote at a meeting 

of the Company is entitled to appoint one or two proxies to attend 

and vote instead of him. Such proxy need not be a member of the 

Company. 

3 Where a member appoints two proxies, the appointments shall 

be invalid unless he specifi es the proportion of his shareholding 

(expressed as a percentage of the whole) to be represented by 

each proxy. 

4 The instrument appointing a proxy or proxies must be deposited at 

the registered offi ce of the Company at 51 Cuppage Road, #09- 

08, StarHub Centre, Singapore 229469, not less than 48 hours 

before the time appointed for the Tenth 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 offi cer or attorney duly authorised. 

6 A corporation which is a member may authorise by a resolution of 

its directors or other governing body such person as it thinks fi t to 

act as its representative at the Tenth Annual General Meeting, in 

accordance with Section 179 of the Companies Act, Chapter 50 

of Singapore. 

General: 

The Company shall be entitled to reject the instrument appointing a 

proxy or proxies if it is incomplete, improperly completed or illegible 

or where the true intentions of the appointor are not ascertainable 

from the instructions of the appointor specifi ed in the instrument 

appointing a proxy or proxies. In addition, in the case of shares 

entered in the Depository Register, the Company may reject any 

instrument appointing a proxy or proxies lodged if the member, being 

the appointor, is not shown to have shares entered against his name in 

the Depository Register as at 48 hours before the time appointed for 

holding the Tenth Annual General Meeting, as certifi ed by The Central 

Depository (Pte) Limited to the Company.

ST Engineering Group 

The winning spirit in an organisation begins with the will of 

its management and is realised in the collective mindset of 

its employees. 

An integrated engineering group, ST Engineering delivers 

innovative solutions and services in the Aerospace, Electronics, 

Land Systems and Marine sectors. The Group leverages on its 

multi-sector capabilities to be a one-stop solutions provider for 

its customers in over 60 countries. 

The Group’s internationalisation efforts have spawned over 100 

subsidiaries and associated companies in 20 countries and 35 

cities, spanning the US, Europe, Middle East, Central Asia and 

Australasia. In the Americas, ST Engineering has established a 

significant presence, with operations in 20 locations across the 

US, Canada and Central America. In China, the Group has grown 

its reach considerably, with operations in 16 cities, including 

Beijing, Shanghai and Guangzhou. 

One of the largest companies listed on The Singapore Exchange 

with a market capitalisation of more than $9b (about US$6b) as 

at end December 2006, ST Engineering achieved revenues of 

$4.49b and net earnings of S$445.1m in FY2006. 

ST Engineering’s solutions add value, build capabilities, as well 

as facilitate transformational outcomes for customers. It fulfils 

this through strategies and practices that promote the winning 

spirit among its 17,000 staff worldwide. 


51 Cuppage Road #09-08 

StarHub Centre 


Tel: (65) 6722 1818 

Fax: (65) 6720 2293 

http://www.stengg.com 

(Regn. No.: 199706274H)

Full Annual Report 2006 - Singapore Technologies Engineering

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