View - Singapore Technologies Engineering

S I N G A P O R E T E C H N O L O G I E S E N G I N E E R I N G A N N U A L R E P O R T 2 0 0 0online at www.stengg.com/ar2000ST ENGG SETSITS SIGHTS ONBIGGER MARKETSA U S T R A L I A C H I N A I N D O N E S I A J A P A N M A L A Y S I A S I N G A P O R E T A I W A N U A E U S A U K V I E T N A M

At this moment, it’s a new day forSingapore Technologies Engineering somewhere in the world.Across the oceans, in countries big and small,ST Engg has established a presence to respond toglobal needs in Aerospace, Electronics, Land Systemsand Marine engineering.Where people from all over the world work inspecialised fields, innovating, inventing andredefining the possibilities of technology.Where it matters to look at the impossible and evolvepossible solutions.In that lies our vision.And in that we see a new day.Aerospace Electronics Land Systems Marine

editor’s noteC O N T R I B U T O R SCompany Secretary CHUA SU LI and her team documentOfflineS I N G A P O R E T E C H N O L O G I E S E N G I N E E R I N G A N N U A L R E P O R T 2 0 0 0online at www.stengg.com/ar2000ST ENGG SETSITS SIGHTS ONBIGGER MARKETSA U S T R A L I A C H I N A I N D O N E S I A J A P A N M A L A Y S I A S I N G A P O R E T A I W A N U A E U S A U K V I E T N A MOnlinewww.stengg.com/ar2000Log in.editor-in-chiefcompanysecretariescorporatecommunicationse-businessfinancehuman resourcephotography coordinationprint & web designonline at www.stengg.com/ar2000printingshirley tanRESEARCH & REPORTINGchua su limary kangkaren ngprema subramaniamjanice tanlaura chuajennifer lohmagdalen lohcelina lownatalie mahchang cheow teckraphael chinpatrick leeng bor weelaurence ongeleana tanchia boon cherlim hock lailorraine ngtan nga koktay cheng beewu siew tsenCREATIVE & PRODUCTIONcelina lowyu long nyuwordmaker designpte ltdsnp sprint pte ltdVISION is published bySingapore Technologies Engineering Ltd51 Cuppage Road#09-08 StarHub CentreSingapore 229469Tel: (65) 836 1138Fax: (65) 836 1933E-mail: comms@stengg.comWebsite: www.stengg.comAll rights reserved. Copyright @ 2000 bySingapore Technologies Engineering Ltd (ST Engg).No information herein should be reproducedwithout the express written permission of ST Engg.All information herein was correct at time ofpublication. For updated information, pleasecontact our Corporate Office.A New VisionWE CAN LEARN OF EVENTS HAPPENING IN A STATE HALFway around the globe within seconds of the inhabitants ofthat country hearing about them.We can communicate withfriends, relatives and business partners in other lands morequickly (and often at a lower cost) than ever before.We enjoy thecuisines of differentcountries, watchfilms and televisionprogrammes fromabroad and useimported materialsin our work placesand homes. Around the world,the story is similar: othersobserve us, call us, try outour cuisine and use goodsthat companies based in ourcountry have sold to them.This is the context withinwhich a large modern businessmust be ready to operate. Itcan mean being exposed totough competition and tryingto operate in unfamiliar areas.To survive and prosper, it isnecessary to be able to learnquickly and be flexible andimaginative.We sometimesneed to re-examine what wethink we know and, in thelight of experience, makechanges in our thinking andways of doing things.To take one small example:we all know what should be ina company’s annual report.We know because the basiccontents (including theChairman/President’s reportand a comprehensivefinancial statement) have beenshown in practice to be avaluable and necessary meansof summing upthe company’sperformance.Sometimes theinformation offeredis not in a “form”;sometimes we puzzleover the meaning of asentence, statistic or group ofinitials; a detail mentioned inpassing catches our attention,but all we have is a tantalisingglimpse of something thatlooked interesting, but ofwhich we see no more.In vision, we set out thebasic information that readerswould expect to find, but tryto make it more accessiblethan ever before.We gobeyond that, to give a morerounded perspective on STEngg. Here, you will find outmore about the context inwhich it operates, how itfunctions and what it does inorder to deliver results.This is a move with thetimes. Each reader can selectwhat he or she wants: whetherit is the bare bones of ST Engg’sperformance, or informationthat builds into a bigger picture.We share our vision with you.Shirley Tan is Vice President/Head of the Corporate Communicationsteam. She plays a key role in communicating the company’s values andmessages to the media, public and investors. Shirley and her team,together with the contributors of the various teams, bring you vision.the tireless efforts of the respective Board Committeestowards establishing good CorporateGovernance practices and captureother corporate information to giveshareholders comfort in knowing thatthe company is being kept on the straight and narrow.Executive Vice President/Group Financial ControllerELEANA TAN and her finance comradesensure that the Group’s financialstate of affairs is always properlyreported. Her team’s contribution tothe financial reports helps shareholders and industrywatchers to rationalise their investment and involvementin the company.Vice President/Director, HumanResource, TAN NGA KOK, is a firmbeliever that our products andservices can only be as goodas our people. Nga Kok and his team’s contribution inthis report gives an insight into the emphasis ST Enggputs on staff training and development and the creationof an environment for staff to give their best.President, VT Systems, Inc. andPresident, New Business, CHANGCHEOW TECK, has the challenging taskof developing new business for STEngg, this includes e-initiatives; and as President of VTS,he heads the US thrust for the Group.

• AEROSPACE• ELECTRONICS• LAND SYSTEMS• MARINEa collection of news briefs & highlights from the yearI N S I D EWho can make Tigers fly like Falcons?Our F-5 Tiger upgrades are the most technologically advanced in the world. Our clients rely on theseupgraded aircraft as F-16 Falcon lead-in trainers. Singapore Technologies Aerospace is making a markin the industry, having completed the most number of F-5 fighter upgrade programmes. ST Aero has alsoadded Falcon ONE, a state-of-the-art F-16 avionics upgrade suite to its offering of fighter upgrade solutions.In the commercial arena, we have probably achieved what no single vendor has; having successfullyredelivered more than 1000 aircraft to a single customer in a short span of eight years.ST Aero’s experience and integrity have won the trust of customers and partners worldwide. Our longstanding relationships with our many clients bear testimony to our commitment to mutual benefit andenhanced value.With the combined experience and resources of ST Aero, ST Elect, ST Kinetics and ST Marine, SingaporeTechnologies Engineering is a one stop provider of engineering solutions, from turnkey projects to customisedupgrades.www.stengg.comRSAF Hosts Successful Millennium Air Power ConferenceNEARLY 600 DELEGATES from around the world attended the Millennium AirPower Conference (MAPC), held in Singapore on 21 February. Defence and airchiefs as well as senior management from the aerospace and defence industriesgathered for the event. Singapore’s Deputy Prime Minister and Minister for Defence,Dr Tony Tan, delivered the opening address.The speakers at the conference, each an expert in his field, were Air Vice Marshal ZekyAmbadar, General Jean Rannou, Lieutenant-General Liu Shunyao, Air Marshal ErrolMcCormack, General Patricio Rios, Major General Eitan Ben-Eliahu, General PatrickGamble, Mr Dain Hancock, Sir Charles Masefield, Mr Serge Dassault, Major GeneralRaymund Ng and from ST Engg, Mr Boon Swan Foo. Speaking on the theme “NewFrontiers, New Paradigms: Air Power in the New Millennium,” they considered theevolution of concepts of air power, the knowledge revolution, the reduction of manningin air power and the uses of extra-terrestrial space.ST ENGG PRESENTS:At the MAPC ConferencePAGE 8ASIAN AVIATIONSUMMIT: Dr HenryKissinger and SM LeeKuan Yew addressAirlines CEOs and seniorexecutivesPAGE 8SAR 21: Impressivedebut in the USPAGE 9IN & OUT BIONIX:The Bionix puts on ashow in the USPAGE 10DC-10 CONVERSION:The first in South EastAsiaPAGE 10SEE THE LIGHT:Thumbs up for LEDPAGE 11HELPING OTHERS:Lady who makes adifferencePAGE 12We take Engineering furtherWe can.The conference was judged a success by its host, the Republic of Singapore Air Force(RSAF) and all attendees.Writing in the conference commemorative journal,Chiefof Air Force Major General Raymund Ng noted that “the Conference also met itssecondary objective of providing an environment for new and renewed friendships.Judging from the interactions during the conference intermissions and lunch reception,I think we have all made a small contribution towards fostering closer defence andinternational relations.”MAPC was held in conjunction with Asian Aerospace 2000, which opened the followingday.You can findmore news andinformationonline at:www.stengg.com/ar2000For more on Aerospace Sector, turn to page 70scene • 7

“Opportunities Abound forNiche Players,” Boon Tells MAPCIN HIS SPEECH TO THE MAPC, Mr Boon Swan Foo, DeputyChairman and CEO, ST Engg, considered the impact of thecontinuing consolidation activities in the aerospace industry.“The period in the aftermath of the end of the Cold War haswitnessed a sustained pattern of consolidation within theinternational aerospace industry,” he said.“After almost a decade, the trend appears to be approachingstabilisation which will leave a handful of mega American andEuropean companies remaining in the global aerospace industry.We have also observed trends in defence contracts fromthe US Department of Defense (DoD) towards single-points ofresponsibilities or one-stop service providers, where industryplayers form partnerships and consortiums…”While acknowledging the benefits that this trend could bringto both the industry and to end-users, he pointed out thatthere was also a downside.Especially troubling is “the distortion of free market forces,eventually curbing potential benefits.” Real choice and priceoptions for end users may be reduced and barriers erectedagainst new entrants and smaller firms in the industry.Nevertheless, Mr Boon maintained that there was a role forsmaller companies that were imaginative and flexible andcould identify a niche for themselves. They might providespecialised services or products to industry giants, allowingthe latter to concentrate on their core competencies andstrategic activities.“Niche players may also have the potential to partly addressthe issue of control. As specialised actors in the value chain,they will not only contribute to a more efficient global divisionof labour, but also by being small, continue to have the nimblenessfor rapid turnovers and changes in specifications comparedto the industry giants.”“The latter would be the ones with the critical mass and financialstrength to undertake much of the new product developmentin the defence industry, but competitive niche playerswill have a key role to play in the new value chain, as theyfocus on specialised roles which they can fulfill more effectivelyand efficiently. Niche players could also dominatecertain key components and become centres of excellence intheir own right, by focussing on their own research and developmentin core areas, rather than at systems level.”Mr Boon concluded by asserting that “opportunities aboundfor niche players in the evolving landscape of the globaldefence industry” but adding, “success is neither assured norassumed. It has to be earned.”SM Lee and Dr Kissinger Address SummitTHEASIAN AVIATIONSummit took place on11 February and wasjointly organised by ST Enggand The Boeing Company.With the theme “Shapingthe Skies of Asia – Creatingthe Vision,” it provided keyairline CEOs and industrychiefs gathered in Singaporewith an opportunity toconsider the future ofAsian aviation.The keynote speakers atthe event were Singapore’sSenior Minister Lee KuanYew and former USSecretary of State, DrHenry Kissinger. Both discussedthe broader politicalcontext for the Asianaviation industry.SM Lee spoke on “Asia’sRole in Tomorrow’sWorld.” Dr Kissinger’ssubject was “Asia’s FuturePolitical Landscape.” Otherspeakers included Mr LiuCommunicAsia 2000THE COMMUNICATION,encryption and broadcastingcapabilities of STElect went on exhibitionin June at Asia’s largestcommunications showcase,CommunicAsia 2000. Heldat the Singapore Expo, theJian-Feng, Minister fromthe Civil AviationAuthority of China andMr Shinji Fukukawa, CEOof Dentsu Institute, aJapanese think tank.Co-chairs from the sponsoringcompanies wereST Engg’s Deputy Chairmanand CEO, Mr BoonSwan Foo and Boeing’sChairman, Mr Phil Condit.The participants gave verypositive feedback about thesummit, which provided avaluable opportunity forkey players in the Asianaviation industry to interact.exhibition attracted 46,000visitors, one third of themnon-Singaporeans. Juztalk,DABOne,VSAT transceiversand satellite modemsand the Agilink digitalradio system were amongST Elect’s exhibits.ST Engg Showcases New Products at AA 2000OVER 920 COMPANIESexhibited at AsianAerospace 2000 (AA 2000),the first air show of thenew millennium. Heldfrom 22 to 27 February,the show was opened bySingapore’s Prime Minister,Goh Chok Tong.PM Goh was upbeat aboutSingapore’s role in theaerospace industry, citingits track record and goingon to note, “The EconomicDevelopment Board forecaststhat the industry willtriple in size from today’sS$2.3 billion by 2010.”He forecasted thatSingapore’s aerospaceindustry would win 70%of its business from outsidethe Asia Pacific region – upTHE LONGEST LINEof people waiting totry their hands at newweapons on range firingday of TREXPO EASTwas for the SAR 21 AssaultRifle.It was no wonder, as manyof the law enforcementand military personnelattending had already beenimpressed by what theyhad read about the newrifle in magazines such asInternational Defence Reviewand Guns & Weapons.from its present 60%.Pride of place at AA 2000went to ST Engg, whichtook over the SingaporePavilion. It had five mainexhibition areas: aerospace,land systems, electronics,marine andSAR 21 makes impressive debut in USHeld in Washington D.C.from 16 to 18 August,TREXPO EAST markedthe debut of the SAR 21 inthe US, where it receivedrave reviews from theCleveland SWAT team,one of the best performanceteams in the US.Besides the standard SAR 21,visitors could also viewvariants such as the SAR 21with M203 grenadelauncher.The responsefrom those who tried outthe rifle was very positive.advanced engineering.Thecompany seized this opportunityto unveil a range ofnew military and commercialproducts.These includedthe “Falcon ONE” F-16avionics upgrade package,the All Terrain TrackedCarrier and the BluePositive response was alsoreceived when the SAR 21team showcased the rifleat the National DefenseIndustry Association(NDIA) symposium inIndianapolis, an eventattended by industryleaders, programme managersand key decisionmakers from the DoDinvolved in the smallarms business.Horizon Unmanned AirVehicle, which is used forreconnaissance and surveillance.New variants of the SAR21 Assault Rifle and theBionix IFV were alsounveiled.The rifle was also exhibitedat the National GuardsAssociation of the UnitedStates convention inSeptember and at theAssociation of the UnitedStates Army’s gatheringin October.VT Kinetics, Inc. is promotingthe SAR 21 to theUS military and lawenforcement markets.A “ G R E E N ” G R E N A D E ?The 40 mm High Velocity High Explosive Dual Purpose (HEDP)round is often referred to as the “environmentally friendlygreen grenade” because of its mechanical self-destruct fuse.The danger of having unexploded duds lying indiscriminately inthe training or battle ground is of great concern to all armedforces. This is particularly so with soft grounds such asswamps or snow covered areas.The self-destruct fuse ensures complete detonation of theammunitions if they fail to explode on impact. Hence, the chanceof endangering friendly troops and innocent beings will beeliminated.8 • visionscene • 9

S M A R T S T U F FFirst And FastTHE FIRST DC-10Passenger-to-Freighterconversion programmecompleted in South EastAsia was handled by STAero’s subsidiary, SASCO,for Boeing.The conversionprogramme was technicallycomplex and demanded ahigh level of competence.The work included theinstallation of the maindeck cargo door, installationof cargo handlingsystems, conversion of theavionics and electricalsuites to fit the aircraft’snew function and heavymaintenance checks.SASCO successfullycompleted the job 20days ahead of schedule.Bionix Showcased in USTHE BIONIX INFANTRY CARRIER VEHICLE (ICV) drew internationalattention when it became one of the finalists for theUS Army’s Interim Armoured Vehicle programme.This was far from being its only appearance in the US in2000. On the contrary, a publicity drive which included aseries of road shows had taken the Bionix across thousandsof miles and to a string of locations.The drive had two objectives: to show the Bionix ICV to themanagement and workers of our US partners, as well asmembers of the communities where they are based.A vital feature of the Bionix ICV is that it’s air-transportable.A Roll-on/Roll-off demonstration from a C-130 was held inMay at Huntsville, Alabama.The event attracted more than 120 people including dignitarieslike the Mayor of Huntsville, the Mayor of Madison,the Chairman of Madison County, Congressional staffers,army and marine personnel and representatives from theChamber of Commerce.In July, a Bionix Day organised at the Pentagon and onCapitol Hill in Washington D.C. attracted high rankingofficials and members of the media.This was followed by another successful Bionix Day at theRed River Army Depot in Louisiana on 3 August, which alsoattracted a large crowd. After appearances organised withpartners in New York and Michigan, the Bionix ICV endedits US tour with a demonstration before local officials andworkers at International Manufacturing Corp in Garland,Texas, in August .Read All About It!ANEWSERVICEavailable to ST Enggstaff gives them access toan enormous range ofinformation about theircompany and the industriesof which it is a part. LexisNexis aggregates newsfrom 2,500 sources acrossthe world and is madeavailable to staff on STEngg’s own portal.Aggregration of news isimportant in a world inwhich there are numerousinformation sources. Onsome topics, the numberof potential sources is sovast that it is quite difficultfor many internet users topinpoint what they wantand to distinguish betweenwhat is genuinely usefuland accurate and what isnot. By aggregating news,a service such as LexisNexis cuts out a lot ofsearch time for the userand assembles a wealth ofmaterial tailored to a user’sspecific needs.Largest YetTHE NORWEGIAN STAR,a luxurious cruisevessel owned by NorwegianCruise Lines, with a carryingcapacity for 800passengers and 400 crew,is the largest cruise vesselrepaired at ST Marine sofar. Major works carriedout included overhaul ofthe vessel’s steering gearand fin stabiliser, renewalof aluminium and steeldecks, painting of its hulland refurbishment of itscasino, club and lounge,decks and basketball court.ST Marine is optimisticabout the prospects offurther expanding itspresence in the cruise shiprepairmarket following itssuccessful completion of aseries of contracts.Maiden VoyageRSS ENDURANCE, THEfirst in the series offour Landing Ship Tanks(LSTs) which ST Marinedesigned and built for theRepublic of SingaporeNavy (RSN) made itsmaiden voyage around theworld in May.The highlightof this voyage wasRSS Endurance’s participationin InternationalNaval Review 2000 inNew York, the 6th to beheld in the last 100 years.T H E X - F A C T O RThe BIONIX is a light and agile Infantry Fighting Vehicle (IFV)with excellent protection. ST ENGG christened the IFV “BIONIX”through a naming competition held in 1997 with the Singaporepublic. Adding a twist to the word BIONIC, the “X” in BIONIXalludes to the “X” factor that makes the vehicle a vastly superiorfighting machine and is meant to evoke the concept of integrationbetween the human intellect and modern day technology.Big Presence at National Day ParadeWHEN SINGAPORE MARKED ITS 35TH BIRTHDAYin 2000 with its annual National Day Parade,ST Engg’s presence was formidable.The Group’s mostvisible contribution was its contingent marching in theparade, but its products were there in force.The Bionixrolled along the street as part of the army’s column ofvehicles, while soldiers marched past bearing the SAR 21Assault Rifle, newly delivered to the Singapore ArmedForces by ST Kinetics. Overhead flew F-16s, for whichST Aero designed the ‘Falcon ONE’ avionics upgradesuite. Out at sea, a Landing Ship Tank built by ST Marineprovided a take-off and landing platform for the SuperPuma helicopter.Public Likes LEDINROBOTIC ARM: A team from ST Aero demonstrated the F-5Lower Wing Inspection System at Asian Aerospace this year.They mocked up a wing which was then meticulously inspectedby a robotic arm. The arm searches for any sign of cracks.CARRY ALL: A ‘carry-all utility’ cart has been zipping aroundST Aero’s facility to deliver spares to its subsidiaries. The electriccart, a substitute for delivery vehicles, zips through internalperimeter roads within ST Aero’s complex, instead of the mainroads. The advantages have been three-fold; saving time,reducing cost and cutting air pollution.WELL SPOTTED: Closed circuit TV cameras mounted in carparks are not always up to the job of reading the number platesof the vehicles that come and go, which can give thieves alucky break. ST Elect’s Licence Plate Recognition System usesa licensed software engine from Kent Ridge Digital Lab torecognise and record characters (including those in Asianscripts) on licence plates accurately by enhancing their readability.1999, ST ELECT WON A CONTRACT FOR THESingapore-wide replacement of existing halogen orincandescent bulb traffic lights. In their place were fittedLight Emitting Diodes (LED) which provide greatervisibility and better colour contrast for road users.Theywould also be easier to maintain and will consume only athird of the energy used by their incandescent counterparts.The acid test was yet to come.What would the publicthink? In June, a team of Business Studies lecturers andstudents from Ngee Ann Polytechnic conducted a surveyon the new lights as part of a project for ST Elect. Sixhundred and twenty-six people were interviewed at fourmain sites in Singapore and the result was a convincing90% endorsement of the LED lights.10 • visionsccene • 11

Helping OthersLADY WHO MAKESA DIFFERENCEIt’s three in the morning.The rustling of sheets fromCarol’s bed roused Trixie.The excruciating pain wasmerciless on Carol’s tormentedmind and frail frame.An instant alleviation was todeny sleep; to stand uprightthroughout the night so thatblood would flow to herlegs, or what could barelybe recognisable as legs.Kidney failure has causedCarol’s legs to balloon.Although neither kith nor kinof Carol, Trixie has taken herinto her home to provide hercare and support.She stayed up with Carol forthe third consecutive night,helpless against Carol’spain, depression and hallucinations,but braced withthe hope that what littlesupport she gives willbring comfort to Carol. Thedroning of the air coolerwhispered to the tickingof the clock till the sunrenewed the day, and itwas off to work for Trixie.That evening Trixie madeher way to the CovenantFamily Service Centre. Thethree children have beenwaiting for their tutor. Sumswere solved and new wordslearnt. Smiles saw thechildren off, brimming withconfidence that they havelearnt, and prepared foranother day in school.• • •A wheelchair-bound lady inher late 70s peered out asTrixie unlatched the gateleading up the driveway.She looked at her watch foran answer to her mother’swakefulness; it was past11 o’clock. The night wasaccompanied by a soothingbreeze – perfect for a goodnight’s rest.Before she went to bed,CLOCKWISE FROM TOP LEFT:Georgina, Trixie and Carol.BELOW: ST Engg admiresTrixie’s spirit and as a companyseeks to contribute tothe community. Seen beloware our staff with membersof the Moral Home for theDisabled, one of thecharities ST Engg supports.Trixie peered through thebedroom door that was leftajar. Seeing that Georginawas still up, Trixie enteredher cousin’s room to enquireabout the progress of heracademic course. Trixie hadtaken Georgina in since shehas been orphaned. Sheheaded back to her room,comforted by the thoughtthat Georgina was well onher way to dreamland.• • •This may be a simple story;it may be lost in the manyseemingly more importantpursuits you and I may beinvolved in. But Trixie’sspirit exemplifies the valuesthat ST Engg as a companypromotes in its quest tocontribute to the community.Trixie Mok currently works as aPersonal Assistant in ST Aero.since 1976. She is the first VicePresident of the SingaporeAssociation of Personal AndExecutive Secretaries. She tutorsat the Covenant Family ServiceCentre twice a week. She liveswith her mother, an older sister, awidowed sister-in-law with hertwo children, and Carol, hersister’s former colleague.takingstock:singaporetechnologieso e engineeringn e e i n gIt was a year of dot.com mania andsoaring oil prices, but amidst theconsequent crashes and uncertainties,ST Engg moved onwards and upwards.Its share price hit a record high in NovemberA Ship Named EnduranceTHE NAMING OF A COMMISSIONEDwarship of the RSN is seriously considered,as it should be in keeping withtradition. The principles adopted by theRSN in naming their ships are akin to thenaming of a newborn child in a family:the ships are named in relation to theirrole, the attributes the RSN wants themto have and in keeping with tradition.Ships in the same class often have a common theme tocreate a familial sense of belonging to bind them together.12 • visionThe Endurance Class LSTs were named so as to inherit therich tradition ascribed to and to continue the fine servicesrendered by their predecessors, the County Class LSTs, whichhad served the RSN faithfully for over 20years since their introduction in the earlydays of the RSN. Another was to celebratetheir ability to sustain themselves atsea and invoke their spirit in the face ofdifficult tasks and a harsh environment.The original RSS Endurance was the firstoperational LST in the RSN and hencethe honour of naming the new class of LSTs and the lead shipwas given to her.and it won a series of awards in recognitionof its achievements.We survey theseaccomplishments in this specialYear 2000 fold-out section.

ST ENGG was named MostTransparent Company (OverallWinner – Golden CircleAward) by SecuritiesInvestors Association ofSingapore. The awardcommends companies forfrequent, timely and highlevel of disclosure of financialresults and corporatedevelopment.Most TransparentCompany AwardST ENGG received Asia’sTop PerformingCompanies 2000Award, from FinanceAsia magazine. The awardis given to companiesthat create shareholderwealth and is basedon change in marketcapitalisation fromAugust 1998 toJanuary 2000. STEngg was ranked7th in Singapore.ST ELECT received theTechnology AchievementAward 2000 fromSingapore’s National Scienceand Technology Board. The awardis given to locally based companiesin recognition of their successfulexploitation of R&D for businesscompetitiveness which hascontributed significantly tothe economic output ofSingapore. It is a nationwideaward that recognisescompanies whichhave harnessed R&Dto raise theirstature andattract newinvestments.Technology AchievementAward 2000Asia’s Top PerformingCompanies 2000 AwardST ENGG was honouredwith the InternationalTrade Award2000/2001 bySingapore’s Trade Development Board.The award is given to companies thathave made outstanding contributions toSingapore’s foreign trade over the lastthree years and have made significantefforts to export Singapore productsand services to overseas markets.ST ELECT was awarded the ASEANEngineering AchievementAward 2000 by ASEAN Federationof EngineeringOrganisation. Theaward is given toorganisations withoutstandingengineeringcapabilities thathave significantlycontributed toengineeringprogress and thequality of life inASEAN.International Trade Award 2000/2001ST ENGG was nominated one ofHSBC’s Asian 100 companies.The award is given to companieswhich deliver high shareholdervalue.ASEAN Engineering AchievementAward 2000ST KINETICS received the DefenceTechnology Prize Team Awardfrom Singapore’s Ministry of Defence.The award is a recognition of the AllTerrain Tracked Carrier’stechnologicalachievement.HSBC’s Asian 100Companies AwardST ENGG was named oneof two Asia’s ValueCreator, in Singaporeby Asian Wall StreetJournal. Listed as one ofthe region’s top performingcompanies thatgives investorsvalue for moneyand is consideredlikely to continuefor at least thenext year.ST ENGG won the Best InvestorRelations Website (Infrastructure/ManufacturingSector), awardedby Finance Intelligence Asia magazine.The award is given to companies thathave best mobilised the Internet toserve the needs and requirements ofthe investment community.ST ENGG received the 27th AnnualReport Award, for Best AnnualReport (Runner-Up) and BestCorporate Governance (FirstRunner-Up) from the SingaporeExchange, the Institute of CertifiedPublic Accountants of Singapore andthe Singapore Institute of Management.Best Annual Report(Runner-Up) AwardBest Corporate Governance(First Runner-Up) Report AwardThe award is given to companies thatset exemplary standards for providingwell-presented, timely and informativedisclosures.ST ENGG was nominated as one ofAsia’s Best ManagedCompanies, (Ranked 2nd inSingapore) from AsiaMoney magazine.The award is given to companiesbased on their corporate strategy,management of financial accounts,reliable forecast, access to seniormanagement, investor relations,treatment of minority shareholders,company website disclosure in anannual report. This is the third winsince 1997.

NOV29 DECS$2.79JANJUNJULAUGOCTYEAR HIGH: 2 NOVS$2.85DEC3 JANS$2.59*Stock prices indicated are basedon end of day closing priceJ A N U A R YST Aero commissionedSuper Nose Dock, ahangar capable ofaccommodating twowidebody aircraft.*F E B R U A R YST Aero co-organisedwith Boeing, AsianAviation Summit, ahigh-level, closed doorsummit for Asian airlineFEBchiefs and seniorexecutives. Keynotespeakers includedSM Lee Kuan Yew andDr Henry Kissinger.The fourth and lastLanding Ship Tank(LST), designed andbuilt by ST Marine, waslaunched by Mrs DavidLim, wife of the Ministerof State for Defence.Launch of JuzTalk, anall-in-one enterprisecommunication systemwith interfaces for avariety of terminalssuch as multimediaPCs, fax machines,telephones, wirelessdevice and digital audiobroadcast transceivers.Launch ofjuzclickcar.com.sg –Singapore’s firstcertified, used caronline bidding systemby STA Inspection.Mr Boon Swan Foopresented ST Enggcapabilities to air chiefsfrom all over the worldat the Millennium AirPower Conference.MARThe Group co-organisedand participated inAsian Aerospace2000, the world’s thirdlargest aerospaceshow. Several newproducts and serviceswere launched: F-16Falcon ONE upgrade,Bionix RecoveryVehicle, All TerrainYEAR LOW: 13 MARS$1.84Tracked Carrier, andSAR 21 variants.Completion of acquisitionof CharteredIndustries of Singaporeand the renaming ofST Auto as ST Kineticsto better reflect theenlarged businessactivities of the company.APRM A R C HST Marine participatedin SingaPort 2000, heldat the SingaporeExposition Centre.MINDEF announced theacquisition of sixfrigates, of which fivewill be built by STMarine.A P R I LST Engg signed anagreement with Freemarketsto access itsB2B eMarketplace topurchase customengineeredproductsand services fromsuppliers globally.Launch ofjuzclickcal.com, a 24x7online equipmentinventory managementtool by ST Elect.MAYTo show the airtransportabilityof theBionix, Roll-on/Roll-offdemonstrations from aC-130 were held inSingapore & Huntsville,Alabama, US. The USdemonstration wasattended by the media,military and officials.Incorporation of VTKinetics to spearheadST Engg’s Land Systemsactivities in the US.Its first activity wasto participate in themulti-billion dollar USArmy IAV programme.ST Elect signed a JVagreement with GrupoFerrominero to set upGFM Electronics inMonterey, Mexico topromote and distributeST Elect’s electronics,high-tech products andservices as well as tocarry out electronicssystem-based projectsin Mexico.M A YRSS Endurance, thefirst LST designed andbuilt by ST Marine, setsail on its maidenvoyage, becoming thefirst RSN ship to circumnavigatethe globe.NTUC Income investeda 15% stake in juzclickcar.com.sgas a strategicpartner. The portaloffers attractive insurancepremiums,extendedwarranties and carloans, making theautomotive portal moreconvenient for users.J U N EInvestment by ST Electin a 19.8% stake inMetron CommunicationsCorp., a chip designcompany engaged inthe development ofGeneral Packet RadioSwitch (GPRS) communicationchip set.Rationalisation of STEngg’s US activitiesunder the umbrella ofVision Technologies.Submission of tenderto the US Army for theIAV programme, followedby submission of thebid sample for evaluationat the AberdeenProving Grounds inMaryland, US.J U L YSigning of aPartnership Agreementbetween ST Aero andiMerchants to set upishopaero.com, a neutralB2B exchange thataims to serve the aerospaceindustry byenabling a wide rangeof aerospace parts andservices to be boughtand sold over theInternet.Signing of MOUbetween ST Aero andBAE Systems for thefurther development ofFalcon ONE Upgradefor F-16 aircraft.As part of Sail Navy2000, RSS Endurancecalled in on the port ofNew York to participatein International NavalReview 2000. TheBionix was also displayedon the LST.ST Kinetics signed anagreement to set up acollaborative researchSEPprogramme withSingapore’s NanyangTechnologicalUniversity. The aim isto undertake researchand developmentwork in Advancedand IntelligentMechatronics.Bionix Day at thePentagon and CapitolHill in Washington DC.The demonstrationswere attended by themedia, Pentagon andarmy officials andCongressional staffers.This was followed by aroad show to severalother states to demonstratethe capabilitiesof the Bionix throughoutthe whole ofAugust.A U G U S TST Engg participatedin the 35th NationalDay Parade.ST Elect incorporatedST Electronics (Taiwan)to design and executetraffic and rail managementsystems andintelligent buildingprojects there.ST Elect clinchedS$5.9 million contractto provide trafficcontrol managementsystem in Suzhou City,China, using the Cetrac2000 system.SEPTEMBERST Elect clinched aS$12.6 million contractto provide communicationssystem for TuchengMRT Line in the Taipeimetropolitan area.STA Inspection signed anMOU with PUSPAKOMof Malaysia to developa used car onlineauction portal.Completion of firstAdvanced CockpitFlight Deck programmefor Boeing by MAE.O C T O B E RST Kinetics exhibitedat the Association ofUS Army AnnualMeeting in Washington,DC. ST Kinetics showcasedits wide range ofland systems productsincluding the Bionix, AllTerrain Tracked Carrier,SAR 21, and the 40mmgrenade.ST Kinetics participatedat the ModernMarine MilitaryExposition Quantico,Virginia, US, showcasingits SAR 21 assaultrifle.ST Marine participatedin Euronaval 2000,Paris, France.Groundbreaking beganfor construction of atwo-bay hangar in MAEfor the B757 Passengerto-Freighter conversionwork.NOVEMBERST Kinetics increasedits stake in ShanghaiElite Electric Vehicle tobecome its sole owner.SEEV will be used asthe beachhead foralternative energytransportation andclean power productsin the China market.ST Aero signed JVagreement with UnitedTechnologies Holdings (aunit of Pratt & Whitney)and SIA Engg to formTurbine Coating Services.TCS will perform PW4000turbine airfoil repair.Signing of JVagreement with SMRTEngineering to undertakethe business ofdesign, manufacture,promotion, distributionand sale of railwayrelatedproducts andservices in Singaporeand globally.SASCO redeliveredthe first DC-10 convertedfreighter to Boeingahead of schedule.SASCO achieved twofirsts: first DC-10 aircraftto be converted inSoutheast Asia and thefirst amongst Boeing’snetwork of facilities toredeliver a convertedDC-10 ahead of schedule.DECEMBERST Kinetics increasedshareholding inSolectria Corporationfrom 9.6% to 44.1%.Solectria Corporation isengaged in the design,engineering, and manufactureof advancedelectric, hybid and fuelcell vehicles drivesystems and relatedcomponents. Thisinvestment will helpposition ST Kinetics asa prominent player inthe alternative energytransportation anddistributed powergeneration industriesin Asia.ST Aero’s B2B portal,ishopaero.com went‘live’ with value-addedfeatures for trading ofaviation parts andservices. It will enablebuyers to reach awider range of potentialsuppliers thanbefore and identify themost attractive sourcesof materials.ST Elect clinched aS$87 million contractto provide electronicssystems for control,communications andsecurity managementfor the Marina MRTline. ST Elect willdeliver a fully-automated,medium-capacityrail system to the5.4km, 6-station lineslated for completion in2005/2006.REVIEW1QGROUP PERFORMANCEGroup turnover increased50% to S$589 million whileprofit before tax increased36% to S$92 million, duelargely to contributionsfrom Land Systems andMarine sectors.QUARTER ON QUARTER CHANGE IN TURNOVERAERO3%86%LAND SYSTEMSELECT25%MARINE347%QUARTER ON QUARTER CHANGE IN PBTAERO2%197%LAND SYSTEMSELECT35%MARINE86%REVIEW2QGROUP PERFORMANCEGroup turnover dipped by 6%to S$501 million due to lowerturnover from the Marinesector. However, profit beforetax rose 24% to S$95.1 millioncompared to the sameperiod the previous year.QUARTER ON QUARTER CHANGE IN TURNOVERAERO 16%ELECTLAND SYSTEMSMARINE10%56%76%QUARTER ON QUARTER CHANGE IN PBTAERO 61%ELECTLAND SYSTEMSMARINE37%142%67%REVIEW3QGROUP PERFORMANCEGroup turnover grew by 25%to S$493 million due mainly tothe Land Systems sector.Profit before tax increased 42%to S$99.6 million in comparisonwith the corresponding periodthe previous year.QUARTER ON QUARTER CHANGE IN TURNOVERAERO 28%ELECTLAND SYSTEMSMARINE13%72%11%QUARTER ON QUARTER CHANGE IN PBTAERO 56%ELECTLAND SYSTEMSMARINE18%132%110%10%REVIEW4QGROUP PERFORMANCEGroup turnover rose 52% to S$676million with increased contributionsfrom the Land Systems andMarine sectors. Profit before taxfor the quarter grew by 47% toS$125.8 million compared to thesame quarter in the previous year.QUARTER ON QUARTER CHANGE IN TURNOVERAERO ELECT3%LAND SYSTEMSMARINE20%97%294%QUARTER ON QUARTER CHANGE IN PBTAERO6%LAND SYSTEMS6%161%ELECT100%MARINE119%19%

DeputyChairman &Chief ExecutiveOfficerBOON Swan FooPresident &Chief OperatingOfficerTAN Pheng Hockorganisationa i o nchartDefence BusinessPresident, TAY Kok KhiangNew BusinessPresident, CHANG Cheow TeckFinanceExecutive Vice President/Group Financial Controller,Eleana TANMarketingSenior Vice President,LOW Yee KahHuman ResourceVice President/Director,TAN Nga KokAerospacePresident,WEE Siew KimDeputy President &Chief Operating Officer,TAY Kok KhiangElectronicsPresident,SEAH Moon MingLand SystemsPresident,WU Tzu ChienChief Operating Officer,TEO Boon Sweecritical massh e a d c o u n tOUR PEOPLE ARE THE KEY TO OUR BUSINESS EXCELLENCE ANDthe cornerstone of our continued success.They are committed,dynamic and passionate professionals truly challenged tobecome world-class global engineering players.JOB GROUP50%YEARS OF SERVICE10%22%21%5%17%28%47%563 Managerial2889 Engineering1743 Administrative5130 Technical & others4878 less than 4 years2291 4 to 9+ years1032 10 to 14+ years2124 more than 15 yearsLegalManager, Mylene CHUACorporate CommunicationsVice President/Head,Shirley TANMarinePresident,SEE Leong TeckChief Operating Officer,TAN Mong SengEDUCATIONAL QUALIFICATION21%15%16%26%22%1612 Secondary Level & lower2672 Trade Certificate & equivalent2251 “O” and “A” Levels & equivalent1619 Diploma & equivalent2171 Degree & equivalentAdvanced Engineering SystemsSenior Vice President,LIM Serh GheeIntegrated Service SupportVice President,LEE Wai MunUS OperationsPresident,CHANG Cheow TeckEurope OperationsExecutive Vice PresidentMarketing,OOI Ling Heong10325 Total workforceREMUNERATION DATA(for employees earning S$100,000 and above p.a.)Total compensation bands (S$) Total no. of employees Total dollar value (S$)100,000 – 149,999 444 53,664,112150,000 – 199,999 141 23,391,862200,000 – 249,999 49 10,842,777250,000 & above 50 25,402,231TOTAL 684 113,300,982critical mass • 21

Turnover (S$ million)Profit before tax (S$ million)Profit after tax (S$ million)before extraordinary items2,2591,764IN THE YEAR 2000, ST ENGG RATIONALISED ITS GROUP CORPORATE STRUCTURETO POSITION ITSELF FOR GROWTH & EXPANSION IN THE UNITED STATES.THE EXERCISE INVOLVED THE CONSOLIDATION OF ST ENGG'S US OPERATIONSFOR EACH OF ITS FOUR STRATEGIC BUSINESS AREAS UNDER A SINGLE UMBRELLATO ACHIEVE CRITICAL MASS WITHIN THE UNITED STATES.1,4771,662KEY FINANCIAL DATA (S$’000)1996 1997 1998 1999 20001,247Turnover by sector 1,246,933 1,476,709 1,661,729 1,764,407 2,259,027Aerospace 523,389 674,204 829,890 856,872 956,320Electronics 152,117 311,504 335,374 354,534 411,781Land Systems 221,465 247,797 298,941 297,022 526,510Marine 349,962 243,204 197,524 255,979 358,433Others – – – – 5,983413Profit before tax by sector 148,053 202,403 249,282 300,060 412,509Aerospace 56,402 113,920 170,468 189,837 218,991Electronics 10,415 19,643 16,159 28,201 46,591Land Systems 22,861 15,358 16,628 33,092 84,650Marine 58,375 53,950 44,831 46,367 63,935Others – (468) 1,196 2,563 (1,658)Profit after tax by sector (before extraordinary items) 95,701 120,812 154,678 200,529 288,138Aerospace 27,838 62,050 102,813 125,208 151,038Electronics 7,283 11,328 9,188 15,300 30,580Land Systems 17,312 9,381 12,228 27,998 64,948Marine 43,268 38,521 30,138 31,178 43,830Others – (468) 311 845 (2,258)300288249201202155148121961996 1997 1998 1999 2000Note: 1996 - 1999 figures for Land Systems sector exclude Founders Industries Pte Ltd (formerly known as Chartered Industries of Singapore (Pte.) Limited)22 • visionfinancial highlights • 23

KEY FINANCIAL DATA (continued)PRODUCTIVITY DATA1996 1997 1998 1999 20001996 1997 1998 1999 2000Shareholders’ funds (S$’000) 729,161 818,366 835,900 840,485 912,280Total assets (S$’000) 2,379,896 2,993,655 3,285,760 3,406,852 4,452,624Net tangible assets (S$’000) 728,287 817,513 835,900 840,485 912,280Earnings per share (¢) 3.57 4.30 5.49 7.08 10.12Return on turnover (%) 7.8 8.4 9.5 11.7 12.9Return on equity (%) 13.1 14.8 18.5 23.9 31.6Return on total assets (%) 4.0 4.0 4.7 5.9 6.5Net tangible assets per share (¢) 27.2 29.1 29.6 29.6 31.9Average staff strength 6,318 7,250 7,790 8,129 10,128Employment costs (S$’000) 328,201 433,424 496,861 533,357 658,511Sales per employee (S$) 197,362 203,684 213,316 217,051 223,048Profit after tax per employee (S$) 15,147 16,664 19,856 24,668 28,450Economic value added (S$’000) 9,377 26,146 75,280 135,640 189,350Economic value added spread (%) 1.0 2.4 6.2 10.5 13.3Economic value added per employee (S$) 1,484 3,606 9,664 16,686 18,696Value added (S$’000) 537,914 723,882 847,945 900,107 1,155,845Value added per employee (S$) 85,140 99,846 108,850 110,728 114,124Value added per $ of employment costs 1.64 1.67 1.71 1.69 1.76Shareholders’ funds (S$ million)729818836 840912Profit after tax per employee (S$’000)15.116.719.924.728.51996 1997 1998 1999 20001996 1997 1998 1999 2000Return on equity (%)13.114.818.523.931.6Economic value added per employee (S$’000)1.53.69.716.7 18.71996 1997 1998 1999 20001996 1997 1998 1999 2000Net tangible assets per share (¢)27.229.129.6 29.631.9Value added per employee (S$’000)85.199.8108.9 110.7114.11996 1997 1998 1999 20001996 1997 1998 1999 200024 • visionfinancial highlights • 25

ECONOMIC VALUE ADDED STATEMENTS (S$ million)VALUE ADDED STATEMENTS (S$’000)1996 1997 1998 1999 20001998 1999 2000Net operating profit before tax 125.2 181.7 224.9 267.2 369.4Adjust for:Share of associated companies’ profit 22.8 20.7 24.3 32.9 43.1Interest expense 2.2 2.5 12.6 9.7 12.7Others 18.5 14.1 46.8 50.5 34.6Adjusted profit before interest and tax 168.8 219.0 308.7 360.3 459.8Cash operating taxes (Note 1) 61.2 80.9 95.9 97.1 130.3Net operating profit after tax (NOPAT) 107.6 138.1 212.7 263.2 329.5Average capital employed (Note 2) 944.2 1,066.8 1,205.8 1,288.1 1,422.2Weighted average cost of capital (Note 3) (%) 10.4 10.5 11.4 9.9 9.9Capital charge 98.2 112.0 137.5 127.5 140.2Economic value added 9.4 26.1 75.3 135.6 189.3Economic value added (S$ million)9.426.175.3135.6189.31996 1997 1998 1999 2000Value added from:• Revenue earned 1,661,729 1,764,407 2,259,027• Less bought in materials and services (943,341) (952,921) (1,243,541)Gross value added 718,388 811,486 1,015,486Income from investments and interest 99,152 58,048 85,349Extraordinary items (2,798) (8,205) –Exchange gain / (loss) (1,080) 336 222Other non-operating income / (expenses) 6,138 5,548 11,722Share of losses of associated companies and joint ventures 28,145 32,894 43,066Total value added 847,945 900,107 1,155,845Distribution of value added:To employees in wages, salaries and benefits 496,861 533,357 658,830To government income and other taxes 94,148 95,666 125,447To providers of capital on• Interest paid on borrowings 5,339 3,961 3,983• Dividends to shareholders 142,210 195,359 213,037738,558 828,343 1,001,297Balance retained in / (applied from) business:Depreciation 63,026 58,787 76,143Retained profits (54,624) (47,274) (7,112)8,402 11,513 69,031Non-production cost and income:Provision of doubtful debts 5,807 10,072 (54)Income from investments and interest 99,056 58,048 85,349Extraordinary items (2,798) (8,205) –Exchange gain / (loss) (1,080) 336 222100,985 60,251 85,517Total distribution 847,945 900,107 1,155,845Note 1: The reported current tax is adjusted for the statutory tax impact of interest expense.Note 2: Monthly average total assets less non-interest bearing liabilities plus timing provision, goodwill amortised, unusualloss/(gain) items, and present value of operating leases.Note 3: The Weighted Average Cost of Capital is calculated in accordance to Singapore Technologies (ST) Group EVA Policy asfollows:i) Cost of Equity using Capital Asset Pricing Model with market risk premium at 7.0% (1999: 8.1%). This is set with referenceto the returns of the MSCI Index less US 30-year Treasury Bond yield rate from 1987 to 1999;ii) Risk-free rate of 4.57% (1999 @ 4.1%) based on yield-to-maturity of Singapore Government 10 years (1999: 7 years) Bonds;iii) Ungeared beta at 0.85 (1999 @ 0.85) based on ST risk categorisation; andiv) Cost of Debt rate at 5.25% (1999 @ 5.5%) using 5-year Singapore Dollar Swap Offered rate plus 75 basis point (1999:average prime lending rate of the 4 major banks in Singapore).Value added (S$ million)1,1568489007245381996 1997 1998 1999 200026 • visionfinancial highlights • 27

• AEROSPACE• ELECTRONICS• LAND SYSTEMS• MARINEe-initiatives by chang cheow tecke-structuringour businessesWho can read the future of next generationproducts and systems?Singapore Technologies Electronics’ formidable reputation for developing cutting-edge electronics systemsinternationally has strategically placed us to serve your organisation further.We provide solutions for the commercial, defence and industrial sectors. Core businesses includeCommunication systems, Microwave systems, Traffic Management systems, Real-time systems, Training andSimulation systems, Intelligent Building Management systems and Intelligent Rail systems.With the combined experience and resources of ST Aero, ST Elect, ST Kinetics and ST Marine, SingaporeTechnologies Engineering is a one stop provider of engineering solutions, from turnkey projects to customisedupgrades.www.stengg.comWe can.THE SLUMP IN INTERNET STOCKS IN 2000 SHOULDnot mislead anyone. It has always been a bubblewaiting to burst. Nevertheless, the e-revolutionwill remain a key factor in weaving togetherthe modern global economy.Traditional bricks and mortarcompanies, which were at first slow to respond to thee-transformation, are carrying the flag now.The aftermath ofthe shock has brought greater appreciation of the ‘www’creature and of the technology’s capability.The ‘click and mortar’ model hasevolved as different industriesshape their own e-models and dictatewhere their cash flows.Whilethere are reasons to be cautious ofpure dot-coms, many e-retailersare rapidly moving away frombusiness models that emphasisegenerating site traffic at greatexpense, in favour of targettingimproved customer retention andincreased sales per customer.The arrival of established companieson the Internet has broughtabout an erosion of the distinctionbetween the so-called “oldeconomy” and “new economy.”E-business is here to stay, becomingincreasingly commonplace.Investing in e-initiatives can becostly, so we have exercised care toensure that we maximise returns onour investments.We believe thatadopting the right technology ismore important than getting thelatest or most sophisticated technology.As technology changes, sowill we.We constantly monitor thedos and don’ts of e-business andassess how to find the right balancebetween re-engineering our businessesand web-enabling existingprocesses.Fundamentally, we aim to leverageon e-technology as a tool to webenableour processes and to shapethe changing business models withthe e-revolution. Any savings that wegenerate from e-business will beploughed back to further improveour business processes. Ultimately,we want to harvest a more costeffectivebusiness so as toposition ourselves ahead of the competitionin the globalmarketplace.Our e-initiativesencompass the threemain areas of CustomerRelationship Management,Supply ChainManagement andEnterprise Management.CUSTOMERRELATIONSHIPMANAGEMENTOur approach towardsCustomer RelationshipManagement (CRM) isto make it a “sticky”one. E-CRM helpssupport our goal ofbuilding long-term relationshipswith all our customers by providinga wider range of products andservices that add value to them.One important goal is to constantlyimprove our responsiveness toevery customer’s changing needs,regardless of their geographicallocation.”WE AIM TOLEVERAGE ONE-TECHNOLOGYAS A TOOL TOWEB-ENABLE OURPROCESSES ANDTO SHAPE THECHANGINGBUSINESS MODELSWITH THEE-REVOLUTION.“While e-transforming our businesses,we have had the opportunityto review our current value chain.This in turn has helped us todetermine vital points we needed tofocus upon to further enhance ourbusiness models. Recognising thatcritical mass and base load are equallyimportant, we have worked withpotential strategic partners to jointlydevelop our own CRM portals.Kicking this off was the Aerospacesector. It launched e-sasco.com inFebruary for our airframe maintenance,repair and overhaul services.Further refined and improved, it wascompleted in June.The Aerospacesector piloted the way for the otherthree sectors, which have rolled outtheir own CRM portals this year.SUPPLY CHAINMANAGEMENTWe are sparing noexpense and efforts tostreamline our processesin order to achieveour globalisation ambitions.Wehave cut outproduction bottlenecks,controlled stock levels,shortened fulfillmenttime and broadenedsupplier base.The resultwill be a significantfreeing of capital andreduction of costs.Our Supply ChainManagement (SCM)e-initiatives have threemain foci: to lower overall supplychain administrative costs, reduceprocurement costs of materials andservices; and improve working capitalmanagement through lowerinventory holdings.We have contracted HewlettPackard and i2 to further developWe take Engineering furtherFor more on Electronics Sector, turn to page 78e-initiatives • 29

T H E E - L I S TT H E E - L I S Tstengg.com is the website of the Group and is also afirst B2B e-commerce portal with special emphasisconvenient access route to information on the fouron the aerospace industry of the Asia Pacific region.constituent sectors. For anyone who wants tobrowse and obtain a general picture of the Group’sactivities or to search for specific facts about a sector,this is the place to go. juzclickcal.com is a B2Bportal designed for calibration customers. It can beused to schedule, monitor and maintain inventorylists, place orders and reach out to more potentialcustomers. The main feature of juzclickcal.com isthe eQuipTrack module, an inventory managementsystem. Among other things, our customers can usethis to access our database and check on the currentstatus of any job that we are doing for them.juzclickcar.com is a portal for the sale and purchaseof certified used cars. Services providedinclude finance, insurance, vehicle certification andonline trading. juzclickcar.com.sg will soon have asister site in Malaysia (juzclickcar.com.my), followingthe signing of an MOU between STA Inspectionand Pusat Pemeriksaan Kenderaan BerkomputerSdn Bhd (PUSPAKOM). juzcliksource.com/tm aprivate marketplace to enhance our procurementprocesses towards an integrated and seamlesse-Supply Chain Management system. It went ‘live’on 13 December; buyers were able to transact RFQswith suppliers via the Internet. ishopaero.com isbeing built by ST Aero and iMerchants Ltd as theand implement an optimised SCMsystem within ST Engg.The projectwill take us through the processes ofidentifying the different types ofmaterials, goods and services we buyand integrating more of our back endoperations to the front end.We have been managing thetransformation and integration ofour legacy system at the back end,while tapping into global tradeexchanges for wider options andgreater economies of scale at thefront end. Global access to sourcesof supplies has helped to bring downcosts and in some cases, establishstrategic relationships with originalequipment manufacturers.To truly realise the benefits ofe-procurement, we have set a targetover the next two years of puttingS$150-200 million of our customengineeredproducts and servicesthrough online reverse auction.Wehave signed a three-year agreementwith Freemarkets to do this.A web-enabled SCM willundoubtedly strengthen the globalreach of both our customers’ andsuppliers’ bases as the consolidationof the latter takes place.ENTERPRISEMANAGEMENTIn April, we launched a new internalST Engg portal. It is used tofoster community building withinST Engg and to generate e-literacyand interest in the Group. In additionto a chat room and a forum,there is a CEO corner that providesa direct link for all employees tothe CEO.An information and news tool keepsthe ST Engg community updated oncurrent activities within the Groupand in the international arena.Games and educational tools are alsoincorporated. Staff are encouraged toaccess this site and to become activeInternet users.This is but the first step in ourquest to build knowledge-managementwithin the Group. Next, weAN E-SAMPLING:The Group has developed a variety ofwebsites to reach out to both new andexisting customers.will develop data and knowledgemining e-processes that can providesynthesised information that is fullyaccessible to all staff.We firmlybelieve that a learning culture iscrucial to our ability to keep upwith the changes in technology andbusiness models, and will continueto look for ways to facilitate andencourage learning within ourworkforce. As we work towardsour vision of a world-class engineeringGroup, we need to remainkeenly aware of global competitionand competitiveness and to recognisethat global networking isinevitable.We have provided a programmeof Internet training to further thefamiliarity of staff with the Internetand accustom them to its use; thiswill be stepped up in the comingyear.We will organise quizzes,competitions and fun activities toencourage greater interest in usingthe Internet for practical purposes.We have also given each employeeup to S$2,900 for the purchase ofa computer or computer-relatedproducts this year.We have recently started e-HR(human resource), an initiative tobuild a HR system on the net.Thesystem will serve to provide quickand convenient access to personneldata and effective personaladministration processing.We also harness technology as atool to help us improve ourproductivity. One example is theimplementation of Aero book, ahandheld tool facilitating the workof the licensed aircraft engineeron-board the aircraft.This conceptcan be expanded to other businessareas within the Group.The future of e-business promisesgreater convenience, efficiency andchange as newer and more intriguingtechnologies emerge.While we cannever be too certain of the eventualform, we are sure that when thesechanges occur, our people will beready to face them.It will enable buyers to reach a wider range ofpotential suppliers than before and identify the mostattractive sources of materials. e-sasco.com,staengineering.com, staengines.com,stasystems.com, stasupplies.com, and edc.com areall specially tailored websites launched by ST Aero.They provide customers with online secured,up to date access to maintenance status and otherwork process databases. e-stmarine.com is thecustomer website of ST Marine. It gives themup to date information on their respective shipbuilding,shiprepair and shipconversion projects, as wellas the latest news from the yards. Three productwebsites of ST Kinetics, launched respectively inAugust, September and October are: bx-ifv.com,a one-stop site for the essential information on theBionix. News, pictures, brochures, videos,technical specifications can all be found here.sar-21.com is the site that offers up to date informationon the SAR 21 and its variants. Customers mayread about its development, download brochuresand view videos on this one-stop site. opel.com.sgbrings ST Kinetics closer to its Opel customersthrough facilities such as e-booking of serviceappointments and an array of online products andaccessories information.e-structuring • 31

investor relationsby shirley tanI N V E S T O RC A L E N D A Rm o r e f o r y o uJAN 25 TO 26 Press & Analysts’ Briefingsfor FY 1999 ResultsYEAR ON YEAR, THE IMPRESSIVE RESULTS THAT ST ENGGproduces for our investors have testified to the Group’sstrength.This has done much to win their confidence, but tous, this was never enough.We believe that a vital part ofbuilding the confidence of investors in us is to show that wehave confidence in them.MORE INFORMATION:NEWSFLOWWe do this by being as open as wecan be about our activities, our plansand our results.We regularlyannounce our plans for expandingour business and provide news aboutour investments and major projects.We spell out their significance so thatour investors are able to obtain agood picture not only of what we aredoing, but why we are doing it andthey are then better placed to assessour progress.The cumulative resultof this flow of information is thatinvestors are able to gain a strongOUR FREQUENT INTERACTIONS with investors and analysts allow us to provide timelyupdates on the Group’s performance and activities.sense of the robustness of our fouroperating business units.This representsadded value to our shareholders.MORE FREQUENT:QUARTERLY RESULTSSuch news releases only provide apartial picture of ST Engg’s performance,rather like scenes from a play.Investors also want to know aboutthe overall performance of theGroup, and we believe we shouldsupply information more frequently,in addition to the annual report.When the Group was established,we began by preparing reports summarisingour activities and resultson a half yearly basis.Then we startedto provide quarterly reportsbeginning from 1Q 1998.When wefirst did so, we did not give a breakdownof SBA results in the first andthird quarters, but now we do: Forevery quarter, we provide full resultsfor the Group as a whole and for itsfour constituent operating businessunits. By 1Q 1999, we had press andanalysts’ briefings for our results on aquarterly basis.MORE SPEEDYOur results announcements used tobe scheduled for the very end of themonth after the reporting period;then became the second week. Forfinancial year 2000, we released ouraudited results within 10 days afterthe year ended.MORE CONTACTSRegular face-to-face meetings andcontacts are a further means tobuild good relations with investors.On average, we make presentationsat three investor conferences a year,usually in Hong Kong, London andNew York, where most of ourshareholders are based. Over thelast two years, we also went on twoglobal road shows to stay in touchwith our shareholders. All thesewere in addition to our ongoingone-on-one meetings and teleconferences.MORE DEPTH:SECTORAL BRIEFINGSDuring 2000, we held four sectoralbriefings for analysts to get a feel ofour various operations.The analystsnot only got to tour our facilities toappreciate the operations better butalso had an opportunity to try ournew products. Most importantly,they had the chance to mingle withour operational managers and getfirst hand information on ouroperations.On the Internet, investors canvisit ST Engg’s Investor Relationswebsite at their convenience. Itprovides a wealth of information,including our annual reports, financialdata and results, a financialcalendar which indicates significantdates, such as those when results willbe released, and details of analystswho make assessments of the Group.It also offers contact details forthe Group and the four sectors, sothat investors can pinpoint for themselvesthe best person to approachwith any query they might haveabout aspects of its performance.OUR INVESTOR RELATIONS homepage onthe corporate website provides investorsaccess to updated information.RECOGNITIONAll these efforts were paid off withthe Group winning several awardsduring the year.This includes theMost Transparent Company (OverallWinner – Golden Circle Award)received in July.This award is givento the company which the SecuritiesInvestors Association of Singaporejudges to be the most transparent inthe country.Financial Intelligence Asia (FIA)magazine conducted a survey of Asiabasedanalysts and investors to findout which, in their view, were thebest and worst corporate websites inthe region.The respondents were to“determine which listed companiesin Asia have mobilised the Internetbest to serve the needs and requirementsof the investment community.”This resulted in ST Engg winning theFIA Best Investor Relations WebsiteAward in the Infrastructure/Manufacturing Sector.We believe that the Group hasbeen able to effectively establishinvestors’ commitment through ouron-going efforts in providing timelyand informative updates on its performance,activities and future plansthroughout the year.This is importantin underpinning our long-termgrowth, and our efforts to be more‘transparent’ to the investors.FEB 24 Analysts’ Tea at Asian Aerospace 2000MAR 14 Release of Annual Report 1999MAR 24 Analysts’ Sectoral Briefing – ST KineticsMAR 31 Annual General MeetingAPR 14 Press & Analysts’ Briefings for 1Q 2000 ResultsAPR 17 TO 18 Presentation at Merrill Lynch AsiaPacific Conference (London)MAY 15 TO 19 CLSA Investors’ Forum Hong KongMAY 26 Analysts’ Sectoral Briefing – ST AeroJUN 22 Analysts’ Sectoral Briefing – ST ElectJUL 13 Extraordinary General Meeting – Share PlansJUL 14 Press & Analysts’ Briefings for 1H 2000 ResultsJUL 26 TO 27 Road Show – Hong KongSEP 8 Analysts’ Sectoral Briefing – ST MarineSEP 28 TO OCT 7 Road Show – USOCT 4 TO 6 Chase JF – 6th Asia Conference (New York)OCT 12 Press & Analysts’ Briefings for 3Q 2000 ResultsOCT 16 TO 20 Road Show – EuropeNOV 23 Extraordinary General Meeting – Share Plans32 • vision

It was a good year for ST Engg, with the company achieving broader recognitionat an international level and its share prices hitting a record high. BOON SWAN FOO,ST Engg’s Deputy Chairman & CEO, surveys the company’s performance in 2000.GOING GLOBALD E A R S H A R E H O L D E R S,I am pleased to report that ST Engg hadanother year of record performance. Ourmarket capitalisation hit an all time high ofS$8.3 billion, before closing at S$8.0 billionon 29 December 2000, an improvement ofabout 8.8% over that of 30 December 1999.This is significantly higher than the S$2.0 billionmarket capitalisation, at the point when theamalgamation of our four subsidiaries wasannounced in August 1997. During the lastthree years, we have successfully consolidatedour businesses and reaped the benefits ofworking together as an integrated engineeringand systems house.BOON SWAN FOO: “Year 2000 will always be remembered as the year we positioned ourselvesfor the next lap. We are now ready to be truly global.”cover story • 35

OUR EFFORTS TO BREAK INTO NEW MARKETS ANDMET WITH A SIGNIFICANT DEGREERE-INVENT OURSELVESOF SUCCESS AND RAISED OUR PROFILE WORLDWIDEThe Bionix was among the four finalists selected for the US Army’s IAV programme.The acquisition and integration of the Founders group(ex-Chartered Industries of Singapore) proceeded smoothlyover the last year and this has helped to significantly boostour performance. Our overseas marketing and businessdevelopment drive continued relentlessly. One key projectwas our participation in the US Army’s Interim ArmouredVehicle (IAV) programme.This is a US$4 billion procurementcontract for the US Army’s rapid deployment forces.Although we did not win the contract, participation in thisprogramme has helped propel ST Engg into the top leagueof defence contractors in the world.We have also restructuredour US operations to prepare ourselves for our mediumterm goal of being accepted as a US company.On the home front, we survived the Y2K bug, whichemerged as the Technology, Multimedia and Telecoms(TMT) stock mania and the consequent adverse impacton the share prices of all non-TMT stocks. More importantly,it threatened to tear up all employment contractsbetween the companies and their in-house providers ofintellectual capital.We are indeed fortunate to havemany excellent yet loyal staff with us.We are a young company – this being only the thirdyear since our amalgamation.Year 2000 will alwaysbe remembered as the year that we positioned ourselvesfor the next lap.The challenge is great. A future ofopportunity lies ahead of us.We are nowready to be truly global.WORKING TOGETHERAS A GROUPOur business achievements are reflectedin the year’s outstanding set of results.Strong and steady growth in all sectorshas made 2000 another year of sterlingperformance by ST Engg. Groupturnover increased from S$1.76 billionin 1999 to S$2.26 billion in 2000, anincrease of S$495 million or 28% whilenet profit after tax grew from S$200.5million to S$288.1 million, a growth ofS$87.6 million or 44% over 1999.The star performer for the year wasthe Land Systems sector.This sector hadto manage on two major fronts – one ofintegrating the acquisition of theFounders group and operating its businesshere in Singapore, while at the sametime launching an aggressive bid for theUS Army’s IAV programme.The effort needed to strategise,organise, market, demonstrate and submit bids forthe programme was immense. In spite of this, the LandSystems sector has done very well. Its turnover and profitabilitygrew by a healthy S$229 million or 77% to S$526million, and S$37 million or 132% to S$64.9 millionrespectively.The Electronics sector also did extremely well, doublingits 1999 net profits after tax, in 2000, from S$15.3million to S$30.6 million, despite an increase in turnoverof only 16% from S$354 million to S$412 million. It isnow achieving better margins after many years of lowmargin performance.The synergies of working togetherG R O U P R E S U L T SYEAR END 1999:S$1.764BYEAR END 2000:$2.259BT U RNO VERNET 28%with the Group and adopting Group processes andphilosophies are showing results.The Aerospace sector continued to post growth inturnover of S$100 million or 12% reaching S$957million. Net profit after tax grew by 21% to S$151million. DalFort Aerospace, our subsidiary in the US,performed badly, moving from a profit of S$6 millionin 1999 to a loss of S$8 million in 2000.With the formationof Vision Technologies in the US and the postingof Chang Cheow Teck to manage our US operations, weare confident of turning around DalFort Aerospace thisyear.With the delivery of two Landing Ship Tanks (LSTs)to the Republic of Singapore Navy (RSN), the Marinesector’s turnover and profitability grew by S$102million or 40% and S$13 million or 41% respectively.Both turnover of S$358 million and net profit aftertax of S$43.8 million were record numbers since theinception of ST Marine. Improved margins for theMarine sector were mainly contributed by its shipbuildingand shiprepair business groups.Y2K VIRUSThe Y2K virus emerged late – some months after31 December 1999 – as the B2C/B2B Internet Stockand the TMT stock prices mania.This had an adverseimpact on our share price which fell to a year intra-daylow of S$1.79.We went on a road show to explain ourstrategies to the public and our shareholders. Fortunately,we had a core group of long-term investors who kepttheir faith in us and continued to support us. Eventuallytheir perseverance was rewarded when our share pricesregained its strength by the year-end.At home, IT engineers were leaving in droves tojoin the dot.coms.The economy was flushed withPRO FIT AFTER TAX44%YEAR END 1999:S$200.5MYEAR END 2000:$288.1M28% 44%liquidity and calls for start-ups and spin-offs wererampant. Many were throwing cash at the mad rush.Toquote Christopher Bartlett of Harvard University,“Throwing monies to attract/retain staff is Lazy Management.”We were glad we did not take that route. Ourstaff continued to remain loyal and the market rewardedthem and us alike through our innovative share options,share ownership and performance share schemes.We alsopaid out attractive bonuses to our staff upon confirmationof the excellent results for the year. Reward forperformance will continue to be our motto. Moreimportantly, our staff have been continually challengedby exciting programmes and demanding but enlightenedcustomers, and indeed our staff have risen up to thechallenge, without being unduly distracted by the “papergold rush.”TOTAL INNOVATIONInnovation and flexibility are vital for companies in today’sglobal markets. ST Engg has those qualities.They weremuch in evidence in the record of our four constituentgroups during the past year, when they achieved significantadvances in product development and in securingrecognition for the quality of their services.To give a fewnotable examples:■The Aerospace sector has developed a complete suite ofF-16 and C-130 upgrade work.This is a major move thatcould see it carve out market niches for itself.Aerospacehas also expanded its development work for the commercialarena.The strategic tie-up with Boeing on the B757Passenger-to-Freighter conversion is a highly significantmilestone in that process.■ Over the last couple of years, the Land Systems sectorhas advanced from being a vehicle maintenance andupgrade service provider to a designer and developerof sophisticated products. Such products include the AllTerrain Tracked Carrier (unveiled this year), Bionix IFV,SAR 21 rifle and 40mm High Velocity self-destruct rounds.■ Within the Electronics sector, the Communicationand Sensor Systems group was commissioned to providea traffic control management system for Suzhou City,China. Its Radio Frequency Identification technologywas also put into service by the National Library Boardin Singapore.When it won the contract to provide anintegrated communications system for the TuchengMRT line in Taipei,Taiwan, it was able to call upon theexperience and expertise of the Large-Scale Systemsgroup. Significant development work performed by the36 • visioncover story • 37

GROUP TURNOVER INCREASED FROM S$1.76 BILLION IN 1999 TO S$2.26 BILLIONIN 2000, AN INCREASE OF S$495 MILLION OR 28%F-16 cockpit on show at Asian Aerospace 2000.Software Systems group over the past year includes thedevelopment of a used car auction software system and are-usable architecture common application platform.■ The Marine sector has been involved in the designand development of sophisticated warships such as theLSTs. It launched the last of four LSTs ordered by theRSN in February.The first of the RSN’s LSTs sailedaround the world in mid-2000 and participated in theInternational Naval Review 2000 held in New YorkCity in July.Within each one of these programmes, many moreinnovations on sub-systems and componentswere achieved. Indeed more than 30% of oursales each year, on a rolling three to five yearbasis, comes from new products developedover the same period.E-INITIATIVESThe Internet revolution and the evolvingB2B landscape will continue to have farreaching implications to the business ofST Engg.The Group has successfully reducedcosts through use of online dynamic pricingcapabilities and reach out to a global supplierdatabase.We deployed several CustomerRelationship Management portals and applicationsto service our customers better.We havelaunched new business models like our usedcar auction business and invested in severalB2B Internet-related ventures.We are lookingforward to these investments bearingfruit over the next two years. Our entirecompany’s supply chain is currently beinge-enabled with capabilities that will allow afront end reach and link to global marketplacesand a seamless back end integrationwith our different back end EnterpriseResource Planning.The objective is to makeus more cost competitive as we compete inthe global market. At the same time, we areexploiting the technology to achieve higherproductivity like the Aerobook that we havedeveloped for use by our engineers on boardaircraft.We will also be investing in an e-enabledemployee portal that will automate currentmanual human resource processes with theaim of improving staff morale, increasingcompany efficiency, heightening awareness with onlinecommunication and lastly and most importantly servingas a platform for every member of the ST Engg familyto keep abreast with technology.COMING OF AGEWhile we are proud of our achievements during thepast year, it has been particularly gratifying to see ourprogress recognised by others. Of special significancewere our listing in the Jane’s Defence Weekly (JDW) Top 20Index and our winning of the Golden Circle Awardfor Corporate Transparency from the SecuritiesInvestors Association of Singapore.The delivery of two LSTs raised Marine sector’s profits by 41% this year.JDW is regarded as a highlyauthoritative publication withinthe global defence industry.Thefact that it has listed our Group inits Top 20 Index reflects recognitionof ST Engg at an internationallevel as a reputable and world-classdefence player, able to stand incomparison with the best in thebusiness, wherever they are.The Golden Circle Award isgiven to the most “transparent”company in Singapore. On aregular basis, we announce ourgrowth and expansion plans, newbusiness focus, investments ine-business, major projects andother details so that shareholdersare kept abreast of the latestdevelopments in ST Engg.We dothis over and above our quarterly result announcementsand briefings to the press and analysts.We are pleased that shareholders and investorshave acknowledged our efforts. At a time when theinternational trend is for companies to become moretransparent, this award is recognition that we areadopting the best global practices.Towards the end of the year, we were named thesecond best-managed company in Singapore by AsiaMoneyas well as one of the best value-adding companies byAsian Wall Street Journal and also by HSBC Top 100companies in Asia.Our JDW listing, the winning of the Golden CircleAward, the award by AsiaMoney for being one of AsiaPacific’s Best-Managed Companies, together with ourgrowing success in securing contracts for our productsand services at an international level, confirm thatST Engg has achieved broad recognition.LOOKING AHEADINVESTING FOR THE FUTUREWe recognise that there is a limit to how much we candevelop and innovate in-house.We need to tap the hugetechnological base that exists overseas.To facilitate this,we have set up a US$30 million technology fund tocomb the world for innovative ideas and technologies.DIVIDENDSWe continue to create shareholders valuein more ways than one. We are paying74% of our full year’s profits as dividend.This is in the form of normal dividend,which is increased from 23% in 1999 to25%, and a special dividend of 55% taxableand 15% exempt, thus returning atotal of S$213 million to shareholders. TheEconomic Value Added has continued togrow: this year, it has risen from S$135.6million to S$189.3 million, an increase of40%. We ended 2000 with a share priceof S$2.79 and a market capitalisation ofS$8 billion, an increase of 8.8% over theend of 1999 market capitalisation.HUMANRESOURCEOur philosophy for managingour business will be to put ourbest foot forward and send ourbest people overseas. Earlythis year, we will redeploy ourpresidents of the varioussectors overseas to searchout, and manage the overseasthrust. We intend to beef upthe overseas offices with ourbest technical managers sothat they scour the world forthe best technology. Only thencan we sprint fast forward.This fund is over and above the 3% of our revenue thatwe currently spend on research and development in ourcore business areas.The technology fund will allow ST Engg to investand incubate technologies and ideas that will developinto our future star products.While many funds exist inthe market, our focus will be upon engineering relatedtechnology development where we can nurture technologyto help it succeed. Our areas of special interestinclude Micro-Electronics-Mechanical-Systems (MEMS),robotics, alternative power sources and new materials.These investments will give us access to new technologiesthat may not be readily available in the open market.The success of some of these technologies will give theGroup an added advantage in exploiting new technologyas a force multiplier for our customers.EXPANDING THE US BEACHHEADThe sheer size of the US market makes it an attractiveproposition for ST Engg to position itself to capturea slice.We are keenly exploring growth opportunitiesin the US.Our participation in the US IAV programme gavea boost to our US operations.The branding, the publicityand the relationship that we developed with ourcustomers and US industry partners have provided anopening for ST Engg to market other products and services.Following the publicity given to Vision Technologies,38 • visioncover story • 39

• AEROSPACE• ELECTRONICS• LAND SYSTEMS• MARINEWE CONTINUE TO CREATE SHAREHOLDERS VALUEIN MORE WAYS THAN ONETrain drivers can now be trained in ST Elect’s Cabin Simulator beforethey ride the tracks.our US branding, we moved ahead in June torestructure our businesses and rationalise our plansfor all of our sectors.Prior to the rationalisation, ST Engg’s presencein the US had been focused in the aerospacemaintenance, repair and overhaul businesses inMobile, Alabama, and Dallas,Texas.The new USorganisation structure under the branding,VisionTechnologies Systems, integrates ST Engg’s fourcore businesses – Aerospace, Electronics, LandSystems and Marine – in the US in order that therespective business groups may directly undertakeprojects and ventures, and exploit opportunitiesavailable in the US.This new structure will effectivelyfacilitate control, growth, market recognition,and scalability within the US. Given that the USORDER BOOKleads the current technological revolutionin e-business, the US group will also serveas a conduit to keep us abreast of the latesttechnological and industrial advances andchanges, and to channel and share suchknowledge for possible application in thenon-US businesses within the ST EnggGroup.EUROPE AS A THIRDLEG OF GROWTHWe have reviewed our plans for Europe aspart of our growth strategy.We intend todevelop in a similar manner that we havein the US, but we anticipate that this will beon a small-scale initially.We shall buildupon our existing contacts. In order to spurthe development of our business in Europe,we shall station a senior management teamthere.They will undertake marketing aswell as developing strategic relationshipswith our partners.This is the third leg of ourgrowth strategy, which should see us become finallyestablished within Europe during the next few years.A VOTE OF THANKSOnce again with the strong support of our shareholders,our customers, our staff, our suppliers, ourpartners, our Chairman and the Board of Directorsof ST Engg and its operating units, we have donewell as a Group.Appreciation is also due to our shareholders forstrongly endorsing our new share option plan andshare issue mandate at the Extraordinary Meetingheld in November.Without the confidence, support and understandingof all these constituents we would not havebeen able to achieve many of the successes that wehad this year.Who can engineer dreams into reality?Backed by our expertise in automotive and ordnance technologies, Singapore Technologies Kinetics hasdeveloped and produced Singapore’s very own Infantry Fighting Vehicle - the Bionix - and the All TerrainTracked Carrier. International accolades have also been received for our SAR 21, the first assault rifle ofits class with an integrated laser aiming device.From the upgrade of military vehicles such as the AMX-13 tank and M113 Armoured Personnel Carrier;to the production of munitions ranging from the 40mm Automatic Grenade Launcher and its self-destruct“green” grenades, customised weapon stations and air defence guns to the FH 2000 52 calibre 155 mmhowitzer and its cargo rounds, ST Kinetics is the region’s leading total solutions provider for the armedforces. In the commercial arena, we provide comprehensive services in vehicle inspection and accidentrepairs, fleet maintenance, parts distribution and a variety of laboratory and industrial test services.With the combined experience and resources of ST Aero, ST Elect, ST Kinetics and ST Marine, SingaporeTechnologies Engineering is a one stop provider of engineering solutions, from turnkey projects to customisedupgrades.www.stengg.comWith a firm order book of S$5.1 billion, of whichS$1.8 billion will be delivered in 2001, weexpect our performance in 2001 to be betterthan 2000. Post balance sheet, we haveannounced new orders amounting to S$194million for our various sectors. In the meantime,we must ensure that we are well placedto ride the waves of change of tomorrow.We look forward to your continued support tobring about many more good years ahead.8 February 2001We can.We take Engineering further40 • visionFor more on Land Systems Sector, turn to page 84

THE NEXTSTEPSvision chats with ST Engg’s Deputy Chairman & CEO, BOON SWAN FOO, andPresident & COO, TAN PHENG HOCK, about its past record and plans for the future.Q1: ST Engg has had another good year in 2000.Are yousatisfied with ST Engg’s performance over the past years?BSF: Since ST Engg’s formation in December 1997through the amalgamation of its four business sectors,I think we have come a long way in the last three years.Revenue has been increasing at a Compounded AnnualGrowth Rate (CAGR) of 15%; Profit After Tax has beenincreasing at a CAGR of 34%.Today, ST Engg is one ofthe top 10 listed companies in the Singapore StockExchange. Our market capitalisation has increased fromS$2 billion to S$8 billion during this period. In July, webecame one of the 20 defence companies listed byJane’s Defence Stocks Index, which is a key index usedto indicate the direction where the global defenceindustry is heading.We are the only Asia Pacific defencecompany to be listed on the index.Thus in form, wehave come a long way since the formation of ST Engg.In substance there is still a lot to do and the challengefor us now is to propel the Group into its next phase ofgrowth which is in the US, followed by Europe in themedium term.Q2: What do you think are the key factors of successthat have sustained ST Engg’s performance and growthover the past years?TPH:Two key areas that we have been focusing upon areimproving quality and internal efficiencies, and innovation.Over the past years, programmes such as 6-Sigma andKaizen have been put in place to improve our internalprocesses. On innovation, we roll out new products andservices every few years to ensure the continued revenueand profit growth for each of our business sectors.Examples for Aerospace sector over the years range fromF-5 upgrades, C-130 and F-16 upgrades, to Passenger-toFreighter conversions. For Electronics sector, fromIntelligent Building Management Systems to LightEmitting Diodes traffic lights; for Land Systems sectorfrom the Bionix to the All Terrain Tracked Carrier; and forMarine sector from Patrol Vessels to Landing Ship Tanks.We try to constantly encourage our staff to innovateand develop their new ideas.We have an internal committeethat goes out on road shows to remind our staff about theimportance of developing new ideas and intellectualproperties and to educate them on how to patent theirideas. Incentive schemes have been put in place toencourage new ideas from our staff, and to help themcommercialise ideas with high potential for success.However, we recognise that there is a limit to howmuch we can develop and innovate in-house with ourBOON SWAN FOO (left)emphasises a pointin conversation withTAN PHENG HOCK42 • visionq&a • 43

10,000 staff.We need to tap the hugetechnological base that exists outside thecompany.To facilitate this, we have set upa US$30 million technology fund, with theobjective of enabling us to find innovativeideas and technologies and invest in them.This fund is on top of the 3% of our revenuethat we spend annually on R&D in our corebusiness areas.Q3: Could you elaborate on yourglobalisation efforts?BSF: We have started with the US andChina. In the US, the Aerospace sector hasspearheaded our drive with Mobile andDalFort Aerospace. In China, the Electronicssector has set up shop in Shanghai.We havesmaller outfits in London and Perth; marketingoffices in Dubai,Tokyo and Taipei.However, we musttake globalisation seriously.Weexpect toexport more and sellmore outside Singaporethan in Singapore. Hence,unlike American andEuropean MNCs, wemust send our very bestoverseas to run and manage these outfits. InUS we now have Chang Cheow Teck, in Europeit will be Wee Siew Kim or Wu Tzu Chien. Intime to come, the Electronics and Marine Headsmust move overseas and manage inwards.Q4: Are ST Engg’s shares a good investmentfor the future?TPH: Creating value for our shareholdershas always been the core of our business philosophy.Wehave implemented EconomicValue Added or EVA to ensure that we haverobust processes to generate shareholdersreturns year after year.We have increasedour EVA since ST Engg’s formation at the endof 1997. Over the past three years, EVA hasincreased from S$75.3 million in 1998, toS$135.6 million in 1999, to S$189.3 millionin year 2000. Going forward, our growth inthe next three to five years is not an issue aswe have a healthy order backlog.We are nowpositioning ourselves for growth beyond thenext five years, with investments in newtechnologies, our e-initiatives and continuedglobalisation efforts.In form, we have come a longway since the formation ofST Engg. In substance there isstill a lot to do and the challengefor us now is to propel the Groupinto its next phase of growthwhich is in the US, followed byEurope in the medium term.Q5: How do you keep your investors abreastof your performance and plans?TPH: We place a lot of emphasis on ourcommunications with our investors and onkeeping them abreast of the company’sperformance and plans.We go to threeoverseas investors’ conferences every yearto brief our shareholders and potentialinvestors about our plans and our performance.Wewere the first company inSingapore to publish results quarterly eventhough it was not a requirement of theSingapore Exchange (SGX). IncorporatedCreating value for our shareholders has always beenthe core of our business philosophy.into these announcements are the results ofour four core businesses as if they werelisted entities themselves. In addition wealso hold investor and analyst briefing sessionswhere we keep our investors updated on ourplan and initiatives. Last year, ST Engg wasvoted the most transparent company inSingapore by the Securities InvestorsAssociation (Singapore).In fact if you look at what we have beendoing over the last three years, you can seethat we have progressively been increasingand improving our transparency level as wellas providing timely information to ourinvestors and public.In our briefing on our FY 2000 results, wehad the session recorded as a delayed webcast.It was intended as a learning experience toprepare ourselves for the ‘live’ webcasting laterin the year of our quarterly results. In fact ourbriefing session is now on our website.This ispart and parcel of our philosophy of continuouslyimproving our corporate transparency.Q6: There are many investment funds outthere in the market. How is your technologyfund positioned vis-à-vis these other funds?TPH: Our technology fund is focused onengineering-related technology development.In some cases, the investment would give usan advantage by providing access to newtechnologies that are not readily available inthe open market.They could be in areaswhere the success of the new technologieswould act as a force multiplier for our customers.Or they could be in areas that aresynergistic with our business and reinforcewhat we are doing today. For example, theycould be investments in new materials thatwe did not know of before and that mightgive us a competitive edge or could give usnew capabilities. At the end of the day, someof these technologies could well becomenew core capabilities and new businesses forST Engg. Even if none of these opportunitiesare realised, we might be able to divestthese investments at the right time and reapgood financial returns.Q7: We understand that the company offersfinancial help for employees to help them buycomputers or software. Does this also fit intoyour e-initiatives?TPH: We see this as helping our employeesbecome more e-literate as part and parcel of44 • visionq&a • 45

We must take globalisation seriously. We expect toexport more and sell more outside of Singaporethan in Singapore. We must send our best overseas.staff development in ST Engg, and as animportant step in building an e-communitywithin the company.We need to encourageand help our employees move towardsthe new economy with confidence.Weneed to help them be more conversantwith Internet technology, to be able toaccess the wealth of information in theInternet world.The Internet could thenbecome a tool for training and retrainingour staff.We want them to stay relevant,competitive and more employable in thenew economy.As a Group, we want to build ane-community within the company whereknowledge is shared among all employees.There is a wealth of knowledge within theorganisation, some of which may neitherbe documented nor shared; it may beresiding in the minds of various individuals.We want to be able to harness and sharethis knowledge.We want to build ane-community where problems, issues andtechnical challenges are posed and shared,and others in the community can contributeand share their experience andknow-how.We want to build a livelye-community where our people can discussissues, solve common problems, and evendevelop new ideas through sharing knowledge,experience and ideas.The $2,500 help we offered follows anearlier $400 that we gave to each staff topurchase IT products or attend IT courses.This is part of our efforts to increase the e-literacy of our staff and to get everyone onboard our e-community. Sometimes it is achallenge of the mind rather than anythingelse, and we want to give our staff theopportunity to break that feeling that theycan’t do it. Recently there was an articleabout a 60-year old lady who went for ITtraining. If the 60-year old lady can do it, Ithink our employees can do it too.Q8: The recent expansion of the Internetand the “new economy” has affected businessesin all industries and will continue to havesignificant impact on business models andmarket structures going into the future. Howis ST Engg positioning itself for thischange?The objective of our e-initiatives is to leverageInternet technology as an enabler to help us creategreater customer satisfaction and to improve our costcompetitiveness vis-à-vis our competitors.TPH: We have embarked on variouse-initiatives in the last couple of years.Weare clear about what we want from oure-initiatives.We are not a dot-com companyand we do not intend to become one – thatis not part of our core business.The objectiveof our e-initiatives is to leverageInternet technology as an enabler to helpus create greater customer satisfaction and“stickiness”, and to improve our costcompetitiveness vis-à-vis our competitors.Such measures would help to ensure ourlong-term competitiveness and revenuestream.We recognise the need to be an earlyadopter of new technologies and new businessmodels in order to stay ahead of competition.Over the past couple of years, wehave developed and continuously improvedour Customer Relationship Managementsystem, Supply Chain Management systemand Enterprise Resource Managementsystem. Under our e-procurement initiatives,our tie-up with Freemarkets’ reverseauction marketplace provides an excellentexample of how significant cost savings canbe achieved through our e-initiatives.Q9: In terms of ST Engg culture, whatwould you want to see?BSF: A free flowing, fun loving, excitingand challenging place to work, play andto grow; seeking to conquer the worldtogether; stressful yet relaxing, supportiveyet demanding, teaching and learning,creating and innovating while showingrespect for one and all.46 • visionq&a • 47

B O A R D • O F •D I R E C T O R SLOOKINGAHEADho chingchairman, st engg;president &chief executive officer,singapore technologies pte ltdST Engg’s Board of Directors.Realistic and practical, they set theirsights upon what can be achieved;imaginative and ambitious, theybelieve that the realm of the possiblefor ST Engg is great.They play theirpart as active shapers of the Group’sstrategy, monitoring its progress,thinking about where it could be inyears to come and planning the wayforward.Together, they haveexperience, knowledge and vision thathave proved invaluable in makingST Engg what it is today.board of directors • 49

B O A R D • O F •D I R E C T O R Sboonswan foodeputy chairman &chief executiveofficer, st enggtanguong chingpermanentsecretary,ministry ofhome affairs,singaporengkee choevice chairman,dbs bankpeterho hak ean1st permanentsecretary,ministry ofdefence,singapore50 • vision board of directors • 51

B O A R D • O F •D I R E C T O R Smg limchuan pohchief ofdefence force,singaporearmed forcesdr philipn. pillaisenior partner,shook lin & bokand jointmanaging partner,allen & overy,shook lin & bokjoint law ventureprof. luipao chuenchief defencescientist,ministry ofdefence,singaporephilip tanyuen fahexecutivevice president,overseasunion bank52 • visionboard of directors • 53

D I R E C T O R S• AEROSPACE• ELECTRONICS• LAND SYSTEMS• MARINEwinston tantien hinmanaging director,corporate brokersinternationalpte ltdWho can shapethe ship of your vision?From the design and building of highly-specialised naval and commercial vessels to jumboisation, conversion,retrofitting and upgrading, we offer total solutions that are tailored to meet the specific requirements ofour customers worldwide.Turnkey programmes include the design and construction of 55m Patrol Vessels and 141m Landing ShipTanks for the Republic of Singapore Navy as well as Feeder Container Vessels and High Speed Ferries forinternational commercial customers. Facilities include a syncrolift with a lifting capacity of 12,500 dwt andtwo floating docks capable of docking vessels up to 40,000 dwt and 70,000 dwt. We also have thecapabilities to repair vessels up to Panamax size and to build vessels up to 30,000 dwt.With the combined experience and resources of ST Aero, ST Elect, ST Kinetics and ST Marine, SingaporeTechnologies Engineering is a one stop provider of engineering solutions, from turnkey projects to customisedupgrades.www.stengg.comlucien wongyuen kuaimanaging partner,allen & gledhilland co-chairman,linklatersallen & gledhillpte ltdWe can.We take Engineering further54 • visionFor more on Marine Sector, turn to page 92

T H E • S E N I O RM A N A G E M E N TSTAYINGAHEADA bowstring which is always kepttaut will soon becomeover-stretched, lose its elasticityand cease to be of use.So it is with human beings, whomust alternate work with relaxation.ST Engg recognises this andencourages its staff to leadbalanced and well-rounded lives.Recreation restores us.Refreshed, we return to work withthe renewed vigour and energywe need to pursue the Group’s goals.boon swan foodeputy chairman &chief executive officer,singapore technologiesengineeringENTERPRISING SPIRITFaith is daring the soulto go beyond whatthe eyes can see.“For we walk by faithnot by sight.”~ 2 CORINTHIANS 5:756 • vision

T H E • S E N I O RM A N A G E M E N Ttan pheng hockpresident & chief operating officer,singapore technologies engineeringchang cheow teckpresident,vt systems, inc.INVESTING IN PEOPLE“The best minute you spend is the one you invest in people.”~ blanchard & johnsonNURTURING“We make a livingby what we get;we make a lifeby what we give.”~ w.a. nancetay kok khiangpresident,defence businesssingapore technologiesengineeringFORWARDMOVING“Do not be afraidof going slowly,be afraid ofstanding still.”~ eastern proverb58 • visionsenior management • 59

T H E • S E N I O RM A N A G E M E N Twee siew kimpresident,aerospace sectorwu tzu chienpresident,land systems sectorRESILIENCE“It’s not whetheryou getknocked down,it’s whetheryou get up again.”~ vince lombardiPROACTIVITY“Even if youare on theright track,you will getrun over if youjust sit there.”~ will rogersseah moon mingpresident,electronics sectorsee leong teckpresident,marine sectorSEEK TO EXCEL“The quality ofyour preparationdetermines thequality of yourperformance.”CONTINUALIMPROVEMENT“Life is likea golf game –your greatestcompetitoris yourself.”60 • visionsenior management • 61

M A N A G E M E N Thuman resource by tan nga kokthehumanfactorTHE WINNING TEAM“Your best qualities will surface in the presence of good people.”Today, in the new economy,what counts more than ever inthe success of many companiesis the quality of their workforce– the skills, knowledge,creativity and motivationthrough which they add valueto the raw materials withwhich they work. In short, itis the human factor.human resource • 63

FOR A FORWARD LOOKING COMPANY LIKE ST ENGG,this understanding is fundamental to our progress. All ourpeople are encouraged to believe in their ability to upgradeexisting skills and to master new ones.We aim to enhancethe skills and abilities that they possess through continuoustraining.We provide them with in-house training and alsosponsor them for courses provided by external bodies,including, where appropriate, at university level. By thesemeans, we aim to help all those who work with thecompany to realise their full potential.On the job, an attitude of beingopen to learning is welcomed: Itmakes good sense for the lessexperienced to learn from the moreexperienced, so we encourage peopleto seek advice from colleagues andexchange views with them about thebest ways to tackle a problem. It isalso important that our people learnfrom and benchmark against others,outside of the company.Career development at ST Engghas these two aspects: an individualhas the chance, and is encouraged, todevelop his skills and capabilities inhis existing job. Enhanced skills andproven talents also provide the basisfor individuals to assume greaterresponsibilities and broaden theircareer prospects. Either way, webelieve that good performance atwork should be recognised andrewarded accordingly.This not onlyencourages our people to contributemore, but helps us ensure that weretain their talents.We are trying to create anenvironment in which new ideas findencouragement.We have organisedcompetitions to foster innovationand ideas and implemented staffsuggestion schemes.We have made itclear throughout ST Engg that anyindividual or group coming forwardwith new product ideas or ways ofimproving our services will receivethe recognition they deserve.Webelieve that enlisting the activeparticipation of our people in developingour products and services is animportant avenue to the achievementof year-on-year progress and thegeneration of increased revenues,whether directly from our own operationsor from licensing patents.In the past year, we have intensifiedour efforts to expand computerliteracy within the company. Everyemployee was offered S$2,500 forthe purchase of computers or softwareand we have conductedInternet training for many membersof our staff. Our goal is for all to bee-literate.To boost our performance as aGroup further, we have embarkedupon the implementation of 6-Sigma,an organisational quality system thathas saved millions of dollars for manyof the world’s leading companies.Believing that we need more than asingle programme to enhance ourcompetitiveness in the global arena,we have also retained Kaizen whichwe have implemented over the pastthree years and which has brought ussignificant savings.SAFE AND HEALTHYAs a Group, we take the attitudethat we are like one family, whosemembers all contribute to ourcommon achievement.We care forour people’s welfare.We go to great lengths to ensurethe safety of the company’s employeesthrough safety inspections, rules andeducation. Health talks, exhibitions,screenings for specific illnesses andeven safety quizzes have all played apart in our efforts.Sports and social activitiesranging from football to the newlyintroduced line dancing are organisedwithin each group, andsometimes at a Group-wide level.They are fun, as well as being goodfor our health.A WIDER COMMUNITYOur employees have under-takenactivities such as visiting charitablehomes, donating blood, and holdingfund-raising events for charities,such as collections and sponsoredruns to do our bit for the community.Wenever forget that webelong to broader communities;and we seek to be good membersof them.SIOW KENG CHENGSENIOR VICE PRESIDENTAND GENERAL MANAGER,ST ELECT“When we first started in theearly ’70’s, we werestruggling for our living afterthe British pulled out and theVietnam war ended. Therewasn’t enough work andthere were even someretrenchments by the electronicsunit.But thereafter,it wasgrowth allthe way. Weadvancedtechnologically, innovated,developed our skills, foundnew customers and we wenton from being a two or threehundred man company tobecoming a 2000-mancompany today.”ANGEL COTTONEXECUTIVE SECRETARY,MAE, ST AERO“In the beginning I chose towork for ST Aero for a careerchange. I continue to work forST Aero because I feel that Iam part ofthe family.Regardlessof whether Iam workingwith someonein Mobile, Dallas orSingapore, I feel that we allhave the same goal in mind.Management makes each ofus feel that we are part of thesolution. None of us is just anemployee number. Our opinionsdo count.”LEE SIAK HOHASSISTANT PRINCIPALENGINEER, ST AERO“The company has growntremendously since I joined10 years ago, so there’s asense of job security here.With this behind us, we canlook forward to opportunitiesand challenges as thecompany expands. We havea good working environment.Also, the company hasalways rewarded us when itdid well orrewardedindividualswhen theydid well. Allthese factorsare incentives to stay for thelong-term: it’s the best place.”TOMAS EMMOTHTECHNICAL CONSULTANT,SES, ST ELECT“For me personally, it’s not somuch promotion that isimportant, like getting a longertitle or somethinglikethis, but it’smore yourown development,thatyou learn more things – what Icall personal development.That’s what’s most importantto me. I think there’s goodopportunities in ST Engg forthat.”CHEE CHEE KHIATHEAD OF DEPARTMENT,ST MARINE“I’ve been here 20 yearsalready. It’s a nice place towork. For me, promotion’s notreally one of the veryimportant things. The moreimportant thing is to get thingsrunning smoothly and to lookfor improvementon thejob. We’vedone thatthroughKaizen andsome of our staff are doing a6-Sigma course.”GERALDINE KOHTREASURY EXECUTIVE,ST ENGG“My colleagues are great. It’sa nice place to be in, like avery bigfamily. If youare youngand new,people helpyou andteach you what to do. I feelthat I have grown with thiscompany and become moreconfident.”YUNOSMOHAMEDSECTION HEAD OF PIPING,ST MARINE“Times have changed. When Iwas a draftsman in thecompany’s early days, I onlydrew with pencil and pen;now, the draftsmen haveCADCAM. All our technologyhas moved on a lot. Asanother example, everythingwas moved by hand in theearly days, but now we havemachines tomove things,includingtwo synchrolifts.Inmy owndepartment, the companyinvested in a machine to bendpipes in five minutes ascompared to what used totake an hour.”JOHNNY TANMACHINIST, ST KINETICS“Every now and then a newjob comes in and you think,‘I’ve never seen this before.’Then you think about it, youget assistance from a friendand you areable to do it.I can go onand makethe most ofmy abilitiesby training and upgrading myskills. Sometimes I think I canpush myself to the limit, butthen I find there’s morebeyond that: even the sky’s nolimit!”64 • visionhuman resource • 65

O U R U S T H R U S TALL SYSTEMS GOand research and development fortank and automotive equipmentworldwide.Also on the board is Mr MauriceShriber who brings with him a21-year federal government careerthat included positions as the DeputyAssistant Secretary of Defense forSpares Program Management andthe Deputy Assistant Secretary ofDefense for Logistics.Additionally at the holding level,we have two consultants for ourAerospace and Marine sectors.Theyare Admiral (Retired), Archie Clemins,and General (Retired), Ronald R.Fogleman, who had distinguishedcareers in their respective services.Admiral Clemins is the formerCommander-in-Chief of the USPacific Fleet, while General Foglemanserved as Chief of Staff of the US AirForce on his final tour of duty.As consultants, the Group willlook to them to provide advice thatwill help VT Systems implement itsplans for growth in the US, includingproviding important contacts andavenues to decision makers.Amongst the directors and consultants,the new Group will be ableto draw upon an invaluable store ofknowledge and understanding ofthe defence industry and system inthe US, enabling it to advance its USmarketing and manufacturing operationsmore rapidly than wouldotherwise be possible.VISION TECHNOLOGIES SYSTEMS, INC.(VT Systems) has appointed a Board of Directorsand consultants who have a broad range ofmilitary and government service experience.Webelieve they possess skills, strategic foresight, insight andknowledge that can enable VT Systems to carve out a placefor itself as a leading defence systems provider in the US.VT Kinetics has appointed as directors,three distinguished members ofthe US defence community with acombined record of over 90 years ofservice with the US Armed Forcesand federal government.ST EnggGeneral (Retired) John Tilelli, theChairman of VT Kinetic’s Board,who retired after 37 years of activeduty service is currently the Presidentof the USO. Prior to retirement, heserved as Commander-in-ChiefVision Technologies (VT): Group of Companies100%VT Systems, Inc.President:Chang CheowTeck100%100%100%100%VT AerospaceVT ElectronicsVT KineticsVT Marineof the United Nations Command,Republic of Korea/United StatesCombined Forces Command, andthe United States Forces, Korea.VT Kinetics also appointed toits Board of Directors, LieutenantGeneral (Retired) Leo Pigaty, whoended his 33 years of active dutywith the US Army by serving asDeputy Commanding General, USArmy Material Command. Prior tothat assignment, he commanded theUS Army Tank-Automotive Commandwhere he was responsible for theoperational support, procurement,100%99%100%DalFort AerospaceGP, Inc.1%DalFort AerospaceL.P.ST Mobile AerospaceEngineering, Inc.GENERAL (Retired)JOHN TILELLIOur friends at Bionix Day, Washington, D.C.A G E N E R A L S E L E C T I O NLIEUTENANT GENERAL(Retired) LEO PIGATYMR MAURICESHRIBERADMIRAL (Retired)ARCHIE CLEMINSGENERAL (Retired)RONALD R. FOGLEMANFrom Left to Right: Maj Gen (Ret) Ted Atkinson, formerSenior Defense Analyst, Central Intelligence Agency; Gen(Ret) John Tilelli, former Commander-in-Chief, UNCommand, Korea/US Combined Forces Command, and USForces, Korea; Gen (Ret) Crosbie E. Saint, formerCommanding General, US Army Europe; Gen (Ret) RobertW. Sennewald, former Commander-in-Chief, UNCommand, Korea/US Combined Forces Command, and USForces, Korea; Gen (Ret) Louis C. Wagner Jr, formerCommanding General, Army Materiel Command; Gen (Ret)Donn A. Starry, former Commanding General, Trainingand Doctrine Command; Gen (Ret) Ronald H. Griffith,former Vice Chief of Staff, US Army; Gen (Ret) Robert W.Riscassi, former Commander-in-Chief, UN Command,Korea/US Combined Forces Command, and US Forces, Korea;Gen (Ret) Jack N. Merritt, former US Senior Representativeto the NATO Military Committee; Lt Gen (Ret) AugustCianciolo, former Deputy Assistant Secretary of theArmy for Research, Development and Acquisition; Maj Gen(Ret) Ed O’Connor, former Commanding General, USArmy Security Systems Command, Washington.66 • visionus thrust • 67

Each of ST Engg’s four sectors had highlights to itsin its day-to-day work. vision looks in on them.activities and results in the past year, and to presentyear but could also take satisfaction from achievementsWe asked representatives of each sector to assess itstheir expectations for its prospects in the near future.R E : V I E W68 • visionre:view • 69

WE HAVE GOOD REASONSto be pleased with ourachievements in 2000,and at the same time, weare reminded of the importance ofhaving a relentless focus on excellencein our operations as we continue toimprove our businesses.The Aerospace sector scored anumber of successes in its commercialand military businesses, developednew technical competencies andexpanded its services. Both ourCommercial Business Group (CBG)and our Military Business Group(MBG) have improved their sales andperformance, strengthened relationshipswith their customers andsecured all-round improvements incontributions and performance fromour core operations, associatecompanies and investments.E-ENHANCEDCUSTOMER SERVICESWe are always looking for ways toimprove our performance and oure-initiatives help us to do just that.Making use of the latest in Internettechnology, we aim to achieve higherproductivity, improved processefficiency, enhanced cost-savings,and reduction of wastage.By providing our customers withonline secured, up to date access tomaintenance status and other workprocess databases, they add anotherdimension to the value we render.We ventured into e-commercethrough the setting up of a B2Bportal ‘www.ishopaero.com’ whichwent ‘live’ in December. Our strategyis to develop a neutral, manyto-manyB2B exchange to bring thegreatest cost benefits to the aerospaceindustry by enabling a widerange of parts and services to betraded intelligently over theInternet.We believe that the introductionof ‘Aerobook’– a mobile, electronic,handheld productivity tool, willimprove the service we provide toour customers by allowing us bettercontrol of workflow, data accessand faster turnaround.This deviceprovides our maintenance personnelwith electronic access to maintenancedocumentation, manuals andtechnical reports, in addition to generatingnon-routine cards and sparerequisitions.We started implementationin SASCO, our Singapore commercialairframe maintenance facilityin September. Once successfullyimplemented here, we expect tointroduce ‘Aerobook’ in our overseasfacilities in the US as well.COMMERCIALBUSINESS GROUPIN LEAGUE WITH A BIG BOYIt was gratifying to see our collaborativeeffort with The Boeing Company(Boeing) on the development of theR E : V I E WAerospaceBy Wee Siew Kim, President and Tay Kok Khiang, Deputy President & Chief Operating OfficerAll these improvements willbe channelled so that they helpour customers reduce costs whileenhancing asset managementefficiency.Between February and September,we launched a series of speciallytailored websites, including:e-sasco.com, staengines.com,staengineering.com, edc.com,stasystems.com and stasupplies.com.The B757 PTF conversion team working onthe prototype in Wichita.70 • visionre:view • 71

AEROSPACE CUSTOMER TALKWe continued to serve FedEx’s global needs through SASCO, MAE and DalFort.Boeing 757 Passenger-to-Freighter(PTF) conversion come to fruitionwith the successful completion ofthe design and engineering phase.Based at Boeing’s Wichitafacility, the ST Aero and BoeingB757 design team worked on theprototype aircraft.The firstproduction aircraft is expected tobe inducted into MAE, our USfacility in Mobile, Alabama by thesecond quarter of 2001.Building upon our other fruitfulcollaborations with Boeing,SASCO successfully completed itsfirst DC-10 PTF conversion aheadof schedule in November.performance of heavy checks onits first batch of B747-400 aircraft.SASCO completed a total of17 such checks for the B747-400maintenance work in its maidenyear of handling them.BUILDING UPON TRUSTWe continue to strengthen ourbonds with our most valuedcustomers and welcomed newWe continue tostrengthen ourbonds with ourmost valuedcustomers andwelcome new ones.Corporation, GE Capital AviationServices, and Helios of Cyprus,amongst others. Federal Express(FedEx) further extended apartnership with us that began inthe early 1990s by awarding athird line of B727 C checks toDalFort, ST Aero’s second USfacility in Dallas,Texas.We continueto serve FedEx’s globalneeds through our three facilities;SASCO, MAE and DalFort.In addition to being awarded aDC-10 maintenance contractfrom Orbis International, SASCOcontinued to be awarded maintenancecontracts from NorthwestHawaiian Airlines started sending work to Singapore TechnologiesAerospace (ST Aero) in 1996. Since then, ST Aero has been one ofHawaiian’s principal vendors for its JT8D engine maintenance work.Hawaiian is very pleased with the performance and operation of theJT8D-17/17A engines overhauled by ST Aero. These engines areoperated up to 14 flights a day on our inter-island routes. Despitethe high cycle consumption and operational fatigue exerted byinter-island routes on the engines, they performed with nosignificant problems. We are now in the process of phasing out theJT8D engines as we convert our entire inter-island fleet to newBoeing 717-200 aircraft. As we do so, marketing the JT8D engineswill be made easier by the positive industry recognition of STAero’s quality work. Hawaiian Airlines would like to commend STAero on its consistent high quality over the years. We are confidentthat the two companies will build upon the excellent relationshipand expand it further in the coming years.ROBERT W. ZOLLER HAWAIIAN AIRLINESEXECUTIVE VICE PRESIDENTOPERATIONS & SERVICEWe added another feather toour cap with the successful completionand redelivery of ‘Prototypenumber 3’ for the DC-10Advanced Common Flight-deckconversion to Boeing in MAE.The complex modificationwork involved the installation andintegration of digital avionics anddisplays in the cockpit, and theconversion of the aircraft cockpitfrom a three-man to a two-manconfiguration.Closer to home, SASCOexpanded its capability with theSASCO clinched contracts from leading European operators including Lauda Air,Airtours and AOM.ones including AirtoursInternational, Air Madagascar,Ansett Worldwide, AOM FrenchAirlines, British World Airlines,Cargo Lion, Emery Worldwide,Evergreen Aircraft Sales andLeasing, Finova CapitalAirlines and Japan Airlines forDC-10/MD-11 and B747 work;as well as maintenance contractsfrom leading European operatorsincluding Lauda Air for B767s andDC-10 contracts from AOM andAirtours.ENGINES OVERHAULED BY ST AEROACHIEVED AN IMPRESSIVE ON-WING TIMEOF MORE THAN 10,000 CYCLES, FAR72 • visionEXCEEDING THE INDUSTRY NORM OF 6,500 CYCLES.

AEROSPACE CUSTOMER TALKAIR VICE MARSHALMOHAMMEDMAHFOODH BINSA’AD AL-ARDHIAIR FORCECOMMANDERTHROUGH THE YEARS OF OUR RELATIONSHIP,ST AERO HAS PROVEN ITSThe Royal Air Force of Oman’s (RAFO) relationship with SingaporeTechnologies Aerospace (ST Aero) began as far back as 1988when RAFO was then known as the Sultanate of Oman Air Force(SOAF). ST Aero first started providing RAFO with some minorcomponent repair services. Today, ST Aero provides total supportservices for RAFO’s C-130 aircraft – from airframe maintenance torepair and overhaul services on our T53 engines and components.On behalf of my organisation, I wish to express deep appreciationfor the excellent performance and quality service provided by STAero over the years. We look forward to continuing ourlongstanding relationship with ST Aero on future programs.CAPABILITIES AS A WORLD-CLASS LEADINGAVIATION MAINTENANCE COMPANYROYAL CHINA-SINGAPORE AIR FORCE OF SUZHOU OMAN INDUSTRIAL PARKADMINISTRATIVE COMMITTEEMAE also received more B747interior modification and DC-10maintenance contracts fromUnited Airlines.The further sharpening of ourtechnical and maintenancecompetencies assisted DalFort insuccessfully clinching a line ofB737 ‘D’ checks from SouthwestAirlines, in addition to its existinglines of work.CONTINUED GROWTHOur CBG hangar capacitiesexpanded in line with the growthin business opportunities. MAE’s‘Super Nose Dock’ openedofficially in January 2000 andSASCO’s ‘Changi Bay 3’ inFebruary.Together, these newhangars add 600,000 manhoursin capacity, and constructioncurrently in progress in MAEwill further add a two-bayhangar dedicated to B757 PTFwork, to our capacity.In DalFort, we also set up newcapability in B757 landing gearoverhaul and successfully redeliveredthe first ship-set of gears toAssociated Air.To support the growingdemands and varying needs ofour valued existing and new customers,we continue to seeknew facilities in the US, Europeand Asia.MILITARYBUSINESS GROUPFor the MBG, 2000 was a yearof new initiatives, strategicmilestones, a growing customerbase and improving sales andperformance across the boardin airframe, engine, componentand engineering support services.In the coming year we willcontinue to develop new capabilitieson all fronts.REVVING ENGINES &BOOSTING COMPONENTSSUPPORTMBG achieved breakthroughs inthe European and South Americanmarkets by securing orders forJT-8D engine support, fromAeropostal in Europe and TAME,Varig and LAB from SouthAmerica.There are two other achievementsin this area of our businesswhich are worth noting. InJanuary, our component overhaulWe continued to expand our helicopter support services by sealing an agreementwith Sikorsky to make ST Aero an S-76 helicopter service centre.specialist subsidiary, STASystems, became the third subsidiaryin the group to be certifiedby the Japan Civil AviationBoard, one of the most stringentauthorities in the aviation industry,and in November, the firstCFM-56 engine came into ourfacility for overhaul.Through ourcontinued focus oncustomer-value, wecan expect toleverage on thelong-term strategicpartnerships wehave establishedwith our customers,many of whom arekey players in theaerospace andaviation industry.WINGS TO PROPELLERSWe further extended our maintenancesupport for the Republic ofSingapore Air Force (RSAF).Thefirst KC-135, a multi-role aircraftdesigned for refuelling, cargo andtroop transportation, was inductedinto our facility in September.Having been trained for over are:view • 75

year in the US to acquire the necessaryskills and competence, our MBGground crew will undertake maintenancetasks for the aircraft at RSAF’sChangi Air Base.Our capabilities are not limitedto fixed-wing aircraft support.Wecontinued to expand the scope of ourhelicopter services by sealing anagreement with Sikorsky making us aservice centre for S-76 helicopters.The capability set-up and trainingof staff are expected to be completedby the second quarter of 2001.A NEW LEASE OF LIFEAnother highlight of the year waswhen “Falcon ONE,” designed anddeveloped by us, made its debut inFebruary at Asian Aerospace 2000.A state-of-the-art F-16 fighter aircraftavionics upgrade suite, “FalconONE” provides an integrated weapondelivery and navigation system forearlier F-16 models.Later, in July, we went on to signa Memorandum of Agreement withBAE Systems to jointly enhance“Falcon ONE” further.We areworking on the development of theupgrade suite through a collaborationwhich demonstrates the strategicpartnership between ST Aero, BAESystems and Lockheed Martin.Our team of engineers andtechnicians continued to work witha Turkish Air Force team in Eskisehir,Turkey, on the F-5 upgrade prototype.Thefirst flight is expected totake place in early 2001.Designed and developed by ST Aero,“Falcon ONE” is a state-of-the-art F-16avionics upgrade suite.We continued to leverage on ourcompetence in providing innovative,cost effective and technologicallyadvanced fighter aircraft avionics andstructural upgrade solutions throughthe provision of avionics upgradeservices on C-130 transport aircraftand helicopters.This complementsour existing one-stop centre supportconcept to provide cost-effective andvalue-added total solutions.SUCCESSFULCOMMERCIALISATION:BOEING 737The year also saw further achievementsby MBG in providing B737maintenance support.We successfullycompleted maintenance programmesfor three Asian domestic airlines: AirPhilippines and Indonesian operators;Airfast Indonesia and MandalaAirlines PT.Commercialisation and theexpansion of our B737 capabilitiescontinued on all fronts to includeairframe, engine and componentmaintenance, as well as engineeringand development.This has enabled usto provide global B737 service supportthrough our network of specialistsubsidiarieslocated in Asia and the US.OUTLOOKThe aviation industry has seen anunparalleled period of growth inthe recent past and the long termprospects look positive as air trafficvolume increases.Short term uncertainties over theUS and the major economies exist;we expect to maintain a balancedmix of maintenance, repair and overhaulwork in both commercial andWe will continue toinvest in our mostvalued asset: ourpeople – a uniqueguarantee of qualitythat brings ourcustomers to us timeand again.military sectors to cushion short termmarket variations in either sectors.Building upon our track record,we foresee the Aerospace sector takingon more challenges in value-addedhigh-technological, engineering anddevelopment support services, particularlyin aircraft modifications andconversion work.We will continue to invest andincrease our involvement in highervalue-added work via collaborativeefforts with Original EquipmentManufacturers for engineering anddesign development work, as well asprovision of technical, engineeringand planning support to our customers.We aim to provide a slew ofvalue-added services to our keycustomers, in line with our goalof becoming a complete technicalpartner to aircraft operatorsworldwide.Given an increasingly competitiveenvironment, we expect to face continuedchallenges from competitors.Through continued focus oncustomer value and by leveragingon long term strategic partnershipswith our customers, many of whomare leading players in the aerospaceand air transportation industries,we will be well poised to take onthese challenges.We will also further developcustomer-focused strategies to honeour competitiveness, while continuingto build upon our ties with keycustomers to enhance our mutuallybeneficial interdependencies overtime, and develop value-creating,strategic business relationships.As we continue to stay lean, wewill also ensure improvements inquality, reliability and safety in allour processes to bring total value toour customers and shareholders.While our deployment ofe-business tools and service offeringsare means to provide our customerswith better services, quality andturnaround time, we will relentlesslypursue our quest to streamlineour processes, and to harness andinvest in new technologies toimprove productivity and reducecosts.Although the aviationindustry has projected significantshortfalls in the availabilityof qualified mechanics andtechnicians over the comingyears, we are confident thatwith a total resource planningand skills training programme,we can attract, train and retainthe necessary skill-mix andcompetencies to keep aheadof the competition.We will continue toinvest in our most valuedasset: our people – a uniqueguarantee of quality thatbrings our customers to ustime and again.We will continue to develop customer-focusedsolutions such asthe Aerobook, which enhancesproductivity and efficiency.76 • visionre:view • 77

R E : V I E WElectronicsBy Seah Moon Ming, President and Ng Chong Khim, President – Communication & Sensor Systems GroupTHE ELECTRONICS SECTORcontinued to perform well in2000, doubling our earningsand achieving many successesby securing contracts in both ourmilitary and commercial businesses.We have made some investments toensure the strengthening of ourcompetencies and to develop futuretechnologies.EXTENDING OURMARKET REACHRiding on the success of a number ofmajor projects in Singapore and EastAsia, we continued our expansioninto the region and beyond.The Electronics sector set upa Hong Kong (HK) Branch Officein March as part of a market developmentinitiative in the Special AdministrativeRegion. It will identifyopportunities, track business andeconomic trends in HK, market andpromote products and offerings fromour group and provide a strategicbase there.With similar perspectives, awholly owned subsidiary in Taiwanwas incorporated in August 2000. Itwill design and execute rail, trafficand intelligent building managementsystems projects in Taiwan as wellas mobile real-time and simulationsystems.KEY GROUP ACTIVITIESOur business activities remainfocused on three key areas throughthe Communication and SensorSystems Group (CSG), the Large-Scale Systems Group (LSG) and theSoftware Systems Group (SSG).COMMUNICATION ANDSENSOR SYSTEMS GROUPCSG was awarded a number of keyprojects in 2000.The Suzhou PublicSecurity Bureau commissioned us toprovide a Traffic Control ManagementSystem in Suzhou City.When itis completed in July 2001, Suzhouwill become the first city in China todeploy an image-based traffic controlsystem on a city-wide scale.The successful completion of theEMAS II (Expressway Monitoringand Advisory System) projectshowcases our road managementsystems capabilities.This includedthe full scope of design, integrationto testing, commissioning andExpressway Monitoring and Advisory Systems(EMAS) at work.maintenance of incident detectionprocessing units and related controlcentre software for the LandTransport Authority (LTA) ofSingapore. In December, LTA alsoawarded us a contract to supply ourElectronic Junction Eye (a visionbasedsystem) and the TrafficScanNationwide Traffic Monitoring.Our development of RadioFrequency Identification (RFID)technology and application is nowbeing employed in a number of locallibraries for the accurate and fastidentification of books and for thepurpose of stocktaking.This technology can also be usedfor stock identification and itemstracking in warehouses and stores aswell as automated registration forconferences and events.In February, our subsidiary, CETTechnologies, launched JuzTalk – aVoice Over Internet Protocol andUnified Messaging System communicationsolution for Telco Operators,Internet Service Providers,Application Service Providers andenterprises.DABOne, a Digital AudioBroadcasting system, based on theEureka 147 standard was enhancedto allow content providers to offersubscription-based multimediaservices to specific market segments.The wide extent of data flow innetworks and on the Internet givesus an opportunity to offer a broadarray of encryptors that have beenhighly successful in regional markets.We have set up distributor channelsin Singapore, the US, Asia Pacific andthe Middle East to market ourencryption products globally.Our subsidiary, AgilisCommunication Technologies, hasmade us one of the top three globalplayers in the Very Small ApertureTerminal (VSAT) market, throughsales in the US, China and Europe.We are one of the top two players inthe world for X-Band MicrowaveSensor, a product for which Agilis hasreceived European CetecomCertification, enhancing its competitivenessin the global market.LARGE-SCALESYSTEMS GROUPIn August, LSG clinched the contractfor a car park management systemfor Thomson Medical Centre, whichhas Singapore's largest stacking carpark.This project features ourCashless Payment License PlateRecognition System (LPRS). Otherre:view • 79

ELECTRONICS CUSTOMER TALKThe International Building is a superior office block in the CentralBusiness District of the China-Singapore Suzhou Industrial Park.Standing 88.8 metres tall with 18 storeys and two basements alloccupying a floor area of 61,000 square metres, this grand buildingis the 1998-1999 focal construction project of the Suzhou IndustrialPark Administrative Committee. The relevant government authoritieshad set up a strong project management team. The selection of thebest construction contractors among the many who are renownedwithin and outside China resulted in an office block of superb quality.Singapore Technologies Electronics Limited was responsible for theintelligent building system of the project. This company was able to“put themselves in the end-user’s shoes” and anticipate everythingthat was needed. The cooperative experience deepened ourunderstanding of Singapore Tehnologies Electronics Limited andenabled us to observe at first-hand their excellent services. We hopethat we will build on this foundation of collaboration for moreopportunities for further development. We take this oppportunity towish Singapore Technologies Electronics Limited a brighterand more splendid future.LPRS car-parking solutions wereinstalled at Sim Lim Square, PasirPanjang Wholesale Centre, andoverseas in Taipei’s Cheng Yuan.Building upon our capability ofintegrating intelligent buildingmanagement systems, LSG tookon the 52-storey Capital Towerproject, a landmark in Singapore’sfinancial district.This involved theintegration of all major securityand communications system componentsand the maintenance ofits system integrity.Our system integrationcapability won us a contract tosupply, install and commission theintegrated security solution in thenew Singapore Civil DefenceForce HQ Complex.This includesaudio visual and sound, andelectronic queue managementsystems.Our VSATs are well positioned globally.Our expertise in rail managementsystems secured us a contractto install a Visual PassengerInformation System on MRT andLRT trains.This will providepassengers information on topicssuch as the weather, airportschedules, stock prices and travelinformation displayed on vehicleborneLiquid Crystal Display(LCD) or Light-Emitting Diode(LED) screens.The LTA awarded us theproject to retrofit Singapore’straffic lights with new LED trafficlights in April 1999.Work in centraland eastern Singapore hasbeen completed and it continueselsewhere on the island.We continueto market the LED trafficlights overseas, such as inMyanmar and Mexico.Outside Singapore, the 56,000square metre Suzhou IndustrialPark International Building wasofficially opened in China showcasingour Extra Low VoltageSystem.This includes BuildingAutomation, Close Circuit TV,Security Management, ElectronicPayment Carpark,Variable AirVolume and Fully IntegratedSecurity Management Systems.Our subsidiary, ST Electronics(Taiwan) Limited was awarded acontract to provide an IntegratedCommunications System for theTucheng MRT Line in the TaipeiMetropolitan Area, due to becompleted in 2006.The systemwill provide essential communicationsbetween trains, stations,depot and the operation controlcentre.WU XIAODONGDIRECTOR, BUILDINGPLANNING BUREAU80 • visionOur LED technology is used in traffic lights deployed throughout Singapore.SOFTWARE SYSTEMSGROUPOur subsidiary, SingaporeEngineering Software (SES)continued to work with variousgovernment agencies offering arange of security, data processingand analysis solutions. During theyear, SES delivered an on-goingCommand and Control projectfor the Ministry of Home Affairs.SES has gradually stepped upits efforts to establish a re-usablearchitecture Common ApplicationPlatform (CAP) that can beemployed for development ofmission critical, command andMETICULOUS ORGANISATION ANDPRECISE BUILDING WORKENSURED THE UNIMPEDED REALISATIONOF A HIGH-QUALITY PROJECTCHINA-SINGAPORE SUZHOU INDUSTRIALPARKPARK ADMINISTRATIVE ADMINISTRATIVE COMMITTEE COMMITTEEannual report 2000 • 31

P A R T N E R SFORMING PARTNERSHIPSTHAT LASTIn the past year, we signed MOUs with:•Clipsal Integrated Systems PteLtd to co-operate on business opportunities,delivering a range of nextgenerationsmart home technologies tocater to the demand for fullynetworked homes across Asia Pacific.•ILOG (S) Pte Ltd to serve escalatingdemands for mission-critical softwaresolutions in HK.•Infomatec IAS Asia Limited tojointly deliver innovative solutions forIntelligent Building ManagementSystems in HK, providing customerswith more flexibility in using informationappliances in homes and offices,enabling easy net surfing for everyone.•DRS Technologies to collaborate inthe US and Asia Pacific region in theareas of defence electronics systemsand communications and surveillancesystems.•User Technology Associates tojointly market each other’s products inthe US and Asia Pacific region. UTAhas a range of IT and softwaresolutions.We formed Joint Ventures with:•SMRT Engineering Pte Ltd to setup Transys Pte Ltd, to develop andmarket various rail related products inSingapore and the Asia Pacific region.•Grupo Ferrominero, S.A. de C.V. toset up GFM Electronics S.A. de C.V., ajoint venture company to promote,distribute and market our electronicand high technology products andservices (security systems for homes,offices, buildings and facilities; LEDtraffic lights, traffic management andradio communications systems) and tocarry out any other electronic systembasedprojects in Mexico.control and information systems. Itallows developers to focus uponsolving their customers’ businessproblems, rather than technical ones.The re-usable CAP helps cutdevelopment effort, schedules risk,and generally increases the competitivenessof SES in its key businessareas. Ready for use in early 2000,the CAP is today actively utilised ineight projects embracing a wide businessarea that includes defence, lawenforcement and international business.In February, SES was presentedwith Hewlett-Packard’s Top SystemIntegrator Award for 1999 in recognitionof its efforts in winning projectsin partnership for end-to-endintegration of large-scale projects.SES developed a used car auctionsoftware system for STA InspectionPte Ltd.The system allows the buyingand selling of used cars throughthe Internet via “juzclickcar.com.sg.”Our simulation capabilities wereshowcased at the Asian Aerospace2000 exhibition through our subsidiary,ST Training & Simulation PteLtd (STTS). STTS’ twin-seater fighteraircraft simulator was a hit withvisitors to the site.In March, STTS won two majorair-platform simulator contractsagainst big international defencesimulator players and continued toincrease its presence in the regionalmarket securing another two simulatormaintenance contracts.Our entry into the commercialtrain cab simulation market was ledby the successful delivery of threecab simulators to Singapore MRTLtd (SMRT) in October.This breakthrough is timely ascountries in Asia are gearing up toexpand their railway networks as themain mode of public transportation,thus presenting opportunities forfurther growth in the commercialsimulation and training arena.On the strategic collaborationfront, STTS established a tie-upwith Logicon International Inc., aNorthrop Grumman Corporationcompany, to pursue informationsystem/information technologyopportunities in regional and globalmarkets. STTS and British Aerospaceentered into a co-operation agreementwith the purpose of undertakingjoint research and developmentprogrammes.POSITIONED FOR THEE-ECONOMY AND THEWIRELESS WORLDWe seek to respond to real needs inthe e-economy, and have beenadvancing in this sector despite thetroubles it has seen in the past year.Our e-business initiatives include anoffice application on-tap designedthrough SES.This allows businessesand organisations to conduct internalsurveys, effectively manage humanresource, allocate resources andother in-company administration.With some minor configurations, anyorganisation becomes wired to experiencefreedom of office administration,at anytime and from anywherein the world within minutes.STTS established an e-businessunit in May. KnowledgeAlive.comwill concentrate on e-learningand knowledge management.Thesalient feature of this site is learningat one’s own pace anywhereand anytime, as long as one isconnected to the Internet. STTS isa strategic e-business partner withestablished companies like Oracleand Interwise.Our in-house designand manufacturingcapabilities providea full array ofsophisticated microwavecomponentsand communicationsystems to meetindustry standards.Another e-initiative we developedoffers an exciting and innovativedimension in online advertising andprovides more interaction and funin surfing experience to the onlinecommunity. Using steganographytechnologies, non-intrusive images,sound and video clips could be“hidden” in the image or sound fileof sponsors’ websites.JuzClickcal was launched inApril by the LSG. It is designed forour calibration services customers.JuzClickcal is a B2B portal thatprovides them with better servicesfor monitoring and maintenancescheduling of their inventory list.The emergence of severalwireless access protocols andstandards promises exciting newwireless communication applications,such as WAP, General PacketRadio Switch (GPRS) and Bluetooth.Realising the potential ofMobile Commerce especially inInformation CommunicationsTechnology (Infocomm) areas, weinvested in Metron CommunicationCorporation. Metron designs,develops and markets wirelesscellular data solutions and willinitially focus on GPRS for GlobalSystems for Mobile Communications(GSM) cellular networks throughthe development of a GPRS chipsetand related firmware.BUSINESS REVIEWAND OUTLOOKOur strategic tie-ups includeNatsteel Electronics with who wewill penetrate the US market forinformation appliances.Working withNEC of Japan, we will utilise its efficientmanufacturing network anddistribution channels to help usreduce costs and tap into its fieldsupport network for the mass market.Weare also developing newmarkets for our transportation businessin China.We were awarded theSingapore Marina MRT Line projectin December and will continue todevelop and deliver comprehensiverail and traffic management systems,helping our regional customersimprove their transportation servicesthroughout the region.New telco players like InternetApplication Service Providers (ASP)have emerged as a result of the liberalisationof the local telecommunicationsindustry that has leveled theplaying field.We have capitalised onopportunities and developed newproducts.We have also expanded ourtelco-related business, securing newbusinesses, such as the StarHub payphonemaintenance contract and theregional depot maintenance servicefor Nokia’s base station equipment.Train drivers are now trained in our CabinSimulators before they ride the tracks.We have created a critical mass ofsubscriber base and expertise bybeefing up our wireless networkSystem Integration capabilities,broadening our product range andleveraging the support of our regionaloffices.We have reduced ourreliance on existing service providersand diversified our marketing effortsto support new telco players in theindustry.Technical consultancy servicesallow us to share our in-housedesign and manufacturing capabilities.Weprovide a full array ofsophisticated communications solutionsand components, digitalmicrowave radio for point-to-pointcommunications and motion sensingradars for use in security and lightingcontrol, mobile real-time andsimulation solutions, intelligentbuilding management system andother system integration solutions.INNOVATIVE MINDSAND A CULTURE FORCONTINUOUS LEARNINGOur success has been made possiblethrough the creativity, diligence andactive participation of our staff andpartners.They are the innovativeminds behind the transformation ofbasic technology into successfulproducts for the marketplace.Our customers trust and consultus and many have worked with us todevelop applications that are useful,cost-effective, efficient and easy touse.We believe in the importance ofR&D, recognising that a conduciveenvironment is necessary to stimulateand nurture a spirit of entrepreneurshipand innovation. Buildingupon our resources and experiences,we believe we can stride forwardwith confidence into 2001 andbeyond.82 • visionre:view • 83

R E : V I E WLand SystemsBy Wu Tzu Chien, President and Teo Boon Swee, Chief Operating OfficerWHEN SINGAPORETechnologies Automotiveacquired CharteredIndustries of Singapore,the result was a new entity superiorto the sum of its parts.We gave it aname which is not merely descriptive,but is also a declaration of whatwe are determined to be.Singapore Technologies Kinetics(ST Kinetics) was established as theLand Systems sector of ST Engg inFebruary.The ‘Kinetics’ in our namereflects the dynamism of our drivetowards greater growth and globalisationas a total land systems solutionprovider of automotive, weapons andmunition products and services. Bycombining the resources of twowell-established companies, we havebrought about synergies and criticalbusiness economies of scale in areassuch as engineering, marketing andprocurement, enabling us to streamlineoperations and to optimise ourcapabilities.PLANTING THE SEEDS OFLEARNING AND GROWTHFor us, the highlight of this year wasour response to the US Army’s callfor tenders for a major project: itsacquisition of an air-deployableInterim Armoured Vehicle (IAV) aspart of its transformation requirementsfor the 21st century.Weseized this opportunity to introduceSingapore’s very own Bionix tothe world.With intensified marketing efforts, theSAR 21 Assault Rifle is going places.January 2000. Having emergedfrom the demonstration with flyingcolours, the Bionix Infantry CarrierVehicle (ICV), was submitted as a bidsample to the US Army for evaluationat the Aberdeen ProvingGround.The fact that our BionixICV was one of the four contendersselected to take part in the evaluationis a significant milestone in ourdevelopment.The mission also saw the BionixICV going on a series of road showsthat included appearances inHuntsville,Washington D.C., NewYork and Red River, where armypersonnel, Congressional staffers,strategic business partners andmembers of the media were givena first hand encounter with thevehicle.The Bionix was widelyreported in both local and US media,and on the Internet.Our experience in being a part ofthis programme – the Army’s largestin 10 years – gained kudos for theLand Systems sector, proving ourcredibility as a defence contractorwith a superior product which canstand up to the best in the world.While disappointed that wewere not awarded the contract, webelieve that we have made a significantimpact with our first forayinto the US. Our participation hasopened doors, which will help ourefforts in future large-scale projects.Indeed, the Bionix has put us onthe world map.ANOTHER STAR IN THE MAKINGThe Bionix is not the only landsystems product that is attractingattention. As today’s most up-to-dateand advanced assault rifle in service,the SAR 21 has drawn tremendousinterest from both military and lawenforcement users.The Bionix was among 36 vehiclesfrom 11 countries taking partin a Platform PerformanceDemonstration conducted in FortKnox from December 1999 toParticipating in the US IAV programmeopened doors of opportunity for the LandSystems sector in international marketingand acquisition of design capabilities.re:view • 85

The ATTC created a splash when it was launched at majorinternational exhibitions.In the US market, we gavedemonstrations to various agenciesincluding the Special Forces andMarine Corps, and took part in majorexhibitions such as the Tactical andSecurity Resources Expo (TREXPO);National Defense IndustrialAssociation Symposium & Exhibition(NDIA); and the Association of theUS Army (AUSA) Convention andExhibition. A SAR 21 “shoot-off ”was conducted at the NationalRifle Association firing range inFairfax,Virginia, for journalists,Congressional staffers and militaryofficials.Elsewhere in the internationalarena, the SAR 21 was demonstratedin the Middle Eastern, African andAsian countries.At home, we delivered the firstbatch of rifles to the SingaporeArmed Forces (SAF), well in timefor its public debut at the NationalDay Parade in August.INNOVATION AND SPEEDThe year saw the launch of our newflagship vehicle – the All TerrainTracked Carrier (ATTC) – a highlymobile and versatile articulatedtracked vehicle with an unsurpassedpayload of 5.5 tons. It was developedin response to the tremendous marketpotential in the US and Europeancountries.Built for both militaryand commercialapplications, the ATTCmade its debut at AsianAerospace 2000 inFebruary. It has sincebeen on exhibition atEurosatory in Paris andAUSA in WashingtonD.C., where it receivedrave reviews in themedia. In Singapore,the ATTC was awardedthe Defence Technology Prize bythe Ministry of Defence in Novemberin recognition of our technologicalinnovation and contribution to thenation’s defence.Manufacturing processes and automatedsystems such as the 40mm fuse assemblyline were streamlined for greater efficiency.Besides the ATTC, threevariants were introduced to theBionix family this year – theRecovery Vehicle, the ArmouredVehicle Launched Bridge andInfantry Carrier Vehicle.Designed using the Bionixplatform, they achieve maximumcommonalities in line with today’srequirements for a family of variantswhich can provide the full spectrumof combat capabilities.MOVING FORWARDAS A TOTAL LAND DEFENCESYSTEMS PROVIDERMilitary forces around the worldhave increasingly come to theconclusion that a prime requirementfor their future is the creation oflighter, highly mobile forces withenhanced firepower.We are continuously centeringour products and R&D efforts tomeet these requirements.In addition to our automotiveinnovation, we have embarked onseveral projects to develop newweapon and munition systems suchas the Self-Propelled Rapid FiringAdvanced Mortar System, theLight-Weight Wheeled-Based FieldHowitzer and the 40mm Air BurstingMunitions System.The commitment shown byour NATO customers reaffirmsthe international standing of ourproducts. In the third quarter, wesecured our first overseas contractfor artillery gun sub-systems froma NATO country after extensivetests by the customer.In addition, we received repeatorders from Sweden for our 40mmHigh Velocity self-destruct rounds,and are working with a few countrieson evaluating and qualifyingthis product to NATO standards.The 40mm rounds – nicknamed“green” grenades because of theirself-destruct fuses – are also beingevaluated for the US market underthe Foreign Comparative Testingprogramme.On the home front, we clinchednew orders from the Ministry ofDefence, primarily for new vehicles,vehicle upgrade programmes andmunitions.As an integrated systems supplier,the Land Systems sector can nowoffer better solutions, combiningplatforms, weapons and munitions tomeet the exacting requirements ofour customers.INTERNATIONAL VISIBILITYWe want our products and capabilitiesin design and developmentto be known as widely as possible.This year, we participated in majordefence exhibitions like AsianAerospace 2000 in Singapore, FIDAEin Chile, SOFEX in Jordan,Eurosatory in Paris, Defence Asiain the Philippines, Defendory inGreece and AUSA in Washington,D.C.Through these platforms, wemanaged to spur greater awarenessand foreign interest in our products.The year also saw us playinghost to dignitaries from around theworld.They included US CongressmanBob Riley, the US House ArmedServices Committee comprising theChairman, US Congressman FloydSpence and US Congressman SolomonOrtiz, and the UK Chief of DefenceProcurement, Sir Robert Walmsley,among others.These visits offeredadditional opportunities for us toshowcase our capabilities and products.The FLYER Light Strike Vehicle.As an integrated systemssupplier, the Land Systemssector can now offer bettersolutions, combiningplatforms, weapons andmunitions to meet theexacting requirements ofour customers.STRATEGIC PARTNERSHIPSFOR LONG-TERM GOALSThe bid for the US IAV tender wasnot a “one off ” project, but part ofour long-term effort to expand intointernational markets.This cannot beachieved solely through doing businessfrom Singapore.We recognise the need to localiseoperations in our customers’countries, and with the US IAVprogramme,Vision TechnologiesKinetics, Inc. (VT Kinetics) wasestablished.Incorporated in Delaware in April,VT Kinetics has its headquarters inHuntsville, Alabama, where its keypartners for the IAV programme arelocated. It has paved the way forfurther penetration of the marketthrough partnership arrangementswith leading US-based defence engineeringfirms (such asTeledyne Brown Engineeringand Army Depots) to manufacturenot just the Bionixbut also other land systemsproducts.In October,VT Kineticsregistered formally to bid forthe United Kingdom’s (UK)Armoured Battle Group SupportVehicle (ABSV), another majorvehicle programme.The UK Armyneeds a new tracked vehicle toreplace its existing aging armouredsupport vehicles. Between 500 to1000 vehicles will be required forfielding scheduled after 2005.The Land Systems sector has alsosecured world (less North America)marketing rights for the FLYER LightStrike Vehicle through a Manufacturingand Marketing Agreement with ourUS partner, HSMV.The past year saw Takata-CPI, ajoint venture company formedbetween Chartered PyrotechnicsIndustry and Takata Corporation(Japan), consolidating final designreview and product validation ofInitiators and Gas Generators for theairbags and seatbelt systems for carmanufacturers. Production willcommence early next year.INVESTING IN THE FUTUREWe’re thinking ahead.The LandSystems sector is investing in keyareas for the future such asAlternative Energy Transportationand Clean Power Strategy.This year,we collaborated with the NationalUniversity of Singapore and theInstitute of Materials Research andEngineering to research and developa low-cost fuel cell membrane.Ourother technology partners includeH Power, an American companyspecialising in fuel cell assembly, in86 • visionre:view • 87

which we have invested US$5 million,representing a 3.8% stake.In July, we signed an agreementwith the Nanyang TechnologicalUniversity to set up a collaborativeR&D programme spearheadingresearch in Advanced and IntelligentMechatronics.in China and Hong Kong.Thesebuses will undergo road testing inBeijing, Shenzhen and Hong Kong.We have embarked on twodevelopment initiatives with SolectriaCorporation (a US company withelectric drive technology) for aStirling Engine-based DistributedGenerator system and a StirlingEngine-based Hybrid Bus.Thesedevelopments are expected to beready in March and June 2001respectively.In addition, we are pleased toreport that interest in the trendy,low-cost Electric Bicycles manufacturedby SEEV has grown steadilyand has contributed positively to oursales in Shanghai.Pemeriksaan Kenderaan BerkomputerSdn Bhd (PUSPAKOM) to develop asimilar portal in Malaysia.The MOUmarks STA Inspection’s first forayinto the region with its e-commerceinitiative.The Malaysian portal willbe named “juzclickcar.com.my” andhave a potential target market ofmore than three million passengercars.E-initiative is also being embracedthrough the establishment of B2Bautomotive parts exchange inSingapore as well as automotivecertification and services in Malaysiaand the region.We plan to seekstrategic partners who possess strongdomain knowledge and are leadersin technology that will add value tothe collaboration.We will continue toaccelerate into the21st Century byinvesting in cuttingedgetechnologiesand research anddevelopment in orderto stay relevant to theever-changing needsof our customers andthe market.It has successfully provided newservices such as Speed Lube quickservicing and instant windscreenreplacement as new value-addedservices to the motoring public.taxi services, CityCab will continueto harness the potential of theInternet and aggressively explore theuse of technology in its transactionswith drivers and customers. It willembark on a comprehensive trainingprogramme, tapping cyber-modes oflearning to create a new breed ofdrivers equipped with the relevantskills for the new economy.CityCab remained profitable overthe year by strengthening its marketLay to accommodate and consolidateall our operations by 2005.Construction is expected to begin in2001, with the first building beingcompleted in 2003.The Bionix was ourfirst step in product design and developmentto meet the stringent demandsof our international customers.We will continue to accelerateinto the 21st century by investing incutting-edge technologies andElectric drive systems for electric andhybrid vehicles are the alternative to conventionaldrive systems in the new century.This year, we took a 20% equityinterest in Int. Silvatech IndustriesInc. of Canada (ISI) through ourinvestment holding company,Mobility Systems Pte Ltd.Together with ISI, we have jointlydeveloped a Syncro Track Hydro-Mechanical Drive Train retrofitkit that offers enhanced vehicleperformance and design flexibilitythrough lower system costs.Shanghai Elite Electric VehiclesCo. Ltd (SEEV) has begun to codevelopseveral prototype electricvehicles and to co-invest in hybridbus projects with three other partiesE-INITIATIVESThe launch of juzclickcar.com.sg(an electronic portal for the sale andpurchase of certified used cars) was atimely and well-conceived move onour part.The website is now themarket leader in the field of used carauction, enabling us to become aone-stop provider of services includingfinance, insurance, vehicle certificationand online trading.Juzclickcar has attracted over42 million hits at year end since itslaunch in February. It has also transactedover S$16 million worth ofused car sales, which is close to 70%of total online transactions for usedcar trading in Singapore.In June, NTUC Income, ourstrategic business partner, took up a15% stake in juzclickcar.com.sg,giving us access to its database of700,000 policyholders in Singapore.In October, STA Inspectionsigned a Memorandum of Understanding(MOU) with PusatWe have capitalised on ST Engg’stie-up with Freemarkets, a reverseauction site for purchase of big ticketitems.To date, about S$44 millionhas been transacted through reverseauction, with an average saving ofabout 18% on bought-in materialand services.We will continue to source newpartners and methods in our effortsto increase productivity whiledriving cost factors down.STAR – NEW INITIATIVESIN CUSTOMER SERVICEWith the establishment of moresatellite centres, STAR AccidentRepair has introduced the “e-eye,” acustomer facility which providesinstant electronic surveyor approvalfor the repair of vehicles damaged inaccidents. Approved by top insurancecompanies, this initiative will helpto increase efficiency in accidentreporting and bring positive growthto STAR.To date, 14 insurance companieshave made STAR their authorisedquality workshop.STRONG OUTLOOK FOROPEL CARS AS E-INITIATIVESARE INTRODUCEDThe issuing of more Certificates ofEntitlement (COEs) and introductionof new Opel models like the Omegaand Zafira MPV have propelled salesthis year.Overall sales exceeded ourvolume target and contributed positivelyto the company’s bottom line.We have introduced another serviceoutlet to provide after-sales serviceat our Portsdown Road facility.The launch of opel.com.sg has seta new service standard for the industryas our customers now have accessto electronic service booking andprice information online. In the comingyear, e-accessories and e-loyaltyprogrammes will be introduced.CITYCAB – DRIVINGTOWARDS BETTER TRAININGAND EFFECTIVENESSTo reinforce its position as an industryleader in providing personalisedWe conduct independent certification programmes for used cars.share through its fleet expansionprogramme.It will increase its efforts toachieve maximum efficiency andlower operating costs and, in its pursuitof business excellence, will takeactive steps to prepare to meet theSingapore Quality Award standards.LOOKING FORWARDTo further enhance our efficiencyand growth, we have plans in placeto redevelop our site in Jalan Boonresearch and development in orderto stay relevant to the ever-changingneeds of our customers and themarket.Today, with our wider portfolioof products and services, thechallenge for the Land Systemssector is to increase market penetrationthrough the creation of greaterawareness of our system and productcapabilities globally.Can we live up to our name? Onthe basis of the past year’s performance,we believe so.88 • visionre:view • 89

LAND SYSTEMS CUSTOMER TALKMARINE CUSTOMER TALKSweden was one of the first countries to adopt a 40mm AutomaticGrenade Launcher (AGL). To be able to use combat ammunition duringpeace time training and in winter time, the round had to be equippedwith a self-destruct fuse. Several companies participated in thedevelopment of such a round. Only two manufacturers succeeded in thedevelopment and have qualified their designs. ST Kinetics is the onlycompany that has produced a round with self-destruct capability in anyquantity, and it has been adopted in Sweden. The 40mm High VelocitySelf-Destruct round has been in use by the Swedish Armed Forces since1999 with excellent results. With thousands of rounds fired not a singledud has been reported. During the development and production it hasbeen a pleasure to work with ST Kinetics’ staff whose expertise is of thehighest standards. Sweden will continue to work with ST Kinetics on thenext generation of AGLs that can fire programmable ammunition withan air burst capability.We were pleased with the quality of work and competence of theworkers during our first repair call to ST Marine. Our fishingvessel has had work done at various shipyards and ST Marine hasbeen one of the most organized and quality driven shipyards thatwe have worked with. The management of the project was efficientand the managers themselves were helpful, competent andorganized. We were very pleased with the level of work, and thesupervision, and quality controls ensured that we received aquality job. We were also very impressed with the facility and itsversatility in operation. I would like specifically to thank themanagement of ST Marine during our stay at the shipyard.PER G. ARVIDSSONPRODUCT MANAGERSMALL ARMS SYSTEMSST KINETICS HAS RESPONDEDTO CUSTOMERS’ NEEDSFOR A SAFE ROUND THAT REDUCESDUDS AND IS A TRULY AWESOMECOMBAT ROUND AT THE SAME TIME.LESLIE CHIKAMIMANAGING OWNERST MARINE HAS BEENONE OF THE MOSTORGANISED ANDQUALITY DRIVENSHIPYARDS THAT WEHAVE WORKED WITH.FORSVARETS MATERIELVERKDEFENCE MATERIEL ADMINISTRATIONSWEDENWESTERN PACIFIC FISHERIES, INC.

R E : V I E WM arineBy See Leong Teck, President and Tan Mong Seng, Chief Operating Officer & President (Commercial Business Group)WHILE WE COULD BEpleased with what theMarine sector achievedduring the past year,perhaps our greatest satisfactioncame from seeing our indigenouslydesignedLanding Ship Tank (LST)prove itself on the oceans and gaininternational accolades as a worldclassproduct.SHIPBUILDINGLANDING SHIP TANK CREATINGWAVES AROUND THE WORLDRSS Endeavour, the last LST in theseries of four which we designedand constructed for the Republic ofSingapore Navy (RSN), was launchedin February. During the year, thesecond and third LSTs, RSS Resolutionand RSS Persistence were deliveredto the RSN.The first LST, RSS Endurance,began a very successful maiden voyagein May. Four months later, it hadgained the distinction of being thefirst RSN vessel to circumnavigatethe globe, as well as being the firstRSN vessel to navigate both the Suezand Panama Canals.RSS Endurance’s world tourbrought it to nine ports of call inthe US, Mexico, Canada, the UK,France, Egypt and Saudi Arabia.Visited by senior naval officers atthe various landfalls, the LST left aconsiderable group of admirers inits wake. Most were particularlyimpressed with the very compact,yet highly versatile capabilities ofthe LST, which won it accoladesfor being a distinctly modern andsophisticated vessel.The highlight of the LST’s worldtour must have been its participationin the International Naval Review2000, hailed as “the largest peacetimemaritime event in US history.”It was certainly noteworthy that theLST was part of the fleet of 40 navalships from 24 nations which participatedin the Presidential Review heldon 4th July.The highly successful world tourof the LST was very significant forthe Marine sector.The waves whichthe LST has created around theworld further testify to ourstanding as a world-class shipyardThe LST made a successful maiden voyagearound the world and gained internationalrepute as a world-class product.with the capability to design andconstruct the most sophisticatedvessels for the modern navy.SEALING CLOSER PARTNERSHIPTIES WITH KEY CUSTOMERThe close working relationshipwhich we share with the RSN wasforged through the years as its partnerin building, maintaining andmodernising the RSN fleet. Anothernotable milestone was reached in theyear when the RSN awarded us acontract to construct five frigates toreplace the Missile Gun Boats whichhave been in service for more than30 years.The frigates will beequipped with combat systems thatwill enable them to conduct anti-air,anti-surface and anti-submarine warfare.Theywill also incorporatestealth technology to enhance theirsurvivability.The first frigate is expected to bedelivered in 2005 and all the frigateswill be fully operational by 2009.SHIPREPAIR &CONVERSIONConditions in the shiprepair marketare challenging, but the yard stays ontrack in its pursuit of high valueaddedrepairs and conversions. Andin these fields, it has achieved laudableresults. Our intense marketingefforts have also resulted in anincrease in the number of newcustomers. Compared to 1999, thenumber of new customers in 2000increased by 13%. A total of 343vessels were repaired in 2000,compared to 313 repaired in 1999.MAKING SIGNIFICANTINROADS IN CRUISE VESSELREPAIR MARKETThe year saw the Marine sectormaking further inroads into thecruise vessel repair market.We completed five cruise vesselrepairs during the year. Noteworthyamong these was the refurbishmentand drydocking repair projectcarried out for Norwegian Star, a204m cruise liner belonging toNorwegian Cruise Line.With a 800-passenger and 400-crew carryingcapacity, Norwegian Star is thelargest cruise vessel repaired at ouryard to date.The Marine sector has successfullyestablished itself as another yard of choicefor cruise vessel repairs in the region.re:view • 93

MARINE CUSTOMER TALKCruise vessel repairs demand ahigh level of project managementskills to deliver services of thehighest quality standards as wellas meeting particularly stringenttime requirements.Our ability to secure a contractfrom one of the major cruiseoperators in the world is a finetestimony to the yard’s impeccablereputation for quality workmanshipand a clear indication of howfar we have come in establishingourselves as a preferred yard forcruise vessel repairs in the region.CREATING HISTORY:SECURING FIRST DREDGERJUMBOISATION PROJECTIN SINGAPOREWe have continued to pursue highvalue-added repairs.This hasyielded very positive resultsduring the year, with severalWe were pleased toadd to our clienteleseveral worldrenownedcompanies.Theseinclude RickmersReederei fromGermany, OdfjellASA from Norwayand Star Cruises.Ham310 by 29.2m from 138.2mto 167.4m.The capacity of thedredger was increased by 52%.Western Tug & Barge, PNG,a subsidiary of P&O MaritimeServices, also contracted us tolengthen their general purposeore and fuel oil carrier,WesternStar, and their general purposeore carrier,Western Flyer.ment, MTM Ship Management,Odfjell ASA, among others.MAKING POSITIVE FIRSTIMPRESSIONS WHICH COUNTOur marketing efforts continuedto yield very positive results.We were pleased to add toour clientele several worldrenownedcompanies. Theseinclude Rickmers Reederei fromGermany as well as one of theworld’s largest chemical tankeroperators, Odfjell ASA fromNorway.We are also proud tomention that Star Cruises – thefourth largest cruise operator inthe world was added to our listof esteemed clients during theyear.The Marine sector has beenmaking very positive first impressionson these new customers,bringing them back to our yardafter we completed our firstStolt-Nielsen Transportation Group’s association with ST Marine startedin 1998 with the first tank coating and repair service which ST Marineprovided for our tanker, M/T Stolt Sunrise. Since then, ST Marine hasbeen regularly repairing and maintaining our fleet of chemical tankers. Iam pleased to say that Stolt-Nielsen Transportation Group’s workingrelationship with ST Marine over the last two years has been excellent. Imust commend ST Marine for proving to be such a reliable provider ofship-repair services. The technical competency of your yard has alwaysgiven us trust and confidence in ST Marine’s ship-repair services. Thedifference which sets ST Marine apart from some other yards must be thevery attentive, personal and highly responsive services which STMarine consistently provides. The professionalism and enthusiasm ofyour team in handling our projects, make it attractive working with STMarine. As a leading provider of transportation services to customersworldwide; operating one of the largest fleet of chemical tankers in theworld, Stolt-Nielsen Transportation Group is committed to deliveringbetter and more cost-effective solutions to the increasing challengesfacing our customers globally. It is very gratifying that we are able towork with a partner who is also similarly committed to be a world classservice provider. Stolt-Nielsen Transportation Group’s partnership withST Marine is one, which we will look forward to in the years ahead.OTTO FRITZNERMANAGINGDIRECTOROur pursuit of high value-added repairs have yielded very positive results. During the year, the yard secured a landmarkcontract to carry out the first dredger jumboisation project in Singapore.major conversion projects beingsecured.The Marine sector madehistory when we secured a landmarkcontract from HollandscheAanneming Maatschappij B.V.(H.A.M. B.V.) to carry out thefirst dredger jumboisation projectin Singapore.The yard’s highly regardedtrack record and expertise in thedesign and construction of sophisticatednaval and commercialvessels clearly provided us withan edge in securing this majorproject to lengthen their dredger,Other conversion contractswhich the yard secured includedthat for a side stone dumpingvessel, Jan Steen, for Van OordACZ B.V.BUILDING ON ASTRONG TRACK RECORD:TANK COATINGTank coating continues to be akey focus area for the yard.Weare pleased to report that theyard completed six tank coatingrepair projects for several worldrenownedcustomers includingStolt-Nielsen,Thome Ship Manage-projects for them. RickmersReederei was so impressed withus for the management of its firstrepair project that it soon awardedus a Fleet Contract for therepair of eight vessels betweenApril and August.Another first-time customerthis year was H.A.M. B.V. Thefirst project involved steel renewalof its hopper dredger, P.C.S.VanHattem, which also included partialrenewal of the centre girder ofthe vessel – a job which demandeda high level of technical finesse.THE DIFFERENCE WHICH SETS ST MARINEAPART FROM SOME OTHER YARDS IS THE VERYATTENTIVE, PERSONALAND HIGHLYRESPONSIVE SERVICESSTOLT-NIELSEN TRANSPORTATION GROUPIT CONSISTENTLY PROVIDES94 • vision

The yard’s ability to go on tosecure the conversion contractfrom H.A.M. B.V. to lengthen itsdredger Ham310 speaks volumesfor the very positive first impressionswhich we have made.Odjfell ASA, one of the world’slargest tanker operator, also awardedus a second contract, followingclose on the heels of the first.MOVING UP THE SCALEOF REPAIR SPECIALITYThe Marine sector moved up thescale of repair speciality this yearwith the commencement of maintenancework for the first of theRSN’s submarines, RSS Conqueror.The submarine came into ouryard for repairs in May, officiallyrolling out our maintenance programmefor the RSN’s submarinefleet.To gear ourselves for thisundertaking, we have been postingengineers and technical personnelfor attachments in Sweden.E-ENHANCEDCUSTOMER SERVICEIn 2000, we launched a portal,e-stmarine.com, specially tailoredfor our newbuilding and shiprepaircustomers.Our objective in establishingthis portal is to provide them withquick and easy access to up-todateinformation related to theirprojects at our yard.We believethat our worldwide customerswill appreciate this initiativewhich enhances the value of theservices that we bring to them.LAND BASEDENGINEERINGThe feasibility study, design anddevelopment of a 5000 ton/daypilot plant was in progress duringthe year.Blast door sales were flatas the Housing and DevelopmentBoard (HDB) hasscaled down their buildingprogramme.We will focusour marketing efforts onprivate residential projects.LOOKING AHEADOur way forward in the nearfuture is through building uponour existing strengths.We willcontinue to leverage on ourproven capabilities in ship designand shipbuilding to pursue highvalue-added repairs such as shipconversions.We are confident thatthe ship conversion projects wehave successfully completed overthe years will also provide us witha competitive edge in this marketsegment.We will continue to pursueniche markets such as cruise vesselrepairs, promoting ourselvesas another yard of choice for thegrowing number of cruise shipoperators in the region. Ourimpeccable reputation for consistentlydelivering high qualityproducts and services, as well asour steadily growing track recordin the cruise vessel repair market,will stand us in good stead.Another niche market isdredger repairs.With the scaleof the projects that the Marinesector has undertaken to date, wehave established a very crediblereputation as a specialist yard fordredger repairs.We will aim toensure that our strong presence inthe dredger repair market continuesto grow.Tank coating projects will alsobe pursued to build on the successfultrack record that we haveestablished in this market segment.The Marine sector commenced maintenancework for the first of the RSN’s submarines,RSS Conqueror.OUTLOOKOverall, the company is cautiouslyoptimistic about the shiprepairand shipbuilding industry.WhileChina presents a potential challengein the newbuilding andshiprepair market, Singaporeyards are still dominant in the bigshiprepair market and in moresophisticated conversion worksuch as FPSOs and dredgerjumboisation.It is anticipated that the numberof VLCCs to be scrapped thisyear will exceed 40.This is likelyto have an impact on ourshiprepair business since biggeryards, with a comparatively lowervolume of VLCC repair projects,are expected to encroach into thenon-VLCC segment of theshiprepair market.On a brighter note, the high oilprices are keeping the tanker marketbuoyant, making the tankerrepair market look promising.Theoffshore sector is also showingsigns of picking up, with demandfor offshore supply vesselsstrengthening.This could presentnewbuilding opportunities for us.Our size and capabilities arewell-suited for the niche marketsand, coupled with the marketingsuccesses and track record we havebuilt up, we are confident that theMarine sector will perform wellin the coming year.for those who need something to count onDetails matter.The preceding pagespresented a picture ofST Engg’s activities during2000 and the key statisticsfor the year. In the followingpages, we offer a thoroughbreakdown of the Group’sperformance in figures.Group FinancialPerformancePAGE 98Directors’ ReportPAGE 101Statement by DirectorsPAGE 116Auditors’ ReportPAGE 117Balance SheetsPAGE 118Statements ofProfit & LossPAGE 120Statements ofChanges in EquityPAGE 121Consolidated Statementof Cash FlowsPAGE 123Notes to the FinancialStatementsPAGE 126Additional InformationPAGE 176Board Composition& CommitteesPAGE 180I N S I D EShareholding StatisticsPAGE 181Share Prices andTurnoverPAGE 182Review of FinancialPerformance:Aerospace,Electronics,Land Systems,MarinePAGE 183Subsidiaries andAssociated CompaniesPAGE 203Corporate InformationPAGE 208Directors’ InformationPAGE 209Corporate DirectoryPAGE 211Notice of Fourth AGMPAGE 221Letter to ShareholdersPAGE 223Proxy FormPAGE 22596 • visionby the numbers • 97

GROUP FINANCIAL PERFORMANCE1. ACQUISITION OF FOUNDERS INDUSTRIES PTE LTDOn 22 October 1999, ST Engg announced the proposedacquisition of the entire issued and paid-up share capitalof Chartered Industries of Singapore (Pte.) Limited(“CIS”) through its wholly-owned subsidiary, SingaporeTechnologies Automotive Ltd (“ST Auto”), subject toshareholders’ approval.The acquisition was approved byshareholders at the Extraordinary General Meeting heldon 8 December 1999 and the acquisition was completedon 9 February 2000. Subsequent to the completion, STAuto and CIS changed their name to SingaporeTechnologies Kinetics Pte Ltd (“ST Kinetics”) andFounders Industries Pte Ltd (“FIPL”) respectively.Theacquisition of FIPL has enabled the creation of a worldclassland systems group within ST Engg as well as theprovision of additional growth opportunities in its developmentas a successful global world-class engineering3. FINANCIAL PERFORMANCE3.1 SELECTED QUARTERLY FINANCIAL DATA2000 1999IN S$’000 EXCEPT PER SHARE AMOUNTS 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QTurnover 589,053 501,092 492,992 675,890 392,138 531,345 395,110 445,814Profit after taxafter minority interest 64,836 67,407 69,096 86,799 45,828 51,448 47,940 55,313Basic earnings per share (¢)Before extraordinary items(Note 1) 2.3 4.6 7.1 10.1 1.6 3.4 5.1 7.1Net tangible assetsper share (¢) (Note 2) 31.3 34.7 36.4 31.9 31.4 33.1 34.9 29.6Note 1: The quarterly data are unaudited.Note 2: Basic earnings per share and Net tangible assets per share are computed based on period-to-date figures.3.2 TURNOVERThe Group’s turnover grew by 28% or S$495 millionfrom S$1.76 billion in 1999 to S$2.26 billion in 2000.All sectors contributed to the increase in turnover.Themajor contribution came from Land Systems sector withan increase of S$229 million or 77% in turnover.The Aerospace sector grew 12% or S$100 million over1999.This was mainly due to higher sales generated bygroup.The enlarged ST Engg is also in a better position toreach out to customers requiring higher value-added andintegrated solutions due to the availability of greaterresources and critical business economies of scale.2. US RESTRUCTURING AND SECTORAL REPORTINGIn year 2000, ST Engg rationalised its group corporatestructure to position itself for growth and expansion inthe United States.The exercise involved the consolidationof ST Engg’s US operations for each of its fourStrategic Business Areas under a single umbrella toachieve critical mass within the United States.Subsequent to the restructuring, the Group reported itsresults by sector independent of its legal structure.Therationale for the change is to better reflect the businessfocus of the Group in the four main areas, namelyAerospace, Electronics, Land Systems and Marine.both Commercial Business Group (CBG) and MilitaryBusiness Group (MBG).The increased capacities in CBGand completion of more project milestones as well asincreased deliveries under maintenance contracts ofMBG contributed to the growth in turnover.Electronics sector’s turnover for 2000 increased by 16%or S$58 million to S$412 million.The increase in saleswas contributed by all three business groups, namely,Large-Scale Systems Group, Communication & SensorSystems Group and Software Systems Group.Turnover for Land Systems sector increased by 77% orS$229 million compared to 1999, of which S$199million was contributed by FIPL.The increased sales waslargely from Manufacturing, Upgrading & Repairsbusiness group due mainly to the inclusion of the munitionsand weapon sales of FIPL, increased revenue fromOrdnance after-sales services and STAR accident repairs.Turnover for Marine sector of S$358 million was 40% orS$102 million higher than that achieved in 1999.Theincrease was primarily due to the delivery of twoLanding Ship Tanks (LST) as well as the completion ofmore conversion projects in 2000 compared to deliveryof only one LST in 1999.3.3 PROFITOn a full year basis, the Group’s profit before taximproved by 37% or S$112.4 million to S$412.5 millionfrom S$300.1 million in 1999. Growth came fromall sectors.Aerospace sector achieved a 15% or S$29.2 million ofprofit before tax growth over that of 1999. Both CBGand MBG registered higher profit of S$2.6 million andS$26.6 million respectively. CBG registered a lowerprofit growth of S$2.6 million with higher contributionfrom Turbine Overhaul Services Pte Ltd and the biennialAsian Aerospace 2000 exhibition, but partially offset bylower margins due to sales mix, Dalfort’s poor performance,bad debts written off and higher provision forinventory. MBG’s higher profit of S$26.6 million was duemainly to higher turnover and investment income.Electronics sector’s profit before tax grew by 65% orS$18.4 million to S$46.6 million over 1999 profit beforetax. All three business groups contributed to theimprovement in profit as a result of higher sales andinterest income as well as better operational efficiency.Profit before tax for Land Systems sector grew 156% orS$51.6 million.The increase of the Manufacturing,Upgrading & Repairs business group was the result ofhigher sales with the inclusion of FIPL, better marginsand productivity gains, as well as higher interest income.Higher sales from Opel and electric vehicle businesses aswell as the inclusion of the profit from trading and testservices business of FIPL also contributed to theimproved profit.Profit before tax from Marine sector of S$63.9 millionwas higher than 1999 by 38% or S$17.5 million.Theincrease was mainly contributed by higher sales as well asimproved margin from all three business groups, butpartially offset by lower investment income due to fewerfunds matured and an increase in provision for diminutionfor a long-term investment.3.4 CASH AND CASH EQUIVALENTSThe Group had a healthy cash balance of S$2.6 billion, anincrease of 24% over 1999. Majority of the funds wereheld in liquid assets such as fixed deposits, floating ratenotes, placements with a related corporation and withprofessional fund managers on a guaranteed principalbasis.The increase was attributable to higher cash flowgenerated from operating activities.3.5 EARNINGS PER SHARE (EPS)Both basic and diluted EPS showed an improvement of42% over 1999. Basic EPS increased from 7.08 cents to10.12 cents in 2000 while diluted EPS increased from7.01 cents to 10.01 cents in 2000.3.6 CAPITAL EXPENDITURECapital expenditure amounted to S$57 million.Thedetails are shown in note 8 to the financial statements.3.7 DIVIDENDThe Directors are pleased to announce that gross dividendstotalling 95% (i.e. S$0.095 for each share of parvalue S$0.10) have been recommended for the year ended31 December 2000.The recommended dividends consistof a gross ordinary dividend of 25% (i.e. S$0.025) and agross special dividend of 70% (i.e. S$0.070).The recommendedspecial dividend reflected the Group’s commitmentto creating shareholders’ value through the EVAapproach to managing its business.The recommended dividendstake into consideration the Group’s present cashposition, positive cashflow generated from operations, taxcredit balances and projected capital requirements.3.8 ECONOMIC VALUE ADDED (EVA)EVA for the full year 2000 was S$189.3 million, anincrease of S$53.7 million or 40% over 1999.The weightedaverage cost of capital was 9.9% for 2000 and 1999.4. REVIEW OF BUSINESS ACTIVITIESAEROSPACEAerospace sector continued to see increased demandsfor MRO services and engineering services from boththe commercial and military business groups in year98 • visiongroup financial performance • 99

2000. In addition to the primary US and Asia sales, year2000 saw increased sales from both Europe and SouthAmerica as a result of the Aerospace sector’s marketingefforts to penetrate these markets.The sector alsocontinued to invest in new maintenance capabilities andengineering developments to generate new services andproducts for the future.ELECTRONICSIn year 2000, the region continued in its recovery fromthe 1997 Asian economic crisis. New prospects unfoldedand the Electronics sector was able to secure new ordersfrom China, Hong Kong,Taiwan and Thailand. Locally,our government continued to invest in infrastructure andthis has led to the sector securing a number of newprojects from the Land Transport Authority.LAND SYSTEMSThe acquisition of FIPL added to the strong growth ofthe existing automotive business.While the sectorcontinues to be strong in its traditional markets,international marketing activities have also been steppedup, especially in Africa, Middle East and Europe.Thesector has also started to market aggressively intoAmerica with its bid for the US Army’s InterimArmoured Vehicle (IAV) program.To further enhance thecapabilities in the military business, the sector hascontinued to invest in collaborative partnerships as wellas companies with dual-purpose technologies. STARaccident repairs achieved higher revenue as a result of thesuccessful launch of new satellite centres and newinitiatives for services that provide the sector with acompetitive advantage.MARINEThough charter rates for containerships, oil tankers andoffshore support vessels/anchor handling tugs declinedmarginally since 3Q1999, the charter rates remainedstrong.The freight rates have risen in tandem with thehigher oil price. Strong demand for containerships, oiltankers and offshore support vessels/anchor handlingtugs is expected to continue through 2001 and this willlead to higher demand for shiprepair.5. PROSPECTSWith a firm order book of S$5.1 billion, of which S$1.8billion will be delivered in 2001, the Directors expectthe performance in 2001 to be better than 2000. For1Q2001, the sales and profit are expected to be lowerthan 4Q2000.AEROSPACEFull year profit for the Aerospace sector is expected to bebetter. 1Q2001 is expected to be weaker than 4Q2000primarily due to the high deliveries by SASCO in4Q2000 and completion of project milestones in thatquarter. Additional hangar capacities will come on streamboth locally and in the US for the Aerospace sector in1Q2001.With the successful conversion of the first DC-10 PTF aircraft by SASCO, a second aircraft is expectedto be inducted in February 2001. On the engineeringfront, the design and prototyping phase of the Turkish AirForce (TuAF) F5 upgrade programme is expected to becompleted in 2001.The B757 PTF programme withBoeing would enter the production phase in 2001.ELECTRONICSOverall, the performance for 2001 is expected to bebetter than that of 2000. However, sales and profit in1Q2001 are expected to be lower than those in 4Q2000as the values of the project milestones that would becompleted for Ministry of Home Affairs, Land TransportAuthority and various defence contracts are lower. Foryear 2001, Electronics sector will continue to enhance itssolutions through research and development and strategicinvestment in Infocomm technologies as well as strengthenits marketing channels.LAND SYSTEMSTurnover and profit are expected to be better in 2001compared to 2000.While turnover is expected to bemaintained, profit is likely to be lower in 1Q2001compared to 4Q2000 due to product mix andcontractual delivery schedules.MARINEOverall, the performance of Marine sector is expectedto be marginally lower than 2000. Sales in 1Q2001 isexpected to be higher than 4Q2000 due mainly to thedelivery of the last of the series of four LSTs andvariation orders.With the delivery of only one LST in2001, both sales and operating profit of Shipbuilding areexpected to be lower. However, the maturity of somefunds under management will contribute to the fullyear results.DIRECTORS’ REPORT31 DECEMBER 2000(Currency - Singapore dollars unless otherwise stated)We, the undersigned directors, on behalf of all thedirectors of the Company, submit this annual report tothe members together with the audited financialstatements of the Group and of the Company for thefinancial year ended 31 December 2000.DIRECTORSThe directors of the Company in office at the date of thisreport are as follows:Ho Ching (Chairman)Boon Swan Foo (Deputy Chairman and CEO)Ng Kee ChoeTan Guong ChingPeter Ho Hak EanMG Lim Chuan Poh (appointed on 1 April 2000)Professor Lui Pao ChuenRESULTS FOR THE FINANCIAL YEARResults of the Group and of the Company for thefinancial year are as follows:Dr Philip Nalliah Pillai (appointed on 1 April 2000)Philip Tan Yuen FahWinston Tan Tien HinLucien Wong Yuen KuaiPRINCIPAL ACTIVITIESThe principal activities of the Company are those of aninvestment holding company and the provision ofengineering and related services.The principal activitiesof the subsidiaries are set out in Note 9 to the financialstatements.There were no significant changes in suchactivities during the financial year, except for newlyincorporated and acquired subsidiaries.EMPLOYEESThe total number of employees in the Group at the endof the financial year was 10,325 (1999: 8,187).GROUP COMPANY$’000 $’000Profit after taxation 291,496 287,468Minority interests (3,358) –Profit attributable to the shareholders of the Company 288,138 287,468Unappropriated profit brought forward 418,543 101,475Profit available for appropriation 706,681 388,943Goodwill realised upon disposal of associated company 3,992 –Additional final dividend paid in respect of 1999 due to the issue of sharesunder ST Engg Share Option Scheme before books closure date (1,439) (1,439)Proposed final dividend of 2.5 cents per share less tax at 25.5% (53,188) (53,188)Proposed special dividend of 5.5 cents per share less tax at 25.5% (117,013) (117,013)Proposed special tax exempt dividend of 1.5 cents per share (42,836) (42,836)Goodwill on acquisition of subsidiary written off (22,531) –Unappropriated profit carried forward 473,666 174,467100 • visiondirectors’ report • 101

TRANSFERS TO OR FROM RESERVES AND PROVISIONSExcept as shown in the financial statements, there wereno material transfers to or from reserves or provisionsduring the financial year.ISSUE OF SHARES AND DEBENTURESThe Company issued 17,004,832 ordinary shares of$0.10 each for cash at the respective price per shareupon exercise of the options granted by the Companyunder the Singapore Technologies EngineeringExecutives’ Share Option Scheme (“ST Engg ShareOption Scheme”):ACQUISITION AND DISPOSAL OF SUBSIDIARIES(a) During the financial year, the Group acquired thefollowing subsidiaries:INTEREST INTEREST AFTER NET TANGIBLEACQUIRED (%) ACQUISITION (%) CONSIDERATION ASSETSNAME OF COMPANY $’000 $’000Founders Industries Pte Ltd 100 100 268,000 244,117(formerly known as Chartered Industries ofSingapore (Pte) Limited) and its subsidiaries(“CIS Group”)DataMark Technologies Pte Ltd 34 51 410 410(b) During the financial year, the Group acquired anadditional equity interest in the following subsidiary:INTEREST INTEREST AFTER NET TANGIBLENAME OF COMPANY ACQUIRED (%) ACQUISITION (%) CONSIDERATION ASSETSShanghai Elite Electric Vehicles Co., Ltd 20 100 US$106,000 RMB928,308and RMB20,000(c) During the financial year, the following subsidiary wasdisposed of:GRANT NO. NO. OF ORDINARY SHARES ISSUED PRICE PER ORDINARY SHARE ($)9501 85,902 0.9059601 50,000 0.90594R3 713,166 0.87394R5 40,000 0.52295R1 880,658 0.90595R3 135,625 0.46795R4 228,096 0.40196R1 794,115 0.90596R2 450,568 0.38096R5 387,204 0.37396R6 20,549 0.46597R1 1,644,569 0.42297R2 537,402 0.62997R3 262,001 0.49297R4 57,268 0.64097R5 231,363 0.72098R1 8,553,900 1.39098R2 1,000,000 1.21098R3 902,206 1.29099R1 30,240 1.418NET TANGIBLENAME OF COMPANY INTEREST (%) CONSIDERATION ($) ASSETS ($)Transport Technologies International Ltd 55 – –Except as disclosed above, there were no otheracquisitions or disposals of subsidiaries during thefinancial year.102 • visiondirectors’ report • 103

During the financial year, its subsidiaries issued thefollowing shares:NAME OF COMPANY SHARES ISSUED AND CONSIDERATION PURPOSESingapore Technologies 2,800,000 ordinary shares of $1 each, For incorporation and initial workingDynamics Pte Ltd at par for cash capitalST Synthesis Pte Ltd 1,999,998 ordinary shares of $1 each, For additional working capital(formerly known asat par for cashSingapore Technologies IntegratedServices Pte Ltd)ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE SHARESOR DEBENTURESExcept for the ST Engg Share Option Scheme, neither atthe end of nor at any time during the financial year wasthe Company a party to any arrangement whose objectsare, or one of whose objects is, to enable the directors ofthe Company to acquire benefits by means of theacquisition of shares in or debentures of the Company orany other body corporate.DIRECTORS’ INTERESTS IN SHARES OR DEBENTURESExcept as disclosed in this report, no director who heldoffice at the end of the financial year had interests inshares or debentures of the Company or of relatedcorporations either at the beginning (or date ofappointment, if later) or at the end of the financial yearand on 6 January 2001.According to the register kept by the Company for thepurposes of Section 164 of the Companies Act, Chapter50, particulars of interests of directors who held office atthe end of the financial year in shares or debentures in theCompany and in related corporations were as follows:Vision Technologies Kinetics, Inc. 100 ordinary shares of US$1 each, For incorporation and initial workingat par for cashcapitaliShopAero Pte Ltd 1,155,000 ordinary shares of US$1 For incorporation and initial workingeach, at par for cash and 630,000 capitalordinary shares of US$1 each atUS$2.5397 per share for cashDataMark Technologies Pte Ltd 410,000 ordinary shares of $1 each, Call options exercisedat par for cashST Electronics (Shanghai) Co., Ltd Paid-in capital of US$700,000 For additional working capitalST Electronics (Taiwan) Limited Paid-in capital of NT$20,000,000 For incorporation and initial workingcapitalJuzclickCar.com Pte Ltd 100,000 ordinary shares of $1 each, For incorporation and initial workingat par for cashExcept as disclosed above, neither the Company nor itssubsidiaries issued any shares or debentures during thefinancial year.capitalHOLDINGS IN THE NAME OF THEDIRECTOR, SPOUSE OR INFANT CHILDREN1 JANUARY 2000 OR DATE 31 DECEMBEROF APPOINTMENT IF LATER 2000THE COMPANYOrdinary Shares of $0.10 eachBoon Swan Foo 600,613 224,433Professor Lui Pao Chuen 161,444 161,444Philip Tan Yuen Fah 25,686 25,686Winston Tan Tien Hin 200,000 200,000OPTIONS TO SUBSCRIBE FOR ORDINARY SHARES OF $0.10 EACH1 JANUARY 2000 OR DATE 31 DECEMBER EXERCISEOF APPOINTMENT IF LATER 2000 PRICE ($) EXERCISABLE PERIODBoon Swan Foo 286,342 – 0.873 18.5.1999 to 7.11.2004286,342 – 0.905 18.5.1999 to 2.6.2005450,568 – 0.380 18.5.1999 to 8.4.2006450,568 – 0.422 18.5.1999 to 2.4.20071,000,000 – 1.210 21.5.2000 to 20.5.20085,000 – 1.290 8.8.2000 to 7.8.20081,000,000 1,000,000 1.418 10.2.2001 to 9.2.20095,000 5,000 2.000 11.8.2001 to 10.8.2009– 1,000,000 2.260 10.2.2002 to 9.2.2010104 • visiondirectors’ report • 105

RELATED CORPORATIONSHOLDINGS IN THE NAME OF THEDIRECTOR, SPOUSE OR INFANT CHILDREN1 JANUARY 2000 OR DATE 31 DECEMBEROF APPOINTMENT IF LATER 2000CHARTERED SEMICONDUCTOR MANUFACTURING LTDOrdinary Shares of $0.26 eachHo Ching – 60,000Boon Swan Foo 28,800 28,800Tan Guong Ching – 2,000OPTIONS TO SUBSCRIBE FOR ORDINARY SHARES OF $0.26 EACH1 JANUARY 2000 OR DATE 31 DECEMBER EXERCISEOF APPOINTMENT IF LATER 2000 PRICE ($) EXERCISABLE PERIODHo Ching 100,000 – 3.344 29.4.2000 to 29.10.2004– 120,000 16.69 6.4.2001 to 6.4.2005– 120,000 11.86 3.10.2001 to 3.10.2005HOLDINGS IN THE NAME OF THEDIRECTOR, SPOUSE OR INFANT CHILDREN1 JANUARY 2000 OR DATE 31 DECEMBEROF APPOINTMENT IF LATER 2000SEMBCORP INDUSTRIES LTDOrdinary Shares of $0.25 eachProfessor Lui Pao Chuen 2,950 12,950OPTIONS TO SUBSCRIBE FOR ORDINARY SHARES OF $0.25 EACH1 JANUARY 2000 OR DATE 31 DECEMBER EXERCISEOF APPOINTMENT IF LATER 2000 PRICE ($) EXERCISABLE PERIODHo Ching – 100,000 1.99 27.6.2001 to 26.6.2010HOLDINGS IN THE NAME OF THEDIRECTOR, SPOUSE OR INFANT CHILDREN1 JANUARY 2000 OR DATE 31 DECEMBEROF APPOINTMENT IF LATER 2000VERTEX INVESTMENT (II) LTDOrdinary Shares of US$1.00 eachProfessor Lui Pao Chuen 20 20Redeemable Preference Shares of US$1.00 eachProfessor Lui Pao Chuen 144 –RAFFLES HOLDINGS LIMITEDOrdinary Shares of $0.50 eachTan Guong Ching –** 2,000Ng Kee Choe –** 10,000VERTEX TECHNOLOGY FUND LTDOrdinary Shares of US$1.00 eachHo Ching 100† 100†Boon Swan Foo 100† 100†Winston Tan Tien Hin 10 10Redeemable Preference Shares of US$0.01 eachHo Ching 80† 5†Boon Swan Foo 80† 5†Winston Tan Tien Hin 10 –ST ASSEMBLY TEST SERVICES LTDOrdinary Shares of $0.25 eachHo Ching – 35,000Boon Swan Foo 750 750Lucien Wong Yuen Kuai – 30,000OPTIONS TO SUBSCRIBE FOR ORDINARY SHARES OF $0.25 EACH1 JANUARY 2000 OR DATE 31 DECEMBER EXERCISEOF APPOINTMENT IF LATER 2000 PRICE ($) EXERCISABLE PERIODST ASSEMBLY TEST SERVICES LTDBoon Swan Foo 14,250 14,250 0.42 10.12.1999 to 9.12.2009106 • visiondirectors’ report • 107

HOLDINGS IN THE NAME OF THEDIRECTOR, SPOUSE OR INFANT CHILDREN1 JANUARY 2000 OR DATE 31 DECEMBEROF APPOINTMENT IF LATER 2000VERTEX TECHNOLOGY FUND (II) LTDOrdinary Shares of US$1.00 eachHo Ching – 100†Boon Swan Foo – 50†Winston Tan Tien Hin – 20Redeemable Preference Shares of US$0.01 eachHo Ching – 100†Boon Swan Foo – 50†Winston Tan Tien Hin – 20SINGAPORE TELECOMMUNICATIONS LIMITEDOrdinary shares of $0.15 eachHo Ching 3,400 3,510Boon Swan Foo 3,400 3,510Tan Guong Ching 3,400 3,510Ng Kee Choe 3,280 3,380MG Lim Chuan Poh 1,440 1,490Peter Ho Hak Ean 1,760 1,820Professor Lui Pao Chuen 3,400 3,510Dr Philip Nalliah Pillai 3,400 3,510Philip Tan Yuen Fah 3,400 3,510Winston Tan Tien Hin 5,400 5,520Lucien Wong Yuen Kuai 3,000 3,110SINGAPORE AIRLINES LIMITEDOrdinary Shares of $1.00 eachPeter Ho Hak Ean 6,000 6,000Professor Lui Pao Chuen 8,000 8,000Winston Tan Tien Hin 4,000 4,000Lucien Wong Yuen Kuai – 25,000SOMERSET HOLDINGS LIMITED#Ordinary Shares of $0.50 eachPhilip Tan Yuen Fah 37,830 –OPTIONS TO SUBSCRIBE FOR ORDINARY SHARES OF $0.05 EACH1 JANUARY 2000 OR DATE 31 DECEMBER EXERCISEOF APPOINTMENT IF LATER 2000 PRICE ($) EXERCISABLE PERIODSINGAPORE FOODINDUSTRIES LIMITEDPhilip Tan Yuen Fah 20,000 20,000 0.78 29.10.2001 to 28.10.2004– 100,000 0.55 24.8.2001 to 23.8.2010HOLDINGS IN THE NAME OF THEDIRECTOR, SPOUSE OR INFANT CHILDREN1 JANUARY 2000 OR DATE 31 DECEMBEROF APPOINTMENT IF LATER 2000SMRT CORPORATION LTDOrdinary Shares of $0.10 eachTan Guong Ching – 11,000Lucien Wong Yuen Kuai – 40,000SINGAPORE AIRPORT TERMINAL SERVICES LTDOrdinary Shares of $0.10 eachNg Kee Choe – 11,000Professor Lui Pao Chuen – 10,000SIA ENGINEERING COMPANY LTDOrdinary Shares of $0.10 eachProfessor Lui Pao Chuen – 10,000THE ASCOTT LIMITED#Ordinary Shares of $0.20 eachPhilip Tan Yuen Fah – 35,181CAPITALAND LIMITED*Ordinary Shares of $1.00 eachNg Kee Choe – 13,000Winston Tan Tien Hin – 25,000OPTIONS TO SUBSCRIBE FOR ORDINARY SHARES OF $1.00 EACH1 JANUARY 2000 OR DATE 31 DECEMBER EXERCISEOF APPOINTMENT IF LATER 2000 PRICE ($) EXERCISABLE PERIODBoon Swan Foo – 53,850 2.54 13.6.2001 to 11.6.2005Lucien Wong Yuen Kuai – 53,850 2.54 13.6.2001 to 11.6.2005SINGAPORE FOOD INDUSTRIES LIMITEDOrdinary Shares of $0.05 eachHo Ching 50,000 50,000Boon Swan Foo 8,000 8,000Philip Tan Yuen Fah 20,000 20,000108 • visiondirectors’ report • 109

The SGX’s Listing Manual requires a company to providea statement as at the 21st day after the end of thefinancial year, showing the direct and deemed interests ofeach director of the Company in the share capital of theCompany. As the Directors’ Report of the Company isdated on 6 January 2001, the Company is unable tocomply with the 21 days’ requirement.There was no change in any of the abovementioneddirectors’ interests in the Company and relatedcorporations between the end of the financial year and6 January 2001.DIRECTORS’ INTERESTS IN CONTRACTSSince the end of the previous financial year, no directorhas received or become entitled to receive a benefit(other than a benefit included in the aggregate amountof emoluments shown in the financial statements, anyfixed salary of a full-time employee of the Company, orany emoluments received from related corporations andshare options granted pursuant to the ST Engg ShareOption Scheme) by reason of a contract made by theCompany or a related corporation with the director orwith a firm of which the director is a member, or witha company in which the director has a substantial financialinterest, except for professional fees paid to a firmof which a director is a member as shown in the financialstatements.HOLDINGS IN THE NAME OF THEDIRECTOR, SPOUSE OR INFANT CHILDREN1 JANUARY 2000 OR DATE 31 DECEMBEROF APPOINTMENT IF LATER 2000SNP CORPORATION LTDOrdinary Shares of $0.50 eachWinston Tan Tien Hin – 94,495† Held in trust by a trustee company on behalf of the directors.* During the financial year, DBS Land Limited and Pidemco Land Limited (the “Scheme A Companies”) entered into a Scheme of Arrangement (“Scheme A”)under Section 210 of the Companies Act, Chapter 50. The Scheme A took effect on 24 November 2000. Pidemco Land Limited was renamed CapitaLandLimited with effect from 27 November 2000 and listed on the Singapore Exchange Securities Trading Limited (SGX-ST) on the same date whereupon DBSLand Limited was delisted and became a wholly-owned subsidiary of CapitaLand Limited. Upon Scheme A taking effect, CapitaLand Limited issued newshares and share options in exchange for previous holdings of shares and share options in the Scheme A Companies in accordance with the terms of theScheme A.** Raffles Holdings Limited became a related corporation with effect from 24 November 2000.# During the financial year, Somerset Holdings Limited and The Ascott Limited (the “Scheme B Companies”) entered into a Scheme of Arrangement (“SchemeB”) under Section 210 of the Companies Act, Chapter 50. The Scheme B took effect on 25 November 2000 whereupon Somerset Holdings Limited became awholly-owned subsidiary of The Ascott Limited. The Ascott Limited issued new Ascott shares in exchange for previous holdings of shares in SomersetHoldings Limited in accordance with the terms of Scheme B. The shares of Somerset Holdings Limited were delisted on 27 November 2000. Share optionsof Somerset Holdings Limited not exercised by 24 November 2000 were allowed to lapse. The Ascott Limited became a related corporation with effect from25 November 2000.DIVIDENDSSince the end of the previous financial year, the Companypaid a final dividend of 2.3 cents per share less tax at25.5% amounting to $48,315,000 and a special dividendof 7 cents per share less tax at 25.5% amounting to$147,044,000 in respect of the previous financial year. Inaddition, the Company paid a net dividend of$1,439,250 in respect of the previous year due to issueof shares under the ST Engg Share Option Scheme beforebooks closure date.The directors now recommend the payment of a finaldividend of 2.5 cents per share less tax at 25.5%amounting to $53,188,000 and a special dividend of 5.5cents per share less tax at 25.5% amounting to$117,013,000 and a special tax exempt dividend of 1.5cents per share amounting to $42,836,000 in respect ofthe financial year under review.OTHER STATUTORY INFORMATION(A) BAD AND DOUBTFUL DEBTSBefore the financial statements of the Company weremade out, the directors took reasonable steps toascertain that proper action had been taken in relation towriting off bad debts and providing for doubtful debts ofthe Company.The directors have satisfied themselves thatall known bad debts had been written off and thatadequate provision has been made for doubtful debts.At the date of this report, the directors are not aware ofany circumstances which would render any amountswritten off as bad debts or provided for doubtful debts inthe consolidated financial statements inadequate to anysubstantial extent.(B) CURRENT ASSETSBefore the financial statements of the Company weremade out, the directors took reasonable steps toascertain that any current assets of the Company whichwere unlikely to realise their book values in the ordinarycourse of business had been written down to theirestimated realisable values and that adequate provisionhas been made for the diminution in value of suchcurrent assets.At the date of this report, the directors are not aware ofany circumstances not otherwise dealt with in this reportwhich would render the values attributable to currentassets in the consolidated financial statements misleading.(C) CHARGES AND CONTINGENT LIABILITIESSince the end of the financial year:(i) no charge on the assets of the Company or anycorporation in the Group has arisen which secures theliabilities of any other person; and(ii) no contingent liability of the Company or anycorporation in the Group has arisen.(D) ABILITY TO MEET OBLIGATIONSNo contingent liability or other liability of the Companyor any corporation in the Group has become enforceableor is likely to become enforceable within the period oftwelve months after the end of the financial year which,in the opinion of the directors, will or may substantiallyaffect the ability of the Group and of the Company tomeet their obligations as and when they fall due.(E) OTHER CIRCUMSTANCES AFFECTING THE FINANCIALSTATEMENTSAt the date of this report, the directors are not aware ofany circumstances not otherwise dealt with in this reportor the financial statements which would render anyamount stated in the consolidated financial statements orfinancial statements of the Company misleading.(F) UNUSUAL ITEMSIn the opinion of the directors, no item, transaction orevent of a material and unusual nature has substantiallyaffected the results of the operations of the Group or ofthe Company during the financial year.In the opinion of the directors, no item, transaction orevent of a material and unusual nature has arisen in theinterval between the end of the financial year and the dateof this report which is likely to affect substantially theresults of the operations of the Group and of the Companyfor the financial year in which this report is made.SHARE OPTIONSThe ST Engg Share Option Scheme is administered by acommittee comprising the following members:Ms Ho Ching (Chairman)Mr Tan Guong ChingMr Ng Kee ChoeDuring the financial year, except as disclosed below,there were no options granted by the Company or itssubsidiaries to any person to take up unissued shares inthe Company or its subsidiaries:110 • visiondirectors’ report • 111

(A) OPTIONS GRANTED UNDER THE ST ENGG SHARE OPTIONSCHEME(i) During the financial year, the following options weregranted under the ST Engg Share Option Scheme.The fairNO. OF SHARESDATE OF EXERCISE GRANTED FAIR VALUE EXERCISE DIVIDEND RISK-FREE VOLATILITY EXPECTEDGRANT PERIOD UNDER OPTIONS OF OPTIONS PRICE YIELD INTEREST RATE RATE LIVES$ $ % % % YEARS9.2.2000* 10.2.2002 to 7,943,000 0.77 1.808 1.04 4.30 38.43 2.59.2.20109.2.2000 10.2.2002 to 35,610,080 0.61 2.26 1.04 4.30 38.43 2.59.2.20106.9.2000 7.9.2002 to 2,689,000 0.70 2.39 0.95 4.38 42.13 2.56.9.2010* At 9 February 2000, options were granted to eligible employees of CIS Group (“CIS Options”) pursuant to the modified Share Option Scheme approved atthe Extraordinary General Meeting held on 8 December 1999. The modified Share Option Scheme provides for the subscription price per share under theCIS Options to be fixed at a price per share equivalent to the price which is at a 20% discount to the average of the last dealt prices for the shares on theSingapore Exchange Securities Trading Limited (SGX-ST) for the five consecutive trading days immediately preceding the date of grant of the CIS Options.(ii) The options granted to directors under the ST EnggShare Option Scheme are as follows:AGGREGATE OPTIONS AGGREGATE OPTIONSGRANTED SINCE EXERCISED SINCE AGGREGATE OPTIONSOPTIONS GRANTED COMMENCEMENT OF COMMENCEMENT OF OUTSTANDINGDURING THE FINANCIAL SCHEME TO END OF SCHEME TO END OF AS AT END OFNAME OF PARTICIPANT YEAR UNDER REVIEW FINANCIAL YEAR FINANCIAL YEAR FINANCIAL YEARDirector of the CompanyBoon Swan Foo 1,000,000 4,775,889 2,770,889 2,005,000As at 31 December 2000, no options have been grantedto controlling shareholders of the Company or associatesof the Company and no employees have received 5% orvalue of options granted at the date of grant is estimatedusing the Black-Scholes option-pricing model on the basisof the following assumptions on dividend yield, risk-freeinterest rate, expected volatility and expected lives:more of the total options available under the ST EnggShare Option Scheme.(iii) Proforma Financial Effect under United StatesFinancial Accounting Standard No. 123.Strictly for information purposes only, the proformaprofit after taxation and minority interest but beforeThese proforma amounts may not be representative offuture disclosures since the estimated fair value of shareoptions is determined in respect of grants made andaccepted from financial years ended 31 December 1999and 2000.The estimated fair value of the share options isamortised over the vesting period and additional optionsmay be granted in future years.2000 1999$’000 $’000Profit after taxation and minority interests but before extraordinary items:As reported 288,138 200,529Proforma 273,379 195,749Earnings per share before extraordinary items (¢):As reported 10.12 7.08Proforma 9.61 6.91Diluted earnings per share before extraordinary items (¢):As reported 10.01 7.01Proforma 9.50 6.84(C) UNISSUED SHARES UNDER OPTIONDetails of the options to subscribe for ordinary shares of$0.10 each of the Company granted to employees of theextraordinary items and the earnings per share wouldhave been as follows had the Company accounted for thefair value of the options granted under United StatesFinancial Accounting Standard 123:(B) ISSUE OF SHARES UNDER OPTIONDuring the financial year, 17,004,832 ordinary shares of$0.10 each in the Company were issued pursuant to theexercise of options to take up unissued shares of theCompany.Group pursuant to the ST Engg Share Option Schemeare as follows:BALANCE ASAT 1.1.2000 BALANCE NO. OFDATE OF OR DATE OF OPTIONS OPTIONS AS AT HOLDERS AT EXERCISEGRANT GRANT IF LATER LAPSED EXERCISED 31.12.2000 31.12.2000 PRICE ($) EXERCISABLE PERIOD6.12.1997 85,902 – 85,902 – – 0.905 6.12.1997 to 2.6.20006.12.1997 18 18 – – – 0.467 6.12.1997 to 16.7.20006.12.1997 379,732 – 50,000 329,732 3 0.905 5.4.1998 to 3.4.20016.12.1997 100,000 – – 100,000 1 0.373 30.8.1998 to 30.8.200129.4.1998 25,000 – 25,000 – – 1.390 20.2.1999 to 20.8.20007.8.1998 5,000 – 5,000 – – 1.290 20.2.1999 to 20.8.20009.2.1999 30,240 – 30,240 – – 1.418 20.2.1999 to 20.8.200029.4.1998 36,000 – – 36,000 1 1.390 30.4.2000 to 29.4.20037.8.1998 5,000 – – 5,000 1 1.290 8.8.2000 to 7.8.20039.2.1999 24,480 – – 24,480 1 1.418 10.2.2001 to 9.2.20046.12.1997 45,056 – – 45,056 1 0.566 18.5.1999 to 28.6.20046.12.1997 765,110 – 713,166 51,944 5 0.873 18.5.1999 to 7.11.20046.12.1997 228,096 – – 228,096 2 0.473 18.5.1999 to 13.12.2004112 • visiondirectors’ report • 113

BALANCE ASAT 1.1.2000 BALANCE NO. OFDATE OF OR DATE OF OPTIONS OPTIONS AS AT HOLDERS AT EXERCISEGRANT GRANT IF LATER LAPSED EXERCISED 31.12.2000 31.12.2000 PRICE ($) EXERCISABLE PERIOD6.12.1997 125,170 – 40,000 85,170 2 0.522 18.5.1999 to 24.12.20046.12.1997 999,958 – 880,658 119,300 7 0.905 18.5.1999 to 2.6.20056.12.1997 90,113 – – 90,113 1 0.422 18.5.1999 to 17.6.20056.12.1997 394,545 – 135,625 258,920 1 0.467 18.5.1999 to 16.7.20056.12.1997 314,402 – 228,096 86,306 1 0.401 18.5.1999 to 4.12.20056.12.1997 112,641 – – 112,641 2 0.357 18.5.1999 to 6.12.20056.12.1997 1,319,425 – 794,115 525,310 14 0.905 18.5.1999 to 3.4.20066.12.1997 450,568 – 450,568 – – 0.380 18.5.1999 to 8.4.20066.12.1997 394,545 – – 394,545 2 0.471 18.5.1999 to 22.4.20066.12.1997 57,268 – – 57,268 1 0.747 18.5.1999 to 18.8.20066.12.1997 882,826 – 387,204 495,622 4 0.373 18.5.1999 to 30.8.20066.12.1997 318,511 – 20,549 297,962 4 0.465 18.5.1999 to 16.10.20066.12.1997 3,418,854 – 1,644,569 1,774,285 14 0.422 18.5.1999 to 2.4.20076.12.1997 1,284,029 – 537,402 746,627 14 0.629 18.5.1999 to 7.4.20076.12.1997 642,161 – 262,001 380,160 3 0.492 18.5.1999 to 24.4.20076.12.1997 57,268 – 57,268 – – 0.640 23.8.1999 to 21.8.20076.12.1997 668,128 – 231,363 436,765 9 0.720 11.9.1999 to 9.9.200729.4.1998 17,380,050 250,400 8,528,900 8,600,750 234 1.390 30.4.2000 to 29.4.200820.5.1998 1,000,000 – 1,000,000 – – 1.210 21.5.2000 to 20.5.20087.8.1998 2,135,000 65,000 897,206 1,172,794 269 1.290 8.8.2000 to 7.8.20089.2.1999 28,516,160 599,760 – 27,916,400 563* 1.418 10.2.2001 to 9.2.200910.8.1999 3,938,500 95,000 – 3,843,500 642* 2.000 11.8.2001 to 10.8.20099.2.2000 35,610,080 353,600 – 35,256,480 687* 2.260 10.2.2002 to 9.2.20109.2.2000 7,943,000 49,000 – 7,894,000 187 1.808 10.2.2002 to 9.2.20106.9.2000 2,689,000 – – 2,689,000 90 2.390 7.9.2002 to 6.9.2010* Includes 1 Director of the Company.The options granted by the Company do not entitle theholders of the options, by virtue of such holdings, to anyright to participate in any share issue of any other company.AUDIT COMMITTEEThe Audit Committee comprises four independent nonexecutivedirectors, one of whom is also the Chairman ofthe Committee.The members of the Audit Committee atthe date of this report are as follows:Ng Kee Choe (Chairman)Dr Philip Nalliah Pillai (appointed on 1 April 2000)Philip Tan Yuen FahLucien Wong Yuen KuaiThe financial statements, accounting policies and systemof internal accounting controls are the responsibility ofthe Board of Directors acting through the AuditCommittee.The Audit Committee met during the yearto review the scope of the internal audit functions andthe scope of work of the statutory auditors, and theresults arising therefrom, including their evaluation ofthe system of internal controls.The Audit Committeealso reviewed the assistance given by the Company’sofficers to the auditors.The consolidated financialOn behalf of the Board of DirectorsHO CHINGDirectorBOON SWAN FOODirectorSingapore6 January 2001statements of the Group and the financial statements ofthe Company were reviewed by the Audit Committeeprior to their submission to the directors of theCompany for adoption.In addition, the Audit Committee has reviewed therequirements for approval and disclosure of interestedpersons transactions, reviewed the procedures set up bythe Group and the Company to identify and report andwhere necessary, seek approval for interested personstransactions and, with the assistance of the internal auditors,reviewed interested persons transactions.The Audit Committee has recommended to the Board ofDirectors that the auditors, Arthur Andersen, be nominatedfor re-appointment as auditors at the forthcomingAnnual General Meeting of the Company.AUDITORSArthur Andersen have expressed their willingness toaccept re-appointment as auditors of the Company.114 • visiondirectors’ report • 115

STATEMENT BY DIRECTORSAUDITORS’ REPORTTO THE MEMBERS OF SINGAPORE TECHNOLOGIES ENGINEERING LTDWe, Ho Ching and Boon Swan Foo, being directors ofSingapore Technologies Engineering Ltd, do hereby statethat in our opinion:(a) the financial statements set out on pages 118 to 175are drawn up so as to give a true and fair view of thestate of affairs of the Company and of the Group as at31 December 2000 and of the results of the businessOn behalf of the Board of DirectorsHO CHINGDirectorBOON SWAN FOODirectorSingapore6 January 2001and changes in equity of the Company and of the Groupand cash flows of the Group for the year ended on thatdate; and(b) at the date of this statement there are reasonablegrounds to believe that the Company will be able to payits debts as and when they fall due.We have audited the financial statements of SingaporeTechnologies Engineering Ltd and the consolidatedfinancial statements of Singapore TechnologiesEngineering Ltd and its subsidiaries as of 31 December2000 set out on pages 118 to 175.These financialstatements are the responsibility of the Company’sdirectors. Our responsibility is to express an opinion onthese financial statements based on our audit.Thefinancial statements for the year ended 31 December1999 were audited by another auditor whose reportdated 25 January 2000 expressed an unqualified opinionon those statements.We conducted our audit in accordance with SingaporeStandards on Auditing.Those Standards require that weplan and perform the audit to obtain reasonableassurance about whether the financial statements are freeof material misstatement. An audit includes examining,on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includesassessing the accounting principles used and significantestimates made by the directors, as well as evaluating theoverall financial statement presentation.We believe thatour audit provides a reasonable basis for our opinion.In our opinion,(a) the financial statements and consolidated financialstatements are properly drawn up in accordance with theprovisions of the Companies Act and Statements ofAccounting Standard in Singapore and so as to give a trueand fair view of:(b) the accounting and other records and the registersrequired by the Act to be kept by the Company and bythose subsidiaries incorporated in Singapore of which weare the auditors have been properly kept in accordancewith the provisions of the Act.We have considered the financial statements and, wherethey are required by the laws of the country ofincorporation, the auditors’ reports of all subsidiaries ofwhich we have not acted as auditors, being financialstatements included in the consolidated financial statements.Thenames of these subsidiaries are stated in Note9 to the financial statements.We are satisfied that the financial statements of thesubsidiaries that have been consolidated with the financialstatements of the Company are in form and contentappropriate and proper for the purposes of the preparationof the consolidated financial statements and we havereceived satisfactory information and explanations asrequired by us for those purposes.The auditors’ reports on the financial statements of thesubsidiaries were not subject to any qualification and inrespect of subsidiaries incorporated in Singapore didnot include any comment made under Section 207(3) ofthe Act.(i) the state of affairs of the Company and of the Groupas at 31 December 2000 and of the results and changes inequity of the Company and of the Group and cash flowsof the Group for the year then ended; and(ii) the other matters required by Section 201 of the Actto be dealt with in the financial statements and consolidatedfinancial statements;Arthur AndersenCertified Public AccountantsSingapore6 January 2001116 • visionauditors’ report • 117

BALANCE SHEETSAS AT 31 DECEMBER 2000(Currency - Singapore dollars)GROUPCOMPANY2000 1999 2000 1999NOTE $’000 $’000 $’000 $’000SHARE CAPITAL AND RESERVESShare capital 3 285,569 283,869 285,569 283,869Share premium 4 30,117 13,420 30,117 13,420Merger reserve 5 – 1,538 – –Capital reserve 6 115,948 114,863 – –Foreign currency translation reserve 6,980 8,252 – –Unappropriated profit 7 473,666 418,543 174,467 101,475912,280 840,485 490,153 398,764Minority interests 23,495 25,144 – –935,775 865,629 490,153 398,764GROUPCOMPANY2000 1999 2000 1999NOTE $’000 $’000 $’000 $’000NON-CURRENT LIABILITIESDeferred income 27 8,061 2,778 – –Deferred taxation 28 8,372 3,371 – –Provision for staff retirement benefits 323 307 – –Floating rate bonds (unsecured) 29 19,072 18,775 – –Lease obligations, non-current 24 16,965 17,093 – –Long-term bank loan, non-current 25 6,950 13,388 – –935,775 865,629 490,153 398,764Represented by:FIXED ASSETS 8 348,933 315,614 44 43SUBSIDIARIES 9 – – 265,852 280,763ASSOCIATED COMPANIES AND JOINT VENTURES 10 153,475 169,395 – –LONG-TERM INVESTMENTS 11 645,015 438,201 210,750 75,000LOANS RECEIVABLE, NON-CURRENT 12 8,683 15,700 14 73CURRENT ASSETSStocks and work-in-progress 13 491,536 341,712 – –Debtors, deposits and prepayments 14 1,408,740 671,131 112,041 93,731Loans receivable, current 12 6,275 3,969 15 29Short-term investments 15 25,206 3,465 – –Amounts under fund management 16 545,468 546,242 – –Bank and other liquid funds 17 819,293 901,423 132,648 158,5903,296,518 2,467,942 244,704 252,350CURRENT LIABILITIESCreditors and accruals 22 2,696,919 1,898,188 14,940 11,501Provisions 23 276,045 206,833 – –Progress billings in excess of work-in-progress 13 71,598 50,016 – –Provision for taxation 182,753 119,525 3,234 2,605Short-term bank loans (unsecured) 7,325 8,009 – –Lease obligations, current 24 990 887 – –Long-term bank loan, current 25 6,950 6,694 – –Proposed dividends 213,037 195,359 213,037 195,359Bank overdrafts (unsecured) 1,489 – – –3,457,106 2,485,511 231,211 209,465NET CURRENT ASSETS (LIABILITIES) (160,588) (17,569) 13,493 42,885The accompanying notes are an integral part of the financial statements.118 • visionbalance sheets • 119

STATEMENTS OF PROFIT AND LOSSFOR THE YEAR ENDED 31 DECEMBER 2000(Currency - Singapore dollars)STATEMENTS OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 DECEMBER 2000(Currency - Singapore dollars)GROUPCOMPANY2000 1999 2000 1999NOTE $’000 $’000 $’000 $’000Turnover 30 2,259,027 1,764,407 235,256 272,153Cost of sales (1,693,793) (1,348,005) – –Gross profit 565,234 416,402 235,256 272,153Other operating income 31 92,948 66,308 16,325 16,141Distribution and selling expenses, net (56,268) (36,029) (6,160) (2,678)Administration expenses (191,573) (147,514) (8,021) (10,318)Other operating expenses (48,859) (33,627) (436) (850)Profit from operations 32 361,482 265,540 236,964 274,448Other income (expenses) 34 11,944 5,884 240 98Financial expenses 35 (3,983) (4,258) – –Exceptional item 36 – – 103,612 –Profit before taxation 369,443 267,166 340,816 274,546Share of results of associated companies andjoint ventures 43,066 32,894 – –412,509 300,060 340,816 274,546Taxation 37 (121,013) (93,887) (53,348) (68,386)Profit after taxation 291,496 206,173 287,468 206,160Minority interests (3,358) (5,644) – –Profit after taxation and minority interestsbut before extraordinary items 288,138 200,529 287,468 206,160Extraordinary items 38 – (8,205) – –Net profit for the year 288,138 192,324 287,468 206,160BASIC EARNINGS PER SHARE (¢) 40Before extraordinary items 10.12 7.08After extraordinary items 10.12 6.79DILUTED EARNINGS PER SHARE (¢) 40Before extraordinary items 10.01 7.01After extraordinary items 10.01 6.72FOREIGNCURRENCYSHARE SHARE MERGER CAPITAL TRANSLATION UNAPPROPRIATEDCAPITAL PREMIUM RESERVE RESERVE RESERVE PROFIT TOTAL$’000 $’000 $’000 $’000 $’000 $’000 $’000THE GROUPAs at 1.1.1999 282,609 123,169 1,538 – 2,256 426,328 835,900Reclassification(Note 4,6) – (114,863) – 114,863 – – –As at 1.1.1999as restated 282,609 8,306 1,538 114,863 2,256 426,328 835,900Foreign currencytranslation differences – – – – 1,627 – 1,627Transfer from revenuereserve to foreigncurrency translationreserve beingexchange differencearising from anassociatedcompany adoptinga new functionalcurrency – – – – 4,369 (4,369) –282,609 8,306 1,538 114,863 8,252 421,959 837,527Issue of shares 1,260 5,521 – – – – 6,781Share of associatedcompany’s sharepremium reversedupon disposal – (407) – – – – (407)Net profit for the year – – – – – 192,324 192,324Dividends (Note 39) – – – – – (195,740) (195,740)As at 31.12.1999 283,869 13,420 1,538 114,863 8,252 418,543 840,485Foreign currencytranslation differences – – – – (1,272) – (1,272)283,869 13,420 1,538 114,863 6,980 418,543 839,213The accompanying notes are an integral part of the financial statements.120 • visionstatement of changes in equity • 121

STATEMENTS OF CHANGES IN EQUITY (cont’d)CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE YEAR ENDED 31 DECEMBER 2000(Currency - Singapore dollars)FOREIGNCURRENCYSHARE SHARE MERGER CAPITAL TRANSLATION UNAPPROPRIATEDCAPITAL PREMIUM RESERVE RESERVE RESERVE PROFIT TOTAL$’000 $’000 $’000 $’000 $’000 $’000 $’000THE GROUP (cont’d)Issue of shares 1,700 16,697 – – – – 18,397Goodwill realisedupon disposal ofassociated company – – – – – 3,992 3,992Net profit for the year – – – – – 288,138 288,138Dividends (Note 39) – – – – – (214,476) (214,476)Goodwill onacquisition ofsubsidiary written off – – (1,538) – – (22,531) (24,069)Other capital reserve – – – 1,085 – – 1,085As at 31.12.2000 285,569 30,117 – 115,948 6,980 473,666 912,280SHARE SHARE UNAPPROPRIATEDCAPITAL PREMIUM PROFIT TOTAL$’000 $’000 $’000 $’000THE COMPANYAs at 1.1.1999 282,609 7,899 91,055 381,563Issue of shares 1,260 5,521 – 6,781Net profit for the year – – 206,160 206,160Dividends (Note 39) – – (195,740) (195,740)As at 31.12.1999 283,869 13,420 101,475 398,764Issue of shares 1,700 16,697 – 18,397Net profit for the year – – 287,468 287,468Dividends (Note 39) – – (214,476) (214,476)As at 31.12.2000 285,569 30,117 174,467 490,1532000 1999$’000 $’000CASH FLOWS FROM OPERATING ACTIVITIESNet profit before taxation including share of results ofassociated companies and joint ventures 412,509 300,060Extraordinary items – (8,205)412,509 291,855Adjustment for items not involving outlay of funds:Share of results of associated companies and joint ventures (43,066) (32,894)Depreciation of fixed assets 76,143 58,787Amortisation of discount on floating rate bonds 297 297Provision for diminution in value of long-term investments 8,457 7,412Fixed assets written off 25 11Profit on disposal of fixed assets (379) (150)Profit on disposal of investments (1,741) (5)Profit on disposal of associated companies and joint ventures (6,300) (9,590)Interest expense 3,686 3,961Interest income (70,491) (46,895)Dividends from investments (1,750) (656)Operating profit before working capital changes 377,390 272,133(Increase) decrease in working capital:Stocks and work-in-progress (50,066) (10,331)Progress billings in excess of work-in-progress 24,010 (14,448)Trade debtors (27,091) (60,914)Advance payments to suppliers 85,355 32,123Other debtors, deposits and prepayments 6,834 (3,693)Holding company and related corporations balances 11,386 (13,042)Associated companies balances 11,012 (4,650)Joint ventures balances 4,271 33Trade creditors (25,482) 50,947Advance payments from customers (15,081) (37,406)Other creditors, accruals and provisions 146,134 117,420Minority shareholders’ balances (2,500) 650Cash generated from operations 546,172 328,822Interest received 70,491 47,564Interest paid (3,686) (4,451)Deferred income (expenditure) (5,917) (212)The accompanying notes are an integral part of the financial statements.122 • visionconsolidated statement of cash flows • 123

CONSOLIDATED STATEMENT OF CASH FLOWS (cont’d)2000 1999NOTE $’000 $’000Cash flows before extraordinary item 607,060 371,723Income tax paid (87,633) (75,718)Exchange difference on operating activities (2,170) (1,198)Net cash from operating activities 517,257 294,807CASH FLOWS FROM INVESTING ACTIVITIESProceeds from sale of fixed assets 1,543 1,029Proceeds from sale of associated companies 112,031 13,222Dividends from associated companies 3,838 12,600Dividends from investments 1,750 657Proceeds from sale and maturity of investments 22,692 6,785Capital contribution from minority shareholders of a subsidiary 2,726 –Purchase of fixed assets (56,664) (48,955)Purchase of investments (48,754) (12,029)Additional investment/acquisition of associated companies and joint ventures (61,045) (4,712)Acquisition of subsidiaries 200,723 (249)Loans to associated companies and joint ventures – 10,274Loans to staff and third parties 4,082 7,755Loans to minority shareholders 976 –Exchange difference on investing activities (3,063) 1,245Net cash from (used in) investing activities 180,835 (12,378)SUMMARY OF EFFECT OF CHANGES ON ACQUISITION OFSUBSIDIARIES:During the financial year, the Group acquired the entireissued and paid-up share capital of Founders IndustriesPte Ltd and its subsidiaries from Singapore TechnologiesPte Ltd for an aggregate cash consideration of $268 millionon the terms and conditions of the Sale and PurchaseAgreement dated 22 October 1999 through SingaporeTechnologies Kinetics Ltd (formerly known as SingaporeTechnologies Automotive Ltd).The acquisition in respect of prior year relates to STAerospace Engineering Pte Ltd acquiring a 100% equityinterest in Pacific Flight Services Pte Ltd for a considerationof $987,015.2000 1999$’000 $’000Net Assets acquired:Minority interest 38 –Goodwill on acquisition 23,883 –Fixed assets 57,485 73Long-term investments 144,639 –Associated companies and joint ventures 6,528 –Loan receivable, non-current 347 –Current assets 852,443 2,622Current liabilities (795,880) (1,708)Non-current liabilities (21,483) –Purchase consideration 268,000 987Less cash and cash equivalents acquired:Cash and bank balances, net of bank overdrafts (19,067) (312)Fixed deposits with financial institutions (59,144) (426)Floating rate notes (142,000) –Short-term loans to a related corporation (248,512) –Cash flow on acquisition, net of cash and cash equivalents acquired (200,723) 249CASH FLOWS FROM FINANCING ACTIVITIESProceeds from issue of shares 18,397 6,781Proceeds from issue of shares to minority shareholders of a subsidiary – 350Repayment of long-term bank loan (6,182) (6,508)Repayment of lease obligations (25) (628)Proceeds from short-term bank loans, net of repayment (684) 11,703Dividend paid to shareholders of the Company (196,798) (142,590)Dividend paid to minority shareholders of subsidiaries (5,708) (1,496)Exchange difference on financing activities 746 –Net cash used in financing activities (190,254) (132,388)NET INCREASE IN CASH AND CASH EQUIVALENTS 507,838 150,041CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 2,107,786 1,957,368EXCHANGE DIFFERENCE ON CASH AND CASH EQUIVALENTSAT BEGINNING OF THE YEAR 1,018 377CASH AND CASH EQUIVALENTS AT END OF YEAR 42 2,616,642 2,107,786The accompanying notes are an integral part of the financial statements.124 • visionconsolidated statement of cash flows • 125

NOTES TO THE FINANCIAL STATEMENTS31 DECEMBER 2000(Currency - Singapore dollars)These notes form an integral part of and should be read inconjunction with the accompanying financial statements.1. THE COMPANY, ITS SUBSIDIARIES AND THEIR PRINCIPALACTIVITIESThe Company is a public limited company domiciledand incorporated in Singapore.The address of theCompany’s registered office is 51 Cuppage Road#09-08 Singapore 229469.The Company’s immediate holding company and ultimateholding company are Singapore Technologies PteLtd and Temasek Holdings (Private) Limited respectively,both incorporated in Singapore.The principal activities of the Company, are those of aninvestment holding company and the provision of engineeringand related services.The principal activities of the subsidiariesare set out in Note 9 to the financial statements.2. SIGNIFICANT ACCOUNTING POLICIES(A) BASIS OF FINANCIAL STATEMENTS PREPARATIONThe financial statements, expressed in Singapore dollars,are prepared in accordance with Statements of AccountingStandard in Singapore and historical cost convention,modified by the revaluation of certain fixed assets.(B) BASIS OF CONSOLIDATION(i) The consolidated financial statements include thefinancial statements of the Company and its subsidiariesmade up to the end of the financial year.The results ofsubsidiaries acquired or disposed during the financialyear are included from the effective date of acquisitionor up to the effective date of disposal. All significantintercompany balances and transactions are eliminatedon consolidation.In the consolidated financial statements, subsidiaries areaccounted for using purchase method, except for theCompany’s interests in Singapore Technologies AerospaceLtd, Singapore Technologies Electronics Limited,Singapore Technologies Kinetics Ltd (formerly known asSingapore Technologies Automotive Ltd), and SingaporeTechnologies Marine Ltd [collectively referred to as the“Scheme Companies”] which resulted from the amalgamationof the Scheme Companies pursuant to a schemeof arrangement under Section 210 of the Companies Act,Chapter 50 (“the Act”) in 1997.As the amalgamation of the Scheme Companies constitutesa uniting of interests, the pooling of interests method hasbeen adopted in the preparation of the consolidated financialstatements in connection with the amalgamation.Under the pooling of interests method, the combinedassets, liabilities and reserves of the pooled enterprisesare recorded at their existing carrying amounts at thedate of amalgamation.The excess or deficiency ofamount recorded as share capital issued (plus any additionalconsideration in the form of cash or other assets)over the amount recorded for the share capital acquiredis recorded as merger reserve.(ii) The Group adopts the equity method to account forits interests in associated companies and joint ventures.The Group’s share of the post-acquisition results of associatedcompanies and joint ventures is included in the consolidatedprofit and loss account.The Group’s share of the postacquisitionaccumulated profits and reserves of associatedcompanies and joint ventures is included in the carryingvalue of the investments in the consolidated balance sheet.For this purpose, the audited financial statements of theassociated companies and joint ventures are used.Whereaudited financial statements are not available, unauditedfinancial statements are used.(iii) Goodwill or reserve on consolidation represents theexcess or deficiency of the purchase consideration over thefair values (assigned by the directors) of the underlying netassets of the subsidiaries, associated companies and joint venturesat the date of acquisition. Goodwill arising on consolidationis written off against reserves in the year of acquisition.(iv) In the preparation of the consolidated financial statements,the balance sheets of foreign subsidiaries, associatedcompanies and joint ventures are translated intoSingapore dollars at rates of exchange ruling at the balancesheet date except for share capital and reserveswhich are translated at historical rates of exchange.Operating results are translated at average rates ofexchange for the year.Translation differences are taken tothe Foreign Currency Translation Reserve.(C) LONG-TERM INVESTMENTS(I) SUBSIDIARIESA subsidiary is a company in which the Group, directlyor indirectly, holds more than half of the issued sharecapital, or controls more than half of the voting power,or controls the composition of the Board of Directors.Investments in shares of subsidiaries are stated in thefinancial statement of the Company at cost.(II) ASSOCIATED COMPANIES AND JOINT VENTURESAn associated company, is a company not being a subsidiaryor joint venture, in which the Group has a substantialinterest of not less than 20 percent of the equityand in whose financial and operating policy decisions theGroup exercises significant influence.A joint venture is a company, not being a subsidiary orassociated company, in which the Group has a long-terminterest of not more than 50 percent of the equity andhas joint control in the investee company’s financial andoperating policies.Investments in associated companies and joint ventures arestated in the financial statements of the Company at cost.(III) OTHER LONG-TERM INVESTMENTSOther investments held for long-term purposes are statedat cost. Distributions from unquoted equity investmentsof a venture fund nature are treated as reductionsFIXED ASSETSFreehold land and buildingLeasehold land and buildingsBuildings on rented propertiesImprovements to premisesWharves and slipwaysSyncrolift and floating docksBoats and bargesPlant and machineryProduction tools and equipmentFurniture, fittings, office equipment and computersTransportation equipment and vehiclesAircraft engines and helicoptersin investment costs until the costs are fully recovered,after which the distributions are recognised as income.(IV) QUOTED BONDSQuoted bonds held on long-term basis are stated at thelower of cost, adjusted for amortisation of premiums andaccretion of discounts, and market value determined on aportfolio basis.Provision for diminution in value of long-term investments(other than quoted bonds) is made when, in theopinion of the directors, there has been a decline, otherthan a temporary decline in the value of the investments.(D) SHORT-TERM INVESTMENTSShort-term investments are stated at the lower of cost,adjusted for the amortisation of premium and accretion ofdiscount, and net realisable value determined on a portfoliobasis. Cost is determined on the weighted average method.Premium or discount on purchase of investment is amortisedover the period of investment.(E) AMOUNTS UNDER FUND MANAGEMENTAmounts under fund management are stated at the principalsums, net of provision for diminution in value on anindividual fund basis.(F) FIXED ASSETS AND DEPRECIATIONFixed assets are stated at cost or valuation, net of depreciationand any impairment loss. Depreciation is providedon the straight-line basis so as to write off the cost ofthese assets over their estimated useful lives as follows:ESTIMATED USEFUL LIVES30 yearsOver the period of the lease of between 10 to 30 years30 years5 to 30 years10 to 16 years10 years5 yearsLower of 5 years or project life3 to 5 years2 to 5 years4 to 5 years5 years126 • visionnotes to the financial statements • 127

Low value assets costing less than $1,000 individually arewritten off to the profit and loss account.Construction-in-progress is not depreciated until each stageof development is completed and becomes operational.(G) STOCKS AND WORK-IN-PROGRESSStocks are stated at the lower of cost (principally on thefirst-in, first-out basis) and net realisable value. Provisionis made for deteriorated, damaged, obsolete and slowmovingstocks.Work-in-progress is valued at cost less progress paymentsreceived and receivable. Cost includes all direct materialand labour costs, equipment and sub-contracting services,together with appropriate overhead expenses exceptfor work-in-progress of a developmental nature whereproduction overheads are expensed as incurred.Provision for anticipated losses on uncompleted contractsis made in the year in which such losses are determined.(H) INCOME RECOGNITIONIncome is recognised using the following methods:(i) Income from sale of goods and services rendered isrecognised upon delivery of goods/services and acceptanceby customers.Where goods and services are supplied under a long-termcontract, profit is recognised as and when goods and services,representing part of a contract, are delivered, completedand billed. Provision for foreseeable losses on uncompletedcontracts is made as soon as such losses are determinable.(ii) Income from long-term contracts is recognised onthe percentage of completion method.The stage of completionis measured by the proportion of costs incurredto estimated total costs to complete the contracts and isrestricted by progress billings received or receivable.Losses, if any, are recognised immediately when theirexistence is foreseen.(iii) Income on shipbuilding, rebuild, repair, engineering,overhaul and service work is recognised when thework is completed and billed. Provision is made formaterial losses anticipated on uncompleted contracts.(iv) Dividend income is recognised on the receipt basisexcept for dividend income from subsidiaries and associatedcompanies which is recognised when the dividendsare proposed.(v) Management fee income is recognised on an accrualbasis upon which management services are renderedand billed.(vi) For certain subsidiaries, the first 25 percent of thetotal commission receivable for each contract is treatedas downpayment and is deferred and taken up in theprofit and loss account only upon the completion ofthe contract. Commission income in respect of eachcontract in excess of the first 25 percent of the totalamount receivable is taken up in the profit and lossaccount as and when it is billed.(vii) Any surplus arising from amounts under fund managementcan only be determined at the end of the relevantfund management period. Such surplus, if any, willbe recognised as income then.(viii) Finance charges from hire purchase financing isrecognised based on sum of digits method over thefinance period.(I) MEMBERSHIP RIGHTSTransferable corporate club memberships are stated at cost.Provision for diminution in value is made when in the opinionof the directors, there has been a decline, other thantemporary, in the value of the membership rights.(J) WARRANTIESProvision for warranty claims is made on the basis ofestimated cost to fulfil warranty obligations.(K) LIQUIDATED DAMAGESProvision for liquidated damages is made in respect ofimminent claims from customers on contracts of whichdeadlines are overdue or not expected to be completedon time in accordance to contractual obligations.(L) ENVIRONMENTAL LIABILITIESEnvironmental expenditures related to existing conditionsresulting from past or current operations and fromwhich no current or future benefit is discernible areexpensed as incurred. Expenditures which extend the lifeof the related property or mitigate or prevent futureenvironmental contamination are capitalised.Environmental liabilities are recorded at the time when itis probable and can be reasonably estimated.(M) BAD AND DOUBTFUL DEBTSKnown bad debts are written off. Specific provisions aremade for accounts considered to be doubtful. In addition,an amount is set aside as a general provision for doubtfuldebts to cover potential losses which, although not separatelyidentified, can be present in any portfolio of debtors.(N) DEFERRED TAXATIONDeferred taxation is provided using the liability methodon all material timing differences resulting from thedifferent treatment of certain items for accounting andtaxation purposes. Deferred tax benefits are, however,recognised only when there is a reasonable expectation oftheir realisation.(O) FOREIGN CURRENCY TRANSLATION(i) The accounting records of the companies in the Groupare maintained in their respective functional currencies.Transactions in foreign currencies during the financialyear are recorded in the respective functional currenciesusing exchange rates approximating those ruling attransaction dates.(ii) Monetary assets and liabilities in foreign currencies,except for foreign currency assets and liabilities hedgedby forward exchange contracts, are translated into therespective functional currencies at rates of exchangeapproximating those ruling at the balance sheet date.Foreign currency assets and liabilities hedged by forwardexchange contracts are translated into the respectivefunctional currencies at the contracted forward exchangerates. All resultant exchange differences are dealt withthrough the profit and loss account.(P) RESEARCH AND DEVELOPMENT EXPENDITUREResearch and development expenditure is charged to theprofit and loss account as and when incurred.(Q) HIRE PURCHASE AND FINANCE LEASES(i) Assets acquired on hire purchase arrangements arecapitalised in the financial statements and the correspondingobligation treated as a liability.The total interest,being the difference between the total instalmentspayable and the capitalised amount, is charged to the3. SHARE CAPITALprofit and loss account over the period of such hire purchasearrangements in equal monthly instalments to producea constant rate of charge on the balance of capitalrepayments outstanding.(ii) Finance leases are those leasing agreements that giverights and obligations approximating to ownership. Assetsfinanced under such leases are treated as if they had beenpurchased outright at the present value of the minimumlease payments and the corresponding leasing commitmentsare shown as obligations to the lessors. Lease paymentsare treated as consisting of capital and interestelements and the interest is charged to the profit and lossaccount over the period of the lease to produce a constantrate of charge on the balance of capital repaymentsoutstanding. All other leases are operating leases and theannual rentals are charged to the profit and loss accountas and when incurred.(iii) Assets acquired on hire purchase and finance leasearrangements are depreciated in accordance with thepolicy set out in (F) above.(R) GOVERNMENT GRANTSGrants in recognition of specific expenses are taken toincome in the same year as the relevant expenses.Similarly, grants related to depreciable assets areallocated to income over the period in which suchassets are depreciated and used in the projects subsidisedby the grants.(S) SEGMENTSFor management purposes, the Group is organised on aworld-wide basis into four major operating businesseswhich is the basis on which the Group reports its primarysegment information.Segment revenue, expenses and results include transfersbetween business segments and between geographicalsegments. Such transfers are accounted for on an arm’slength basis.GROUP AND COMPANY2000 1999$’000 $’000Authorised:4,999,999,999 ordinary shares and 1 special share of $0.10 each 500,000 500,000Issued and fully paid:2,855,694,045 (1999: 2,838,689,213) ordinary shares and 1 special share of $0.10 each 285,569 283,869128 • visionnotes to the financial statements • 129

Included in the share capital is a special share of $0.10issued to the Minister for Finance (Incorporated).Thespecial share enjoys all the rights attached to the ordinaryshares. In addition, the special share carries the right toapprove any resolution to be passed by the Company,either in general meeting or by its Board of Directors, oncertain matters specified in the Company’s Articles ofAssociation.The special share may be converted at anytime into an ordinary share.During the financial year, the Company issued17,004,832 ordinary shares of $0.10 each for cash uponthe exercise of the options under the ST Engg ShareOption Scheme.At the end of the financial year, unissued ordinary sharesof $0.10 each of the Company under options granted toeligible employees and a director of the Company underthe ST Engg Share Option Scheme amounted to a total of94,054,226 ordinary shares of $0.10 each.4. SHARE PREMIUMThe share premium account may be applied only for thepurposes specified in the Companies Act.The balance isnot available for distribution of dividends except in theform of shares.Other than the reclassification of $114,863,000 fromshare premium account to capital reserve as disclosed inNote 6 to the financial statements, the movement in theshare premium account arises from the issuance of17,004,832 ordinary shares of $0.10 each at between7. UNAPPROPRIATED PROFIT$0.37 to $1.42 per share for cash upon the exercise ofoptions under the ST Engg Share Option Scheme.5. MERGER RESERVEThis amount in respect of prior year represents thesurplus arising from the amalgamation of the SchemeCompanies pursuant to a Scheme of arrangement underSection 210 of the Companies Act in 1997.The surpluscomprises the difference between the amount recordedas share capital issued by the Company and the amountrecorded for the share capital of the Scheme Companiesacquired under the pooling of interest method.During the financial year, the merger reserve has beenutilised to partially write off against the goodwill onacquisition of Founders Industries Pte Ltd (formerlyknown as Chartered Industries of Singapore (Pte)Limited) and its subsidiaries.6. CAPITAL RESERVEDuring the financial year, an amount of $114,863,000has been reclassified from the share premium account tocapital reserve as disclosed in Note 4 to the financialstatements.This amount relates to share premium of therespective pooled enterprises, namely SingaporeTechnologies Aerospace Ltd, Singapore TechnologiesElectronics Limited, Singapore Technologies Kinetics Ltdand Singapore Technologies Marine Ltd which should beclassified as capital reserve upon the pooling of interestsin the financial year ended 31 December 1997.Accordingly, prior year comparatives have been restatedto conform with current year presentation.GROUP2000 1999$’000 $’000Retained by:The Company 174,467 101,475Subsidiaries 271,325 231,112Associated companies and joint ventures 27,874 85,956473,666 418,543Included in unappropriated profit of the Company is anamount of $98,595,254 received from a subsidiary representingthe distribution of the subsidiary’s share premiumas a result of a capital reduction as described in Note 36 tothe financial statements.The distribution of this amount isrestricted by certain provisions of the Companies Act.8. FIXED ASSETSVALUATION/COSTADDITIONS DUEAS AT TO ACQUISITION TRANSLATION AS AT1.1.2000 ADDITIONS OF SUBSIDIARIES DISPOSALS TRANSFERS DIFFERENCE 31.12.2000$’000 $’000 $’000 $’000 $’000 $’000 $’000THE GROUPAT 1972 VALUATIONLeasehold land andbuildings 3,365 – – – – – 3,365Wharves and slipways 1,490 – – – – – 1,490Syncrolift andfloating docks 4,603 – – – – – 4,603Plant and machinery 1,694 – – – – – 1,694Furniture, fittings, officeequipment andcomputers 653 – – – – – 653AT COSTFreehold land andbuilding 5,347 – 477 – (4,856) 179 1,147Leasehold land andbuildings 244,508 5,352 104,307 (193) 11,159 1,242 366,375Buildings on rentedproperties 34,457 – – – – – 34,457Improvements topremises 4,169 276 – (244) 873 239 5,313Wharves and slipways 19,631 – – – – – 19,631Syncrolift andfloating docks 61,624 – – – – – 61,624Boats and barges 3,239 – – – – – 3,239Plant and machinery 219,100 17,230 56,395 (8,177) 3,022 2,280 289,850Production tools andequipment 71,085 6,041 109 (1,072) (1,014) 108 75,257Furniture, fittings, officeequipment andcomputers 93,897 19,690 33,222 (11,555) 8 430 135,692Transportationequipment andvehicles 13,317 955 2,577 (1,078) – 35 15,806Aircraft enginesand helicopters 11,229 – – (2,774) (1,705) – 6,750Construction in progress 6,702 7,100 – (262) (7,487) 96 6,149800,110 56,644 197,087 (25,355) – 4,609 1,033,095130 • visionnotes to the financial statements • 131

8. FIXED ASSETS (cont’d)ACCUMULATED DEPRECIATIONDEPRECIATION ADDITIONS DUEAS AT CHARGE FOR TO ACQUISITION TRANSLATION AS AT1.1.2000 THE YEAR OF SUBSIDIARIES DISPOSALS TRANSFERS DIFFERENCE 31.12.2000$’000 $’000 $’000 $’000 $’000 $’000 $’000THE GROUPAT 1972 VALUATIONLeasehold land andbuildings 3,365 – – – – – 3,365Wharves and slipways 1,490 – – – – – 1,490Syncrolift andfloating docks 4,603 – – – – – 4,603Plant and machinery 1,694 – – – – – 1,694Furniture, fittings, officeequipment andcomputers 653 – – – – – 653AT COSTFreehold land andbuilding 575 46 217 – (299) 12 551Leasehold land andbuildings 85,350 20,440 52,989 (174) 182 215 159,002Buildings on rentedproperties 14,436 995 – – – – 15,431Improvements topremises 3,510 232 – (242) 117 72 3,689Wharves and slipways 9,355 1,025 – – – – 10,380Syncrolift andfloating docks 24,680 6,358 – – – – 31,038Boats and barges 2,841 398 – – – – 3,239Plant and machinery 180,317 21,718 54,077 (7,078) 1,062 929 251,025Production toolsand equipment 59,857 5,951 72 (1,064) (966) 87 63,937Furniture, fittings,office equipmentand computers 77,202 16,580 30,009 (9,195) – 211 114,807Transportationequipment andvehicles 9,154 2,021 2,238 (922) – 17 12,508Aircraft enginesand helicopters 5,414 2,823 – (1,391) (96) – 6,750484,496 78,587 139,602 (20,066) – 1,543 684,162DEPRECIATIONCHARGENET BOOK VALUE1999 2000 1999$’000 $’000 $’000THE GROUPAT 1972 VALUATIONLeasehold land and buildings – – –Wharves and slipways – – –Syncrolift and floating docks – – –Plant and machinery – – –Furniture, fittings, office equipment and computers – – –AT COSTFreehold land and building 37 596 4,772Leasehold land and buildings 8,967 207,373 159,158Buildings on rented properties 995 19,026 20,021Improvements to premises 94 1,624 659Wharves and slipways 1,025 9,251 10,276Syncrolift and floating docks 6,366 30,586 36,944Boats and barges 397 – 398Plant and machinery 20,643 38,825 38,783Production tools and equipment 5,181 11,320 11,228Furniture, fittings, office equipment and computers 10,305 20,885 16,695Transportation equipment and vehicles 1,830 3,298 4,163Aircraft engines and helicopters 2,696 – 5,815Construction in progress – 6,149 6,70258,536 348,933 315,614The depreciation charge for the year amounting toapproximately $2,444,000 is capitalised in work-inprogress(1999: an additional charge of approximately$251,000 reversed from work-in-progress).AT COSTAS AT 1.1.2000 ADDITIONS DISPOSALS AS AT 31.12.2000$’000 $’000 $’000 $’000THE COMPANYFurniture, fittings, office equipment and computers 369 73 – 442ACCUMULATED DEPRECIATIONDEPRECIATIONCHARGEAS AT 1.1.2000 FOR THE YEAR DISPOSALS AS AT 31.12.2000$’000 $’000 $’000 $’000THE COMPANYFurniture, fittings, office equipment and computers 326 72 – 398132 • visionnotes to the financial statements • 133

8. FIXED ASSETS (cont’d)THE GROUP(a) Assets which are shown at valuation are stated atvalues arrived at by an independent firm of professionalvaluers on 30 November 1972, on the basis of openmarket value for existing use.There is no fixed frequencyof revaluation. Revaluation will be performed as andwhen deemed appropriate by the directors.DEPRECIATIONCHARGENET BOOK VALUE1999 2000 1999$’000 $’000 $’000THE COMPANYFurniture, fittings, office equipment and computers 321 44 43Included in the above are fixed assets acquired underfinance leases with a net book value of:GROUP2000 1999$’000 $’000Leasehold land and building 6,512 6,785Plant and machinery 1 15Furniture, fittings, office equipment and computers – 276,513 6,827(c) The major properties of the Group comprise:(i) Freehold Land and Buildings(b) The buildings on rented properties relate to buildingsconstructed by one of the subsidiaries on properties rentedfrom the Ministry of Defence on leases which are renewableevery three years. In view of the relationship betweenthe landlord and the subsidiary, the cost of the buildings onrented properties is depreciated over 30 years.LOCATION DESCRIPTION LAND AREA NET BOOK VALUE(SQ.M.) 2000 1999$’000 $’000MALAYSIA8th mile, Genting Highlands, 69000 Staff recreation and 117 236 –Genting Highlands, Pahang(ii) Leasehold Land and Buildingsapartment unitLOCATION DESCRIPTION TENURE LAND AREA NET BOOK VALUE(SQ.M.) 2000 1999$’000 $’000SINGAPORE501 Airport Road Factory and office building 20 years from 23,899 5,622 6,0051.6.1993503 Airport Road Factory and office building 20 years from 7,175 1,683 1,8141.6.1993(ii) Leasehold Land and Buildings (cont’d)LOCATION DESCRIPTION TENURE LAND AREA NET BOOK VALUE(SQ.M.) 2000 1999$’000 $’000SINGAPORE540 Airport Road Warehouse and office 30 years from 5,850 2,280 2,435building 15.8.1985Hangar and office building 30 years from 18,918 6,978 7,4851.1.198411 Changi North Crescent Hangar and office building 30 years from 75,713 57,102 54,6951.1.19925 Portsdown Road Industrial and commercial 3 years from 88,400 2,974 3,425buildings 1.12.1996,renewableto 20105 Ubi Close Car shownroom cum 30 years from 6,274 23,146 24,422workshop 1.8.199433 Tuas Avenue 2 Factory and office building 30 years from 6,669 3,702 3,8501.4.199616 Benoi Crescent Industrial and commercial 30 years from 6,981 5,013 5,284buildings 16.7.198924 Ang Mo Kio Street 65 Industrial and commercial 30 years from 34,699 15,626 16,462buildings 1.12.1982,renewableto 204216 Benoi Road Administrative offices 56 years from 20,224 – –1.6.19697 Benoi Road Buildings, foreshore and 56 years from 103,802 3,912 4,170workshops 1.6.196960 Tuas Road Building, foreshore and 30 years from 125,262 12,366 11,149workshops 1.12.1992249 Jalan Boon Lay Industrial and commercial 67 years from 120,000 9,985 –buildings 9.4.1998 to 20652D Ayer Rajah Crescent Industrial and commercial 3 years from 29,404 8,545 –buildings1.4.1998 to31.3.200114 & 16 Tuas Avenue 7 Industrial buildings 30 years from 24,059 3,814 –16.8.1983602 Rifle Range Road Industrial buildings Renewable 1,380,983 10,734 –every year15 Chin Bee Drive Industrial building 60 years from 39,640 8,064 –1.8.1973134 • visionnotes to the financial statements • 135

8. FIXED ASSETS (cont’d)(ii) Leasehold Land and Buildings (cont’d)LOCATION DESCRIPTION TENURE LAND AREA NET BOOK VALUE(SQ.M.) 2000 1999$’000 $’000USA2100 9th Street Hangar and office building 22 years from 103,825 14,383 6,785Brookley Complex, 1.1.1991Mobile, Alabama7701 Lemmon Avenue Hangar and office building 68 1 /4 years from 71,227 6,684 6,721Dallas, Texas 10.6.1955(iii) Buildings on Rented PropertiesLOCATION DESCRIPTION TENURE LAND AREA NET BOOK VALUE(SQ.M.) 2000 1999$’000 $’000540 Airport Road Hangars and office building 3 years lease 38,414 19,026 20,0219. SUBSIDIARIESfrom 20.11.1997COMPANY2000 1999$’000 $’000Unquoted shares, at cost:Singapore Technologies Aerospace Ltd 90,114 135,843Singapore Technologies Electronics Limited 26,982 26,982Singapore Technologies Kinetics Ltd 61,938 61,938(formerly known as Singapore Technologies Automotive Ltd)Singapore Technologies Marine Ltd 56,000 56,000Vision Technologies Systems, Inc. 25,859 –(formerly known as Singapore Aerospace (USA) Incorporated)Singapore Technologies Dynamics Pte Ltd 2,800 –ST Synthesis Pte Ltd 2,156 –(formerly known as Singapore Technologies Integrated Services Pte Ltd)Vision Technologies Kinetics, Inc. 3 –265,852 280,763Details of the subsidiaries are as follows:EFFECTIVE EQUITYINTEREST HELDBY THE GROUP2000 1999NAME OF SUBSIDIARY % %(A) SINGAPORE TECHNOLOGIES AEROSPACE LTD AND ITS SUBSIDIARIES 100 100ST Aerospace Engineering Pte Ltd and its subsidiaries: 100 100ST PAE Holdings Pty Ltd 100 100Pacific Flight Services Pte Ltd 100 100ST Aerospace Engines Pte Ltd 100 100ST Aerospace Systems Pte Ltd 100 100ST Aerospace Supplies Pte Ltd and its subsidiary: 100 100iShopAero Pte Ltd 65 –ST Aerospace International Structures Pte Ltd 100 100ST Aviation Resources Pte Ltd and its subsidiary*: 50 50ST Aviation Resources 1 Limited 50 50ST Aviation Services Co Pte Ltd 80 80Visiontech Investment Pte Ltd 100 100Singapore Aerospace (UK) Investments Pte Ltd and its subsidiaries: 100 100Singapore Technologies Engineering (Europe) Ltd 100 100Airline Rotables Limited 100 100Singapore Aerospace Kabushiki Kaisha 100 100Visiontech Engineering Pte Ltd 51 51ST Airport Ground Services Pte Ltd 100 100(B) SINGAPORE TECHNOLOGIES ELECTRONICS LIMITED AND ITS SUBSIDIARIES 100 100SEEL Electronic & Engineering Sdn Bhd 100 100Singapore Engineering Software Pte Ltd 100 100ST Training & Simulation Pte Ltd and its subsidiary: 100 100Interactive Visual Simulation Laboratory Pte Ltd 65 65CET Technologies Pte Ltd and its subsidiaries: 100 100DigiSAFE Pte Ltd and its subsidiaries: 100 100DataMark Technologies Pte Ltd@ 51 –DigiSAFE, Inc. 100 100Agilis Communication Technologies Pte Ltd 100 100ST Electronics (Shanghai) Co., Ltd. 100 100iTS Technologies Pte Ltd 100 100ST Electronics (Taiwan) Limited 100 –136 • visionnotes to the financial statements • 137

EFFECTIVE EQUITYINTEREST HELDBY THE GROUP2000 1999NAME OF SUBSIDIARY % %(C) SINGAPORE TECHNOLOGIES KINETICS LTD(formerly known as Singapore Technologies Automotive Ltd) AND ITS SUBSIDIARIES 100 100Singapore Ordnance Engineering Pte Ltd 100 100Mobility Systems Pte Ltd 100 100(formerly known as SAE Supplies Pte Ltd)STA Inspection Pte Ltd 100 100(formerly known as ST Automotive Inspection Pte Ltd) and its subsidiary:JuzclickCar.com Pte Ltd 90 –Singapore Commuter Private Limited 100 100ST Automotive Industrial Pte Ltd 100 100STA Investment Pte Ltd 100 100ST Automotive (Vietnam) Pte Ltd 100 100STA Detroit Diesel-Allison (Singapore) Pte Ltd 60 60Shanghai Elite Electric Vehicles Co., Ltd 100 80Founders Industries Pte Ltd 100 –(formerly known as Chartered Industries of Singapore (Pte.) Limited) and its subsidiaries:Expert Systems Pte Ltd 100 –Singapore Test Services Private Limited and its subsidiary: 100 –SAO Industrial Services Pte Ltd 100 –Chartered Ammunition Industries Pte Ltd and its subsidiary: 100 –Chartered Pyrotechnic Industries Private Limited 51 –Unicorn International Pte Limited 100 –Allied Ordnance of Singapore (Pte) Limited 100 –Ordnance Development and Engineering Company of Singapore (Private) Limitedand its subsidiary: 100 –Ordnance Development and Engineering Company of Singapore (1996)Private Limited 100 –(D) SINGAPORE TECHNOLOGIES MARINE LTD AND ITS SUBSIDIARY 100 100STSE Engineering Services Pte Ltd 100 100EFFECTIVE EQUITYINTEREST HELDBY THE GROUP2000 1999NAME OF SUBSIDIARY % %(E) VISION TECHNOLOGIES SYSTEMS, INC.#(formerly known as Singapore Aerospace (USA) Incorporated) AND ITS SUBSIDIARIES 100 100Singapore Technologies Engineering (USA) Inc. 100 100Vision Technologies Aerospace Inc. 100 100(formerly known as Vision International Incorporated) and its subsidiaries:ST Mobile Aerospace Engineering, Inc. 100 100DalFort Aerospace, L.P. 100 100DalFort Aerospace GP, Inc. 100 100SA Supplies (USA) Inc. 100 100Vision Technologies Marine Inc. 100 –VT Systems, Inc. 100 –(F) SINGAPORE TECHNOLOGIES DYNAMICS PTE LTD 100 –(G) ST SYNTHESIS PTE LTD 100 –(formerly known as Singapore Technologies Integrated Services Pte Ltd)(H) VISION TECHNOLOGIES KINETICS, INC. 100 –* ST Aviation Resources Pte Ltd is deemed to be a subsidiary of Singapore Technologies Aerospace Ltd through the control of the composition of its board ofdirectors.@ Previously included under long-term investments as a 17% held investment.# During the financial year, Singapore Technologies Aerospace Ltd transferred its equity interest in Vision Technologies Systems, Inc. (formerly known asSingapore Aerospace (USA) Incorporated) and its subsidiaries at cost to the Company. Accordingly, comparative percentage of effective equity interest inVision Technologies Systems, Inc. and its subsidiaries held by the Group has been reclassified to conform with current year’s presentation.Further details of the subsidiaries are as follows:COUNTRY OF INCORPORATION/NAME OF SUBSIDIARY PRINCIPAL ACTIVITIES PLACE OF BUSINESSSingapore Technologies Aerospace Ltd Investment holding and provision of engineering, Singaporemarketing and engineering support servicesST Aerospace Engineering Pte Ltd Repair, maintenance and servicing of aircraft SingaporeST PAE Holdings Pty Ltd* Investment holding AustraliaPacific Flight Services Pte Ltd Providing air transport services SingaporeST Aerospace Engines Pte Ltd Repair and overhaul of aircraft engines SingaporeST Aerospace Systems Pte Ltd Repair, servicing and overhaul of aircraft Singaporecomponents138 • visionnotes to the financial statements • 139

COUNTRY OF INCORPORATION/NAME OF SUBSIDIARY PRINCIPAL ACTIVITIES PLACE OF BUSINESSST Aerospace Supplies Pte Ltd Trading and providing warehousing services for Singaporeaircraft equipment, parts and componentsiShopAero Pte Ltd E-commerce exchange for aerospace industry SingaporeST Aerospace International Designing, developing and manufacturing aircraft, SingaporeStructures Pte Ltdengines, equipment, accessories, components andsuch other partsST Aviation Resources Pte Ltd Investment holding SingaporeST Aviation Resources 1 Limited# Investment holding and aircraft leasing business British Virgin IslandsCOUNTRY OF INCORPORATION/NAME OF SUBSIDIARY PRINCIPAL ACTIVITIES PLACE OF BUSINESSSEEL Electronic & Engineering Sales of electronic instruments and equipment, MalaysiaSdn Bhd*electronic engineering and systems integrationservices for infrastructure projects as well asmaintenance and calibration of electronicequipmentSingapore Engineering Software Design, development and supply of SingaporePte Ltdreal-time/mission critical systems and provision ofrelated maintenance servicesST Training & Simulation Pte Ltd Design, development, supply, integration and Singaporemaintenance of training and simulation systemsST Aviation Services Co Pte Ltd Repair, maintenance and servicing of Singaporecommercial aircraftVisiontech Investment Pte Ltd Investment holding and dealing SingaporeInteractive Visual SimulationLaboratory Pte LtdDesign, development and manufacture of computers Singaporeand data processing systems, as well as provisionof services for the processing and maintenance ofdata and informationSingapore Aerospace (UK) Investment holding UKInvestments Pte Ltd*Singapore Technologies Engineering Providing marketing and investment services UK(Europe) Ltd*to the GroupAirline Rotables Limited* Providing component management and support UKservices for aircraftCET Technologies Pte Ltd Design and development, systems integration, Singaporemanufacturing and sale of communicationequipment, GPS-based fleet managementequipment and weapon electronicsDigiSAFE Pte LtdDesign, development and sale of internet, electronic Singaporecommerce and network based information andsecurity solutions and servicesSingapore Aerospace Kabushiki Providing marketing services to the Group JapanKaisha#DataMark Technologies Pte Ltd Develop and provide digital water marking and Singaporerelated solutionsVisiontech Engineering Pte Ltd Provision of engineering services for the repair, Singaporemaintenance and modification of aircraft, aircraftequipment and componentsST Airport Ground Services Pte Ltd Investment holding and provision of airport ground, Singaporecargo and passenger handling servicesDigiSAFE, Inc.# Marketing and provision of technical support for USAinformation security products and servicesAgilis Communication Technologies Design and manufacture of components and SingaporePte Ltdsub-systems for microwave engineering anddefence electronicsSingapore Technologies Electronics Systems integration, core product design and SingaporeLimiteddevelopment and maintenance operations, in theareas of industrial automation, simulation, anddefence electronicsST Electronics (Shanghai) Co., Ltd* Engineering, development, production, sales and People’s Republic of Chinamarketing of electronic system covering applicationsuch as building automation, transportation andcommunication140 • visionnotes to the financial statements • 141

COUNTRY OF INCORPORATION/NAME OF SUBSIDIARY PRINCIPAL ACTIVITIES PLACE OF BUSINESSiTS Technologies Pte Ltd Development, marketing and maintenance of Singaporeadvance simulation and training systems for theaircraft and other industriesCOUNTRY OF INCORPORATION/NAME OF SUBSIDIARY PRINCIPAL ACTIVITIES PLACE OF BUSINESSShanghai Elite Electric Vehicles Manufacture and sale of electric bicycles and People’s Republic of ChinaCo., Ltd*provision of vehicle repairs and consultancyservicesST Electronics (Taiwan) Limited# Provide integration for large-scale system projects Taiwanin rail, expressway and intelligent buildingmanagement solutionsFounders Industries Pte Ltd Investment holding and provision of management Singapore(formerly known as Charteredservices to subsidiariesIndustries of Singapore (Pte.) Limited)Singapore Technologies Kinetics Ltd(formerly known as SingaporeTechnologies Automotive Ltd)Provision of automotive engineering repair services, Singaporemaintenance, assembly, upgrading andmanufacturing of heavy vehicles, automotive designand engineering services, and trading in motorvehicles, equipment, vehicle spares and relatedaccessoriesExpert Systems Pte Ltd Dormant SingaporeSingapore Test Services Private Limited Provide professional engineering consultancy, Singaporetests, inspection, certification and related servicesSAO Industrial Services Pte Ltd Dormant SingaporeSingapore Ordnance Engineering Workshop and provision of engineering services SingaporePte LtdChartered Ammunition Industries Manufacture and sale of munition products SingaporePte LtdMobility Systems Pte Ltd Investment holding Singapore(formerly known as SAE SuppliesPte Ltd)STA Inspection Pte Ltd Inspection of heavy goods vehicles, light vehicles, Singapore(formerly known as ST Automotive buses, motorcycles and carsInspection Pte LtdChartered Pyrotechnic Industries Manufacture and sale of pyrotechnic products SingaporePrivate LimitedUnicorn International Pte Limited Trading and marketing of military products SingaporeAllied Ordnance of Singapore Manufacture and dealing in explosives and Singapore(Pte) Limitedassembly and maintenance of gunsJuzclickCar.com Pte Ltd Sale and purchase of quality used vehicles via the Singaporeinternet through on-line bidding and bargaining aswell as a host of other automotive related activitiesto cater to the needs of the general motoristsSingapore Commuter Private Limited Dormant SingaporeST Automotive Industrial Pte Ltd Dormant SingaporeSTA Investment Pte Ltd Investment dealing SingaporeST Automotive (Vietnam) Pte Ltd Investment holding SingaporeSTA Detroit Diesel-Allison (Singapore) Sales and servicing of diesel engines, automatic SingaporePte Ltdtransmissions and power generation equipmentOrdnance Development and Investment holding SingaporeEngineering Company of Singapore(Private) LimitedOrdnance Development and Manufacture and sale of weapons, weapon SingaporeEngineering Company of Singapore magazines, spares and military equipment(1996) Private LimitedSingapore Technologies Marine Ltd Construction and repair of naval and commercial Singaporevessels, design, integration, fabrication, installationof military and commercial engineering equipmentand the provision of engineering consultancy andtechnical management servicesSTSE Engineering Services Pte Ltd Contractor, developer and sub-contractor of Singaporeengineering and engineering related works andprovider of turnkey engineering solutions142 • visionnotes to the financial statements • 143

COUNTRY OF INCORPORATION/NAME OF SUBSIDIARY PRINCIPAL ACTIVITIES PLACE OF BUSINESSVision Technologies Systems, Inc. Investment holding USA(formerly known as SingaporeAerospace (USA) Incorporated)#Singapore Technologies Engineering Providing marketing services to the Group USA(USA) Inc.#ACQUISITIONS AND DISPOSALSDuring the financial year, the Group acquired 100% ofthe issued share capital of Founders Industries Pte Ltdand an additional 34% equity interest in DataMarkTechnologies Pte Ltd (“DataMark”), thereby increasingthe Group’s shareholding in DataMark from 17% to10. ASSOCIATED COMPANIES AND JOINT VENTURES51%.The profit after taxation and extraordinary items ofthe acquired subsidiaries amounts to approximately$24,084,000 for the year ended 31 December 2000(1999: $11,316,000), of which $24,084,000 arose in theperiod from the respective acquisition dates to 31December 2000.Vision Technologies Aerospace Inc. Investment holding and providing investment USA(formerly known as Visionservices to the Aerospace SectorInternational Incorporated)#ST Mobile Aerospace Engineering, Repair and maintenance of aircraft USAInc.*DalFort Aerospace, L.P.* Repair and maintenance of aircraft USADalFort Aerospace GP, Inc.# Investment holding USASA Supplies (USA) Inc.# Dormant USAVision Technologies Marine Inc.# Investment holding and providing investment USAservices to the Marine SectorGROUP2000 1999$’000 $’000Unquoted shares, at cost 124,442 71,629Provision for diminution in value of investments (6,440) (2,919)Goodwill on acquisition written off (1,737) (6,317)116,265 62,393Share of post-acquisition:Profits 29,611 92,273Reserves (353) 4,962145,523 159,628Loans to associated companies – 2,000Loans to joint ventures 9,663 9,663Provision for doubtful loans (1,711) (1,896)153,475 169,395VT Systems, Inc.# Investment holding and providing investment USAservices to the GroupSingapore Technologies Dynamics Systems integration, core product design and SingaporePte Ltddevelopment of aeronautic defence systemsST Synthesis Pte Ltd Providing armament services Singapore(formerly known as SingaporeTechnologies Integrated ServicesPte Ltd)During the financial year, cost of investment in AtlantisShipyard Pte Ltd (“Atlantis”) amounting to $6 millionhas been reclassified from an associated company to along-term investment.The management is of the opinionthat the Group is no longer able to exercise significantinfluence over the financial and operating policy makingprocess in Atlantis through its representation on theBoard of Directors of Atlantis (Note 11).The share of post-acquisition losses and reserves andgoodwill of Atlantis amounting to $1.917 million hasbeen reclassified to provision for diminution in value oflong-term investment (Note 11).The loan to an associated company, Atlantis, which isinterest-free, unsecured and with no fixed terms ofrepayment has been reclassified to loans receivable(Note 12).Loans to a joint venture are interest-free, unsecured andhave no fixed terms of repayment.Vision Technologies Kinetics, Inc.# Investment holding and providing investment USAservices to Land Systems Sector* Audited by associated firms of Arthur Andersen, Singapore# Not required to be audited by the law in the country of incorporation144 • visionnotes to the financial statements • 145

PROVISION FOR DIMINUTION IN VALUE OF INVESTMENTSMovements in provision for diminution in value ofinvestments during the year are as follows:PROVISION FOR DOUBTFUL LOANSMovements in provision for doubtful loans during theyear are as follows:The Group’s share of the joint ventures’ results and assetsand liabilities are as follows:GROUP2000 1999$’000 $’000At beginning of year 2,919 3,683Provision utilised (731) (764)Reclassified from long-term investments (Note 11)@ 4,252 –At end of the year 6,440 2,919@ During the financial year, the Group increased its shareholdings in a non-related corporation, thereby making it into an associated company. Accordingly,the corresponding provision for diminution in value of the investment has also been reclassified from long-term investments.GROUP2000 1999$’000 $’000At beginning of year 1,896 909Charge to profit and loss account 315 1,108Provision utilised (500) (121)At end of the year 1,711 1,8962000 1999$’000 $’000RESULTSTurnover 38,126 260Net profit (loss) for the year 442 (367)ASSETS AND LIABILITIESNon-current assets 17,923 8,453Current assets 74,939 640Current liabilities 72,644 37Non-current liabilities 9,688 9,663(a) Details of the associated companies are as follows:COUNTRY OFPERCENTAGE OFNAME OF ASSOCIATED COMPANY PRINCIPAL ACTIVITIES INCORPORATION EQUITY HELD2000 1999% %Turbine Overhaul Services Pte Ltd** Repair and servicing of gas and Singapore 49 49steam turbine componentsAsian Aerospace Pte Ltd Promoting and organising of trade Singapore 50 50exhibitions in Singapore forsystems, equipment, products andservices in aerospace anddefence-related applications on abiennial basisSingapore British Engineering Pte Ltd Marketing and sale of a range of Singapore 32 32defence products and associatedequipment and participating in thedevelopment of new products andsystemsSingapore-China Merchants Aviation Investment holding Hong Kong 50 50Holdings Limited#Composite Technology International Repairing and rebuilding helicopter Singapore 33.33 33.33Pte Ltdrotor bladesEurocopter South East Asia Selling, maintaining and Singapore 25 25Private Limitedoverhauling of helicoptersSingapore Precision Repair and Repair and overhaul of aircraft Singapore 50 50Overhaul Pte Ltdand helicopter landing gear andits related componentsAerospace Engineering Services Trustee of unit trust fund Australia 50 50Pty LtdAerospace Engineering Services Maintenance and servicing of Australia 50 50Pty Ltd Unit TrustaircraftChangi Aviation Services Pte Ltd Investment holding Singapore 50 50Turbine Coating Services Pte Ltd Repair and servicing of gas and Singapore 24.5 –steam turbine components146 • visionnotes to the financial statements • 147

COUNTRY OFPERCENTAGE OFNAME OF ASSOCIATED COMPANY PRINCIPAL ACTIVITIES INCORPORATION EQUITY HELD2000 1999% %CityCab Pte Ltd Rental of taxis Singapore 46.5 46.5Asia-Pacific Training and Simulation Provision of simulator training Singapore 25 25Pte LimitedservicesST LogiTrack Pte Ltd Promote, market and distribute the Singapore 50 50use of RFID technology in logisticsmanagementSilvatech Global Systems Pte Ltd Owns the intellectual property British Virgin 20 –rights of manufacturingIslandsoff-highway equipment usinghydro-mechanical drive technologyInt. Silvatech Industries Inc. Research and development of Canada 20 –off-highway equipment usinghydro-mechanical drive technologySilvatech Systems Corporation Marketing and managing licenses Singapore 20 –Pte Ltdof products usinghydro-mechanical drive technologySolectria Corporation* Design, engineering and USA 44.1 –manufacture of advanced electric,hybrid electric and fuel cell vehicledrives system and relatedcomponentsCOUNTRY OFPERCENTAGE OFNAME OF ASSOCIATED COMPANY PRINCIPAL ACTIVITIES INCORPORATION EQUITY HELD2000 1999% %Stegami.com Pte Ltd Develop and provide internet- Singapore 37.6 –marketing solutions and servicesSentry Technologies Pte Ltd Design, development and sale of Singapore 35 35computer security productsAnchorville Pte Ltd Construction, operation and Singapore 25 –maintenance of desalinationprojects and related consultancyservices on desalination plantsPT SSE-Van der Horst Indonesia Precision engineering services Indonesia 37 37AquaGen International Pte Ltd Water treatment service Singapore 25 25@ Sino-Singapore Medical Disposables (Pte) Ltd is in the process of creditors’ liquidation.# Singapore-China Merchants Aviation Holdings Limited is in the process of voluntary liquidation.* Previously included under long-term investments as a 9.6% held investment.** During the year, Singapore Technologies Aerospace Ltd (“ST Aero”) has undertaken a restructuring (the “Restructuring”) of its 49% shareholding interests inTurbine Overhaul Services Pte Ltd (“TOS”).Under the Restructuring, the entire business and assets of TOS were transferred as a going concern to a wholly owned subsidiary of TOS (“NEWCO”).Subsequent to the business transfer on 1 December 2000, ST Aero acquired a direct 49% interest in the capital of the NEWCO and simultaneously exitedfrom TOS, marking the completion of the Restructuring. NEWCO took over the name of Turbine Overhaul Services Pte Ltd from TOS with effect from the dateof the business transfer when simultaneous changes in names were made to both companies. TOS was renamed UTSTA Pte Ltd.Defence Electronics of Singapore Manufacture and marketing of Singapore 49 –Pte Ltdmilitary fusesSino-Singapore Medical Disposables Dormant Singapore 40 –(Pte) Ltd@Nusantara Technologies Sdn Bhd Provision of non-destructive testing Malaysia 49 –services, ultrasonic flaw detectionand gauging survey and pressuregauge callibrationCIS - Oerlikon Pte Ltd Dormant Singapore 50 –148 • visionnotes to the financial statements • 149

(b) Details of joint ventures are as follows:COUNTRY OFPERCENTAGE OFNAME OF JOINT VENTURE PRINCIPAL ACTIVITIES INCORPORATION EQUITY HELD2000 1999% %Joint Shipyard Management Services Construction and managing Singapore 30 30Pte Ltd11. LONG-TERM INVESTMENTSworkers’ dormitoriesJoint Shipyard Technologies Pte Ltd Undertaking, organising and Singapore 14 14promotion of research anddevelopment of new marinetechnologiesSMART Systems Pte Ltd Life systems integration of Singapore 50 –weapon systemTakata CPI Singapore Pte Ltd Manufacture of pyrotechnic Singapore 24.99 –components for seatbelts and airbags used in motor vehiclesGFM Electronics S.A. de C.V. Promotion, distribution and sale of Mexico 50 –electronic and high technologyproducts and servicesGROUP2000 1999$’000 $’000UNQUOTED INVESTMENTS - AT COSTEquity shares:Related corporation 4,302 1,800Non-related corporations* 50,994 53,09555,296 54,895Floating rate notes 609,846 402,789Membership rights 1,132 995666,274 458,679Provision for diminution in value of investments (26,252) (27,141)TOTAL UNQUOTED INVESTMENTS 640,022 431,538TOTAL LONG-TERM INVESTMENTS 645,015 438,201QUOTED INVESTMENTS - MARKET VALUESingapore Government Securities 4,548 5,933Equity shares:Related corporation 842 1,032Non-related corporations 27,307 13432,697 7,099* The unquoted investments in equity shares held by the Group in prior year included a corporation which was listed during the financial year. Accordingly,the cost of investment and the corresponding provision for diminution in investment of approximately $6,730,000 has been reclassified under quotedinvestments in current year.Under the lock-up agreements entered between the Group and certain shareholders of the quoted investment, the Group shall not directly or indirectlydispose of their investment until February 2001.GROUP2000 1999$’000 $’000QUOTED INVESTMENTS - AT COSTSingapore Government Securities 4,250 5,550Equity shares:Related corporation 1,085 1,080Non-related corporations* 6,997 10812,332 6,738Provision for diminution in value of investments (7,339) (75)TOTAL QUOTED INVESTMENTS 4,993 6,663PROVISION FOR DIMINUTION IN VALUE OF QUOTEDINVESTMENTSMovements in provision for diminution in value ofquoted investments during the year are as follows:GROUP2000 1999$’000 $’000At beginning of the year 75 475Charge (write back) to profit and loss account 534 (400)Reclassified from unquoted investments 6,730 –At end of the year 7,339 75150 • visionnotes to the financial statements • 151

PROVISION FOR DIMINUTION IN VALUE OFUNQUOTED INVESTMENTSMovements in provision for diminution in value ofunquoted investments during the year are as follows:THE COMPANYThe investments of the Company consist of Floating RateNotes, at cost.The Floating Rate Notes of the Group and Company areGROUP2000 1999$’000 $’000At beginning of the year 27,141 19,329Charge to profit and loss account 7,923 7,812Provision utilised (3,696) –Reclassified to quoted investments (6,730) –Reclassified to associated companies (Note 10) (4,252) –Acquisition of subsidiary 3,949 –Share of post-acquisition losses and reserves and goodwill of an associatedcompany reclassified as provision for diminution in value of long-terminvestment (Note 10) 1,917 –At end of the year 26,252 27,14112. LOAN RECEIVABLESissued by a related corporation, ST Treasury ServicesLimited, and guaranteed by the immediate holding company,Singapore Technologies Pte Ltd. Interest on theFloating Rate Notes is at an annual rate ranging from2.69% to 3.14% (1999: 1.64% to 4.68%) per annum.GROUPCOMPANY2000 1999 2000 1999$’000 $’000 $’000 $’000Housing and car loans and advances to staff 5,321 7,005 29 102Loans to:Related corporations 7,030 7,030 – –Third parties 25,862 23,766 – –Provision for doubtful loans:Related corporations (7,030) (7,030) – –Third parties (19,330) (17,683) – –6,532 6,083 – –Minority shareholders – 976 – –Hire purchase receivables 3,105 5,605 – –14,958 19,669 29 102Receivable:Within 1 year 6,275 3,969 15 29After 1 year 8,683 15,700 14 7314,958 19,669 29 102Movements in provision for loans to related corporationsduring the year are as follows:Movements in provision for loans to third parties are asfollows:GROUPCOMPANY2000 1999 2000 1999$’000 $’000 $’000 $’000At beginning of the year 7,030 – – –Charge to profit and loss account – 7,030 – –At end of the year 7,030 7,030 – –GROUPCOMPANY2000 1999 2000 1999$’000 $’000 $’000 $’000At beginning of the year 17,683 5,000 – –Charge to profit and loss account 1,647 12,683 – –At end of the year 19,330 17,683 – –(a) Loans to related corporations are unsecured, interestfreeand not repayable within the next 12 months.(b) Included in the loans to third parties is an amount of$5,475,000 (1999: $6,282,000) which is secured by thethird party’s investment in a unit trust and the loan isrepayable over a period of 12 years commencing from1998. Interest is chargeable at 15% per annum calculatedon the reducing balance basis.(c) Included in the loans to third parties is an amount of$8,312,000 (1999: $8,312,000) which is secured byintellectual property rights of the third party. Interest ischargeable at the United States Dollar prime rate plus2% per annum.(d) Hire purchase receivables comprise:GROUPGROSS UNEARNED NETINVESTMENT INTEREST INVESTMENTRECEIVABLE INCOME RECEIVABLE$’000 $’000 $’0002000Within 1 year 1,102 144 958Within 2 to 5 years 2,239 92 2,1473,341 236 3,1051999Within 1 year 1,641 92 1,549Within 2 to 5 years 4,484 429 4,055After 5 years 1 – 16,126 521 5,605152 • visionnotes to the financial statements • 153

13. STOCKS AND WORK-IN-PROGRESS14. DEBTORS, DEPOSITS AND PREPAYMENTSGROUP2000 1999$’000 $’000STOCKSStocks of equipment and spares 215,366 164,890Provision for stocks obsolescence (68,326) (60,221)147,040 104,669WORK-IN-PROGRESS IN EXCESS OF PROGRESS BILLINGSWork-in-progress 565,955 549,909Provision for foreseeable losses (24,937) (15,820)541,018 534,089Progress billings (196,522) (297,046)344,496 237,043491,536 341,712GROUPCOMPANY2000 1999 2000 1999NOTE $’000 $’000 $’000 $’000Trade debtors 18 390,758 278,991 – –Advance payments to:Suppliers 323,043 93,471 – –Related corporations 759 5,165 – –Other debtors, deposits and prepayments 19 28,671 16,512 888 704Due from:Immediate holding company (non-trade) 1,798 967 1,155 934Subsidiaries (non-trade) – – 11 1,126Related corporations 20 657,094 269,321 109,987 90,967Associated companies 21 6,575 6,704 – –Joint ventures (trade) 42 – – –1,408,740 671,131 112,041 93,731PROGRESS BILLINGS IN EXCESS OF WORK-IN-PROGRESSWork-in-progress 63,096 28,747Progress billings (134,694) (78,763)(71,598) (50,016)Movements in provision for stocks obsolescence duringthe year are as follows:Movements in provision for foreseeable losses during theyear are as follows:GROUP2000 1999$’000 $’000At beginning of the year 60,221 62,239Charge to profit and loss account 703 3,951Provision utilised (1,508) (6,119)Acquisition of subsidiary 8,736 124Translation difference 174 26At end of the year 68,326 60,221GROUP2000 1999$’000 $’000At beginning of the year 15,820 7,859Charge to profit and loss account 12,366 7,961Provision utilised (3,249) –At end of the year 24,937 15,82015. SHORT-TERM INVESTMENTS16. AMOUNTS UNDER FUND MANAGEMENTGROUP2000 1999$’000 $’000AT COSTQuoted equity investments 461 3,465Other quoted investments 24,745 –25,206 3,465MARKET VALUEQuoted equity investments 1,644 6,168Other quoted investments 24,764 –26,408 6,168GROUP2000 1999$’000 $’000Principal sum of amounts under fund management 553,766 557,984Provision for diminution in value (8,298) (11,742)545,468 546,242154 • visionnotes to the financial statements • 155

The terms of the management agreements, which arefor periods ranging from 2 to 5 years, provide for thefollowing:(a) the guarantee of the return of the principal sumsfrom 95% to 100% by the fund managers at the end ofthe relevant fund management period; andMovements in provision for diminution in value ofamounts under fund management during the year areas follows:Amounts under fund management can be analysedas follows:17. BANK AND OTHER LIQUID FUNDS(b) the fees payable to the fund manager include a share,in specified proportions, of any surplus (determined atthe end of the relevant fund management period) arisingfrom the management of the fund.As the surplus, if any, arising from the management ofthese funds can only be determined at the end of therelevant fund management period, such surplus, if any,will be recognised as income then.GROUP2000 1999$’000 $’000At beginning of the year 11,742 11,027(Write back) charge to profit and loss account (3,444) 715At end of the year 8,298 11,742GROUP2000 1999$’000 $’000Quoted equity investments at market value 67,452 120,317Quoted bond investments at market value 249,298 298,058Cash 266,177 197,459582,927 615,834GROUPCOMPANY2000 1999 2000 1999$’000 $’000 $’000 $’000Fixed deposits with financial institutions 697,118 830,240 86,931 153,139Cash and bank balances 122,175 71,183 45,717 5,451819,293 901,423 132,648 158,59018. TRADE DEBTORSMovements in provision for doubtful debts during theyear are as follows:19. OTHER DEBTORS, DEPOSITS AND PREPAYMENTSNon-trade debtors are stated after provision fordoubtful debts:GROUP2000 1999$’000 $’000Trade debtors 419,545 318,678Provision for doubtful debts (73,305) (54,119)Provision for unestablished claims (4) (26)346,236 264,533Unbilled receivables 44,522 14,458390,758 278,991GROUP2000 1999$’000 $’000At beginning of the year 54,119 54,530(Write back) charge to profit and loss account (2,612) 5,447Bad debts written off against provision (1,990) (6,018)Acquisition of subsidiary 23,788 145Translation difference – 15At end of the year 73,305 54,119GROUPCOMPANY2000 1999 2000 1999$’000 $’000 $’000 $’000Deposits 2,209 1,303 – –Prepayments 11,462 3,107 – –Interest receivable 4,944 4,459 863 691Other recoverables 3,106 1,153 – –Non-trade debtors 6,950 6,490 25 1328,671 16,512 888 704GROUP2000 1999$’000 $’000At beginning of the year 478 394(Write back) charge to profit and loss account (428) 84At end of the year 50 478156 • visionnotes to the financial statements • 157

20. DUE FROM RELATED CORPORATIONS21. DUE FROM ASSOCIATED COMPANIESGROUPCOMPANY2000 1999 2000 1999$’000 $’000 $’000 $’000Trade balances 7,093 11,441 – –Non-trade balances 6,938 4,013 1,403 13Loans 643,063 253,867 108,584 90,954657,094 269,321 109,987 90,967GROUP2000 1999$’000 $’000Trade balances 3,856 3,668Non-trade balances 3,252 3,195Provision for doubtful debts (533) (159)6,575 6,70422. CREDITORS AND ACCRUALSGROUPCOMPANY2000 1999 2000 1999NOTE $’000 $’000 $’000 $’000Trade creditors 427,651 415,091 213 225Advance payments from customers 1,600,138 1,084,364 – –Other creditors and accruals 26 645,649 384,325 14,631 11,251Due to:Immediate holding company (trade) 424 1,033 – –Immediate holding company (non-trade) 79 234 – –Subsidiaries (non-trade) – – 82 25Related corporations (trade) 14,497 10,569 – –Related corporations (non-trade) 3,058 1,263 14 –Associated companies (trade) 4 315 – –Joint ventures (trade) 4,346 33 – –Minority shareholder (trade) 1,073 961 – –2,696,919 1,898,188 14,940 11,501Movements in provision for doubtful debts during theyear are as follows:GROUP2000 1999$’000 $’000At beginning of the year 159 30Charge to profit and loss account 374 170Provision utilised – (41)At end of the year 533 15923. PROVISIONSGROUP2000 1999$’000 $’000Provision for:Warranties 227,995 161,758Liquidated damages 42,747 2,959Contingencies – 19,236Engineering and development – 6,587Wharf and syncrolift upkeep – 11,000Environmental liabilities 5,303 5,293276,045 206,833(a) Movements in provision for warranties during theyear are as follows:GROUP2000 1999$’000 $’000At beginning of the year 161,758 117,727Charge to profit and loss account 40,912 47,374Provision utilised (3,452) (3,363)Acquisition of subsidiary 28,774 –Translation difference 3 20At end of the year 227,995 161,758158 • visionnotes to the financial statements • 159

(b) Movements in provision for liquidated damages duringthe year are as follows:(c) Movements in provision for contingencies during theyear are as follows:(d) Movements in provision for engineering and developmentduring the year are as follows:(e) Movements in provision for wharf and syncroliftupkeep during the year are as follows:GROUP2000 1999$’000 $’000At beginning of the year 2,959 3,681Charge (write back) to profit and loss account 12,658 (680)Provision utilised (571) (42)Acquisition of subsidiary 27,701 –At end of the year 42,747 2,959GROUP2000 1999$’000 $’000At beginning of the year 19,236 19,610Write back to profit and loss account (41,146) (219)Provision utilised (14) (170)Acquisition of subsidiary 21,883 –Translation difference 41 15At end of the year – 19,236GROUP2000 1999$’000 $’000At beginning of the year 6,587 4,597(Write back) charge to profit and loss account (6,587) 2,290Provision utilised – (300)At end of the year – 6,587GROUP2000 1999$’000 $’000At beginning of the year 11,000 11,000Write back to profit and loss account (6,000) –Reclassified to accrued operating expenses (5,000) –At end of the year – 11,000(f) Movements in provision for environmental liabilitiesduring the year are as follows:24. LEASE OBLIGATIONSA subsidiary of Singapore Technologies Aerospace Ltd(“ST Aero”) leases certain land, buildings, and equipmentfrom a foreign Airport Authority (the “Authority”) undera capital lease related to industrial revenue bonds issuedby the Authority. Assets being leased are pledged as collateralagainst the bonds.The bonds have staggered maturitydates and the lease payments have been structured tocoincide with the staggered maturities of the bonds withthe final payment due on 1 November 2012, the expirationdate of the lease.In connection with the bond issue, the subsidiaryentered into a letter of credit agreement for approximately$13,600,000, which is used to guarantee paymentson the bonds in the event that the subsidiary isunable to make required lease payments. However, theletter of credit agreement expires in May 2001, and theGROUP2000 1999$’000 $’000At beginning of the year 5,293 5,457Provision utilised – (167)Translation difference 10 3At end of the year 5,303 5,293subsidiary has no alternative sourcing in place.Withoutthe letter of credit agreement in place, the Authoritywill call the bonds. ST Aero has expressed its ability andintent to pay off the bonds with other long-termfinancing should the subsidiary not enter into anotherletter of credit agreement by the original agreement’smaturity. As such, the capitalised lease obligation isclassified as long-term in the accompanying 2000balance sheet.The subsidiary also leases certain land, buildings, andequipment from the Authority under an operating lease.The lease term coincides with the term of the capitallease.The Company has unconditionally guaranteedpayment of all rents.The obligations under the finance lease to be paid by thesubsidiary are as follows:PRINCIPAL INTEREST$’000 $’00020001 year to 5 years 5,734 5,901After 5 years 12,388 3,908Total 18,122 9,809Discount (167) –17,955 9,809PRINCIPAL$’0002000Repayable:Within 1 year 990After 1 year 16,96517,955160 • visionnotes to the financial statements • 161

Lease terms do not contain restrictions concerning dividends,additional debt or further leasing.25. LONG-TERM BANK LOANPRINCIPAL INTEREST$’000 $’00019991 year to 5 years 5,138 6,065After 5 years 13,204 4,743Total 18,342 10,808Discount (362) –17,980 10,808PRINCIPAL$’0001999Repayable:Within 1 year 887After 1 year 17,09317,980GROUP2000 1999$’000 $’000Loan repayments:Within 1 year 6,950 6,694After 1 year 6,950 13,38813,900 20,082The loan is denominated in US dollars, unsecured andinterest is charged at a flat rate of 6.48% (1999:6.48%) per annum.The loan is repayable over 5 yearson a half-yearly basis and the principal repayment commencedin June 1999.27. DEFERRED INCOMEMovements in deferred income recognised to date duringthe year are as follows:28. DEFERRED TAXATIONGROUP2000 1999$’000 $’000At beginning of the year 3,333 3,234Additions during the year 672 99Acquisition of subsidiary 10,101 –14,106 3,333Less deferred income recognised to date (6,045) (555)At end of the year 8,061 2,778GROUP2000 1999$’000 $’000At beginning of the year 555 320Recognise in profit and loss account 922 235Acquisition of subsidiary 4,568 –At end of the year 6,045 555GROUP2000 1999$’000 $’000At beginning of the year 3,371 4,013Write back to profit and loss account (3,676) (640)Translation difference (92) (2)Acquisition of subsidiary 8,769 –At end of the year 8,372 3,37126. OTHER CREDITORS AND ACCRUALSGROUPCOMPANY2000 1999 2000 1999$’000 $’000 $’000 $’000Non-trade creditors 20,235 22,869 2,947 188Purchase of fixed assets 530 2,349 – –Accrued operating expenses 624,479 358,723 11,684 11,063Accrued interest payable 405 384 – –645,649 384,325 14,631 11,25129. FLOATING RATE BONDS (UNSECURED)GROUP2000 1999$’000 $’000Floating rate bonds (unsecured) 20,000 20,000Unamortised discount (928) (1,225)19,072 18,775Unamortised discount:At beginning of the year 1,225 1,522Amortisation for the year (297) (297)At end of the year 928 1,225162 • visionnotes to the financial statements • 163

The Unsecured Floating Rate Bonds were issued by a subsidiaryat the price of 85.15% of the principal amounts.Interest is payable every 6 months from the dates of issueof the bonds, being 18 January 1994 for Tranche Aamounting to $10,000,000 and 18 April 1994 for TrancheB amounting to another $10,000,000 respectively, at theswap offer rate less 1.5%.The swap offer rate is determinedat the beginning of each interest period.The bondholders have the option to have all or any ofthe bonds redeemed by the subsidiary on any of theinterest payment dates falling between January 2002 andJuly 2003.30. TURNOVERThe subsidiary has the option to redeem all, but not partially,of the bonds on the interest payment date falling ineach January of 1999 to 2003.The above options to redeem are structured at a discountfrom the principal amount.Unless previously redeemed, the final redemption datefor the bonds is the interest payment date falling inJanuary 2004.GROUPCOMPANY2000 1999 2000 1999$’000 $’000 $’000 $’000Sale of goods 481,006 467,482 – –Service income 1,778,021 1,296,925 – –Investment incomeDividend from unquoted investments in subsidiaries – – 235,256 272,1532,259,027 1,764,407 235,256 272,153GROUPCOMPANY2000 1999 2000 1999NOTE $’000 $’000 $’000 $’000Provision for diminution in value of investmentsUnquoted long-term investments 11 (5,978) (2,685) – –Quoted long-term investments 11 (534) – – –Amounts under fund management 16 – (715) – –Write-back of provision for diminution in valueof investmentsLong-term quoted investments 11 – 400 – –Short-term quoted investments 15 – 1,089 – –Amounts under fund management 16 3,444 – – –Profit on sale of investmentsLong-term investments 740 5 – –Short-term investments 1,415 – – –Other investments 395 – – –Surplus arising from amounts under fund management 6,715 12,913 – –Management income, net – – 8,508 8,984Project consultancy fees 1,178 1,766 – –Distributions from unquoted equity investments 606 – – –Surplus on restructuring of associated company 6,304 – – –Others 3,960 3,295 – –92,948 66,308 16,325 16,14131. OTHER OPERATING INCOMEGROUPCOMPANY2000 1999 2000 1999NOTE $’000 $’000 $’000 $’000Commission income 2,462 2,689 – –Dividend incomeQuoted equity investments 317 115 – –Unquoted equity investments 1,433 541 – –Interest incomeSingapore Government Securities 687 518 – –Bonds 525 – – –Immediate holding company – 447 – –Subsidiaries – – 273 75Related corporations 34,384 19,230 5,096 5,928Bank deposits 33,316 24,347 2,447 1,152Hire purchase – 360 – –Staff loans 213 255 1 2Other quoted investments – 20 – –Others 1,366 1,718 – –32. PROFIT FROM OPERATIONSGROUPCOMPANY2000 1999 2000 1999NOTE $’000 $’000 $’000 $’000Profit from operations is arrived at:AFTER CHARGINGAuditors’ remuneration:Auditors of the CompanyCurrent year 1,012 792 40 34Underprovision in respect of prior year 13 11 8 6Other auditorsCurrent year 356 313 – –Overprovision in respect of prior year (47) – – –Non-audit fees:Auditors of the CompanyCurrent year 349 255 94 35Other auditors 127 277 2 –Fees and remuneration of directorsCurrent year 2,576 2,241 2,433 1,926(Over) Underprovision in respect of prior year (342) 23 (337) 54164 • visionnotes to the financial statements • 165

GROUPCOMPANY2000 1999 2000 1999NOTE $’000 $’000 $’000 $’000AFTER CHARGING (cont’d)Fees paid to a firm in which a director is a member 1,888 46 90 20Depreciation of fixed assets 8 76,143 58,787 72 321Provision for:Stocks obsolescence 13 703 3,951 – –Foreseeable losses 13 12,366 7,961 – –Doubtful debtsTrade 18 – 5,447 – –Non-trade 19 – 84 – –Associated companies and joint ventures 10,21 689 1,566 – –Loan receivables 12 1,647 4,371 – –Warranties 23 40,912 47,374 – –Liquidated damages 23 12,658 – – –Engineering and development 23 – 2,290 – –Diminution in value of investments made forresearch and development purposes 11 1,945 – – –Fixed assets written off 25 11 – –Stocks written off 2,297 994 – –Bad debts written offTrade 2,598 35 – –Non-trade 38 – – –Research and development costs 38,028 23,676 – –Design and development expenditure written off 16,564 16,544 – –Operating lease expenses 16,464 5,398 292 176AND CREDITINGWrite-back of provision for:Unestablished claims 18 22 22 – –Doubtful debtsTrade 18 2,612 – – –Non-trade 19 428 – – –Liquidated damages 23 – 680 – –Contingencies 23 41,146 219 – –Engineering and development 23 6,587 – – –Wharf and syncrolift upkeep 23 6,000 – – –Grants and subsidies received 5,029 5,713 – –Amortisation of deferred income 27 922 235 – –Bad debts recovered 38 – – –33. PERSONNEL EXPENSES34. OTHER INCOME (EXPENSES)35. FINANCIAL EXPENSESGROUPCOMPANY2000 1999 2000 1999$’000 $’000 $’000 $’000Wages and salaries 548,640 345,158 6,657 7,064Pension contributions 50,225 23,118 349 281Termination benefits – 55 – –Other social expenses 57,723 33,658 813 461656,588 401,989 7,819 7,806GROUPCOMPANY2000 1999 2000 1999$’000 $’000 $’000 $’000Profit on disposal of fixed assets 379 150 – –Exchange gain (loss), net 222 336 50 (6)Grants and subsidies received 666 55 – –Rental income 2,354 4,221 – –Others 8,323 1,122 190 10411,944 5,884 240 98GROUPCOMPANY2000 1999 2000 1999NOTE $’000 $’000 $’000 $’000Interest expense:Bank loans and overdrafts 3,385 3,692 – –Floating rate bonds and notes 301 269 – –Amortisation of discount on floating rate bonds 29 297 297 – –3,983 4,258 – –36. EXCEPTIONAL ITEMDuring the financial year, a subsidiary reduced its issuedand paid-up capital from $150,746,501 to$100,000,000 by cancelling 101,493,001 of the issuedand fully paid ordinary shares of $0.50 each in the capitalof the Company and the cancellation of the amountof $98,595,254 standing to the credit of the sharepremium account.The capital reduction has been confirmedby the High Court under a Court Order dated25 September 2000.The exceptional item relates to thedistribution of $103,612,251 arising from the abovementionedcapital reduction.166 • visionnotes to the financial statements • 167

37. TAXATION38. EXTRAORDINARY ITEMSTHE GROUPThe tax charge in respect of the profit of the Groupfor the financial year is higher than that determined byapplying the statutory tax rate to the profit beforetaxation due primarily to certain expenses not deductiblefor taxation purposes, income of foreign subsidiariesbeing taxed at higher rates and deferred taxbenefits not recognised.As at 31 December 2000, unutilised tax losses,unutilised investment allowances and unabsorbed wearand tear allowances of subsidiaries amounted toapproximately $101,737,000 (1999: $39,064,000)which are available for set-off against future taxableprofits subject to agreement with the Income TaxAuthorities and compliance with certain provisions ofGROUPCOMPANY2000 1999 2000 1999$’000 $’000 $’000 $’000Income tax on the profit for the year:Current tax 116,770 88,298 53,348 68,386Deferred tax (1,698) (511) – –Associated companies 8,160 5,076 – –Joint ventures 190 – – –123,422 92,863 53,348 68,386Under (over) provision in respect of prior year:Current tax (431) 1,153 – –Deferred tax (1,978) (129) – –121,013 93,887 53,348 68,386the tax legislation of the respective countries in whichthe subsidiaries operate.The potential tax benefit of approximately$142,199,000 (1999: $89,121,000) arising from suchunutilised tax losses, unabsorbed wear and tearallowances and other timing differences has not beenrecognised in the financial statements in accordance withthe Group’s accounting policy.THE COMPANYThe tax charge in respect of the profit of the Companyfor the financial year is lower than that determined byapplying the statutory tax rate to the profit beforetaxation due primarily to tax exempt dividends receivedfrom subsidiaries.39. DIVIDENDSGROUP2000 1999$’000 $’000Write-back of provision for potential loss on disposal of a subsidiary – 3,500Gain on voluntary liquidation of an associated company – 123Loss on redemption of preference shares of a subsidiary – (480)Provision for:Diminution in value of unquoted investments – (5,127)Loans receivable – (15,342)Expected losses from a subsidiary’s operation in China – (634)Doubtful debts on advances to an associated company written back – 288Gain on disposal of:Joint ventures – 1,378Associated companies – 8,089– (8,205)GROUPCOMPANY2000 1999 2000 1999$’000 $’000 $’000 $’000Additional final dividend paid in respect of the previousyear due to issue of shares under ST Engg ShareOption Scheme before books closure date 1,439 381 1,439 381Proposed final dividend of 2.5 cents (1999: 2.3 cents)per share less tax at 25.5% 53,188 48,315 53,188 48,315Proposed special dividend of 5.5 cents (1999: 7 cents)per share less tax at 25.5% 117,013 147,044 117,013 147,044Proposed special tax exempt dividend of 1.5 cents(1999: Nil cents) per share 42,836 – 42,836 –214,476 195,740 214,476 195,74040. EARNINGS PER SHAREBASIC EARNINGS PER SHAREThe calculations for basic earnings per share before extraordinary items and basic earnings per share after extraordinaryitems are based on:GROUP2000 1999$’000 $’000Consolidated profit after taxation and minority interests but before extraordinary items 288,138 200,529Consolidated profit after taxation, minority interests and extraordinary items 288,138 192,324168 • visionnotes to the financial statements • 169

GROUP2000 1999NUMBER OF SHARES (’000)The weighted average number of ordinary shares is arrived at as follows:Issued ordinary shares at beginning of the year 2,838,689 2,826,089Weighted average number of ordinary shares issued during the year 7,470 7,895Weighted average number of ordinary shares 2,846,159 2,833,984DILUTED EARNINGS PER SHAREWhen calculating diluted earnings per share, the weightedaverage number of shares is adjusted for the effect ofall dilutive potential ordinary shares.The number of unissuedshares under option granted under the ST EnggShare Option Scheme and their exercise prices are setout in the Directors’ Report.The average fair value ofone ordinary share during financial year 2000 was $2.43(1999: $1.96) per share.The weighted average numberof ordinary shares adjusted for the unissued shares underoption is as follows:GROUP2000 1999NUMBER OF SHARES (’000)Weighted average number of ordinary shares (used in the calculation ofbasic earnings per share) 2,846,159 2,833,984Weighted average number of unissued shares under option 98,111 64,180Number of shares that would have been issued at fair value (66,873) (38,247)Weighted average number of ordinary shares (diluted) 2,877,397 2,859,91741. RELATED PARTY TRANSACTIONSIn addition to related party information disclosed elsewherein the financial statements, the Group and theCompany have significant transactions with relatedparties on terms agreed between the parties as follows:GROUPCOMPANY2000 1999 2000 1999$’000 $’000 $’000 $’000INCOMESales and services rendered 6,616 18,978 – –Management fees received from subsidiaries – – 15,202 11,792Other income – 5,344 – –EXPENSESPurchases and services received 44,499 33,671 402 –Management and administrative fees paid 6,693 4,333 6,693 4,333Fixed assets purchases 122 5,622 – –42. CASH AND CASH EQUIVALENTS43. COMMITMENTS(A) CAPITAL COMMITMENTS(B) LEASESFuture minimum lease payments under non-cancellableoperating leases are as follows:GROUP2000 1999$’000 $’000Cash and cash equivalents comprise the following:Fixed deposits with financial institutions 697,118 830,240Cash and bank balances 122,175 71,183Short-term investments 461 3,465Amounts under fund management 545,468 546,242Floating rate notes 609,846 402,789Short-term loans to related corporation 643,063 253,867Bank overdrafts (unsecured) (1,489) –2,616,642 2,107,786GROUP2000 1999$’000 $’000Capital expenditure contracted but not provided for in the financial statements 35,679 5,709GROUP2000 1999$’000 $’000Within 1 year 15,685 11,552Within 2 to 5 years 42,745 37,287After 5 years 388,090 113,328446,520 162,167The Group has an operating lease agreement for leaseholdland and building.The lease for the leasehold landand building does not contain renewal options orpurchase options.The lease does not contain escalationclauses and does not provide for contingent rents.Lease terms do not contain restrictions on the Groupactivities concerning dividends, additional debt orfurther leasing.170 • visionnotes to the financial statements • 171

(C) INVESTMENTSAs at 31 December 2000, the Group has outstandingcommitments in respect of uncalled capital to the extentof $153,600 (1999: $153,600) in an associated company.As at 31 December 2000, in respect of investments inunquoted equity shares of venture capital fund companies,there is uncalled capital contribution amounting to$3.0 million (1999: $6.3 million) for the Group.As at 31 December 2000, in respect of investments inunquoted equity shares of an associated company, thereare project commitments amounting to $6.0 million(1999: $6.3 million) for the Group.(D) FORWARD FOREIGN EXCHANGE CONTRACTSAs at 31 December 2000, the Group has outstandingforward foreign exchange contracts amounting toapproximately $114 million (1999: $54 million) forhedging against future purchase commitments denominatedmainly in Australian Dollars, United States Dollarsand British Sterling Pounds.44. CONTINGENT LIABILITIES (UNSECURED)(a) Guarantees given by the Company to third parties inrespect of the provision of goods and services to subsidiariesof $440,000 (1999: $481,000).(b) A joint venture agreement between SingaporeTechnologies Aerospace Ltd and four Indonesian partieswas entered into in 1994 for the establishment of P.T.Batam Aircraft Maintenance (“P.T. BAM”). As at the yearend, no investment cost has been made.As part of the agreement, P.T. BAM will enter into alease agreement with one of the joint venture parties.Furthermore, under this agreement, SingaporeTechnologies Aerospace Ltd will be liable to pay thelease rental fees in proportion to its respective shares inP.T. BAM (i.e. 25%) in the event of the insolvency ofP.T. BAM.The maximum potential liability arising from thisagreement amounts to approximately $5.4 million(1999: $5.4 million).45. SEGMENT INFORMATION(A) ANALYSIS BY BUSINESS SEGMENTSThe Group is organised on a worldwide basis into fourmain operating segments, namely:(a) Aerospace(b) Electronics(c) Land Systems(d) MarineOther operations include research and development,treasury, investment holding and provision ofmanagement, consultancy, warehousing and othersupport services.Inter-segment pricing is on an arm’s length basis.45. SEGMENT INFORMATION (cont’d)LANDAEROSPACE ELECTRONICS SYSTEMS MARINE OTHER ELIMINATIONS GROUP$’000 $’000 $’000 $’000 $’000 $’000 $’0002000TURNOVERExternal sales 956,320 411,781 526,510 358,433 5,983 2,259,027Inter-segment sales 2,810 11,752 1,731 679 236,737 (253,709) –TOTAL SALES 2,259,027Segment result 149,132 38,410 48,625 61,821 (3,837) (6,074) 288,077Investment income, net 11,389 – 1,851 1,618 235,256 (235,256) 14,858Interest income 23,417 8,408 28,369 2,421 8,253 (377) 70,491Operating profit 373,426Financial expenses (3,969) (7) (374) (10) – 377 (3,983)Exceptional item – – – – 103,612 (103,612) –Share of results ofassociatedcompanies and jointventures 39,022 (220) 6,179 (1,915) – 43,066Taxation (64,209) (16,293) (19,806) (20,105) (53,348) 52,748 (121,013)Minority interests (3,744) 282 104 – – (3,358)NET PROFIT 288,138Assets 645,349 298,792 746,569 110,999 8,693 1,810,402Associated companiesand joint ventures 61,142 147 82,333 9,853 – 153,475Unallocated assets 2,488,747TOTAL ASSETS 4,452,624Liabilities 760,555 494,622 1,432,654 341,433 25,592 631 3,055,487Unallocated liabilities 461,362TOTAL LIABILITIES 3,516,849Capital expenditure 37,196 6,446 8,392 4,009 601 56,644Depreciation andamortisation 36,751 5,329 21,707 12,142 214 76,143Other non-cashexpenses 2,583 1,968 (515) 4,446 – 8,482172 • visionnotes to the financial statements • 173

45. SEGMENT INFORMATION (cont’d)LANDAEROSPACE ELECTRONICS SYSTEMS MARINE OTHER ELIMINATIONS GROUP$’000 $’000 $’000 $’000 $’000 $’000 $’0001999TURNOVERExternal sales 856,872 354,534 297,022 255,979 – 1,764,407Inter-segment sales 1,071 7,457 166 – 272,153 (280,847) –TOTAL SALES 1,764,407Segment result 148,681 22,514 14,711 31,705 (4,764) 170 213,017Investment income, net (1,845) – – 13,357 272,153 (272,153) 11,512Interest income 19,613 5,687 12,037 2,576 7,157 (175) 46,895Operating profit 271,424Financial expenses, net (4,156) – (102) (175) – 175 (4,258)Share of results ofassociated companiesand joint ventures 27,544 – 6,446 (1,096) – 32,894Taxation (59,309) (12,916) (4,755) (15,189) (68,386) 66,668 (93,887)Minority interests (5,320) 15 (339) – – (5,644)Profit after taxation andminority interests butbefore extraordinaryitems 200,529Extraordinary items (8,205)NET PROFIT 192,324Assets 424,459 276,785 255,069 117,684 2,129 (5,227) 1,070,899Associated companiesand joint ventures 102,974 105 48,901 17,415 – 169,395Unallocated assets 2,166,558TOTAL ASSETS 3,406,852(B) ANALYSIS BY COUNTRY OF INCORPORATIONTurnover is based on the country of incorporationregardless of where the goods are produced. Assets andadditions to property, plant and equipment are based onthe location of those assets.TURNOVER ASSETS CAPITAL EXPENDITURE2000 1999 2000 1999 2000 1999$’000 $’000 $’000 $’000 $’000 $’000Asia 1,930,706 1,464,141 1,665,824 919,486 39,155 32,933United States of America 304,990 278,713 124,406 132,091 15,469 10,909Europe 23,331 21,553 16,634 16,704 1,792 4,888Others – – 3,538 2,618 228 2252,259,027 1,764,407 1,810,402 1,070,899 56,644 48,955(C) ANALYSIS BY GEOGRAPHICAL AREASTurnover is based on the location of customersregardless of where the goods are produced.TURNOVER2000 1999$’000 $’000Asia 1,697,215 1,249,320United States of America 406,675 399,830Europe 86,698 59,254Others 68,439 56,0032,259,027 1,764,40746. COMPARATIVE FIGURESThe comparative figures were audited by a firm ofcertified public accountants other than Arthur Andersen.Where necessary, the prior year financial statementshave been restated to conform with the current year’spresentation in accordance with the new presentationrequirements of Statement of Accounting Standard No. 1(Revised 1999), Presentation of Financial Statements,and Statement of Accounting Standard No. 23 (Revised1999), Segment Reporting.Liabilities 727,904 417,543 648,428 350,889 11,501 (4,492) 2,151,773Unallocated liabilities 389,450TOTAL LIABILITIES 2,541,223Capital expenditure 41,876 3,740 1,262 1,748 329 48,955Depreciation andamortisation 29,628 5,348 10,755 12,735 321 58,787Other non-cash expenses 2,407 3,486 1,665 (135) – 7,423174 • visionnotes to the financial statements • 175

SGX LISTING MANUAL REQUIREMENTS31 DECEMBER 2000(Currency - Singapore dollars)2. INTERESTED PERSONS TRANSACTIONSInterested persons transactions carried out during thefinancial year pursuant to the Shareholders’ Mandateobtained under Chapter 9A of the Listing Manual of theSingapore Exchange Securities Trading Limited by theGroup are as follows:1. DIRECTORS’ REMUNERATIONThe following information relates to remuneration ofdirectors of Singapore Technologies Engineering Ltd:NUMBER OF DIRECTORS IN REMUNERATION BANDS 2000 1999REMUNERATION BANDS$500,000 and above 1 1$250,000 to $499,999 – –Below $250,000 10 10TOTAL 11 11Summary compensation table for the year ended31 December 2000 (Group):DIRECTORS’FAIR VALUE OFSTOCK OPTIONSNAME OF DIRECTOR SALARY* ($) BONUS* ($) FEES ($) TOTAL ($) GRANTED^ ($)Ho Ching – – 60,000▲ 60,000 –Boon Swan Foo 879,639 1,213,486 – 2,093,125 569,000Tan Guong Ching – – 24,200◆† 24,200 –Ng Kee Choe – – 57,000▲ 57,000 –MG Lim Chuan Poh# – – 10,000◆† 10,000 –Peter Ho Hak Ean – – 10,000◆ 10,000 –Professor Lui Pao Chuen – – 13,750◆† 13,750 –Dr Philip Nalliah Pillai# – – 40,750† 40,750 –Philip Tan Yuen Fah – – 86,000† 86,000 –Winston Tan Tien Hin – – 112,000† 112,000 –Lucien Wong Yuen Kuai – – 49,000 49,000 –LG Bey Soo Khiang** – – 2,500◆ 2,500 –Loh Chuk Yam## – – 17,250▲† 17,250 –879,639 1,213,486 482,450 2,575,575 569,000* The salary and bonus amount shown is inclusive of allowances and CPF.^ Relates to options granted during the year by the Group. The fair value of stock options granted is estimated using the Black-Scholes Option Pricing model.# Appointed on 1 April 2000.▲ Fees are paid to Director’s employer company.◆ Fees for public sector Directors are paid to government agency.† Includes fees for directorship in subsidiary/ies.** Resigned on 1 April 2000.## Retired at AGM on 31 March 2000.TREASURY TRANSACTIONSPlacement of funds with a subsidiary of the immediateholding company, Singapore Technologies Pte Ltd, forperiods of between 1 week and 3 months comprisesamounts ranging from $0.3 million (1999: $0.5 million)to $90 million (1999: $50 million) per transaction.MANAGEMENT AND SUPPORT SERVICESPayment of ST Group Management and Support ServiceFee by the Group of $6,693,000 (1999: $4,332,620).3. REPORT ON CORPORATE GOVERNANCE ACTIVITIES ANDPROCESSESBOARD MEETINGS AND COMMITTEESThe Board of Directors of the Company held a total offive Board meetings during the financial year ended 31December 2000 comprising four regularly scheduledmeetings and a special meeting. These meetings wereheld to address business strategies and major operationalthrusts of the group, approve annual budgets, release ofthe quarterly and regular financial results, as well as considerand approve investment proposals.The incumbentDirectors attended at least 72% of the aggregate numberof meetings of the Board of Directors and meetings ofthe Committees of the Board on which they served.The focus on expanding markets in the US and Europeinvolved much of Mr Boon Swan Foo’s time overseasand this partly accounted for the lower percentage ofBoard Committee attendances compared to the previousyear. However all papers were reviewed andendorsed by Mr Boon as CEO before submission to therespective committees.The Board also approved a different reporting format forthe Group by business sectors following the US restructuringof its subsidiary corporations.GROUP2000 1999$’000 $’000GENERAL TRANSACTIONSSales of goods and services 3,212 4,616Purchases of goods and services 3,912 4,951The Company and its main subsidiaries continued intoits second year of prompt quarterly reporting of itsfinancial results.Board committees addressed several issues during 2000.The Audit Committee is chaired by Mr Ng Kee Choe andincludes Mr Philip Tan, Mr Lucien Wong and Dr PhilipPillai, all of whom are independent directors.TheCommittee held four meetings during the year.The ongoing practice of dovetailing our four main subsidiaries’Audit Committees’ roles into the main STEngg Audit Committee for transparency and good corporategovernance has served us well as issues raised ineach sector are given due focus and attention by independentdirectors.The Committee held four meetings during the year toreview the quarterly, half-yearly and year-end financialstatements and the Group Internal Audit Report includingcompliance of internal control procedures forInterested Party transactions under Chapter 9A of theSGX Listing Manual.The Committee was satisfied thatthere were no incidents of non-compliance.The Committee also recommended to the Board achange of auditors as part of best practice to rotate auditorsonce every few years.Following the first Audit Committee meeting for 2001,the Audit Committee met up with the external auditorsand internal auditors of the Company in the absence ofManagement.This meeting is convened once a year aspart of good corporate governance to provide an opportunityfor the internal and external auditors to raiseissues which they had encountered in the course of176 • visionadditional information • 177

their audit to the independent directors of theAudit Committee.The Committee was briefed by Arthur Andersen, thenew auditors for the Group on their roles andresponsibilities and the planned audit approach withspecial attention on risk areas and activities of theGroup.The Committee also addressed IT securityissues and improvements to IT security infrastructureand controls to constantly ensure a secure operatingenvironment.The Budget & Finance Committee held three meetingsduring the year.The Committee comprises Mr TanGuong Ching as Chairman, Mr Philip Tan, Mr LucienWong, all of whom are independent members and MrBoon Swan Foo.The Committee held three meetings during the year.During the year, the Committee reviewed and approvedthe Group’s contractual and legal policies checklist to aidcontract negotiators in addressing critical issues andcontaining major risk factors affecting the Group’sliabilities during contract negotiations.The checklist isbeing reviewed regularly.The Committee also reviewed unusual liability issuesin contract terms with major customers, factoringarrangement with subcontractors and factoring companies,risk management in new e-bidding car tradingsystem and counter-risk measures.The Committee further reviewed the Group’s forexposition. No major issue was brought to its attention.The Technology Committee is chaired by Mr Peter Hoand consists of Prof Lui Pao Chuen and Mr Boon SwanFoo.The Committee met three times during the year toreview technology development plans of the Groupfrom the development of identified technologies to thebuildup of capabilities for cross-learning and applicationin each of the sectors.The Research & Development Committee is chaired byProf Lui Pao Chuen and comprises Mr Winston Tan andMr Boon Swan Foo. It held three meetings during theyear.The Committee reviewed R&D initiatives for1999 and the Group’s R&D Plan for 2000 with theobjective of strengthening core competencies andsustaining core engineering expertise.The ST EnggInnovation Award to encourage research anddevelopment efforts and sharing continued into itssecond year.The Senior HR Committee is chaired by Ms Ho Chingand consists of Mr Boon Swan Foo, Mr Tan Guong Chingand Mr Peter Ho.The Committee met once during theyear to discuss proposed changes in senior appointmentsas well as training and development of senior staff andstaff with potential for senior positions in the Group.STATEMENT OF COMPLIANCEThe Board of Directors confirms that during the yearended 31 December 2000, the Company has compliedwith the ST Engg Corporate Governance Policy whichis modelled on the principles of the SGX BestPractices Guide.Activities involved the quarterly and half year review offinancial results in relation to the budget, e-businessinitiatives and five-year forecast of each sector as well asthe annual budget process.The Business Investment/Divestment Committeecomprises Mr Tan Guong Ching, Chairman andMr Winston Tan who are independent members, MrPeter Ho, MG Lim Chuan Poh and Mr Boon Swan Foo.Mrs Lim Hwee Hua, a director of ST Kinetics, is a cooptedmember.The Committee held one meeting duringthe year to review a strategic investment proposal by thesubsidiaries.The fact that the Committee had only onemeeting this year is by no means a reflection of lack ofinvestment opportunities. In March 2000, the Boardraised the approval limit for investments by the DeputyChairman & CEO to S$25m. Furthermore investment/acquisition opportunities under review are not raised tothe Committee at the preliminary stage.The Legal Committee, which met thrice during the year,comprises Mr Lucien Wong as Chairman, Mr Boon SwanFoo, Mr Philip Tan and Mr Winston Tan. Assoc Prof TanCheng Han, a Director of ST Aero, is a co-optedmember.The Legal Committee’s objective is to providelegal guidance and directions on all important legalmatters of the Group.The Risk Review Committee is chaired by MG LimChuan Poh and members consist of Mr Winston Tan, DrPhilip Pillai, Mr Chang See Hiang (co-opted member andBoard member of ST Marine) and Mr Boon Swan Foo.The Compensations Committee is chaired by Ms HoChing with Mr Ng Kee Choe and Mr Fock Siew Wah(co-opted) as independent members.The Committeemet twice during the year to assess the performance ofkey executives, determine the bonus award for 1999,review salaries and approve the incentives plan for keyexecutives for Year 2000. Mr Fock stepped down fromthe Committee at the end of the year.We are grateful tohim for his contribution and time.The ESOS Committee is chaired by Ms Ho Ching andconsists of Mr Ng Kee Choe and Mr Tan Guong Chingwho are independent members.The Committee mettwice during the year to decide on option grants.Following the approval in November 2000 of theST Engg Share Plans, the functions of both the ESOSCommittee and the Compensations Committee havebeen merged under the Executive Resource &Compensation Committee (ERCC).The ERCC comprises Ms Ho Ching as Chairman, MrNg Kee Choe and Mr Tan Guong Ching.The Tenders Committee comprises a rolling list of anythree Directors and the CEO.The Committee met twicelast year to discuss various issues relating to the US Bionixprogramme such as programme schedules, strategies, riskfactors, costing, funding, pricing, strategy, payment termsand projected financial impact.The Meetings were chairedby Mr Tan Guong Ching and attended by Mr LucienWong, Mr Winston Tan and Mr Boon Swan Foo.178 • visionadditional information • 179

BOARD COMPOSITION AND COMMITTEESSHAREHOLDINGS STATISTICSAS AT 8 FEBRUARY 2001Board MembersMs Ho ChingAudit CommitteeBusiness Investment/Divestment CommitteeExecutive Resource &Compensation CommitteeCBudget & Finance CommitteeResearch & DevelopmentCommitteeTechnology CommitteeSenior HR CommitteeCRisk Review CommitteeLegal CommitteeTenders Committee *Authorised Share Capital : $500,000,000.00Issued and Paid-Up Capital: $285,741,514.70Class of Shares : Ordinary Shares of $0.10 eachOne Special Share of $0.10 held by the Minister for Finance (Incorporated)Voting Rights: One vote per shareANALYSIS OF SHAREHOLDINGSRANGE OF SHAREHOLDINGS NO. OF SHAREHOLDERS % NO. OF SHARES %1 – 1,000 3,717 19.63 2,555,308 0.091,001 – 10,000 12,713 67.14 56,310,390 1.9710,001 – 1,000,000 2,482 13.11 93,042,576 3.261,000,001 And Above 22 0.12 2,705,506,873 94.6818,934 100.00 2,857,415,147 100.00Mr Boon Swan FooMr Ng Kee ChoeMr Tan Guong ChingMr Peter HoMG Lim Chuan PohProf Lui Pao ChuenDr Philip PillaiMr Philip TanMr Winston TanMr Lucien WongNon-Board MembersMrs Lim Hwee HuaMr Chang See HiangAssoc. Prof.Tan Cheng HanCMMMM M M M M M M MC M C MMMMCo-optedMemberDenotesC – ChairmanM – Member* Membership comprises a rolling list of any three Directors and the CEOMMMCMCMMCMMCo-optedMemberMMCCo-optedMemberCMMNO. OF SHARESSUBSTANTIAL SHAREHOLDERS DIRECT INTEREST DEEMED INTEREST TOTAL INTEREST %1 Temasek Holdings (Private) Limited – 1,619,473,137 1,619,473,137 56.682 Singapore Technologies Holdings Pte Ltd – 1,599,249,719 1,599,249,719 55.973 Singapore Technologies Pte Ltd 1,599,168,719 277,000 1,599,445,719 55.984 The Capital Group Companies, Inc. – 224,604,115 224,604,115 7.86MAJOR SHAREHOLDERS LIST – TOP 20NO. NAME NO. OF SHARES HELD %1 Singapore Technologies Pte Ltd 1,599,168,719 55.972 DBS Nominees Pte Ltd 370,546,700 12.973 Raffles Nominees Pte Ltd 339,253,187 11.874 HSBC (Singapore) Nominees Pte Ltd 116,100,586 4.065 CitiBank Nominees Singapore Pte Ltd 86,395,879 3.026 United Overseas Bank Nominees Pte Ltd 68,994,440 2.417 DB Nominees (S) Pte Ltd 52,819,814 1.858 Keppel Corporation Limited 15,000,000 0.539 Oversea Chinese Bank Nominees Pte Ltd 14,233,845 0.5010 Overseas Union Bank Nominees Pte Ltd 8,778,073 0.3111 Dexia Nominees (S) Pte Ltd 6,754,429 0.2412 RHB-Cathay Securities Pte Ltd 6,465,651 0.2313 ABN Amro Nominees Singapore Pte Ltd 3,996,570 0.1414 Ang Beng Siong @ Hendrik Atmaja 2,706,947 0.0915 J M Sassoon & Co (Pte) Ltd 2,568,528 0.0916 NTUC Income Insurance Co-Operative Limited 2,213,408 0.0817 Keppel Bank Nominees Pte Ltd 2,127,555 0.0718 Shanwood Development Pte Ltd 2,077,000 0.0719 G K Goh Stockbrokers Pte Ltd 1,533,413 0.0520 E.G. Tan Nominees Private Limited 1,420,624 0.052,703,155,368 94.60180 • visionshareholdings statistics • 181

SINGAPORE TECHNOLOGIES ENGINEERING SHARE PRICESAND TURNOVERREVIEW OF FINANCIAL PERFORMANCE – AEROSPACE SECTORTurnover(S$ million)80706050403020100JANFEB MAR APR MAY JUN JUL AUG SEP OCT NOV DECShare Prices(S$)3.02.52.01.51.00.50.01. FINANCIAL PERFORMANCE1.1 TURNOVERTurnover for 2000 increased 12% from $858 million to$959 million.The Commercial Business Group (CBG)registered higher turnover by $42 million due mainlyto increased capacities in both US and Singapore. STMobile Aerospace Engineering, Inc (MAE) added a SuperNose Dock in January 2000 while ST Aviation ServicesCo Pte Ltd (SASCO) commissioned its third wide-bodybay in Changi in February 2000. Military BusinessGroup (MBG) turnover was also higher by $59 milliondue to higher deliveries under maintenance contractsmainly in the component and engines division as wellas completion of project milestones.1.2 PROFITGross margin at 23.9% in 2000 was lower than the24.8% achieved in 1999 due mainly to sales mix andhigher provision for inventory. Other operating incomeincreased by $13.3 million due mainly to investmentincome of $4.4 million (as a result of fund maturity), again of $6.3 million (from the restructuring of UTSTAPte Ltd, formerly known as Turbine Overhaul ServicesPte Ltd) and higher interest income.The increase indistribution and selling expenses was a result of baddebts written off and higher exhibition costs (includingAsian Aerospace 2000) during the year. Higheradministration expenses for 2000 were due mainly toboth higher depreciation cost and higher staff and relatedcosts as a result of increase in salaries. Share of results ofassociated companies increased by 42% or $11.5 milliondue mainly to higher contribution from Turbine OverhaulServices Pte Ltd (TOS) and a $4.4 million contributionfrom the biennial Asian Aerospace 2000 exhibition. Profitbefore taxation at $219.0 million grew by 15% over1999.This translated to profit after taxation and minorityinterests of $151.0 million representing a growth of 21%or $25.8 million over 1999.The effective tax rate for2000 was 29.3%, whilst that for 1999 was 31.2%.Thiswas due to the lower proportion of the overseassubsidiaries’ profits (which are operating in a higher taxrate environment) and higher contributions from the taxincentivised TOS.1.3 CASH AND CASH EQUIVALENTSNet cash from operating activities for the year amountedto $179.4 million.The sector also paid dividends of$88.7 million and made a capital reduction of $149.3million during the year. At the end of the year, cash andcash equivalents amounted to $747.0 million.1.4 CAPITAL EXPENDITURETotal capital expenditure for the year amounted to $37.2million mainly for the purchase of plant and machinery,office equipment and the construction of added facilitiesin MAE and SASCO. $25.6 million was incurred fornew capabilities and the balance of the amount was spenton replacement of fixed assets.1.5 ECONOMIC VALUE ADDED (EVA)EVA for the full year 2000 was $110.1 million, anincrease of 19% or $17.5 million over 1999’s EVA.The weighted average cost of capital remained at 9.9%for both 1999 and 2000.2. REVIEW OF BUSINESS ACTIVITIES2.1 BUSINESS ENVIRONMENTAerospace sector continued to see increased demands forMRO services and engineering services from both thecommercial and military business groups in year 2000.In addition to the primary US and Asia sales, year 2000saw increased sales from both Europe and South Americaas a result of the Aerospace sector’s marketing efforts topenetrate these markets.The sector also continued toinvest in new maintenance capabilities and engineeringdevelopments to generate new services and products forthe future. Some, like the JT8D-200 and CFM56-3capabilities, have started to contribute revenue whilstthe B757 Passenger-to-Freighter (PTF) design will leadto conversions commencing February 2001.2.2 MAJOR PROJECTSThe first prototype of the B757 PTF conversionprogramme with Boeing is expected to be completedin January 2001. Production at MAE will commenceshortly thereafter. On the military side, the designdevelopment of the Turkish Air Force (TuAF) F5 upgradefleet is progressing well. MBG continues to manage thehelicopter and F16 Falcon One upgrade programmes.Hangar capacity will be increased in the first quarter of2001 with the addition of a two-bay B757-sized hangar inMobile, Alabama, and an extension to its military hangarin Singapore.The latter would free up space equivalentto a narrow-body bay for commercial aircraft work.182 • visionreview of financial performance • 183

2.3 MAJOR ACQUISITIONSThe sector invested a 65% shareholding in iShopAeroPte Ltd in July 2000.The partnership with iMerchantsseeks to establish internet trading of aircraft partsand components.In December 2000, the sector, in collaboration with SIAEngineering Company and Pratt & Whitney establishedTurbine Coating Services Pte Ltd (TCS).The principalactivities are the repair, refurbishment and upgrading ofaircraft jet engine turbine blades and vanes. Our share inTCS is 24.5%.AEROSPACE SECTOR PROFIT AND LOSS ACCOUNTS3. PROSPECTSThe B757 PTF production line in MAE will commenceoperations by first quarter 2001 as mentioned above.Following the successful DC-10 PTF aircraft conversionby SASCO, a second aircraft is expected to be inductedin February 2001.The first KC-135 tanker modificationwill commence in first quarter 2001.The design andprototyping phase of the TuAF F5 upgrade programmeis expected to be completed in 2001.AEROSPACE SECTOR BALANCE SHEETS2000 1999$’000 $’000SHARE CAPITAL AND RESERVES 381,397 464,610MINORITY INTERESTS 21,236 21,266402,633 485,876Represented by:FIXED ASSETS 175,247 175,097ASSOCIATED COMPANIES AND JOINT VENTURES 61,142 102,974LONG TERM INVESTMENTS 215,870 317,175LOANS RECEIVABLE, NON-CURRENT 2,331 3,6252000 1999$’000 $’000Turnover 959,130 857,943Cost of sales (729,641) (644,945)Gross profit 229,489 212,998Other operating income 37,343 24,078Distribution and selling expenses (14,329) (4,967)Administration expenses (57,785) (54,652)Other operating expenses (15,481) (14,544)Profit from operations 179,237 162,913Other income (expenses) 4,701 3,536Financial expenses (3,969) (4,156)Profit before taxation 179,969 162,293Share of results of associated companies and joint ventures 39,022 27,544218,991 189,837Taxation (64,209) (59,309)Profit after taxation 154,782 130,528Minority interests (3,744) (5,320)Profit after taxation and minority interests but before extraordinary items 151,038 125,208Extraordinary items – 3,143Net profit for the year 151,038 128,351CURRENT ASSETSStocks and work-in-progress 86,902 90,323Debtors, deposits and prepayments 195,364 165,966Short term loans to a related corporation 189,233 66,831Loans receivable, current 2,007 2,150Amounts under fund management 151,564 144,945Short term investments 24,745 –Bank and other liquid funds 219,535 275,012869,350 745,227CURRENT LIABILITIESCreditors and accruals 697,193 655,349Provisions 62,210 73,816Short term bank loans (unsecured) 5,004 5,509Provision for taxation 78,019 62,653Lease obligations, current 990 887Long term bank loan, current 6,950 6,694850,366 804,908Net current assets (liabilities) 18,984 (59,681)473,574 539,190NON-CURRENT LIABILITIESDeferred taxation 1,292 2,868Deferred rent 1,098 1,146Floating rate bonds (unsecured) 19,072 18,775Lease obligations, non-current 16,965 17,093Long term bank loan 6,950 13,388Loan from holding company 25,510 –Provision for staff retirement benefits 54 4470,941 53,314402,633 485,876184 • visionreview of financial performance • 185

AEROSPACE SECTOR VALUE ADDED STATEMENTSAEROSPACE SECTOR FINANCIAL HIGHLIGHTS2000 1999 1998$’000 $’000 $’000VALUE ADDED FROM:• Revenue earned 959,130 857,943 830,262• Less bought in materials and services (431,211) (363,997) (383,353)GROSS VALUE ADDED 527,919 493,946 446,909Income from investments and interest 34,806 17,768 37,934Extraordinary items – 3,143 512Exchange gain (loss) (388) (468) (674)Other non-operating income (expenses) 5,089 4,005 1,961Share of results of associated companies and joint ventures 39,022 27,544 25,870TOTAL VALUE ADDED 606,448 545,938 512,512DISTRIBUTION OF VALUE ADDED:To employees in wages, salaries and benefits 340,024 316,444 296,550To government income and other taxes 65,846 60,251 65,761To providers of capital on• Interest paid on borrowings 3,969 4,156 5,331• Dividends to shareholders 88,653 88,704 110,619498,492 469,555 478,261BALANCE RETAINED IN (APPLIED FROM) BUSINESS:Depreciation 36,751 29,628 27,567Retained profits 31,711 24,524 (31,589)68,462 54,152 (4,022)NON-PRODUCTION COST AND INCOME:Bad debts 5,076 1,788 501Income from investments and interest 34,806 17,768 37,934Extraordinary items – 3,143 512Exchange gain (loss) (388) (468) (674)39,494 22,231 38,2731996 1997 1998 1999 2000$’000 $’000 $’000 $’000 $’000Turnover 523,389 674,204 830,262 857,943 959,130Profit before tax 56,402 113,920 170,468 189,837 218,991Profit after tax (before extraordinary items) 27,838 62,050 102,813 125,208 151,038Shareholders’ funds 377,812 431,316 423,461 464,610 381,397Total assets 1,005,961 1,171,129 1,186,549 1,344,098 1,323,940Net tangible assets 377,516 430,986 423,461 464,610 381,397Return on turnover (%) 5.6 9.8 12.8 15.2 16.1Earnings per share (¢) 9.28 20.58 34.10 41.53 54.70Return on equity (%) 7.4 14.4 24.3 27.0 39.6Return on total assets (%) 2.8 5.3 8.7 9.3 11.4Net tangible assets per share (¢) 125.83 142.95 140.45 154.10 138.13PRODUCTIVITY DATAAverage staff strength 3,365 3,579 3,973 4,254 4,332Employment costs ($’000) 199,540 257,283 296,550 316,444 340,373Sales per employee ($) 155,539 188,378 208,976 201,679 221,406Profit after tax per employee ($) 8,273 17,337 25,878 29,433 34,866Economic value added ($’000) (22,737) 12,895 61,595 92,567 110,108Economic value added spread (%) (4.1) 2.2 9.9 14.2 16.2Economic value added per employee ($) (6,757) 3,603 15,503 21,760 25,417Value added ($’000) 285,821 416,078 512,512 545,938 606,448Value added per employee ($) 84,939 116,255 128,999 128,335 139,993Value added per $ of employment costs 1.43 1.62 1.73 1.73 1.78TOTAL DISTRIBUTION 606,448 545,938 512,512186 • visionreview of financial performance • 187

REVIEW OF FINANCIAL PERFORMANCE – ELECTRONICS SECTOR1. FINANCIAL PERFORMANCE1.1 TURNOVERTurnover for 2000 increased by 17% or $62 million to$424 million.The larger sales recognition in Large-ScaleSystems Group was due to milestone completion of theLand Transport Authority’s (LTA) Expressway Monitoring& Advisory System (EMAS) Phase II Project and MRTprojects for the North-East line. Communication &Sensor Systems Group’s sales came mainly from thesupply of communications equipment and milestonecompletion in the Ministry of Home Affair’s (MHA)communication project. In Software Systems Group,major sales were recognised from milestone completionof the MHA’s command and control project and a shipconsole project.1.2 PROFITThe sector’s profit after tax increased by 100% or $15.3million to $30.6 million. For the whole year, all threebusiness groups had performed well due to higher sales,higher interest income and better overall operationalefficiency. In Software Systems Group, the profit washigher partly due to provisions made in respect of aproject in 4Q1999.1.3 CASH AND CASH EQUIVALENTSNet cash from operating activities for the year amountedto $97.3 million. $19.0 million was paid out during theyear as net dividends to the parent company.1.4 CAPITAL EXPENDITURETotal capital expenditure amounted to $6.4 millionmainly incurred for the purchase of computers andoffice equipment of $5.3m. $0.96m was incurred forupgrading and replacing plants & machineries, testingequipment and tools.1.5 ECONOMIC VALUE ADDED (EVA)EVA for the full year 2000 was $23.0 million, an increaseof $10.4 million over 1999.The weighted average cost ofcapital was 9.9% for both 1999 & 2000.2. REVIEW OF BUSINESS ACTIVITIES2.1 BUSINESS ENVIRONMENTIn year 2000, the region continued in its recoveryfrom the effects of the 1997 Asian economic crisis. Newprospects unfolded and the sector was able to secure neworders from China, Hong Kong,Taiwan and Thailand.Wealso saw a gradual recovery in demand for the VSATproducts in Indonesia and other markets.Locally, our government continued to invest ininfrastructure.This has led to the sector securing anumber of new projects from the LTA, in addition tothose from the Ministry of Defence (MINDEF).2.2 MAJOR PROJECTSMajor projects executed in 2000 included the EMASPhase II Project; MRT projects for the North-East Line;Communications, Command & Control Systems for theMHA; and various defence electronic and communicationprojects for MINDEF.Major new orders secured included those from the LTA,a $87 million contract for the Marina Line, a $13 millioncontract for a Visual Passenger Information System anda $6 million contract to install the Junction-Eye Systemfor up to 100 traffic junctions with potential forextension to other major traffic junctions in the future;an Integrated Traffic Control Management System inSuzhou, China; Simulator projects for MINDEF andRoyal Thai Air Force; and various defence electronicand communication projects. Other significant orderswere those from Hughes Network and Comsat Lab forVSAT products.2.3 MAJOR ACQUISITIONThe sector acquired the following companies:(a) 19.8% stake in Metron CommunicationsCorporation, a US company specialising in developingGPRS chipset;(b) 12.5% stake in Redsonic, Inc., a US companyspecialising in real-time operating system based onLinux.3. PROSPECTSIn 2001, we expect to see completion of moremilestones for MHA’s communications and command& control projects, LTA’s LED Traffic Lights and MRTprojects.The sector will also begin to realise sales fromthe new orders recently secured. Overall, we expect toELECTRONICS SECTOR PROFIT AND LOSS ACCOUNTScontinue to improve our performance riding on a strongorder book.The momentum of growth will be fueled byresearch & development, international marketing andstrategic investments.Wireless Broadband applicationsand eBusiness related activities will provide exciting newbusiness opportunities.2000 1999$’000 $’000Turnover 423,533 361,991Cost of sales (326,591) (294,475)Gross profit 96,942 67,516Other operating income 8,394 5,719Distribution and selling expenses (12,983) (9,372)Administration expenses (32,305) (25,859)Other operating expenses (15,986) (12,219)Profit from operations 44,062 25,785Other income (expenses) 2,756 2,416Financial expenses (7) –Profit before taxation 46,811 28,201Share of results of associated companies and joint ventures (220) –46,591 28,201Taxation (16,293) (12,916)Profit after taxation 30,298 15,285Minority interests 282 15Profit after taxation and minority interests but before extraordinary items 30,580 15,300Extraordinary items – (2,093)Net profit for the year 30,580 13,207188 • visionreview of financial performance • 189

ELECTRONICS SECTOR BALANCE SHEETSELECTRONICS SECTOR VALUE ADDED STATEMENTS2000 1999$’000 $’000SHARE CAPITAL AND RESERVES 78,746 67,322MINORITY INTERESTS 5 33578,751 67,657Represented by:FIXED ASSETS 23,381 23,732ASSOCIATED COMPANIES AND JOINT VENTURES 147 105LONG TERM INVESTMENTS 39,639 35,379MEMBERSHIP RIGHTS 100 115LOANS RECEIVABLE, NON-CURRENT 220 8512000 1999 1998$’000 $’000 $’000VALUE ADDED FROM:• Revenue earned 423,533 361,991 337,670• Less bought in materials and services (247,801) (230,819) (216,744)GROSS VALUE ADDED 175,732 131,172 120,926Income from investments and interest 8,409 5,687 7,619Extraordinary items – (2,093) –Exchange gain (loss) 782 997 (321)Other non-operating income (expenses) 1,974 1,451 1,630Share of results of associated companies and joint ventures (220) – (766)TOTAL VALUE ADDED 186,677 137,214 129,088CURRENT ASSETSStocks and work-in-progress 135,748 100,600Debtors, deposits and prepayments 273,473 192,256Loans receivable, current 707 743Bank and other liquid funds 119,469 143,343529,397 436,942CURRENT LIABILITIESCreditors and accruals 390,874 337,540Provisions for warranty 44,038 34,914Progress billings in excess of work-in-progress 59,185 41,176Provision for taxation 19,130 14,972513,227 428,602Net current assets (liabilities) 16,170 8,34079,657 68,522NON-CURRENT LIABILITIESDeferred income 256 221Deferred taxation 381 381Provision for staff retirement benefits 269 26378,751 67,657DISTRIBUTION OF VALUE ADDED:To employees in wages, salaries and benefits 134,482 107,121 91,929To government income and other taxes 16,632 13,151 7,341To providers of capital on• Interest paid on borrowings 7 – –• Dividends to shareholders 19,040 16,906 10,105170,161 137,178 109,375BALANCE RETAINED IN (APPLIED FROM) BUSINESS:Depreciation 5,329 5,348 6,969Retained profits 2,067 (8,305) 2,5537,396 (2,957) 9,522NON-PRODUCTION COST AND INCOME:Bad debts (71) (1,598) 2,893Income from investments and interest 8,409 5,687 7,619Extraordinary items – (2,093) –Exchange gain (loss) 782 997 (321)9,120 2,993 10,191TOTAL DISTRIBUTION 186,677 137,214 129,088190 • visionreview of financial performance • 191

ELECTRONICS SECTOR FINANCIAL HIGHLIGHTSREVIEW OF FINANCIAL PERFORMANCE – LAND SYSTEMS SECTOR1996 1997 1998 1999 2000$’000 $’000 $’000 $’000 $’000Turnover 152,117 311,504 337,670 361,991 423,533Profit before tax 10,415 19,643 16,159 28,201 46,591Profit after tax (before extraordinary items) 7,283 11,328 9,188 15,300 30,580Shareholders’ funds 54,343 71,965 71,013 67,322 78,746Total assets 131,897 350,192 407,154 497,124 592,884Net tangible assets 53,765 71,644 71,013 67,322 78,746Return on turnover (%) 4.8 3.6 2.7 4.2 7.2Earnings per share (¢) 12.14 10.78 8.75 14.57 29.11Return on equity (%) 13.4 15.7 12.9 22.7 38.8Return on total assets (%) 5.5 3.2 2.3 3.1 5.2Net tangible assets per share (¢) 89.61 68.20 67.60 64.09 74.96PRODUCTIVITY DATAAverage staff strength 888 1,527 1,638 1,796 2,030Employment costs ($’000) 42,600 80,468 91,929 107,121 134,135Sales per employee ($) 171,303 203,997 206,148 201,554 208,637Profit after tax per employee ($) 8,202 7,418 5,609 8,519 15,064Economic value added ($’000) 412 3,722 6,073 12,599 22,957Economic value added spread (%) 0.6 3.7 5.7 11.2 18.8Economic value added per employee ($) 464 2,437 3,708 7,015 11,309Value added ($’000) 60,447 121,239 129,088 137,214 186,677Value added per employee ($) 68,071 79,397 78,808 76,400 91,959Value added per $ of employment costs 1.42 1.51 1.40 1.28 1.391. FINANCIAL PERFORMANCE1.1 TURNOVERTurnover increased by 78% or $231 million comparedto the corresponding period in 1999, of which FoundersIndustries Pte Ltd (FIPL) accounted for $200 million.The inclusion of the munitions and weapon sales of FIPL,increased revenue from STAR accident repairs andOrdnance after-sales services contributed to the higherturnover for the Manufacturing, Upgrading & Repairsbusiness group. Higher sales from Opel and electricvehicle businesses, as well as the inclusion of sales fromtrading activities of FIPL, accounted for the increase inturnover of the Engineering Services & Trading businessgroup. Sales of FIPL from its test services businessaccounted for the increase in turnover of the Inspection,Test Services & Others business group.1.2 PROFITProfit after tax (before extraordinary items) increasedby 132% or $36.9 million to $64.9 million over thesame period last year, of which FIPL accounted for$24.4 million.The bulk of the increase came from theManufacturing, Upgrading & Repairs business group.This was the result of higher sales with the inclusion ofFIPL, better margins and productivity gains, as well ashigher interest and other income. Higher sales from Opeland electric vehicle businesses and the inclusion of thetrading profit from FIPL, contributed positively to theEngineering Services & Trading business group.Theincrease in profit for the Inspection,Test Services &Others business group was mainly contributed by the testservices business from FIPL. Increases in Distributionand Selling expenses, Administration expenses and OtherOperating expenses were due mainly to the inclusion ofFIPL.1.5 ECONOMIC VALUE ADDED (EVA)EVA for the full year 2000 was $41.8 million, an increaseof $13.2 million over 1999.The weighted average cost ofcapital was 9.9% for 2000 and 1999.2. REVIEW OF BUSINESS ACTIVITIES2.1 BUSINESS ENVIRONMENTThe acquisition of FIPL added to the strong growth ofthe existing automotive business. As a fully integratedland systems group, the sector now has a much widerportfolio of products and services to meet the changingneeds of our customers.While we continue to be strongin our traditional markets, we have stepped up ourinternational marketing activities especially in Africa,the Middle East and Europe.We also started to marketaggressively into America with our bid for the US Army’sInterim Armoured Vehicle (IAV) program.To furtherenhance our capabilities in the military business, wecontinued to invest in collaborative partnerships as wellas companies with dual-purpose technologies. Beyondthe acquisition of FIPL and organic growth, we have tograsp the implications of the rapid consolidation in recentyears of the western land systems industry.The last fewyears have seen many European companies eithermerging among themselves or acquired by theirAmerican counterparts.This trend will continue and it isinevitable that we shall have to find ways to participate inthis global change that is sweeping the industry. STARaccident repairs achieved higher revenue as a result of thesuccessful launch of new satellite centres and newinitiatives for services that provide us a competitiveadvantage. Estimated market share for the accidentrepairs business increased from 7% to 10%. Opel sawa surge in volume sales and market presence for Opelincreased from 1% in 1999 to 2% in year 2000.1.3 CASHNet cash from operating activities for the year amountedto $177.8 million.1.4 CAPITAL EXPENDITURETotal capital expenditure amounted to $8.4 millionmainly for the purchase of plant and machinery andcomputer equipment for project use.2.2 MAJOR PROJECTSMajor deliveries in 2000 were Bionix IFVs, FLYER lightstrike vehicles, SAR 21 assault rifles and the 40mmfamily of launchers and munitions.We also launchedvarious new products such as the ATTC, SAR21 variants,FLYER and new Bionix variants (AVLB and RCV).Although another Bionix variant, the ICV, was notselected for the US Army’s IAV program, we gained192 • visionreview of financial performance • 193

international recognition as a major land systems playerby being one of the 4 final contenders in the program.A number of other developmental projects, such as the40mm Air-Bursting Munitions, were started.2.3 MAJOR ACQUISITIONSThe sector acquired Founders Industries Pte Ltd(formerly known as Chartered Industries of Singapore(Pte.) Limited), full-year 2000 results of which arecombined in the sector’s results for the year, and alsoincreased its equity investment in Solectria Corporation,making it a 44.1%-owned associated company.Thesector made new investments in the Silvatech group ofcompanies and the Flyer Group and increased its stake inits subsidiary company Shanghai Elite Electric Vehicles Co.,Ltd from 80% to 100%.LAND SYSTEMS SECTOR PROFIT AND LOSS ACCOUNTS3. PROSPECTSProfit is expected to be higher in 2001 in tandem withexpected higher turnover.The Manufacturing, Upgrading& Repairs business group will continue to deliverexisting projects such as Bionix IFVs and SAR 21 assaultrifle.We will also commence delivering new programsin the automotive, munitions and weapons businesses.STAR accident repairs business will continue to expandwith another new workshop repair facility to cater tohigher intake of accident vehicles from the satellite centresand mobile reporting services. In the EngineeringServices and Trading business group, the Opel businesswill continue to grow with the introduction of newermodels and higher COE allocation. Inspection businesshas plans to open another inspection centre at a strategiclocation and will continue to provide satisfactory earningsin an otherwise mature market.2000 1999$’000 $’000Turnover 528,241 297,188Cost of sales (367,091) (218,089)Gross profit 161,150 79,099Other operating income 31,016 12,486Distribution and selling expenses (23,709) (18,432)Administration expenses (70,115) (40,005)Other operating expenses (22,551) (6,560)Profit from operations 75,791 26,588Other income (expenses) 3,054 161Financial expenses (374) (102)Profit before taxation 78,471 26,647Share of results of associated companies and joint ventures 6,179 6,44684,650 33,093Taxation (19,806) (4,755)Profit after taxation 64,844 28,338Minority interests 104 (339)Profit after taxation and minority interests but before extraordinary items 64,948 27,999Extraordinary items – (9,255)Net profit for the year 64,948 18,744LAND SYSTEMS SECTOR BALANCE SHEETS2000 1999$’000 $’000SHARE CAPITAL AND RESERVES 95,075 86,069MINORITY INTERESTS 2,254 3,54397,329 89,612Represented by:FIXED ASSETS 88,990 47,764SUBSIDIARIES – –ASSOCIATED COMPANIES AND JOINT VENTURES 82,333 48,901LONG TERM INVESTMENTS 160,619 –LOANS RECEIVABLE, NON-CURRENT 5,663 9,335CURRENT ASSETSStocks and work-in-progress 269,945 144,262Debtors, deposits and prepayments 571,391 107,715Loans receivable, current 3,321 5,102Amounts under fund management 85,469 96,082Bank and other liquid funds 315,635 287,0081,245,761 640,169CURRENT LIABILITIESCreditors and accruals 1,288,959 606,965Provisions 136,988 40,051Provision for taxation 42,696 5,508Short term bank loans 2,500 2,500Bank overdrafts (unsecured) 1,294 –1,472,437 655,024Net current assets (liabilities) (226,676) (14,855)110,929 91,145NON-CURRENT LIABILITIESLong term loan from minority shareholder 194 –Deferred income 6,707 1,411Deferred taxation 6,699 12297,329 89,612194 • visionreview of financial performance • 195

LAND SYSTEMS SECTOR VALUE ADDED STATEMENTSLAND SYSTEMS SECTOR FINANCIAL HIGHLIGHTS2000 1999 1998$’000 $’000 $’000VALUE ADDED FROM:• Revenue earned 528,241 297,188 299,116• Less bought in materials and services (331,921) (207,549) (235,080)GROSS VALUE ADDED 196,320 89,639 64,036Income from investments and interest 30,220 11,678 18,929Extraordinary items – (9,255) (3,310)Exchange gain (loss) (201) (177) (116)Other non-operating income (expenses) 3,255 243 1,369Share of results of associated companies and joint ventures 6,179 6,446 5,076TOTAL VALUE ADDED 235,773 98,574 85,984DISTRIBUTION OF VALUE ADDED:To employees in wages, salaries and benefits 128,354 57,355 53,838To government income and other taxes 21,333 4,881 4,769To providers of capital on• Interest paid on borrowings 374 102 209• Dividends to shareholders 32,000 8,007 11,989182,061 70,345 70,805BALANCE RETAINED IN (APPLIED FROM) BUSINESS:Depreciation 21,707 10,755 12,520Retained profits 2,825 8,829 (13,300)24,532 19,584 (780)NON-PRODUCTION COST AND INCOME:Bad debts (839) 6,399 456Income from investments and interest 30,220 11,678 18,929Extraordinary items – (9,255) (3,310)Exchange gain (loss) (201) (177) (116)29,180 8,645 15,9591996 1997 1998 1999 2000$’000 $’000 $’000 $’000 $’000Turnover 221,465 247,797 299,116 297,188 528,241Profit before tax 22,861 15,358 16,628 33,092 84,650Profit after tax (before extraordinary items) 17,312 9,381 12,228 27,998 64,948Shareholders’ funds 91,766 79,037 75,624 86,069 95,075Total assets 679,315 720,062 782,414 746,168 1,583,366Net tangible assets 91,766 79,037 75,624 86,069 95,075Return on turnover (%) 7.9 3.2 4.1 9.5 12.3Earnings per share (¢) 14.42 7.80 10.16 23.22 53.87Return on equity (%) 18.9 11.9 16.2 32.5 68.3Return on total assets (%) 2.5 1.3 1.6 3.8 4.1Net tangible assets per share (¢) 76.42 65.56 62.73 71.39 78.9PRODUCTIVITY DATAAverage staff strength 843 920 974 983 2,679Employment costs ($’000) 42,859 42,325 53,838 57,355 128,372Sales per employee ($) 262,711 269,345 307,101 302,328 197,178Profit after tax per employee ($) 20,536 10,197 12,554 28,482 24,243Economic value added ($’000) 8,779 (3,450) 4,113 28,610 41,755Economic value added spread (%) 8.6 (2.7) 3.1 21.7 17.6Economic value added per employee ($) 10,414 (3,750) 4,223 29,105 15,586Value added ($’000) 75,655 63,778 85,984 98,574 235,773Value added per employee ($) 89,745 69,324 88,279 100,279 88,008Value added per $ of employment costs 1.77 1.51 1.59 1.72 1.84Note: 1996-1999 figures for Land Systems sector exclude Founders Industries Pte Ltd (formerly known as Chartered Industries of Singapore (Pte.) Limited)TOTAL DISTRIBUTION 235,773 98,574 85,984196 • visionreview of financial performance • 197

REVIEW OF FINANCIAL PERFORMANCE – MARINE SECTOR3. PROSPECTSWith the delivery of only one LST in 2001, bothShipbuilding turnover and its operating profit areexpected to be lower. Shiprepair activities especiallyconversion work is expected to increase. Some maturitiesof funds under management will contribute to thefull year results. Overall, the performance of the sectoris expected to be marginally below 2000.1. FINANCIAL PERFORMANCE1.1 TURNOVERThe sector’s turnover of $359 million in 2000 was40% or $103 million higher than that achieved in 1999.Shipbuilding turnover increased by 66% or $99 milliondue primarily to deliveries of two Landing Ship Tanks(LST) in 2000 compared to only one LST in 1999.For the same period, Shiprepair turnover recorded anincrease of 6% or $5 million due to completion of moreconversion and major repair projects. Engineeringturnover of $18 million was marginally lower by 4%or $1 million in 2000 due to completion of fewerblastdoor projects.1.2 PROFITGross profit for 2000 was $75.3 million, 29% or $16.7million higher than that achieved in 1999 due mainly tohigher Shipbuilding turnover.The sector experiencedlower distribution and selling expenses due to write-backof provision for doubtful debts no longer required, andlower other operating expenses.This was largely offsetby lower other operating income which decreased by$8.2 million due to lower investment income as a resultof fewer funds matured and an increase in provision fordiminution for a long term investment.The above together with share of higher losses fromassociated companies, higher tax expense (by $4.9million in 2000 compared to 1999) resulted in thesector’s net profit for the year of $43.8 million being41% or $12.7 million higher than 1999.1.3 CASH AND CASH EQUIVALENTSCash and cash equivalents as at 31 December 2000 was$351.2 million, an increase of $9.8 million from $341.4million at the beginning of the year.The increase wasattributable to higher cash flow generated from operatingactivities.1.4 CAPITAL EXPENDITURETotal capital expenditure incurred was $4.0 million,mainly for the conversion of the temporary occupationlicence for two floating docks’ seabed to a 26 yearspermanent lease, and purchase of plant and machinery.1.5 ECONOMIC VALUE ADDED (EVA)EVA for full year 2000 was $38.7 million, an increase of$16.1 million or 71% over 1999.The weighted averagecost of capital was 9.9% for 2000 and 1999.2. REVIEW OF BUSINESS ACTIVITIES2.1 BUSINESS ENVIRONMENTThough charter rates for containerships, oil tankers andoffshore support vessels/anchor handling tugs declinedmarginally since 3Q1999, the charter rates remainedstrong.The freight rates have risen in tandem with thehigher oil price and are considered relatively healthy byindustry players, especially when compared to those in1999.We expect to see a gradual increase in the ordersfor new offshore support vessels/anchor handling tugs.With oil price continuing to stay high, oil producingcountries are expected to have surplus funds to replacetheir ageing defence hardware; we anticipate a gradualincrease in the replacement of ageing missile strike craftbuilt in the 1960s and 1970s.Strong demand for containerships, oil tankers andoffshore support vessels/anchor handling tugs isexpected to continue through 2001.This will fuelhigher demand for shiprepair. In addition, shipbuildingprices are expected to firm and delivery times areexpected to stretch longer as shipbuilders register highbacklog of new orders.We expect to see someshipowners turning to conversion in order to meet theincreasing demand.2.2 MAJOR PROJECTSDuring the year, the Marine sector secured a contractfrom DCN International (DCN) of France to build fivestealth frigates for the Republic of Singapore Navy(RSN). DCN will design and construct the first ship.The second and third LSTs were delivered during theyear. In 1Q2001, we expect to deliver the last of theseries of four LSTs and commence construction of thethree platform supply vessels for Tidewater Inc.2.3 MAJOR ACQUISITIONThere was no major acquisition during the year.MARINE SECTOR PROFIT AND LOSS ACCOUNTS2000 1999$’000 $’000Turnover 359,112 255,979Cost of sales (283,768) (197,378)Gross profit 75,344 58,601Other operating income 8,145 16,389Distribution and selling expenses, net 2,657 (5,220)Administration expenses (19,336) (18,454)Other operating expenses (2,305) (5,562)Profit from operations 64,505 45,754Other income (expenses) 1,355 1,884Financial expenses (10) (175)Profit before taxation 65,850 47,463Share of results of associated companies and joint ventures (1,915) (1,096)63,935 46,367Taxation (20,105) (15,189)Net profit for the year 43,830 31,178198 • visionreview of financial performance • 199

MARINE SECTOR BALANCE SHEETSMARINE SECTOR VALUE ADDED STATEMENTS2000 1999$’000 $’000SHARE CAPITAL AND RESERVES 93,174 104,312Represented by:FIXED ASSETS 60,845 68,978ASSOCIATED COMPANIES AND JOINT VENTURES 9,853 17,416LONG TERM INVESTMENTS 18,034 10,532LOANS RECEIVABLE, NON-CURRENT 396 840CURRENT ASSETSStocks and work-in-progress 247 2,817Debtors, deposits and prepayments 63,851 48,635Loans receivable, current 211 303Short term investments 461 3,465Amounts under fund management 308,435 305,215Bank and other liquid funds 16,872 34,406390,077 394,841CURRENT LIABILITIESCreditors and accruals 311,176 317,215Provisions 32,544 37,292Progress billings in excess of work-in-progress 2,680 –Provision for taxation 39,631 33,788386,031 388,295Net current assets 4,046 6,54693,174 104,3122000 1999 1998$’000 $’000 $’000VALUE ADDED FROM:• Revenue earned 359,112 255,979 197,567• Less bought in materials and services (246,900) (165,635) (111,782)GROSS VALUE ADDED 112,212 90,344 85,785Income from investments and interest 4,039 15,933 27,674Exchange gain (loss) (29) (10) 31Other non-operating income (expenses) 1,384 1,894 1,178Share of results of associated companies and joint ventures (1,915) (1,096) (2,035)TOTAL VALUE ADDED 115,691 107,065 112,633DISTRIBUTION OF VALUE ADDED:To employees in wages, salaries and benefits 42,916 43,830 48,041To government income and other taxes 21,029 15,664 15,447To providers of capital on• Interest paid on borrowings 10 175 –• Dividends to shareholders 54,968 91,869 79,959118,923 151,538 143,447BALANCE RETAINED IN (APPLIED FROM) BUSINESS:Depreciation 12,142 12,735 15,322Retained profits (15,148) (76,614) (75,798)(3,006) (63,879) (60,476)NON-PRODUCTION COST AND INCOME:Bad debts (4,236) 3,483 1,957Income from investments and interest 4,039 15,933 27,674Exchange gain (loss) (29) (10) 31(226) 19,406 29,662TOTAL DISTRIBUTION 115,691 107,065 112,633200 • visionreview of financial performance • 201

MARINE SECTOR FINANCIAL HIGHLIGHTS1996 1997 1998 1999 2000$’000 $’000 $’000 $’000 $’000Turnover 349,962 243,204 197,567 255,979 359,112Profit before tax 58,375 53,950 44,831 46,367 63,935Profit after tax (before extraordinary items) 43,268 38,521 30,138 31,178 43,830Shareholders’ funds 205,240 214,824 165,003 104,312 93,174Total assets 817,599 728,087 634,802 492,607 479,205Net tangible assets 205,240 214,824 165,003 104,312 93,174Return on turnover (%) 12.4 15.8 15.3 12.2 12.2Earnings per share (¢) 22.20 19.71 15.41 15.94 22.41Return on equity (%) 21.1 17.9 18.3 29.9 47.0Return on total assets (%) 5.3 5.3 4.7 6.3 9.1Net tangible assets per share (¢) 105.00 109.85 84.37 53.34 47.64PRODUCTIVITY DATAAverage staff strength 1,222 1,224 1,195 1,073 951Employment costs ($’000) 43,202 53,348 48,041 43,830 43,077Sales per employee ($) 286,385 198,696 165,328 238,564 377,615Profit after tax per employee ($) 35,408 31,471 25,220 29,057 46,088Economic value added ($’000) 22,923 13,447 11,245 22,597 38,747Economic value added spread (%) 10.3 5.2 4.1 13.0 25.0Economic value added per employee ($) 18,759 10,986 9,410 21,060 40,743Value added ($’000) 115,991 122,787 112,633 107,065 115,691Value added per employee ($) 94,919 100,316 94,254 99,781 121,652Value added per $ of employment costs 2.68 2.30 2.34 2.44 2.69SINGAPORE TECHNOLOGIES ENGINEERING LTD –SUBSIDIARIES AND ASSOCIATED COMPANIESSingapore Technologies Aerospace Ltd (100%)Singapore Technologies Electronics Limited (100%)Singapore Technologies Kinetics Ltd (100%)Singapore Technologies Marine Ltd (100%)Singapore Technologies DynamicsPte Ltd (100%)ST Synthesis Pte Ltd (100%)Vision Technologies Systems, Inc. (100%) +• Vision Technologies AerospaceIncorporated (100%) @• Singapore Technologies Engineering(USA) Inc. (100%)• SA Supplies (USA) Inc. (100%)• Vision Technologies Marine, Inc.(100%)• VT Systems, Inc. (100%)Vision Technologies Kinetics, Inc. (100%)• ST Mobile Aerospace Engineering, Inc. (100%)• DalFort Aerospace GP, Inc. (100%)• DalFort Aerospace, L.P. (99%) *@Formerly known as Vision International Incorporated+ Formerly known as Singapore Aerospace (USA) Incorporated* Balance 1% held by DalFort Aerospace GP, Inc.Non Bold Indicates subsidiaries (both directly & indirectly held)Italics Indicates Associated Companies or Others202 • visionsubsidiaries and associated companies • 203

SINGAPORE TECHNOLOGIES AEROSPACE LTD –SUBSIDIARIES AND ASSOCIATED COMPANIESSINGAPORE TECHNOLOGIES ELECTRONICS LIMITED –SUBSIDIARIES AND ASSOCIATED COMPANIES• Pacific Flight Services Pte Ltd (100%)ST Aerospace Engineering Pte Ltd (100%)ST Aerospace Engines Pte Ltd (100%)ST Aerospace International StructuresPte Ltd (100%)ST Aerospace Systems Pte Ltd (100%)ST Aerospace Supplies Pte Ltd (100%)ST Airport Ground Services Pte Ltd (100%)Visiontech Investment Pte Ltd (100%)ST Aviation Services Co Pte Ltd (80%)ST Aviation Resources Pte Ltd (50%)*Singapore Aerospace Kabushiki Kaisha (100%)Singapore Aerospace (UK) InvestmentsPte Ltd (100%)• ST PAE Holdings Pty Ltd(100%)• Aerospace Engineering• Composite Technology International Pte Ltd (33.33%) Services Pty Ltd• Eurocopter South East Asia Private Limited (25%)Unit Trust (50%)• Aerospace Engineering ServicesPty Ltd (50%)• Singapore Precision Repair and Overhaul Pte Ltd (50%)• Changi Aviation Services Pte Ltd (50%)• ST Aviation Resources 1 Limited (100%)• Singapore Technologies Engineering (Europe) Ltd (100%)• Airline Rotables Limited (100%)Agilis Communication Technologies Pte Ltd (100%)CET Technologies Pte Ltd (100%)Singapore Engineering Software Pte Ltd (100%)iTS Technologies Pte Ltd (100%)ST Training & Simulation Pte Ltd (100%)SEEL Electronic & Engineering Sdn Bhd (100%)ST Electronics (Shanghai) Co., Ltd (100%)ST Electronics (Taiwan) Limited (100%)ST LogiTrack Pte Ltd (50%)GFM Electronics, S.A. De C.V. (50%)Asia-Pacific Training and Simulation Pte Limited (25%)• DigiSAFE Pte Ltd (100%)• Sentry Technologies Pte Ltd (35%)• Interactive Visual Simulation LaboratoryPte Ltd (65%)• DigiSAFE, Inc. (100%)• Datamark Technologies Pte Ltd (51%)• Stegami.com Pte Ltd (37.6%)iShopAero Pte Ltd (68%)Visiontech Engineering Pte Ltd (51%)Asian Aerospace Pte Ltd (50%)Turbine Coating Services Pte Ltd (24.5%)Turbine Overhaul Services Pte Ltd (49%)Singapore British Engineering Pte Ltd (32%)* Deemed to be a subsidiary by virtue of the Company’s control of the Board of DirectorsNon Bold Indicates subsidiaries (both directly & indirectly held)Italics Indicates Associated Companies or OthersNon BoldItalicsIndicates subsidiaries (both directly & indirectly held)Indicates Associated Companies or Others204 • visionsubsidiaries and associated companies • 205

SINGAPORE TECHNOLOGIES KINETICS LTD –SUBSIDIARIES AND ASSOCIATED COMPANIESSINGAPORE TECHNOLOGIES MARINE LTD –SUBSIDIARIES AND ASSOCIATED COMPANIESFounders Industries Pte Ltd(100%)• CIS - Oerlikon Pte Ltd (50%)• Allied Ordnance of Singapore(Pte) Limited (100%)• Defence Electronics ofSingapore Pte Ltd (49%)STSE Engineering Services Pte Ltd (100%)PT SSE-Van der Horst Indonesia (37%)• AquaGen International Pte Ltd (25%)• Anchorville Pte Ltd (25%)ST Automotive IndustrialPte Ltd (100%)STA Investment Pte Ltd (100%)Mobility Systems Pte Ltd (100%)+• Chartered AmmunitionIndustries Pte Ltd (100%)• Expert Systems Pte Ltd (100%)• Chartered PyrotechnicIndustries Private Limited (51%)• SMART Systems Pte Ltd (50%)• Sino-Singapore MedicalDisposables (Pte) Ltd(under Creditors’ Liquidation) (40%)• Takata CPI Singapore Pte Ltd (49%)Joint Shipyard Management Services Pte Ltd (30%)Singapore Commuter PrivateLimited (100%)Singapore Ordnance EngineeringPte Ltd (100%)ST Automotive (Vietnam) Pte Ltd(100%)STA Detroit Diesel-Allison(Singapore) Pte Ltd (60%)• Ordnance Development andEngineering Company ofSingapore (Private)Limited (100%)• Singapore Test Services PrivateLimited (100%)• Unicorn International PteLimited (100%)• Ordnance Developmentand Engineering Companyof Singapore (1996) PrivateLimited (100%)• SAO Industrial ServicesPte Ltd (100%)• Nusantara TechnologiesSdn. Bhd.(49%)Shanghai Elite Electric VehiclesCo. Ltd (100%)STA Inspection Pte Ltd (100%)• Juzclickcar.com Pte Ltd (90%)CityCab Pte Ltd (46.5%)Int. Silvatech Industries Inc. (20%)Silvatech Systems Corporation Pte. Ltd. (20%)Silvatech Global Systems Pte Ltd (20%)Solectria Corporation (44.1%)+ Formerly known as SAE Supplies Pte LtdNon Bold Indicates subsidiaries (both directly & indirectly held)Italics Indicates Associated Companies or OthersNon BoldItalicsIndicates subsidiaries (both directly & indirectly held)Indicates Associated Companies or Others206 • visionsubsidiaries and associated companies • 207

CORPORATE INFORMATIONDIRECTORS’ INFORMATIONBOARD OF DIRECTORSMs Ho Ching (Chairman)Mr Boon Swan Foo (Deputy Chairman & CEO)Mr Ng Kee Choe (Director)Mr Tan Guong Ching (Director)Mr Peter Ho Hak Ean (Director)MG Lim Chuan Poh (Director)Prof. Lui Pao Chuen (Director)Dr Philip Nalliah Pillai (Director)Mr Philip Tan Yuen Fah (Director)Mr Winston Tan Tien Hin (Director)Mr Lucien Wong Yuen Kuai (Director)Mr Peter Ong Boon Kwee (Director)Mr Teo Chan Eddie @ Teo Chan Seng Eddie (Director)COMPANY SECRETARYMrs Chua Su LiAUDIT COMMITTEEMr Ng Kee Choe (Chairman)Dr Philip Nalliah PillaiMr Philip Tan Yuen FahMr Lucien Wong Yuen KuaiEXECUTIVE RESOURCE & COMPENSATIONCOMMITTEEMs Ho Ching (Chairman)Mr Ng Kee ChoeMr Tan Guong ChingREGISTERED OFFICE51 Cuppage Road #09-08StarHub CentreSingapore 229469Tel: (65) 836 1138Fax: (65) 836 1933http://www.stengg.comSHARE REGISTRARM & C SERVICES PRIVATE LIMITED138 Robinson Road #17-00Hong Leong CentreSingapore 068906AUDITORSARTHUR ANDERSEN10 Hoe Chiang Road#18-00 Keppel TowersSingapore 089315Mr Tam Chee Chong (Partner-in-charge)PRINCIPAL BANKERSCITIBANK N.A.3 Temasek Avenue #14-00Centennial TowersSingapore 039190THE DEVELOPMENT BANK OF SINGAPORE LTD6 Shenton WayDBS BuildingSingapore 068809Ms Ho Ching is the Chairman of ST Engg and Chairmanof the Executive Resource & Compensation Committee.She has been with the ST group since 1987 servingin several senior engineering and executive positionsincluding Managing Director (in 1995) before assumingher present position as President & CEO of SingaporeTechnologies Pte Ltd in 1997. Ms Ho is also Chairmanof the Singapore Institute of Molecular Agrobiologyand Board member of National Science and TechnologyBoard. Ms Ho holds a Master of Science (ElectricalEngineering) degree from Stanford University, USA.Mr Boon Swan Foo is the Deputy Chairman & CEO ofST Engg. He is concurrently ExCo Director and ChiefFinancial Officer of Singapore Technologies Pte Ltd. Heis the Deputy Chairman and Chairman of the ExecutiveCommittee of ST Engg’s subsidiaries, namely, ST Aero,ST Kinetics, ST Elect and ST Marine. Mr Boon joinedST Marine as Naval Architect in 1979 and has heldseveral senior positions in the company through theyears, serving as its Chief Executive from 1990 to 1995.He then moved on to be the Chief Executive of ST Aerofrom 1995 to 1997, before his current appointment. MrBoon obtained a Bachelor of Science (Naval Architecture)(First Class Honours) from the University of Newcastleupon-Tyneand a Master of Business Administrationfrom the National University of Singapore. He attendedthe Harvard Business School’s Advanced ManagementProgram. He is a registered Professional Engineer,Singapore, and associate member of the Association ofChartered Certified Accountants of UK and a memberof the Institute of Certified Public Accountants ofSingapore. Mr Boon chairs the ManagementDevelopment Institute of Singapore Senate. He is alsoa Member of the Management Board of the Instituteof High Performance Computing and a Member ofthe Singapore Polytechnic Board of Governors.Mr Ng Kee Choe is the Chairman of the AuditCommittee. Mr Ng is a DBS Bank career banker ofmore than 30 years. He was appointed Executive VicePresident in 1990, Deputy President in 1994, Presidentand Chief Operating Officer in 1997 and Vice Chairmanof DBS Bank in Jan 2001. Mr Ng also sits on the boardsof various companies and professional bodies includingthe Institute of Banking and Finance and the SingaporeInternational Foundation, and has served on educationalinstitutions and business councils. Mr Ng graduated fromthe former University of Singapore with a Bachelor ofScience (Honours) Degree.Mr Tan Guong Ching is Chairman of the BusinessInvestment/Divestment and Budget & FinanceCommittees of ST Engg. He is currently the PermanentSecretary, Ministry of Home Affairs. He joined theCivil Service in 1972 and has held various key positionsincluding serving as the Principal Private Secretary tothe Prime Minister, Permanent Secretary in theMinistries of Communications and of the Environmentand Chief Executive Officer of the Housing &Development Board. Mr Tan holds a Master ofEngineering Degree in Chemical Engineering fromMcMaster University, Canada.Mr Peter Ho Hak Ean is the Chairman of the TechnologyCommittee. Mr Ho is Chairman of SingaporeTechnologies Holdings Pte Ltd and a Director ofSingapore Technologies Pte Ltd. He is concurrentlyChairman of Maritime and Port Authority of Singapore,the Logistics Institute-Asia Pacific, Defence Science &Technology Agency and SAFRA Resort & Country ClubPte Ltd and Deputy Chairman of Info-CommunicationsDevelopment Authority of Singapore. He is 1stPermanent Secretary, Ministry of Defence. After acareer in the SAF (1973 to 1989), Mr Peter Ho joinedthe Administrative Service where he went on to holdvarious senior positions including that of DeputySecretary (Policy) in MINDEF and Deputy Secretaryin the Ministry of Foreign Affairs. He holds a Masterof Arts (Engineering Tripos) from the University ofCambridge, UK.MG Lim Chuan Poh is the Chairman of the Risk ReviewCommittee. MG Lim is the Chief of Defence Force.He joined the Singapore Armed Forces in 1980 andhas held various key command and staff positions inMINDEF. He is Deputy Chairman of SAFRA Resortand Country Club Pte Ltd and Director of SingaporeTelecommunications Ltd and the Defence Science andTechnology Agency. MG Lim obtained a Master ofBusiness Administration from Cornell University, USAand a Master of Arts (Mathematics Tripos) from theUniversity of Cambridge, UK.208 • visiondirectors’ information • 209

Professor Lui Pao Chuen is the Chairman of the Research& Development Committee. He is the Chief DefenceScientist in MINDEF. Professor Lui joined MINDEFin 1966 and, during his 34 years of service, has beenappointed to various key positions including that ofDirector, Joint Operations and Plan Directorate inMINDEF. He is Chairman of DSO National Laboratories,whose primary mission is to engage in defence researchand development. He is also the Chairman of TemasekLaboratories at NUS. Professor Lui also sits on variousscientific and research institutes. He is also an AdjunctProfessor in the Engineering Faculty in NationalUniversity of Singapore. Professor Lui graduatedfrom the University of Singapore with an Honoursdegree in Physics and obtained a Master of Sciencedegree in Operations Research from the U.S. NavalPostgraduate School.Dr Philip N. Pillai is the Senior Partner of Shook Lin &Bok and joint Managing Partner of Allen & Overy, ShookLin and Bok Joint Law Venture. He is a Director of STElect and also sits on the respective Boards and AuditCommittees of Hotung Investment Holdings Ltd andLindeteves-Jacoberg Ltd. Dr Pillai began his career as aLecturer in the Faculty of Law, National University ofSingapore in 1972 and was Associate Professor andVice-Dean from 1983 to 1985. Dr Pillai obtained hisLL.B (First Class Honours) from the former Universityof Singapore, LL.M and SJD from Harvard University.Mr Philip Tan Yuen Fah is the Executive Vice President ofOverseas Union Bank Limited (“OUB”). Prior to joiningOUB in 1979, Mr Tan was with various organisations inthe commercial and industrial sectors. He is a Directorof ST Marine and Singapore Food Industries Limited andChairman of the Audit Committees of both companies.Mr Tan is a member of the Institute of Certified PublicAccountants of Singapore (“ICPAS”), an Associate of theChartered Institute of Management Accountants (UK)and a Fellow of CPA (Australia). He sits on various publiccommittees including the Accounting Standards andBanking Finance Committees of ICPAS and the SkillsDevelopment Fund Technical Committee of theSingapore Productivity & Standards Board. Mr Tan holdsa Bachelor of Accountancy from the former Universityof Singapore and Bachelor of Laws from the Universityof Wolverhampton, UK.Mr Winston Tan Tien Hin is the Managing Director ofCorporate Brokers International Pte Ltd. He is also aDirector of Enersave Holdings Ltd, Ascendas Pte Ltdand several unlisted companies. Mr Tan is an activeinvestor and business angel helping companies improvethemselves and connecting relevant parties together.He is also on the Board of the “Centre for SignalProcessing” and GINTIC Technologies Pte Ltd. He wasformerly the General Manager of Deutsche Bank AG,Singapore Branch and his 24-year banking career includemore than 16 years with Citibank. Mr Tan graduatedwith a Bachelor of Science (Physics) degree from theformer University of Singapore and attended ColumbiaUniversity’s Executive Program on “InternationalManagement”.Mr Lucien Wong Yuen Kuai is the Chairman of the LegalCommittee. He is a Director of CapitaLand Limited,John Hancock Life Assurance Co Ltd, Raffles InvestmentsLtd and Raffles Hotel (1886) Ltd. Mr Wong is ManagingPartner of Allen & Gledhill and Co-Chairman ofLinklaters Allen & Gledhill Pte Ltd and has been in legalpractice for more than 20 years. Mr Wong specialises incorporate and finance work (including mergers andacquisitions, privatisations, IPOs and other fundraising)and has been involved in several landmark corporatetransactions in Singapore. Mr Wong has sat on a numberof law review committees in Singapore which reviewedamendments to Singapore company and securities law.Mr Wong graduated from the former University ofSingapore with a Bachelor of Law (Honours Degree).ADDRESSES OF SUBSIDIARIES AND ASSOCIATED COMPANIESCORPORATESINGAPORE TECHNOLOGIES ENGINEERING LTD (ST ENGG)51 Cuppage Road#09-08, StarHub CentreSingapore 229469Tel : (65) 836 1138 (mainline)Fax : (65) 836 1933Website :www.stengg.comContact :TAN Pheng Hock, President& Chief Operating Officere-mail : tanph@st.com.sgContact : Shirley TAN,Vice President/Head,Corporate Communicationse-mail : comms@stengg.comInternational MarketingTel : (65) 233 2868Fax : (65) 836 1933Contact : LOW Yee Kah, Senior Vice President,International Marketinge-mail : lowyk.ui@stengg.comEUROPESINGAPORE TECHNOLOGIES ENGINEERING (EUROPE) LTDBuilding 6002,Taylors EndStansted AirportStansted, Essex CM24 1RLUnited KingdomTel : (44) 1 279 681770Fax : (44) 1 279 680598Contact : OOI Ling Heong, Executive Vice President,Marketinge-mail : ooilh@st.com.sgMIDDLE EASTDUBAISINGAPORE TECHNOLOGIES ENGINEERING (MIDDLE EAST) LTD(Formerly known as Singapore Technologies Aerospace Ltd - Dubai)PO Box 60333Dubai, United Arab EmiratesTel : (971) 4 286 0267Fax : (971) 4 286 0269Mobile : (971) 50 650 8301Contact : James TAN, Regional Directore-mail : jamestkh@emirates.net.aeUSAVT SYSTEMS, INC.7701 Lemmon AvenueDallas,Texas 75209, USATel : (1) 214 358 6237Fax : (1) 214 902 0938Contact : CHANG Cheow Teck, Presidente-mail : cheowteck@st.com.sgVISION TECHNOLOGIES AEROSPACE, INC.7701 Lemmon AvenueDallas,Texas 75209, USATel : (1) 214 358 6237Fax : (1) 214 902 0938Contact : CHANG Cheow Teck, Directore-mail : cheowteck@st.com.sgVISION TECHNOLOGIES KINETICS, INC.Suite H-112, 300 Sparkman DriveHuntsville, AL 35805Alabama, USATel : (1) 256 726 5000Fax : (1) 256 726 5001Contact : MAK Chan Fai, Marketing Managere-mail : makcf.kinetics@stengg.comVISION TECHNOLOGIES MARINE, INC.7701 Lemmon AvenueDallas,Texas 75209, USATel : (1) 214 358 6230Fax : (1) 214 358 6234Contact : Alan BRAGASSAM, Executive VicePresidente-mail : bragassamalan@stmarine.st.com.sgSINGAPORESINGAPORE TECHNOLOGIES DYNAMICS PTE LTD249 Jalan Boon LaySingapore 619523Tel : (65) 660 7060Fax : (65) 261 6566Contact : LIM Serh Ghee, Senior Vice Presidente-mail : limsg@st.com.sg210 • visioncorporate directory • 211

ST SYNTHESIS PTE LTD249 Jalan Boon LaySingapore 619523Tel : (65) 660 7512Fax : (65) 262 2707Contact : LEE Wai Mun,Vice President/General Managere-mail : leewm.synthesis@stengg.comAEROSPACE SECTORSINGAPORE TECHNOLOGIES AEROSPACE LTD (ST AERO)540 Airport RoadPaya LebarSingapore 539938Tel : (65) 287 1111 (mainline)Fax : (65) 280 9713/8213Website : www.stengg.comContact :WEE Siew Kim, Presidente-mail : weesk@st.com.sgContact :TAY Kok Khiang, Deputy President & COOe-mail : taykk@st.com.sgContact : Celina LOW, Asst.Vice President/Head,Corporate Communicationse-mail : comms.aero@stengg.comInternational MarketingTel : (65) 380 6192Fax : (65) 280 8213Contact : CHIANG Woon Senge-mail : mktg.aero@stengg.comEngineering & DevelopmentTel : (65) 380 6181Fax : (65) 287 1283Contact :TAN Seow Juay, Senior Vice President,Engineering & Developmente-mail : tansj@st.com.sgMarketing OfficeASIA PACIFICJAPANSINGAPORE AEROSPACE KABUSHIKI KAISHA1-19-3 Wakabacho,TachikawaTokyo 190-0001, JapanTel : (81) 42 537 6005Fax : (81) 42 537 6882Contact :Taijo SATO, Representativee-mail : sakk@mtf.biglobe.ne.jpUNICORN INTERNATIONAL PTE LIMITED249 Jalan Boon LaySingapore 619523Tel : (65) 660 7619Fax : (65) 266 6971Contact : LOW Yee Kah, Senior Vice President/General Managere-mail : lowyk.ui@stengg.comSUBSIDIARIESSINGAPOREISHOPAERO PTE LTD (iShopAero)540 Airport RoadPaya LebarSingapore 539938Tel : (65) 380 6928Fax : (65) 382 1213Website : www.ishopaero.comContact : Ambrose WILLIAM, Managing Directore-mail : ambrosew@st.com.sgPACIFIC FLIGHT SERVICES PTE LTD (PFS)ST Aerospace Engineering BuildingSeletar West Camp Road, Seletar AirportSingapore 797796Tel : (65) 481 3756Fax : (65) 482 1727Contact : Capt.Terry Kenneth ABBOTT, Chief Pilote-mail : charter_flight@pacific.net.sgContact : Katherine YEO, Asst. Marketing Managere-mail : charters_flight@pacific.net.sgST AEROSPACE ENGINEERING PTE LTD(STA ENGINEERING)540 Airport RoadPaya LebarSingapore 539938Tel : (65) 287 1111Fax : (65) 284 8575Contact : HO Yuen Sang, Presidente-mail : yuensang@st.com.sgContact : Joseph NG,Vice President/GeneralManagere-mail : josephng@st.com.sgST AEROSPACE ENGINES PTE LTD (STA ENGINES)501 Airport RoadPaya LebarSingapore 539931Tel : (65) 285 1111Fax : (65) 282 3010Contact : CHOO Han Khoon,Vice President/General Managere-mail : choohk@st.com.sgST AEROSPACE INTERNATIONAL STRUCTURES PTE LTD (STAIS)540 Airport RoadPaya LebarSingapore 539938Tel : (65) 380 6815Fax : (65) 380 6292Contact :TAN Seow Juay,Vice President/General Managere-mail : tansj@st.com.sgST AEROSPACE SUPPLIES PTE LTD (STA SUPPLIES)540 Airport RoadPaya LebarSingapore 539938Tel : (65) 287 1111Fax : (65) 383 4757/284 3637Contact : Francis HO,Vice President/GeneralManagere-mail : francish@st.com.sgST AEROSPACE SYSTEMS PTE LTD (STA SYSTEMS)505A Airport RoadPaya LebarSingapore 539934Tel : (65) 287 2222Fax : (65) 284 0236Contact : SEW Chee Jhuen,Vice President/General Managere-mail : sewcj@st.com.sgST AIRPORT GROUND SERVICES PTE LTD (STAGS)540 Airport RoadPaya LebarSingapore 539938Tel : (65) 380 4612Fax : (65) 284 0236Contact : SEW Chee Jhuen, Directore-mail : sewcj@st.com.sgST AVIATION RESOURCES PTE LTD (STAR)540 Airport RoadPaya LebarSingapore 539938Tel : (65) 380 4612Fax : (65) 284 0236Contact : SEW Chee Jhuen, General Managere-mail : sewcj@st.com.sgST AVIATION SERVICES CO PTE LTD (SASCO)8 Changi North WaySingapore 499611Tel : (65) 545 0988Fax : (65) 545 6757Contact : CHONG Kok Pan, Presidente-mail : chongkp@st.com.sgContact : Stephen LOW,Vice President/General Managere-mail : stephenl@st.com.sgVISIONTECH ENGINEERING PTE LTD (VTE)540 Airport RoadPaya LebarSingapore 539938Tel : (65) 380 6819Fax : (65) 287 6164Contact : R Bala KRISHNAN, General Managere-mail : rbala@st.com.sgEUROPEUNITED KINGDOMAIRLINE ROTABLES LIMITED (ARL)Building 6002,Taylors EndStansted Airport, StanstedEssex CM24 1RLUnited KingdomTel : (44) 1279 681 770Fax : (44) 1279 681 402Contact : Bernard CHEONG,Vice President/General Managere-mail : bernard.cheong@airline-rotables.comNORTH AMERICAUNITED STATES OF AMERICADALFORT AEROSPACE L.P. (DALFORT)7701 Lemmon AvenueDallas,Texas 75209USATel : (1) 214 358 6019Fax : (1) 214 902 0938Contact : Bob TAN, Chief Executive Officere-mail : bob_tan@dalfort.comContact : Stephen LIM, Presidente-mail : stephen_lim@dalfort.comST MOBILE AEROSPACE ENGINEERING INC (MAE)2100 9th Street, Brookley ComplexMobile, Alabama 36615USATel : (1) 334 438 8888Fax : (1) 334 438 8892212 • visioncorporate directory • 213

Contacte-mailContacte-mailASSOCIATED COMPANIESASIA PACIFICAUSTRALIA: Bob TAN, Chief Executive Officer: bob_tan@dalfort.com: Ronnie KOH, President: ronnie_koh@stmae.comAEROSPACE ENGINEERING SERVICES PTY LTD (AES)PO Box 213, BullsbrookWestern Australia 6084AustraliaTel : (61) 8 9571 6170Fax : (61) 8 9571 6191Contact : Albert CHAN, Director, Operationse-mail : achan@iinet.net.auSINGAPOREASIAN AEROSPACE PTE LTD (AAPL)1 Temasek Avenue#17-01 Millennia TowerSingapore 039192Tel : (65) 338 2002Fax : (65) 338 4632Contact : Jimmy LAU, Managing Directore-mail : jimmy.lau@reedexpo.com.sgCOMPOSITE TECHNOLOGY INTERNATIONAL PTE LTD (CTI)39 Loyang WaySingapore 508735Tel : (65) 542 1121Fax : (65) 542 5383Contact : Ambrose WILLIAM, General Managere-mail : ctisin@mbox4.singnet.com.sgELECTRONICS SECTORSINGAPORE TECHNOLOGIES ELECTRONICS LIMITED (ST ELECT)24 Ang Mo Kio Street 65Singapore 569061Tel : (65) 481 8888 (mainline)Fax : (65) 482 1079Website : www.stengg.comContact : SEAH Moon Ming, Presidente-mail : seahmm@stee.st.com.sgContact : Magdalen LOH, Asst.Vice President/Head,Corporate Communicationse-mail : comms.elect@stengg.comEUROCOPTER SOUTH EAST ASIA PTE LTD48 Loyang WaySingapore 508740Tel : (65) 543 4101Fax : (65) 542 8797Contact : Henri STELL, Presidente-mail : sales@eurocoptersea.com.sgSINGAPORE BRITISH ENGINEERING PTE LTD (SBE)4 Loyang CrescentSingapore 508979Tel : (65) 543 1221Fax : (65) 543 1661Contact :TAN Shih Shiuan, General Managere-mail : tanss@st.com.sgSINGAPORE PRECISION REPAIRAND OVERHAUL PTE LTD (S-PRO)51 Loyang DriveSingapore 508956Tel : (65) 545 3088Fax : (65) 545 0833Contact : HWANG Tseng Ho, General Managere-mail : spro1@magix.com.sgTURBINE OVERHAUL SERVICES PTE LTD (TOS)5 Tuas Drive IISingapore 638639Tel : (65) 862 1001Fax : (65) 862 1068Contact : CHAN Kwai Wan, General Managere-mail : chankw@pweh.comInternational MarketingTel : (65) 480 7750Fax : (65) 484 8840Contact : LEE Fook Sun, President, Defence Businesse-mail : leefs@stee.st.com.sgContact : LOY Chee Hiang,Vice President,Regional Businesse-mail : loych@stee.st.com.sgSINGAPORE TECHNOLOGIES ELECTRONICS LIMITEDLarge-scale Systems Group (LSG)Tel : (65) 481 8888 (mainline)Fax : (65) 484 8840Contacte-mailMarketing OfficesASIA PACIFICHONG KONG: SIOW Keng Cheng, Senior VicePresident/General Manager: siowkc@stee.st.com.sgSINGAPORE TECHNOLOGIES ELECTRONICS LTD(HONG KONG BRANCH)30th Floor Catic PlazaNo. 8 Causeway RoadHong KongTel : (852) 2577 1230Fax : (852) 2577 1121Contact : Patrick LIM, Branch Managere-mail : patlim@stelect.com.hkNORTH AMERICAUNITED STATES OF AMERICAST ELECT - USA MARKETING OFFICE7701 Lemmon AvenueDallas,Texas 75209United States of AmericaTel : (1) 214 358 6019Fax : (1) 214 358 6834Contact : NG Kim Hock, Regional Directore-mail : ngkh@dalfort.comSUBSIDIARIESASIA PACIFICCHINAST ELECTRONICS (SHANGHAI) CO., LTD.5th Floor, JinNiu Building77 E-Shan RoadPudong New AreaShanghai 200127People’s Republic of ChinaTel : (86) 21 5873 8333Fax : (86) 21 5873 7564Beijing Branch OfficeSuite 701, Beijing Silver Tower2 Dongsanhuanbei RoadChaoyang DistrictBeijing 100027People’s Republic of ChinaTel : (86) 10 6410 6190Fax : (86) 10 6410 6188Contact : CHAN Mark, General Managere-mail : chancm@stelect.comMALAYSIASEEL ELECTRONIC & ENGINEERING SDN BHD15B & 17B Jalan Petaling Utama 11Off Jalan Kelang Lama46000 Petaling Jaya SelangorMalaysiaTel : (60) 3 7781 1573Fax : (60) 3 7783 2308Contact : Patrick CHONG, Asst General Managere-mail : patrickc@seel.po.mySINGAPOREAGILIS COMMUNICATION TECHNOLOGIES PTE LTD (ACT)100 Jurong East Street 21, Level 4Singapore Technologies BuildingSingapore 609602Tel : (65) 567 6791Fax : (65) 567 6370Contact :TANG Kum Chuen,Vice President/General Managere-mail : tangkc@agilis.st.com.sgCET TECHNOLOGIES PTE LTD (CET)100 Jurong East Street 21Singapore Technologies BuildingSingapore 609602Tel : (65) 567 6769Fax : (65) 567 6300Contact : NG Chong Khim, President(Communication & Sensor Systems Group)/General Managere-mail : ngck@cet.st.com.sgDATAMARK TECHNOLOGIES PTE LTDUnit 106 Innovation CentreBlk 1, 16 Nanyang DriveSingapore 637722Tel : (65) 790 6373/793 7725Fax : (65) 793 7790Contact : Dr Anthony HO, Chief Executive Officere-mail : tonyho@datamark-tech.comDIGISAFE PTE LTD (DigiSAFE)100 Jurong East Street 21Singapore Technologies BuildingSingapore 609602Tel : (65) 568 7118Fax : (65) 567 6300Contact : David YAN, General Managere-mail : yanky@digisafe.com.sg214 • visioncorporate directory • 215

SINGAPORE ENGINEERING SOFTWARE PTE LTD (SES)24 Ang Mo Kio Street 655th Floor, Block DSingapore 569061Tel : (65) 481 8888Fax : (65) 481 0693Contact : CHANG Yew Kong, Senior VicePresident/General Managere-mail : changyk@ses.st.com.sgST TRAINING & SIMULATION PTE LTD (STTS)24 Ang Mo Kio St 654th Floor, Block DSingapore 569061Tel : (65) 481 8888Fax : (65) 482 4651Contact :YONG Thiam Chong, Presidente-mail : tcyong@itstech.com.sgTAIWANST ELECTRONICS (TAIWAN) LIMITED6th Floor, No 9, Lane 3Min Sheng West RoadTaipei,Taiwan, R.O.C.Tel : (886 2) 2521 6388Fax : (886 2) 2521 4880Contact : KOH Chan Tia, Managere-mail : kct@stelect.com.twASSOCIATED COMPANIESASIA PACIFICSINGAPOREASIA-PACIFIC TRAINING & SIMULATION PTE LIMITED4 Loyang CrescentSingapore 508979Tel : (65) 543 2188Fax : (65) 543 2122Contact : John YEOMANS, Chief Executive Officere-mail : aptsim@singnet.com.sgSENTRY TECHNOLOGIES PTE LTD21 Science Park Road#03-22 The AquariusSingapore 117628Tel : (65) 779 0925Fax : (65) 779 1715Contact : CHAN Nai Tiong,Chief Executive Officere-mail : channt@sentrytech.com.sgINTERACTIVE VISUAL SIMULATION LABORATORY PTE LTD89 Science Park Drive#01-10 The RutherfordSingapore 118261Tel : (65) 873 0110Fax : (65) 779 8931Contact : Luke LOH,Acting General Managere-mail : luke@stts.com.sgSTEGAMI.COM PTE LTDSuite 106 Innovation CentreBlock 1, 16 Nanyang DriveSingapore 637722Tel : (65) 793 7726Fax : (65) 793 7790Contact : Dr Anthony HO, Chief Executive Officere-mail : tonyho@stegami.comST LOGITRACK PTE LTD5 Clementi LoopST Logistics CentreSingapore 129816Tel : (65) 562 8877Fax : (65) 462 0907Contact :TANG Kwai Leng, General Managere-mail : tangkl@stee.st.com.sgContact : KOH Kok Lim, Marketing Managere-mail : kohkl@cyberway.com.sgTRANSYS PTE LTD251 North Bridge RoadSingapore 179102Tel : (65) 480 7807Fax : (65) 482 1803Contact : ANG Ban Sher, General Managere-mail : angbs@stee.st.com.sgCENTRAL AMERICAMEXICOGFM ELECTRONICS, S.A. DE C.V.Av Pedro Ramirez Vazquez 200-10Colonia Valle OrienteGarza Garcia, N.L. 66269MexicoTel : (52) 8 152 1532/1562Fax : (52) 8 152 1583Contact : Roberto Rivero LARREA, Directore-mail : robertorl@autlan.com.mxLAND SYSTEMS SECTORSINGAPORE TECHNOLOGIES KINETICS LTD (ST KINETICS)5 Portsdown RoadSingapore 139296Tel : (65) 473 6311 (mainline)Fax : (65) 471 0662Website : www.stengg.comContact :WU Tzu Chien, Presidente-mail : wutc.kinetics@stengg.comContact : Natalie MAH, Asst.Vice President/Head,Corporate Communicationse-mail : comms.kinetics@stengg.comInternational MarketingTel : (65) 660 7631Fax : (65) 265 8862Contact : Patrick CHOY, Senior Vice President/Director, Kinetics Marketing Groupe-mail : mktg.kinetics@stengg.comSTA AUTOCENTRE5 Portsdown RoadSingapore 139296Star Automotive CentreTel : (65) 562 0000 (main line)(65) 9718 9999 (24 Hr Helpline)Fax : (65) 475 1991Contact : CHOO Keat Thin, Customer Service& Claims Executivee-mail : star911@cyberway.com.sgSTA AUTOCENTRE5 Ubi CloseSingapore 408605Opel ShowroomTel : (65) 842 2866Fax : (65) 842 8349Contact : Daphne WONG, Manager, Opele-mail : dw.kinetics@stengg.comOpel Service CentreTel : (65) 842 1123Fax : (65) 842 8356Contact : Daphne WONG, Manager, Opele-mail : dw.kinetics@stengg.comMarketing OfficeSINGAPORE TECHNOLOGIES KINETICS LTD - VIETNAMREPRESENTATIVE OFFICECityview Commercial BuildingUnit 201, 12 Mac Dinh Chi StDistrict 1, Ho Chi Minh CityVietnamTel : (84) 8 823 4003Fax : (84) 8 823 4004Contact : BUI Viet Long, Assistant ChiefRepresentativee-mail : stahcmc@bdvn.vnmail.vnd.netSUBSIDIARIESASIA PACIFICCHINASHANGHAI ELITE ELECTRIC VEHICLES CO. LTD (SEEV)1st Floor North Building ofHong Cheng Industry Building98E Shan RoadPu Dong ShanghaiChina 200127Tel : (86) 21 587 33397Fax : (86) 21 587 33286Contact :TEE Song Huat, Senior Managere-mail : teesh.kinetics@stengg.comMALAYSIADETROIT DIESEL - ALLISON (MALAYSIA) SDN BHDLot 28 Jalan Modal 23/2Seksyen 23, Kawasan MIEL40000 Shah AlamSelangor, Darul EhsanMalaysiaTel : (60) 3 541 8888Fax : (60) 3 541 1888Contact : CHIN Yang Pin, General Managere-mail : chinyp.kinetics@stengg.comSINGAPOREALLIED ORDNANCE OF SINGAPORE (PTE) LIMITED (AOS)2D Ayer Rajah Crescent#08-01 AOS BuildingSingapore 139938Tel : (65) 779 7955Fax : (65) 779 0284Contact : Andrew TAN, Senior Vice President/General Managere-mail : tanandrew.kinetics@stengg.com216 • visioncorporate directory • 217

MARINE SECTORASSOCIATED COMPANIESNOTICE OF FOURTH ANNUAL GENERAL MEETINGSINGAPORE TECHNOLOGIES MARINE LTD (ST MARINE)Main Yard7 Benoi RoadSingapore 629882Tel : (65) 861 2244 (mainline)Fax : (65) 861 3028Website : www.stengg.comContact : SEE Leong Teck, Presidente-mail : seelt@stmarine.st.com.sgContact : Laura CHUA, Asst.Vice President/Head,Corporate Communicationse-mail : comms.marine@stengg.comTuas Yard60 Tuas RoadSingapore 638501Tel : (65) 862 2902/3Fax : (65) 862 5382International MarketingTel : (65) 861 2244Fax : (65) 861 3028Contact : MOK Kim Whang, Senior Vice President,(Yard-Tuas)TWOON Kok Yam,Vice President,(Yard-Benoi)LIM Siew Koon,Vice President,Commercial MarketingCharles LOKE, Senior Manager, NavalMarketinge-mail : mktg.marine@stengg.comSUBSIDIARYSTSE ENGINEERING SERVICES PTE LTD7 Benoi RoadSingapore 629882Tel : (65) 861 2244Fax : (65) 861 3028Contact :TAN Kiang Pheng,Vice President, LandbasedEngineeringe-mail : tankp@stmarine.st.com.sgASIA PACIFICINDONESIAPT SSE-VAN DER HORST INDONESIA (PT-SSE)Gedung Artha Graha, 25th FloorJl Jendral Sudirman Kav 52-53Jakarta 12190IndonesiaTel : (62) 21 5154271Fax : (62) 21 5154272Contact :WEE Boon Chye, Directore-mail : bcwee@vanderhorst.comSINGAPOREAQUAGEN INTERNATIONAL PTE LTD (AIPL / AQUAGEN)79 Robinson Road#24-01 CPF BuildingSingapore 068897Tel : (65) 792 1159Fax : (65) 792 0575Contact : Gavin LIAU, Chief Executive Officere-mail : gavin@aquagenusa.sgJOINT SHIPYARD MANAGEMENT SERVICES PTE LTD (JSMS)29 Tanjong Kling RoadSingapore 628054Tel : (65) 265 1766Fax : (65) 261 0738Contact : LIM Hock Lai, Directore-mail : limhl@stmarine.st.com.sgContact :TWOON Kok Yam, Directore-mail : twoonky@stmarine.st.com.sgANCHORVILLE PTE LTD79 Robinson Road#24-01 CPF BuildingSingapore 068897Tel : (65) 823 8334Fax : (65) 823 8037Contact : ONG Liong Chuan, Executive Directore-mail : liongchuan@spower.com.sgNOTICE IS HEREBY GIVEN THAT the Fourth AnnualGeneral Meeting of the Company will be held at MumtazMahal & Shah Jahan Room, Basement 1, Holiday InnPark View Singapore, 11 Cavenagh Road, Singapore229616 on 30 March 2001 at 2.00 p.m. to transact thefollowing business:AS ORDINARY BUSINESS1 To receive and adopt the Directors’ Report andAudited Accounts for the year ended 31 December2000 and the Auditors’ Report thereon.2 To declare a first and final dividend of 25% less incometax of 25.5%, a special dividend of 55% lessincome tax of 25.5% and a special tax exemptdividend of 15% for the year ended 31December 2000.3 (a) To re-elect the following Directors, each of whomwill retire by rotation pursuant to Article 98 of theArticles of Association of the Company and who,being eligible, will offer themselves for re-election:(i)(ii)Ms Ho ChingMr Lucien Wong Yuen Kuai (independentmember of the Audit Committee)(b) To record the retirement of Mr Ng Kee Choe, aDirector retiring pursuant to Article 98 of theCompany’s Articles of Association who has decidednot to seek re-election.(c) To re-elect the following Directors, each of whomwill cease to hold office pursuant to Article 104 ofthe Articles of Association of the Company and who,being eligible, will offer themselves for re-election:(i) MG Lim Chuan Poh(ii) Dr Philip Nalliah Pillai(iii) Mr Peter Ong Boon Kwee(iv) Mr Teo Chan Eddie @ Teo Chan Seng Eddie(d) To record the retirement of Mr Peter Ho Hak Eanas Director.4 To approve the sum of $352,000 as Directors’ feesfor the year ended 31 December 2000. (1999:$285,000)5 To re-appoint Arthur Andersen as Auditors ofthe Company and to authorise the Directors to fixtheir remuneration.6 To transact such other ordinary business asmay be transacted at an Annual General Meeting ofthe Company.AS SPECIAL BUSINESSTo consider and, if thought fit, to pass with or withoutmodifications, the following resolutions which will beproposed as Ordinary Resolutions:ORDINARY RESOLUTIONS7 That pursuant to Section 161 of the Companies Act,Chapter 50 and the listing rules of the SingaporeExchange Securities Trading Limited, authority beand is hereby given to the Directors of the Companyto issue ordinary shares in the Company (whether byway of rights, bonus or otherwise) at any time andupon such terms and conditions and for such purposesand to such persons as the Directors may in theirabsolute discretion deem fit provided that theaggregate number of ordinary shares to be issuedpursuant to this Resolution does not exceed fiftyper cent. (50%) of the issued share capital of theCompany for the time being, of which the aggregatenumber of ordinary shares to be issued other than ona pro rata basis to shareholders of the Company doesnot exceed twenty per cent. (20%) of the issuedshare capital of the Company for the time being, and,unless revoked or varied by the Company in generalmeeting, such authority shall continue in force untilthe conclusion of the next Annual General Meeting ofthe Company or the date by which the next AnnualGeneral Meeting of the Company is required by lawto be held, whichever is the earlier.8 THAT approval be and is hereby given to theDirectors to:(a) offer and grant options in accordance with theprovisions of the Singapore Technologies EngineeringShare Option Plan (“Share Option Plan”) and/or togrant awards in accordance with the provisions of theSingapore Technologies Engineering PerformanceShare Plan (“Performance Share Plan”) and/or theSingapore Technologies Engineering Restricted StockPlan (“Restricted Stock Plan”) (the Share OptionPlan, the Performance Share Plan and the RestrictedStock Plan, together the “Share Plans”); and(b) allot and issue from time to time such numberof ordinary shares of $0.10 each in the capital of the220 • visionnotice of fourth annual general meeting • 221

Company as may be required to be issued pursuantto the exercise of options under the Share OptionPlan and/or such number of fully paid shares as maybe required to be issued pursuant to the vesting ofawards under the Performance Share Plan and/or theRestricted Stock Plan,provided that the aggregate number of ordinary sharesto be issued pursuant to the Share Plans shall notexceed fifteen per cent. (15%) of the issued sharecapital of the Company from time to time.9 THAT:(a) approval be and is hereby given for the purposesof Chapter 9A of the Listing Manual of the SingaporeExchange Securities Trading Limited, for theCompany, its subsidiaries and target associatedcompanies (the “Group”) or any of them to enterinto any of the transactions falling within the typesof Interested Person Transactions, particulars ofwhich are set out in the Company’s Circular toMembers dated 7 March 2000 (the “Circular”)with any party who is of the class of InterestedPersons referred to in the Circular, provided thatsuch transactions are made on an arm’s length basisand on normal commercial terms;(b) the approval given in paragraph (a) above (the“Mandate”) shall, unless revoked or varied by theCompany in General Meeting, continue in forceuntil the next Annual General Meeting of theCompany; and(c) the Directors of the Company be and are herebyauthorised to complete and do all such acts andthings (including executing all such documents asmay be required) as they may consider expedientNotes:A member may appoint not more than two proxies to attend at the samemeeting.Where a member appoints more than one proxy, he shall specifythe proportion of his shareholdings to be represented by each proxy. Aproxy need not be a member of the Company.The instrument appointinga proxy must be deposited at the Registered Office of the Company at 51Cuppage Road, #09-08, StarHub Centre, Singapore 229469 not less than48 hours before the time appointed for holding the meeting.BOOKS CLOSURE AND DIVIDEND PAYMENT DATESDuly completed transfers in respect of ordinary shares in the capital of theCompany together with all relevant documents of title received by theCompany’s share registrar, M & C Services Private Limited, 138 Robinsonor necessary or in the interests of the Company togive effect to the Mandate and/or this Resolution.STATEMENT PURSUANT TO ARTICLE 60 OF THE ARTICLES OFASSOCIATION OF THE COMPANYResolution No. 7 is to empower the Directors to issueordinary shares in the capital of the Company up to anamount not exceeding in total fifty per cent. (50%) ofthe issued ordinary share capital of the Company for thetime being.Resolution No. 8 is to empower the Directors to issueordinary shares in the capital of the Company pursuantto the Singapore Technologies Engineering Share OptionPlan, Singapore Technologies Engineering PerformanceShare Plan and Singapore Technologies EngineeringRestricted Stock Plan (collectively the “Share Plans”)provided that the aggregate number of ordinary sharesissued pursuant to the Share Plans shall not exceedfifteen per cent. (15%) of the issued ordinary sharecapital of the Company for the time being.Resolution No. 9 is to renew the mandate to allow theCompany, its subsidiaries and target associated companiesor any of them to enter into certain interested persontransactions with persons who are considered “interestedpersons” (as defined in Chapter 9A of the Listing Manualof the Singapore Exchange Securities Trading Limited).Please refer to the attached letter to shareholders dated 7March 2001 for details.By Order of the BoardCHUA SU LI (Mrs)Company SecretarySingapore, 7 March 2001Road, #17-00, Hong Leong Centre, Singapore 068906 up to the close ofbusiness at 5.00 p.m. on 9 April 2001 (the “Books Closure Date”) willbe registered to determine members’ entitlements to the proposeddividends, subject to approval of members to the proposed dividends atthe Fourth Annual General meeting to be convened on 30 March 2001.Subject as aforesaid, members whose Securities Accounts with TheCentral Depository (Pte) Limited are credited with ordinary shares inthe capital of the Company as at 5.00 p.m. on the Books Closure Datewill be entitled to the dividends.The Register of Members and ShareTransfer Books will be closed on 10 and 11 April 2001 for the purposeof determining members’ entitlements to the proposed dividends.Theproposed dividends, if so approved by members, will be paid on 25April 2001.LETTER TO SHAREHOLDERSBoard of Directors:Ho Ching (Chairman)Boon Swan Foo (Deputy Chairman & CEO)Ng Kee ChoeTan Guong ChingPeter Ho Hak EanMG Lim Chuan PohProfessor Lui Pao ChuenDr Philip Nalliah PillaiPhilip Tan Yuen FahWinston Tan Tien HinLucien Wong Yuen KuaiPeter Ong Boon KweeTeo Chan Eddie @ Teo Chan Seng EddieTo:The MembersSingapore Technologies Engineering LtdDear Sir/Madam,RENEWAL OF SHAREHOLDERS MANDATE1.BACKGROUNDWe refer to(1) the Notice of Annual General Meeting of theMembers of Singapore Technologies Engineering Ltd(the “Company” or “ST Engg”) dated 7 March 2001(the “Notice”), accompanying the Annual Report2000 of the Company, convening the Fourth AnnualGeneral Meeting (“AGM”) to be held on 30 March2001 and(2) Ordinary Resolution No. 9 under the heading “SpecialBusiness” set out in the Notice.At the Extraordinary General Meeting of the Companyheld on 31 March 2000, a mandate (the “ShareholdersMandate”) was approved for the purposes of Chapter9A of the Listing Manual of the Singapore ExchangeSecurities Trading Limited, for the Company, itssubsidiaries and target associated companies(the “Group”) or any of them to enter into certaininterested person transactions (the “Interested PersonTransactions”), particulars of which were set out in theCompany’s Circular to Members dated 7 March 2000(the “Circular”).Registered Office:51 Cuppage Road,#09-08, StarHub CentreSingapore 2294697 March 2001The Shareholders Mandate was expressed to take effecton 31 March 2000 until the date of the forthcomingAGM, being 30 March 2001. Accordingly, the Directorspropose that the Shareholders Mandate relating to theapproval for Interested Person Transactions underChapter 9A be renewed at the forthcoming AGM totake effect until the Fifth AGM of the Company.The particulars of the Interested Person Transactions inrespect of which the Shareholders Mandate is sought tobe renewed remain unchanged and are as set out inthe Circular.Based on the consolidated audited accounts of the STEngg Group for the financial year ended 31 December2000, the shareholders’ funds of the ST Engg Group wasS$912,280,000. Accordingly, in relation to the ST EnggGroup and under Chapter 9A of the Listing Manual, aThreshold 2 transaction would be one which is enteredin the current financial year with an Interested Personand the value of which is equal to or above 3%(S$27,368,400) and below 5% (S$45,614,000) ofshareholders’ funds.222 • visionletter to shareholders • 223

PROXY FORMSINGAPORE TECHNOLOGIES ENGINEERING LTDIMPORTANT: 1. For investors who have used their CPF moneys to buy ordinary shares in the capital of Singapore Technologies Engineering Ltd,the 2000 Annual Report is forwarded to them at the request of their CPF Approved Nominees and is sent solely FOR INFORMATION ONLY. 2. ThisProxy 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.2. DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTERESTSAs at 5 February 2001, the latest practicable date priorto the printing of this Letter, the interests of DirectorsST will abstain from voting at the AGM in respect ofShares held by it in relation to Ordinary Resolution No.9 to be proposed at the AGM.3. DIRECTORS’ RECOMMENDATIONThe Directors (save for Ho Ching and Boon Swan Foowho hold executive positions in the ST group ofcompanies who abstain from making a recommendation)are of the opinion that the renewal of the ShareholdersMandate as described in this Letter is in the best interestsof the Company and accordingly recommend thatMembers vote in favour of Ordinary Resolution No. 9to be proposed at the AGM.and substantial shareholders in the ordinary shares (the“Shares”) in the capital of the Company are as follows:NUMBER OF SHARESCOMPRISED INOUTSTANDING OPTIONSNUMBER OF SHARESGRANTED BY THE COMPANYDIRECT DEEMED DIRECT DEEMEDDIRECTORS INTEREST INTEREST INTEREST INTERESTHo Ching – – – –Boon Swan Foo 224,433 – 2,005,000 –Ng Kee Choe – – – –Tan Guong Ching – – – –Peter Ho Hak Ean – – – –MG Lim Chuan Poh – – – –Professor Lui Pao Chuen 7,705 153,739 – –Dr Philip Nalliah Pillai – – – –Philip Tan Yuen Fah 25,686 – – –Winston Tan Tien Hin – 200,000 – –Lucien Wong Yuen Kuai – – – –Peter Ong Boon Kwee – – – –Teo Chan Eddie @ Teo Chan Seng Eddie – – – –NUMBER OF SHARESSUBSTANTIAL SHAREHOLDERS DIRECT INTEREST DEEMED INTERESTTemasek Holdings (Private) Limited – 1,619,473,137Singapore Technologies Holdings Pte Ltd – 1,599,249,719Singapore Technologies Pte Ltd (“ST”) 1,599,168,719 277,000The Capital Group Companies, Inc – 224,604,1154. DOCUMENT AVAILABLE FOR INSPECTIONA copy of the Circular is available for inspection at theregistered office of the Company at 51 Cuppage Road,#09-08, StarHub Centre, Singapore 229469 duringnormal business hours from the date of this Letter upto the date of the AGM.Yours faithfully,By Order of the BoardCHUA SU LI (MRS)Company SecretaryIIIIIII/We, ___________________________________________of ____________________________________________________being a member/members of the abovenamed Company, hereby appointa) ________________________ _______________________________ ________________ _________________________Name Address NRIC/Passport Number Proportion of Shareholdings (%)and/or (delete as appropriate)b) ________________________ _______________________________ ________________ _________________________Name Address NRIC/Passport Number Proportion of Shareholdings (%)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 FourthAnnual General Meeting of the Company to be held at Mumtaz Mahal & Shah Jahan Room, Basement 1, Holiday Inn Park ViewSingapore, 11 Cavenagh Road, Singapore 229616 on 30 March 2001 at 2.00 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 OrdinaryResolutions as set out in the Notice of the Annual General Meeting. In the absence of specific directions, the proxy/proxieswill vote or abstain as he/they may think fit, as he/they will on any other matter arising at the Annual General Meeting.)NO ORDINARY RESOLUTIONS FOR AGAINSTOrdinary Business1 Adoption of Accounts and Reports2 Declaration of First and Final Dividend, Special Dividend and Special Tax Exempt Dividend3 Re-election of Directors(i)(ii)(iii)(iv)(v)(vi)Ms Ho ChingMr Lucien Wong Yuen KuaiMG Lim Chuan PohDr Philip Nalliah PillaiMr Peter Ong Boon KweeMr Teo Chan Eddie @ Teo Chan Seng Eddie4 Approval of Directors’ Fees5 To re-appoint Arthur Andersen as Auditors6 Any other ordinary businessSpecial Business7 Authority for Directors to Issue Shares pursuant to Section 161 of the Companies Act, Cap. 508 Authority for Directors to offer and grant options and/or grant awards and allot shares,pursuant to the Singapore Technologies Engineering Share Option Plan, SingaporeTechnologies Engineering Performance Share Plan and Singapore TechnologiesEngineering Restricted Stock Plan9 Approval for Renewal of Shareholders MandateDated this ________ day of __________________ 2001____________________________________________Signature(s) of Member(s) or Common SealTOTAL NUMBER OF SHARES HELDIMPORTANT:PLEASE READ NOTES OVERLEAF224 • visionproxy form • 225

PROXY FORMSINGAPORE TECHNOLOGIES ENGINEERING LTDjargon watchNOTES:1.2.3.4.5.6.Please insert the total number of shares held by you. If you have shares entered against your name in the DepositoryRegister (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore), you should insert that number ofshares. 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 theRegister of Members, you should insert the aggregate number of shares entered against your name in the DepositoryRegister and registered in your name in the Register of Members. If no number is inserted, the instrument appointing aproxy or proxies shall be deemed to relate to all the shares held by you.A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or twoproxies to attend and vote instead of him. Such proxy need not be a member of the Company.Where a member appoints two proxies, the appointments shall be invalid unless he specifies the proportion of hisshareholding (expressed as a percentage of the whole) to be represented by each proxy.The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 51 CuppageRoad, #09-08, StarHub Centre, Singapore 229469, not less than 48 hours before the time appointed for the Fourth AnnualGeneral Meeting.The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorisedin writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed eitherunder its seal or under the hand of an officer or attorney duly authorised.A corporation which is a member may authorise by a resolution of its directors or other governing body such person asit thinks fit to act as its representative at the Fourth Annual General Meeting, in accordance with Section 179 of theCompanies 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 completedor illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointorspecified in the instrument appointing a proxy or proxies. In addition, in the case of shares entered in the DepositoryRegister, 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 appointedfor holding the Fourth Annual General Meeting, as certified by The Central Depository (Pte) Limited to the Company.w a t c h w h a t y o u s a yIF YOU’VE EVER SAT IN ON A CONVERSATION IN THEST Engg cafeteria, it would be easy to imagine you’vetravelled through time and dropped in on some mysteriousconversation being held in secret code. In a way,you could be correct, as “industry speak” often contains thelatest cutting-edge language referring to the latest technologiesand products. Jargon Watch updates you on some of thenew industry terminology so you too can use it to impressyour friends at the lunch table tomorrow.BLUETOOTH is an open standardfor short-range transmission of digitalvoice and data between mobile devicesas well as consumer electronic devices.It enables users to easily connect awide range of computing and telecommunicationsdevices without havingto buy, carry or connect cables.CAD/ME CAD Computer-AidedDesign (CAD) is the generic termfor all aspects of design using computersoftware tools. It usually coversgeometry creation, manipulation andthe production of plotted drawings.ME CAD refers to its application inmechanical engineering design.CAM Computer-Aided Manufacturingis the use of software tools toprogramme and simulate manufacturingprocesses. Simply, it is a typeof computer application that helpsautomate a factory.DAB Digital Audio Broadcast isthe latest digital technology in theradio industry and has been labelledthe “sound of the future.” ST Elect’sDABOne CA System utilises DABtechnology and allows content providersto offer subscription-basedmultimedia services (audio, dataand even moving video) to targetedmarket segments.DREDGER A special vessel designedto dredge soil or other materials fromthe sea bed.There are various typesof dredgers, ie, cutter dredger, hopperdredger, trailing hopper suctiondredger. Dredgers are commonlydeployed in reclamation projects.FALCON-ONE “Falcon” is thedesignated name of the F-16 fighteraircraft. “Falcon ONE” is an F-16avionics upgrade suite designed anddeveloped by ST Aero’s engineeringand development team.The teamdesignated the upgrade suite FalconONE to position it as the best systemavailable and, incidentally, it’s thefirst F-16 avionics upgrade solutiondeveloped by ST Aero.FLYER A Light Strike Vehiclenamed FLYER because of its lowcombat weight and high tacticalmobility. Frequently used in reconnaissanceand swift deploymentmissions, it literally “flies” on crosscountryterrain at top speeds. Itsconfigurable roll-cage design makes itmodifiable for various missions;while its ability to negotiate steepslopes makes it ideal in providingclose fire support for infantry troops.GPRS General Packet Radio Switchtechnology allows data to be sent/received across a mobile telephonenetwork at up to 115 kbps, fourtimes faster than the current speed.Labelled the third-generation (3G)mobile technology, it will enable aconvergence of voice, data and videoto be sent/received instantly and costeffectively. GPRS is an enhancementto the GSM standard but with betterdata transfer rates.HUSH-KIT Refers to a muffler ornoise reduction kit fitted onto an aircraftengine to reduce noise so theydo not exceed regulatory levels specifiedby airports. Hush-kitting aircraftthat have older engines is required tomeet these regulations.JUMBOISATION Lengtheningof an existing ship through the insertionof a new block or section.Thisinvolves slicing the vessel in half andthen inserting a new mid-section,aft or stern.PTF “Passenger-to-Freighter” conversionrefers to the modification ofa passenger aircraft to a full freighteror cargo-carrying aircraft.SHIP CONVERSION Change ofship type (eg, from a container vesselto a cattle carrier, an offshore supplyvessel to a cable laying ship, etc.) orchange of ship system (eg, from oneusing the propeller system to oneusing the waterjet system).TANK COATING Recoating ofvessel’s cargo tank to allow it tocarry special liquid cargo especiallychemicals or other “aggressive” cargo.During tank coating, the cargo tank’ssteel surface is re-blasted using abrasivecopper slag or grit. Paint is thenapplied on the blasted surface.VSAT Very Small Aperature Terminalis a low cost antenna which delivershigh technology, personalised satelliteservice.VSAT’s are usually twowaytransmit and receive antennascapable of sending at least one voicechannel and data, but can be “receiveonly” terminals.226 • visionjargon watch • 227

end page• AEROSPACE• ELECTRONICS• LAND SYSTEMS• MARINEc o v e r s t o r yTHERE’S A LOGIC TO THE DEVELOPMENT OF ST ENGG’Sannual report covers.They are not only the result of longrange planning, but depict the evolution of the Group.In 1997, when the four SBAs amalgamatedunder the ST Engg umbrella,the report’s theme was “EngineeringOur Future.” This was not only astatement of commitment to ourtrade but also to convey theidea that we could engineerour own future, as well as,perhaps, shape those of ourcustomers, staff and shareholders.Therainbowis a symbol of hope and theimage of people hauling asegment into positionsuggests both building uponhopes and constructionthrough team effort.“Strengthening Fundamentals”was the 1998 theme.Theannual report’s message wasone of consolidation, whileplanning for the future.Thecover picture shows springs,chains, cogwheels, a boltand a glove: staples of theengineering industry for thepast 200 years. It reflectsour fundamental values ofreliability, of dependenceupon tried and tested methodsand techniques.The 1999 cover showstwo hands gently cradling aglobe.The year’s theme was“Nurturing a World-ClassEnterprise.” We are ambitiousto become greaterthan what we already are,and yet recognising that weare at a stage of developmentwhere we still have tofully establish our internationalstanding.The annual report for 2000, is thereport of a Group that is confidentof its world-class status. vision is atitle that can be interpreted on differentlevels. As a desirable quality,vision embodies imagination andforesight. It also implies having aview of what the future could be,a sense of where we are going andhow we will get there.1997 19981999 2000Who can spot a bright idea a mile away?When it comes to bright ideas, one recent engineering breakthrough shines out. The blue LED, 100% brighterand 75% more energy efficient than an ordinary Edison lightbulb, has been achieved after eluding engineersfor more than 40 years. It is engineering feats like these that inspire Singapore Technologies Engineeringto take engineering further.For example, ST Engg’s aerospace capabilities have soared to great heights – our F-5 Tiger upgrades areacknowledged as the most advanced in the world. In the field of electronics, we have provided solutionsfor the commercial, defence and industrial sectors with core businesses in multiple systems.Meanwhile, our land systems arm has achieved technological sophistication with the launch of Bionix,Singapore’s first locally designed and manufactured Infantry Fighting Vehicle. Our marine sector offersproven turnkey solutions and total project management, including the design and construction of PatrolVessels and Landing Ship Tanks.With our combined experience and resources, ST Engg is a one stop provider of engineering solutions,from turnkey projects to customised upgrades.www.stengg.comWe can.228 • visionWe take Engineering further

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