a new era begins >> · tang chun choy retired on 30 september 2003 ng keh long alternate...

a new era begins >>

3corporate information | 4beyond the decade | 6corporate profile | 9vision & mission | 10chairman’s message | 13highlights of the year

14operations review | 19financial highlights | 20group structure | 21members of the board | 24corporate governance | 33financials

contents >>

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corporate

information >>

board of directors >> Steve Ting Tuan Toon Executive Chairman

Lim Chin Hu President & Chief Executive Officer

Shirley Wong Swee Ping Vice President

non-executives >> Tay Swee Sze Independent Director

Harrison Wang Hong She Independent Director

Robert Yap Min Choy Liow Voon Kheong Robert Michael Stein Independent Director

Sim Wong Hoo retired on 30 September 2003

Tang Chun Choy retired on 30 September 2003

Ng Keh Long alternate director to Sim Wong Hoo, retired on 30 September 2003

company secretary >> Tan Bak Leng

registered office >> 750 Chai Chee Road #02-01/03 Technopark@Chai Chee Singapore 469000

telephone >> +65 6773 7227

facsimile >> +65 6779 4455

corporate website >> www.frontline.com.sg

audit committee >> Tay Swee Sze Chairman

Harrison Wang Hong She Steve Ting Tuan Toon

compensation committee >> Harrison Wang Hong She Chairman

Tay Swee Sze Steve Ting Tuan Toon

auditors >> Ernst & Young 10 Collyer Quay #21-01 Ocean Building Singapore 049215

audit partner-in-charge >> Steven Phan since financial year ended 31 March 2003

share registrar >> Barbinder & Co Pte Ltd 8 Cross Street #11-00 PWC Building Singapore 048424

principal bankers >> Citibank, N.A. DBS Bank Ltd Oversea-Chinese Banking Corporation Limited

Since Frontline Technologies was formed in 1993, we have seen many changes in the information

technology world in the past decade. We have experienced the rapid advance of technologies that have

enabled a networked world. We have witnessed how this has brought about demands for borderless

communication, seamless information access, more robust infrastructure as well as increased security

and storage needs. And we have ridden this paradigm shift with the synergy of our internal development

efforts, a strong service team and a strategic network of leading partners. As we mark the start of a

second decade, we renew our commitment to making technology easier to use and manage. At the

same time, we will continue to keep a strong focus on delivering quick and effective solutions to meet

customer needs.


beyond the decade,

a new era begins >>


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Frontline Technologies is a leading IT service provider of end-to-end solutions that include

consulting, infrastructure and applications development, outsourcing, security, networking and

storage solutions. Since establishment in 1993, we have built up a strong and diversified base

of customers in the transportation and logistics, telecommunications, banking and finance,

government, education, manufacturing, healthcare, and other sectors. Listed on the main board of

the Stock Exchange of Singapore, we are headquartered in Singapore and have operations across

Asia – China, India, Malaysia, Philippines, Singapore and Thailand – to better service multinational

businesses. As a reflection of Frontline Technologies’ service dedication and high-quality solutions,

we have received many accolades from the industry, our business partners and customers.

corporate

profile >>


vision and

mission >>

vision >>

to be the leading billion-dollar, pan-asian technology solutions company

mission >>

we enable the best business results through ideas, people and technology preferred by customers, partnersand employees

9 >>


a good start to a new decade >> FY2004 has certainly been an encouraging start to a new decade of business and operation at the Frontline Group.

Having embarked on our 11th year in an increasingly tough economy, we are very much heartened by our performance for FY2004. It was a year of turnaround that saw us return to profitability despite the SARs epidemic and weaker IT spending in Asia.

Net profit attributable to shareholders reversed sharply to a gain of S$3.5 million in FY2004 from a S$5.3 million loss in FY2003. Profit before goodwill amortization, exceptional items and taxation more than doubled to S$6.9 million in FY2004 from S$2.5 million in FY2003. This turnaround was achieved with a revenue of S$106.8 million in FY2004, compared with our S$122.9 million revenue in FY2003. Earnings per share reversed to 0.44 cent in FY2004 from a loss per share of 0.67 cent in FY2003. Net asset per share rose to 10.9 cents at the end of FY2004 from 10.7 cents at the end of FY2003. The Group’s cash reserves as at 31 March 2004 remained strong at S$51.5 million after a S$3.2 million dividend payment to shareholders on 30 December 2003.

These were due mainly to a greater focus on IT services, which contributed to almost a third of our revenue. The absence of bad debts and low levels of inventory also helped us to move back into the black.

expanding our capabilities and services >> During the year under review, we remained focused on strengthening and broadening our capabilities and services to a diverse base of customers.

In November 2003, we acquired a 30% stake in Ecquaria Limited of Singapore, which has given the Group strong e-Government, healthcare and e-entertainment capabilities in the region.

With a focus on growing our IT services, we developed more solutions for client needs in the areas of outsourcing, networking, data centre, business continuity and training.

a strong pan-Asian presence >> To realize our vision of strengthening our pan-Asian network, we took a 42% stake in Accel ICIM Systems & Services Ltd in January 2004 for S$13 million. Accel ICIM is one of India’s top ten IT service companies, and is expected to account for a double-digit quantum of the Group’s revenue and profit in FY2005. Furthermore, we increased our stake in MDCL-Frontline (China) Limited, our joint-venture company in China, by 8.46% to 43.46%.

This presence in India and our associate company in China (through MDCL-Frontline) make up Frontline’s twin pillars of growth in Asia’s emerging markets. While Frontline and its subsidiaries recorded a turnover of S$106.8 million in FY2004, the total turnover of the Group (including associated companies) is almost three times higher at S$327 million.

Apart from revenue, the staff strength of Frontline and its subsidiaries is now more than 300 while at the Group level (including our associate companies), the total headcount exceeds 2,000. These numbers give us the critical mass to position ourselves as a premier IT service company in Asia.

message from the

executive chairman >> continued next page >>


looking ahead >> With the global economies on a recovery path and expected improved corporate earnings, IT spending in the region is expected to increase in the coming year.

We are well-positioned to reap the benefits of our medium to long-term strategy which combines three critical elements: first, our strong physical presence in China and India – two major regional markets – to build a truly pan-Asian IT services company; second, our move up the value chain with our own intellectual capital and intellectual property; and third, strengthening our regional investments and presence.

Our increased regional footprint – now covering six countries – will diversify our income sources. As such, we expect that more than 50% of our revenue for FY2005 will be derived from outside Singapore compared to about 30% in FY2004.

a note of appreciation >> Such an eventful and successful year could not have passed without the help and support of many people and organizations. I wish to place on record my appreciation for our customers, our board of directors, our shareholders, business partners and employees. To all of you, a big thank you. I look forward to your continued support as we work towards charting a higher growth path in this decade and further increasing shareholder value.

Steve Ting

Founder & Executive Chairman

Frontline Technologies Corporation Ltd

message from the

executive chairman >>


highlights of

the year >>

June 2003Frontline Solutions announced collaboration to provide Betrusted’s (formerly Baltimore Technologies) security products, solutions and services in the Asia-Pacific region.

Frontline Technologies received our third “Value Added Reseller” award from Oracle.

MDCL-Frontline was named “Sun Java Center Of Excellence Level One Authorized Partner”.

July 2003Frontline’s Malaysian subsidiary, Frontline Technologies Corporation Malaysia Sdn Bhd, bought out the management of BizInfo Sdn Bhd, a leading software solutions provider in Malaysia, to form BizFront Sdn Bhd.

Frontline Technologies Corporation was voted one of the 50 fastest growing companies in Singapore 1000/SME 500.

Frontline Technologies was presented the Sunshine Award (Platinum) from Sun Microsystems.

August 2003Frontline Technologies received “Elite Partner” and “Most Strategic Win 2003” honours from Veritas.

MDCL-Frontline was named Sun Microsystems’ “Gold Partner”, “Best Sun ONE Solution Integrator” and “Best Storage Partner”.

September 2003Frontline Technologies received “Gold Solutions Partner” award from Hitachi.

October 2003Frontline Technologies Corporation increased stake in Chinese associate company, MDCL-Frontline (China) Ltd, from 35% to 43.46%.

MDCL-Frontline was awarded “Best LSP in High End Services” honour by Sun Microsystems.

November 2003Frontline Technologies Corporation acquired a 30% equity stake in Ecquaria Limited, a leading web service software infrastructure and solutions provider, for S$5.7 million. This investment adds strong e-Government, healthcare and e-entertainment capabilities to Frontline’s existing portfolio.

December 2004Frontline Technologies was awarded the ISO 9001:2000 certification for the provision of installation and support services for enterprise IT infrastructure and call centre services.

Frontline Solutions was awarded the ISO 9001:2000 certification for the provision of IT security services.

January 2004Frontline Technologies Corporation made inroads into the Indian IT industry with a 42% stake in Accel ICIM Systems and Services Limited, a leading IT solutions provider and outsourcing company in India.

MDCL-Frontline was named Veritas’ “Select Partner”, and Sun Microsystem’s “IForce System Provider”, “IForce Channel Development Provider” and “Local Strategic Provider (Diamond LSP)”.


operations

review >>

The world of information technology (IT) has never been so challenging. Exponential data growth, endless security issues and rising expectations of IT to bring about more business efficiencies place an ever increasing demand on companies to get the most out of their IT investments. And they are increasingly turning to IT service providers to deliver more value at a lower cost.

At Frontline, we have placed an even stronger focus on providing integrated services, helping our customers to innovate their operations and efficiently deliver through the use of IT. This effort has paid off. Growth in our IT services, in addition to further cost-containment efforts, has helped to fuel a solid year despite the Severe Acute Respiratory Syndrome (SARs) epidemic and weaker IT spending in Asia. As such, the Frontline Group achieved a net profit of S$3.5 million for the financial year ended 31 March 2004 (FY2004), a sharp reversal from the loss of S$5.3 million we saw in FY2003. Services contributed to 32% of total revenue in FY2004, up from 24% in FY2003.

In addition, the Group continued to strengthen its financial position. We ended the year with a strong balance sheet, having S$51.5 million in cash reserves after the payment of S$3.2 million in dividends.

Our presence in the Asia-Pacific region now spans six countries – Singapore, China, India, Malaysia, the Philippines and Thailand – giving us a combined talent network of over 2,000 IT professionals. Their various expertise and rich experience will enable us to increase the breadth and depth of our service offerings to customers across Asia.

Singapore >> Frontline’s Singapore operations continued to contribute to the bulk of the Group’s revenue with a 71.7% share of the total revenue. Demand for our IT security services remained strong, and customers leveraged our experience in large-scale deployments of IT security projects for both the public and private sectors.

Apart from infrastructure solutions, we further built up our offerings in the areas of IT outsourcing, cross-platform solutions and application software development, and secured contracts from companies in diverse industries in the financial services, telecommunications, transportation & logistics, healthcare, manufacturing, public and education sectors.

key projects in various sectors >> efficient data delivery for mobile portal. Our strong capabilities and expertise in the telecommunications domain won us a project from MobileOne Ltd (M1) to develop a leading mobile portal that would enable it to efficiently deliver data services to its target audience. Working closely with M1, we helped them to overcome the challenges of assimilating content from different sources and managing structured data (such as XML text) together with unstructured data within a single environment, so as to attract more content partners. In helping them to enhance their customer experience, we developed a solution that presents contents in optimized formats to different phone devices.

mission-critical system with 99.99% system-level guarantee. Another endorsement of Frontline’s competency came from one of the top transportation and logistics companies in the world. Strong collaboration with the client brought about the successful implementation of a highly available system with a service-level guarantee of 99.99% each year. In addition, we undertook the design and large-scale implementation of their enterprise data management back-up system, providing them with the benefits of centralised data management and proven methodologies for disaster recovery. The project was planned and implemented within a space of only three months.

data and application migration with minimal downtime. A project to migrate data and applications to a new system without interrupting business operations was carried out for a leading provider of digital entertainment products. At the same time, we drew up methodologies for the client’s new business continuity solutions in the face of growing business needs.

We also helped a manufacturer of industrial automation and control products to relocate their Asia-Pacific data centre within Singapore in November 2003. Working hand-in-hand with the client to manage the project and several vendors involved, we achieved this with just three months of planning and implemented all critical systems in only 18 hours.


operations

review >>

expertise in heterogeneous platforms. Frontline also demonstrated its strengths in managing the complexity of heterogeneous environments. In a project for a leading pharmaceutical company, we successfully consolidated and centralized back-up data from disparate technology silos across diverse platforms using one single solution.

infrastructure solutions for the manufacturing sector. In the manufacturing sector, Frontline installed the infrastructure for the e-business system of Chartered Semiconductor Manufacturing, one of the world’s top three dedicated semiconductor foundries. We also provided infrastructure solutions for Maxtor Corporation, a major supplier of hard disk drive storage products and solutions, and set up the first line of its factory information system in Suzhou.

more IT security offerings. In June 2003, Frontline was engaged to provide Betrusted’s (formerly Baltimore Technologies) high-trust security products, solutions and services in Singapore and the Asia-Pacific region, and to implement the UniCERTTM Public Key Infrastructure (PKI) software for several organizations, including a leading financial service provider and a government organization in Asia.

close collaboration with learning institutions. Maintaining our presence in the education sector, we secured and completed projects for the National University of Singapore, National Technological University, Ngee Ann Polytechnic, Singapore Polytechnic and other tertiary institutions.

managed services for customers’ convenience. In the area of managed services, our affiliate company, iAspire.Net Pte Ltd, provided data centre management and remote monitoring services for various existing customers in the manufacturing as well as service sectors. Moving forward into the new financial year, it will focus on expanding its range of service offerings to include hosted email applications, storage solutions as well as onsite management services to offer a more extensive range of outsourced services to its clients.

strengthening our growth in e-Government initiatives. In November 2003, we concluded the acquisition of a 30% stake in Ecquaria Limited of Singapore for S$5.7 million. The acquisition enabled us to tap into Ecquaria’s strengths in the government sector and integrate its Service Oriented PlatformTM (SOP) intellectual property for mission-critical applications into our service offerings. This will help us to grow our business in e-Government and other industries such as entertainment, education and finance.

China >> Our investment in China is proving to be well timed. According to Gartner, China’s IT services market grew 6.8% in 2003, with revenue reaching S$6.7 billion (US$3.7 billion). At the same time, enterprises in industries such as telecommunications and finance are becoming more sophisticated in their IT service demands. In line with these developments, Frontline increased our stake in MDCL-Frontline (China) Limited, our joint-venture company in China, by 8.46% due to the issue of bonus shares in October 2003. This has increased Frontline’s shareholding in MDCL-Frontline from 35% to 43.46%.

Although the SARs epidemic was a dampener for the economy, MDCL-Frontline saw a quick rebound in the second half of the calendar year 2003. Major new contracts were clinched from mainly the telecommunications, financial services, government, automotive and electronics manufacturing sectors.

In order to garner a larger share of the application solutions market, MDCL-Frontline embarked on the development of applications software for the financial services, telecommunication and retail industries. One significant development was the investment to set up a new software research and development (R&D) centre in the city of Tianjin. With this centre, the company will be able to embark on software development and R&D activities to develop and customize application software for the China market. MDCL-Frontline also commenced efforts to develop a new version of office automation and workflow applications targeted at the telecommunications and financial services sector. In addition, the company collaborated with Oracle to develop a Java-based version of a new Office Automation application software based on the Oracle Collaboration Suite (OCS).


operations

review >>

Major undertakings in FY2004 included the provision of IT infrastructure, system integration, customized office automation software as well as training and consulting services to mobile telecommunication operators Sichuan Mobile, Jilin Mobile and Fujian Mobile. MDCL-Frontline was also engaged to provide solutions and services to the Bank of Communications and the Industrial and Commercial Bank of China.

In another project, MDCL-Frontline developed and implemented an e-commerce system for UTStarcom in China. UTStarcom is a developer of wireless, optical and access switching solutions.

FY2004 also saw new wins in various other sectors. MDCL-Frontline clinched projects to offer infrastructure, system integration and consulting services for State Power’s branch video conferencing project. The company also implemented IT infrastructure solutions for carmaker Citroën Auto and started on supply chain system projects for foundries Semiconductor Manufacturing International Corporation and Grace Semiconductor Manufacturing Corporation.

Malaysia >> In a move to expand its enterprise application and IT security services, our Malaysian subsidiary, Frontline Technologies Corporation (M) Sdn Bhd, bought out the management of BizInfo Sdn Bhd, a software solutions provider in Malaysia, to form BizFront Sdn Bhd in July 2003. Frontline Malaysia was also able to expand its offerings with Bizfront’s proven firewall and secure VPN solutions, which are already widely deployed in banks, insurance companies, SMEs and government agencies in Malaysia.

Frontline Malaysia once again demonstrated its strengths in the education sector when it was engaged to provide infrastructure solutions for Kolej Universiti Kejuruteraan Teknologi, Universiti Putra Malaysia as well as the Ministry of Education.

In the financial services sector, Frontline Malaysia undertook infrastructure implementation for United Overseas Bank and application development for Malayan Banking Berhad.

Proving its ability to deliver, the company was awarded new contracts by existing customers Celcom Malaysia Berhad and the National Valuation Institute to supply, install and maintain high availability infrastructure.

Thailand >> Thailand’s IT industry grew 20.5% to 89 billion baht (S$3.7 billion) in 2003, and is expected to continue this upward trend to reach 103.2 billion baht (S$4.3 billion) in 2004 (Source: Association of Thai Computer Industry). Against this backdrop, our associate company, Logic Co., Ltd., continued to do well during the financial year, chalking up a turnover of 2.2 billion Thai baht (S$91.8 million) for its financial year ended 31 December 2003. Contributing significantly to Logic’s revenue were contract wins to provide data warehousing systems and infrastructure services to enterprises in the telecommunications, banking, and automotive industries.

Key customers for the year included Hutchinson Wireless, Advanced Info Service, a leading wireless operator, Krung Thai Bank, Bank of Thailand, Kasikorn Bank and Bank of Ayudhya. Other clients included Toyota and Thai Airways International.

Working with Ecquaria’s SOP solution, Logic also won several contracts in the education sector, providing solutions and services for institutions such as Burapha University and Rajamangala Institute of Technology.

The Philippines >> Business conditions for IT providers in the Philippines continued to be challenging due to political and economic uncertainties. Nevertheless, our subsidiary, IT Holdings Incorporated, through Sun Microsystems Philippines, Inc., garnered a number of projects in various sectors.

Major contracts were secured from BayanTel and SMART Communications Inc. in the telecommunications industry, the Bureau of Internal Revenue and Maynilad, Inc. in the government sector, as well as Analog Devices and Philips Semiconductors in the high-tech industry.

Going forward into the next financial year, the company will keep an intense focus on measures for recovery and for building up its share in the market.


operations

review >>

India >> Frontline made inroads into the Indian IT industry with the purchase of a 42% stake in Accel ICIM Systems and Services Limited, a leading IT solutions provider and outsourcing company in India, in January 2004. Concluded in June 2004, this S$13 million investment gives Frontline a strong foothold in India’s booming domestic market, with 40 offices nationwide and over a hundred outsourced service locations in India.

We are also able to leverage Accel ICIM’s lower cost, yet highly skilled pool of talented 1,200 IT professionals, as well as excellent customer base in the manufacturing, banking and finance, government and education, telecommunications and software services industries. Key customers of Accel ICIM include Life Insurance Corporation of India, Central Excise & Customs, Centre for Railway Information Systems, Bharat Heavy Electricals Ltd., Bharti Tele-Ventures, General Electric, Indian Airlines, Seagate, Sony Ericsson, and Alcatel.

With Accel ICIM, we are well positioned to grow our outsourcing and software businesses, particularly in the India market. According to studies by McKinsey, the Indian IT industry is expected to grow to S$120.4 billion (US$70 billion) by 2008, with software and IT services expected to account for about 40% of the total market.

In addition, Accel ICIM’s software development centre, certified to the Software Engineering Institute-Capability Maturity Model (SEI-CMM) for software quality and productivity, will serve as a strategic offshore development base for Frontline’s clients in Asia.

awards and accolades >> In line with our emphasis on providing high-quality services, we achieved certification to the ISO 9001:2000 standard for installation and support services for enterprise IT infrastructure, call centre services and IT security services during the year.

FY2004 also marked the start of our second decade with more awards and accolades. In July 2003, Frontline was voted one of the fastest growing companies in Singapore as part of the Singapore 1000 and SME 500 rankings, in which companies are ranked according to their annual audited financial results.

We continued to top various partners’ list of awards and accolades, winning the “Value Added Reseller” award from Oracle for the third time. Other awards include “Gold Solutions Partner” from Hitachi, and Sunshine Award (Platinum) from Sun Microsystems, and “Elite Partner” and “Most Strategic Win 2003” from Veritas. Outside of Singapore, MDCL-Frontline was awarded several honours from Sun Microsystems and Veritas. In addition, our subsidiary in Malaysia was selected as a partner of Apple.

moving forward >> While Frontline continues to extend our presence throughout Asia, we will continue to manage this expansion with increased competitiveness and constant innovation in our service offerings to keep ahead. All with the aim of delivering differentiated value to our customers. This, together with the critical mass and solid strengths that Frontline has built up, puts the Group in a strong position to take advantage of growth opportunities in FY2005.

Lim Chin Hu

President & Chief Executive Officer

Frontline Technologies Corporation Ltd


financial

highlights >>

FY2004 FY2003 Change (%)

Consolidated profit & loss account (S$’000)Turnover 106,786 122,863 (13.1)

Profit before amortisation, exceptional items & taxation 6,906 2,558 170.0

Net profit (loss) before taxation 5,261 (6,184) NM

Profit (loss) attributable to shareholders 3,483 (5,274) NM

Consolidated balance sheets (S$’000)Total assets 142,758 145,738 (2.0)

Net assets 89,130 84,505 5.5

Shareholders’ funds 84,787 79,320 6.9

Consolidated cash flow statement (S$’000)

Net cash from operating activities 1,718 14,611 (88.2)

Net cash used in investing activities (1,284) (1,669) 23.1

Net cash used in financing activities (3,238) (1,330) (143.5)

Cash and cash equivalents (Note1) 50,143 52,946 (5.3)

Divident per share (cents) 0.50 0.25 100.00

Per Share Data (cents)Basic earnings (loss) 0.44 (0.67) NM

Diluted earnings (loss) 0.44 (0.67) NM

Net assets value 10.87 10.73 1.3

Return on shareholders’ funds (%) 4.2 (6.4) NM

(Note2)

note 2: return

group

structure >>

Frontl ine Technologies Corporat ion LimitedFrontline Technologies Pte LtdEquity held: 100%

Singapore

Investees / Associates / Affiliates

Regional Operations

Singapore Operations

Frontline Solutions Pte LtdEquity held: 100%

Singapore

Green House Group Pte LtdEquity held: 100%

Singapore

iAspire.Net Pte LtdEquity held: 19.3%Singapore

FTI Ventures Pte LtdEquity held: 60%Singapore

iGine Pte LtdEquity held: 10.2%Singapore

Ecquaria LtdEquity held: 30%British Virgin Islands

Frontline Technologies Corporation (M) Sdn BhdEquity held: 100%

Malaysia

Frontline Technologies (M) Sdn BhdEquity held: 100%Malaysia

FTI, IncEquity held: 100%

Mauritius

MDCL-Frontline (China) LimitedEquity held: 43.46%British Virgin Islands

G-Able Co., LtdEquity held: 20.5%

Thailand

Modern Devices (China) LtdEquity held: 100%Hong Kong

Beijing Huan YaEquity held: 100%People’s Republic of China

Ecquaria Technologies Pte LtdEquity held: 100%

Singapore

Bizfront Sdn BhdEquity held: 100%Malaysia

Excite Symphony Sdn BhdEquity held: 100%Malaysia

IT Holdings, IncEquity held: 49%

Philippines

Sun Microsystems Philippines LtdEquity held: 51%Philippines

PSPI – Subic IncEquity held: 100%Philippines

Accel ICIM Systems & Services LimitedEquity held: 42%

India

ACL Systems & Technologies Pte LtdEquity held: 99.99%Singapore

Accel Infotech MEEquity held: 100%Dubai

Xian Feng Ke JiEquity held: 100%People’s Republic of China


From left to right: Tay Swee Sze, Liow Voon Kheong, Lim Chin Hu, Steve Ting Tuan Toon, Shirley Wong Swee Ping, Robert Yap Min Choy and Harrison Wang Hong She. Absent: Robert Michael Stein


board of

directors >>

Steve Ting Tuan Toon >> Founder, Executive Chairman and Director. Mr. Steve Ting Tuan Toon is a veteran in the technology industry with more than 20 years of experience. He has held several management positions in Hewlett Packard Singapore and Mentor Graphics Corporation Pte Ltd. He started his first company, Mentor Graphics Associates Pte Ltd, in 1993 and subsequently Frontline Technologies Pte Ltd in 1994. Mr. Ting served in various committees in tertiary institutions in Singapore and is also active in providing guidance in entrepreneurship via lectures and seminars. In recognition of his entrepreneurial achievements, Mr. Ting was conferred the honorary title of Doctor of Philosophy in Business Administration from the Wisconsin International University, USA in 2002. He was also named Ernst and Young’s Entrepreneur of the Year (Business Services & Technology) in 2002. Mr. Ting holds a Bachelor of Engineering degree from the National University of Singapore, a postgraduate degree from the Institute of Marketing in the United Kingdom and a graduate diploma in Marketing Management from the Singapore Institute of Management.

Lim Chin Hu >> President, Chief Executive Officer and Director. As the Group President & CEO of Frontline Technologies Corporation Ltd, Mr. Lim Chin Hu oversees its regionalization plan and operations. Mr. Lim has more than 20 years of management experience in the IT industry. Prior to joining Frontline, he was with Sun Microsystems, Inc. where he held several positions, including Managing Director for Sun Microsystems Singapore, Country Manager for Sun Microsystems in Thailand, Indonesia, Philippines and Vietnam, and Director of e-Business and Channels for Sun Asia-Pacific. Before he joined Sun Microsystems, he held several managerial roles at Hewlett-Packard Singapore Pte Ltd. He has also worked with a Singapore-based IT company for several years. Mr. Lim serves in several government bodies including being a council member in the Singapore Infocomm Technology Federation (SITF) as well as Singapore’s Information Technology Standards Committee (iTSC). He also serves as a board member of the Infocomm Development Authority of Singapore (IDA) and sits on the audit sub-committee of the IDA board. Mr. Lim holds a diploma in Electrical and Electronics Engineering from Ngee Ann Polytechnic and a Bachelor of Computer Science degree from the La Trobe University, Melbourne, Australia.

Shirley Wong Swee Ping >> Co-founder, Vice President and Director. Ms. Shirley Wong Swee Ping is currently the Managing Director of Frontline Solutions Pte Ltd and has more than 14 years of experience in the IT industry. Before founding Frontline, Ms. Wong was Sales Director at Mentor Graphics Associates Pte Ltd, Design Engineer at Chartered Electronics Industries Ltd, Regional Applications Manager at Cadnetix Pte Ltd (formerly known as Dazix Pte Ltd and subsequently Intergraph Pte Ltd) and Design Manager at Flextronics Pte Ltd. Ms. Wong holds a diploma in Electrical and Electronics Engineering from City and Guilds in the United Kingdom.

Tay Swee Sze >> Independent Director. Mr. Tay Swee Sze, a practising Certified Public Accountant, is the Managing Director of TSS Advisory Pte Ltd, which focuses on business financial advisory services. Up till June 2000, he was a partner at Arthur Andersen, Singapore and headed its Global Corporate Finance Division, primarily responsible for Corporate Recovery Services. Mr. Tay also served as partner in the Audit & Business Advisory division, in its Emerging Business group. Prior to re-joining Arthur Andersen, Mr. Tay was the Deputy Regional Financial Controller at Citibank Asia Pacific Consumer Bank from 1989 to 1993. He is a member of the Institute of Certified Public Accountants of Singapore. Mr. Tay holds a Bachelor of Accountancy (Hons) degree from the then University of Singapore, now known as the National University of Singapore.


board of

directors >>

Robert Yap Min Choy >> Non-executive Director. Mr. Robert Yap Min Choy is the Chief Executive Officer of PSA (Asia & Middle East). He concurrently serves as the Chairman of DBHR Pte Ltd and Autoscan Pte Ltd, Deputy Chairman of Dalian Portnet Co Ltd and as a board director for various other subsidiaries within the PSA Group including PSA International, PSA China, CWT Distribution Ltd (listed in Singapore), CIAS International Pte Ltd and COSMOS NV (Belgium). Prior to joining PSA Corporation, Mr. Yap was the Director of Corporate Information Technology with PHILIPS Electronics Asia Pacific. Mr. Yap holds a Bachelor of Mechanical Engineering (Hons) degree and Master of Engineering Science degree from the University of New South Wales, Australia.

Liow Voon Kheong >> Non-executive Director. Mr. Liow Voon Kheong is CEO of EDBV Management Pte Ltd, a wholly owned venture capital/private equity fund management subsidiary under EDB Investments Pte Ltd. Mr. Liow has been with the Economic Development Board since 1976. He has held various senior positions including Division Director (Electronics) for over 20 years developing a vibrant worldclass electronics industry in Singapore, and has led EDB’s development efforts for some 15 years to build up Singapore’s emerging venture capital industry since the mid 1980’s. He was EDB’s Assistant Managing Director (Operations) until end 2001, and General Manager of EDB Investments, the strategic co-investment arm of EDB until 2003. Mr. Liow graduated from the National University of Singapore with a Bachelor of Electrical and Electronics Engineering degree and a diploma in Business Administration.

Robert Michael Stein >> Non-executive Director. Mr. Robert Michael Stein is currently a Managing Board Member of West Deutsche Landesbank. Prior to joining WestLB, he was CEO of Adelphi Capital Partners and also a Board Director of the Singapore Stock Exchange. He has also served as CEO of Deutsche Bank Group, Asia Pacific, Head of Debt and Equity Markets at Merrill Lynch, Asia Pacific (Hong Kong) and was with Lazard Freres’ Government Advisory Group, “Troika” (New York). Mr. Stein holds a Master of Science degree in International and Development Economics from Oxford University and a Bachelor of Arts (Hons), Philosophy and Biochemistry degree from Dartmouth College.

Harrison Wang Hong She >> Independent Director. Dr. Harrison Wang Hong She is the Chief Executive Officer of EM Partners Pte Ltd, the investment advisor for the e-millennium Asia fund which was set up by Deutsche Bank in 2000.Dr. Wang joined Deutsche Bank in 2000 as Managing Director, Head of e-Business Asia Pacific with the main responsibility of setting up and running the e-millennium Asia fund. Previously, Dr. Wang was Managing Director for GE & GE Capital, responsible for its Asia business development and various other businesses. Dr. Wang has more than 10 years of experience in Silicon Valley covering industrial automation technologies and venture capital investments for institutions including Dyna Mechtronics, H&Q Asia Pacific, Adept Technology and Stanford Artificial Intelligence Laboratory. Dr. Wang holds a Doctor of Philosophy in Robotics and Industrial Automation and a Master of Science degree in Mechanical Engineering both from Stanford University, and a Bachelor of Science degree in Mechanical Engineering from the National Taiwan University.


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board of directors >>Steve Ting Tuan Toon Executive chairman

Lim Chin Hu President & CEO, Executive director

Shirley Wong Swee Ping Vice president, Executive director

Tay Swee Sze Independent director

Harrison Wang Hong She Independent director

Robert Yap Min Choy Non-executive director

Robert Michael Stein Independent director

Liow Voon Kheong Non-executive director

Good corporate governance enhances the interests of all shareholders by establishing and maintaining an ethical environment. Frontline Technologies Corporation Ltd (“Company”) is therefore committed to maintaining the highest standards of corporate governance. This report describes the Company’s corporate governance processes and activities in accordance with the Code of Corporate Governance (“Code”).

1. board of directors [principles 1, 2, 3 and 6] >>The Company is headed by an effective board of directors to lead and control its operations and affairs. The Company’s board of directors (“Board”) consists of eight directors and the Board is of the view that the current board size is appropriate, taking into account the nature and scope of the Company’s operations. The Company’s board composition and balance comprises of five (5) non-executive directors, three (3) of whom are independent directors. In compliance with the Code, independent directors make up at least one-third of the Board by the end of this financial year. The objective judgment of the independent and non-executive directors on corporate affairs and their collective experience and contributions are valuable to the Company.

The Board comprises of businessmen and professionals with strong financial and entrepreneurial backgrounds. Their collective knowledge and experience provides the Board with the necessary expertise to effectively direct and lead the Company.

The Board meets at least twice a year to supervise the management of business and affairs of the Group. It approves the Group’s corporate and strategic direction, appointment of directors, major funding and investments proposals, and reviews the financial performance of the Group. All transactions concerning mergers and acquisitions, including material capital investment, are discussed and come under the Board’s purview.

To enable the Board to fulfill its responsibilities, the management (“Management”) provides the Board with regular periodic updates containing complete, adequate and timely information prior to Board meetings. In the event the directors, whether as a group or individually, need independent professional advice, the Company will, upon direction by the Board, appoint a professional advisor selected by the group or the individual to render the advice. Newly appointed directors are briefed by the Management on the business activities of the Group and its strategic directions and will also be updated on major events of the Company.

audit comittee >>Tay Swee Sze Chairman

Harrison Wang Hong SheSteve Ting Tuan Toon

nomination committee >>Harrison Wang Hong She Chairman

Tay Swee SzeSteve Ting Tuan Toon

compensation committee >>Harrison Wang Hong She Chairman

Tay Swee SzeSteve Ting Tuan Toon


The Board believes that the independent directors have demonstrated high commitment in their role as directors and have ensured that there is a good balance of power and authority.

The Company’s Chairman and CEO positions are separate and held by different persons with clear division of responsibilities. They are the most senior executives in the Company and bear executive responsibility for the Company’s business, as well as the workings of the Board.

The Chairman and CEO ensure that board meetings are held when necessary and set the board meeting agenda in consultation with the directors. The Chairman and CEO reviews most board papers before they are presented to the Board and ensures that board members are provided with complete, adequate and timely information. As a general rule, board papers are sent to directors in advance in order for directors to be adequately prepared for the meeting. Management staff who have prepared the papers, or who can provide additional insight into the matters to be discussed, are invited to present the paper or attend at the relevant time during the board meeting. The Chairman assists to ensure that procedures are introduced to comply with the Code.

The Company Secretary attends all Board meetings and ensures that Board procedures are followed. The Company Secretary also ensures that requirements of Companies Act and all other rules and regulations of the Singapore Exchange Securities Trading Limited (“SGX-ST”) are complied with.

2. audit committee [principle 11] >>The Audit Committee (“AC”) comprises of two (2) independent non-executive directors and one (1) executive director. All members have accounting or related financial and investment management background.

The AC meets at least twice a year to review the announcements of the half-year and full-year results before being approved by the Board for release to the SGX-ST. The AC intends to meet at least four times a year as part of the ongoing preparations towards the possible announcements of the quarterly results.

The key responsibilities of the AC include the following:

• To review, the external and internal audit plans, including the nature and scope of the audit before the audit commences, the internal auditors’ evaluation of the Company’s system of internal controls, the external and internal audit reports and management letter issued by the external auditors and Management’s response to the letter.

• To review the announcements of the interim and annual results prior to their submission to the Board for approval for release to the SGX-ST.

• To review interested person transactions in accordance with the requirements of the Listing Rules of the SGX-ST.

• To review all non-audit services provided by the external auditors to determine if the provision of such services would affect the independence of the external auditors.

• To review and recommend the re-appointment of the external auditors, etc.

The AC may meet with the external auditors at any time, without the presence of the Company’s Management. It may also examine any other aspects of the Company’s affairs, as it deems necessary where such matters relate to exposures or risks of regulatory or legal nature, and monitor the Company’s compliance with its legal, regulatory and contractual obligations.

The AC has reviewed the non-audit services provided by the external auditors, Messrs Ernst & Young, and is of the opinion that the provision of such services does not affect their independence. The AC has recommended the re-appointment of Messrs Ernst & Young as external auditors at the Company’s forthcoming annual general meeting.

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3. nomination committee [principles 4 and 5] >>The Nomination Committee comprises of two (2) independent non-executive directors and one (1) executive director. The NC is regulated by its charter and is responsible for making recommendations to the Board on all Board appointments and re-appointments through a formal and transparent process.

Its key functions include the following:

• To review to determine the independence of each director.

• To conduct a formal assessment of the effectiveness of the Board as a whole and the contribution by each director to the effectiveness of the Board, particularly when a director serves on multiple Boards.

Under the Company’s articles of association, at least one-third of the directors are required to retire by rotation at each annual general meeting and all newly appointed directors will have to retire at the next annual general meeting following their appointment. The retiring directors are eligible to offer themselves for re-election.

The NC has recommended the re-appointment of retiring director, Mr Tay Swee Sze, at this forthcoming annual general meeting. The Board has accepted the NC’s recommendation and Mr Tay will be offering himself for re-election.

4. compensation committee [principle 7] >>The Compensation Committee (“CC”) consists of two (2) independent directors and one (1) executive director. The CC is chaired by an independent director and regulated by its charter. Its key functions include the following:

• To recommend to the Board a framework of remuneration for executive directors and key executives that are competitive and sufficient to attract, retain and motivate key executives of the required quality to run the Company successfully.

• To review and determine the specific remuneration packages and terms of employment for each executive director and senior executives.

The CC will be meeting during the year ending 31 March 2005 to review and determine the remuneration packages of the executive directors and key executives. The CC shall ensure that directors are adequately but not excessively remunerated. The CC shall also consider, among other things, their responsibilities, skills, expertise and contribution to the Company’s performance and whether the remuneration packages are competitive and sufficient to ensure that the Company is able to attract and retain the best available executive talent.

No individual director is involved in fixing his own remuneration. One (1) non-executive director is paid directors’ fees annually on a standard fee basis, which the remaining non-executive directors do not receive any remuneration for their services.

5. disclosure on remuneration [principle 8 and 9] >>

Remuneration of Directors 2004

$500,000 and above $0 0

$250,000 to below $500,000 1

Below $250,000 2

Remuneration of Directors for the Year Ended 31 March 2004

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Remuneration Band and Base Salary Bonuses Fees Name of Director (%) (%) (%)

$500,000 and above N.A. N.A. N.A. NIL

$250,000 to below $500,000 N.A. N.A. N.A. NIL

Below $250,000

Steve Ting Tuan Toon 96.19 3.81 –

Lim Chin Hu 96.17 3.83 –

Shirley Wong Swee Ping 94.31 5.69 –

Tay Swee Sze – – 100

Harrison Wang Hong She – – –

Tang Chun Choy – – –

Liow Voon Kheong – – –

Robert Yap Min Choy – – –

Robert Michael Stein – – –N.A.- Not Applicable

Remuneration of 5 top key executives of the Group for the year ended 31 March 2004

Remuneration Band and Base Salary Performance-related bonus Benefits-in-kind Name of director (%) (%) (%)Peter Goh Beng Hwa 84.92 5.21 9.87

Cheong Yen Niap 81.91 5.06 13.03

Chiam Heng Huat 91.30 0.00 8.70

Jimmy Tan Heng Chin 46.50 46.34 7.15

Yan Chin Hwang 61.55 28.19 10.26

6. executive management >>The three (3) executive directors are collectively responsible for managing the business and operations of the Company and its subsidiaries. A system of monthly management performance reviews, coupled with a formalized business entity/portfolio management and reporting system ensures accurate and up-to-date business performance and leadership guidance for the business and operations of the Company and its subsidiaries.

7. key management staff >>The background of the key management staff are as follows:

Steve Ting Tuan Toon >> Founder, Executive Chairman and Director. Mr. Steve Ting Tuan Toon is a veteran in the technology industry with more than 20 years of experience. He has held several management positions in Hewlett Packard Singapore and Mentor Graphics Corporation Pte Ltd. He started his first company, Mentor Graphics Associates Pte Ltd, in 1993 and subsequently Frontline Technologies Pte Ltd in 1994. Mr. Ting served in various committees in tertiary institutions in Singapore and is also active in providing guidance in entrepreneurship via lectures and seminars. In recognition of his entrepreneurial achievements, Mr. Ting was conferred the honorary title of Doctor of Philosophy in Business Administration

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from the Wisconsin International University, USA in 2002. He was also named Ernst and Young’s Entrepreneur of the Year (Business Services & Technology) in 2002. Mr. Ting holds a Bachelor of Engineering degree from the National University of Singapore, a postgraduate degree from the Institute of Marketing in the United Kingdom and a graduate Diploma in Marketing Management from the Singapore Institute of Management.

Lim Chin Hu >> President, Chief Executive Officer and Director. As the Group President & CEO of Frontline Technologies Corporation Ltd, Mr. Lim Chin Hu oversees its regionalization plan and operations. Mr. Lim has more than 20 years of management experience in the IT industry. Prior to joining Frontline, he was with Sun Microsystems, Inc. where he held several positions, including Managing Director for Sun Microsystems Singapore, Country Manager for Sun Microsystems in Thailand, Indonesia, Philippines and Vietnam, and Director of e-Business and Channels for Sun Asia-Pacific. Before he joined Sun Microsystems, he held several managerial roles at Hewlett-Packard Singapore Pte Ltd. He has also worked with a Singapore-based IT company for several years. Mr. Lim serves in several government bodies including being a council member in the Singapore Infocomm Technology Federation (SITF) as well as Singapore’s Information Technology Standards Committee (iTSC). He also serves as a board member of the Infocomm Development Authority of Singapore (IDA) and sits on the audit sub-committee of the IDA board. Mr. Lim holds a Diploma in Electrical and Electronics Engineering from Ngee Ann Polytechnic and a Bachelor of Computer Science degree from the La Trobe University, Melbourne, Australia.

Shirley Wong Swee Ping >> Co-founder, Vice President and Director. Ms. Shirley Wong Swee Ping is currently the Managing Director of Frontline Solutions Pte Ltd and has more than 14 years of experience in the IT industry. Before founding Frontline, Ms. Wong was Sales Director at Mentor Graphics Associates Pte Ltd, and Design Engineer at Chartered Electronics Industries Ltd, Regional Applications Manager at Cadnetix Pte Ltd (formerly known as Dazix Pte Ltd and subsequently Intergraph Pte Ltd) and Design Manager at Flextronics Pte Ltd. Ms. Wong holds a Diploma in Electrical and Electronics Engineering from City and Guilds in the United Kingdom.

Cheong Yen Niap >> Managing Director. Mr. Cheong Yen Niap is the Managing Director of Frontline Technologies Pte Ltd and has more than 15 years of experience in the IT industry. Prior to joining Frontline Technologies in July 2000, he has held sales and marketing appointments at several technology corporations, including Sun Microsystems Pte Ltd, IBM Singapore Pte Ltd, Sequent Computer Systems and Tandem Computers. His last appointment was at Sun Microsystems Pte Ltd as its Regional Manager (Financial Services Industry). He holds a Bachelor of Engineering degree from the Nanyang Technological University.

Chiam Heng Huat >> Chief Financial Officer. Mr. Chiam Heng Huat is the Chief Financial Officer of Frontline Technologies Corporation Ltd. He has some 15 years of financial management and public accounting experience in both large multinational corporations as well as public-listed organizations in Singapore. Prior to joining Frontline, he has had experience in various merger-and-acquisition transactions as well as due diligence exercises, both on the buy-side and sell-side. To his credit, he has led in Pacific Internet’s acquisition of five Internet Service Providers in Australia and the Asia-Pacific region. He was also instrumental in the financial and legal restructuring of these acquisitions. After his career stint with Pacific Internet, he joined the Internet Capital Group Asia and Commerce Exchange Pte Ltd holding similar positions. Mr Chiam holds a Bachelor of Commerce and Administration degree from the Victoria University of Wellington.

Peter Goh >> Group Chief Executive Officer. Mr. Peter Goh is the Group CEO of Frontline Technologies Corp (M) Sdn Bhd. Prior to joining Frontline Malaysia in September 2000, he has held sales and marketing appointments at several technology corporations, including Lotus Development Corporations, Sun Microsystems, IBM Singapore, AT&T GIS and NCR. His last appointment was at Lotus Development as its Managing Director, Asia South. He holds a Bachelor of Science degree from the National University of Singapore.

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8. investment committee >> The Company’s investment committee (“Investment Committee”) comprises members of the AC. The Investment Committee approves investment proposals, and undertakes investment risk management and oversees of the Company’s various investments and portfolio companies.

9. internal controls and internal audit [principles 12 and 13] >>The Board believes in the importance of maintaining a sound system of internal controls to safeguard the interests of the shareholders and the Company’s assets. To achieve this, internal reviews are constantly being undertaken to ensure that the system of internal controls maintained by the Company is sufficient to provide reasonable assurance that the Company’s assets are safeguarded against loss from fraud or other irregularity, unauthorized use or disposition, that transactions are properly authorized and proper financial records are being maintained.

As part of the yearly statutory audit on the financial statements, the external auditors report to the AC and the appropriate level of management any material weaknesses in financial internal controls over the areas which are significant to the audit.

Based on internal control reviews carried out by the Company, the Board is assured that adequate internal controls are in place. The Company outsources its internal audit functions to external consultants.

10. shareholder communications [principles 10, 14, and 15] >>The Board is mindful of the obligation to provide timely and fair disclosure of material information. The Board is accountable to the shareholders while the Management is accountable to the Board. Results and other material information are released through the MASNET system on a timely basis for dissemination to shareholders and the public in accordance with the requirements of the SGX-ST. A copy of the Annual Report and Notice of the annual general meeting are sent to every shareholder of the Company. The Notice is also advertised in the newspapers and is also made available on the SGX’s website. During annual general meetings, shareholders are given opportunities to speak and seek clarifications concerning the Company.

11. dealings in the company’s securities >>The Company has adopted internal guidelines to provide guidance to key officers of the Company and its subsidiaries with regard to dealings in the Company’s securities in compliance with the Best Practices Guide of the SGX-ST.

12. directors’ attendance at board and committee meetings >>

Board AC NC CC

Total held for Year Ended 31/3/2004 3 3 1 1

Steve Ting Tuan Toon 3 3 1 1

Lim Chin Hu 3 NA NA NA

Shirley Wing Swee Ping 3 NA NA NA

Tay Swee Sze 3 3 1 1

Harrison Wang Hong She 3 3 1 1

Liow Voon Kheong 2 NA NA NA

Robert Yap Min Choy 3 NA NA NA

Robert Michael Stein 2 NA NA NA

Tang Chun Choy* 1 NA NA NA

Sim Wong Hoo/Ng Keh Long (Alt)* 2 NA NA NA*Resigned during the financial year ended 31 March 2004.

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13. material contracts >>No material contracts were entered between the Company or any of its subsidiaries with any director or controlling shareholder during the financial year ended 31 March 2004.

14. interested person transactions (“IPTs”) >>The Company has in place proper policies and procedures for the identification, approval and monitoring of transactions with interested persons. All interested person transactions are subject to review by the AC. Currently, the Company is not required to have a general mandate from its shareholders in relation to IPTs as the aggregate value of IPT transactions is below the threshold level as set out in the Listing Manual of the SGX-ST. For financial year ended 31 March 2004, the total value of IPT transactions was S$33,876.33. Pursuant to rule 907 of the SGX-ST Listing Manual:

Name of interested person Aggregate value of all IPTs during the financial year under review (excluding transactions less than $100,000 and

transactions conducted under the shareholders’ mandate pursuant to

Rule 920)

Aggregate value of all IPTs conducted under the shareholders’ mandate pursuant to Rule 920 (excluding transactions less than $100,000)

Total NIL

statistics of shareholders as at 16 july 2004 >>

Authorised Share Capital S$100,000,000

Issued & Fully Paid-Up Capital S$40,995,379.60

Class of Share Ordinary shares of S$0.05 each

Voting Rights 1 vote per share

analysis of shareholders by range of balances as at 16 july 2004 >>Size of Holdings Number of Shareholders % Number of Shares %

1-999 4 0.05 508 0

1,000-10,000 3,382 42.86 21,143,339 2.58

10,001-1,000,000 4,463 56.56 256,549,217 31.29

1,000,001 and above 42 0.53 542,214,528 66.13

TOTAL 7,891 100.00 819,907,592 100.00

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substantial shareholders >>

S/No Name of Substantial Shareholder Direct Interest Deemed Interest (ord shares of $0.05) (ord shares of $0.05)1 Steve Ting Tuan Toon 21,274,548 80,000,0001

2 E-Millenium Asia Fund, LP 58,886,000

3 CTI II Limited 56,250,252

4 Creative Technology Ltd – 56,250,2522

5 Sim Wong Hoo – 56,250,2522

6 Portnet.com Pte Ltd 50,000,000

7 PSA Corporation Limited 50,000,0003

8 Temasek Holdings Pte Ltd – 51,000,0004

Note:1 Deemed interest in ordinary shares held by Mr. Steve Ting Tuan Toon’s Nominees.2 Deemed interest in ordinary shares each held by CTI II Limited.3 Deemed to have an interest in ordinary shares held by Portnet.com Pte Ltd.4 Deemed to have an interest in ordinary shares held by Keppel Corporation Group of Companies and PSA Corporation Group of Companies.

list of top 20 shareholders as at 16th july 2004 >>

Name of Shareholders No. of Shares % of Holdings 01. Steve Ting Tuan Toon 101,274,548 12.35

02. E-Millenium Asia Fund, LP 58,860,000 7.18

03. CTI II Limited 56,250,252 6.86

04. Portnet.Com Pte Ltd 50,000,000 6.10

05. Lorani Pte Ltd 40,293,228 4.91

06. Lim Chin Hu 39,025,000 4.76

07. EDB Ventures 2 Pte Ltd 26,654,431 3.25

08. Shirley Wong Swee Ping 21,263,570 2.59

09. DBS Nominees Pte Ltd* 11,900,000 1.45

10. United Overseas Bank Nominees Pte Ltd 11,335,000 1.38

11. UOB Kay Hian Pte Ltd 11,177,319 1.36

12. OCBC Securities Private Ltd 10,760,000 1.31

13. Citibank Consumer Nominees Pte Ltd 8,954,000 1.09

14. Citibank Nominees Singapore Pte Ltd* 7,496,039 0.91

15. Phillip Securities Pte Ltd 7,161,000 0.87

16. Oversea Chinese Bank Nominees Pte Ltd 6,917,000 0.84

17. Digital Zillion Sdn Bhd 6,800,000 0.83

18. Kim Eng Securities Pte Ltd 5,718,000 0.70

19. DBS Vickers Securities (S) Pte Ltd 5,543,000 0.68

20. Raffles Nominees Pte Ltd* 4,735,770 0.58

Total 492,118,157 60*excludes declared beneficial interests of other Top 20 Shareholders

On the basis of the information available to the Company, approximately 56.53% of the equity securities of the Company (excluding preference shares & convertible equity securities) are held in the hands of the public. This is in compliance with Rule 723 of the Listing Manual of the SGX-ST, which requires at least 10% of a listed issuer’s equity securities to be held by the public.

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directors’ report >>

statement by directors pursuant to section 201 (15) >>

auditors’ report >>

balance sheets >>

consolidated profit and loss account >>

consolidated statement of changes in equity >>

consolidated cash flow statement >>

notes to the financial statements >>

notice of annual general meeting >>

proxy form >>

financials >>35

39

40

41

43

44

45

49

82

100

financial

pages >>


directors’

report >>

The directors are pleased to present their report to the members together with the audited consolidated financial statements of Frontline Technologies Corporation Ltd (the “Company”) and its subsidiaries (the “Group”) for the financial year ended 31 March 2004 and balance sheet of the Company as at 31 March 2004.

Directors >>The directors of the Company in office at the date of this report are:

Steve Ting Tuan Toon Lim Chin Hu Shirley Wong Swee Ping Tay Swee Sze Harrison Wang Hong She Yap Min Choy Liow Voon Kheong Robert Michael Stein

Arrangements to enable directors to acquire shares or debentures >>Saved as disclosed in the financial statements, neither at the end nor at any time during the financial year was the Company a party to any arrangement whose object was to enable the directors or the Company to acquire benefits by means of the acquisition of shares or debentures of the Company or any other body corporate.

Directors’ interests in shares or debentures >>The interests of the directors who held office at the end of the financial year in the shares or debentures of the Company and related corporations, according to the register kept by the Company for the purposes of section 164 of the Singapore Companies Act, Cap. 50, were as follows:

Held by director as at

1 April 2003 31 March 2004 21 April 2004

The CompanyOrdinary shares of $0.05 each

Steve Ting Tuan Toon 100,874,548 100,874,548 100,874,548Shirley Wong Swee Ping 21,263,570 21,263,570 21,263,570Lim Chin Hu 38,925,000 39,025,000 39,025,000Tay Swee Sze 1,282,000 1,282,000 1,282,000

Except as disclosed above, no other director had an interest in the shares or debentures of any company in the Group either at the beginning or the end of the financial year and on 21 April 2004.



directors’

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Directors’ contractual benefits >>Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than a benefit or any fixed salary of a full-time employee of the Company included in the aggregate amount of emoluments shown in the financial statements, or any emoluments received from related corporations) by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest.

Share options >>Frontline Technologies Corporation Ltd Share Option Scheme 2000 (“the Scheme”)The Scheme was approved by the members of the Company at an Extraordinary General Meeting held on 19 September 2000. The scheme provides an opportunity for employees and executive and non-executive directors of the Group to participate in the share capital of the Company. The scheme serves to motivate employees to optimise their performance standards, dedication and efficiency and promote the retention of employees.

The scheme is administered by the Compensation Committee comprising the following directors:

Harrison Wang Hong She (Chairman) Tay Swee Sze Steve Ting Tuan Toon

On 28 January 2002, the Company issued 104,860,000 options to the employees of the Group to subscribe for ordinary shares of the Company of $0.05 each at the discounted price of $0.22 per share. The exercise period of the option is from 28 January 2004, where up to 33% of options granted to the employees may be exercised, to 28 January 2006 where 100% of the options may be exercised. Options granted are cancelled when the option holder ceases to be in full-time employment of the Company or any corporation in the Group.

No options were issued during the financial year and none were exercised.

Movement in the number of share options outstanding are as follows:

OptionsAs at 28 January 2002 104,860,000Cancellation during the year (13,600,000)

As at 31 March 2002 91,260,000Cancellation during the year (15,596,000)


As at 31 March 2004 47,771,000

As at 31 March 2004, no options have been granted to directors of the Company, controlling shareholders of the Company or associated of the company and no employees have received 5% or more or the total options available under the Scheme.

The options under the Scheme do not entitle the holder to participate in any share issue of any other corporation by virtue of the option. As at 31 March 2004, no options have been exercised under this Scheme in the Group.

directors’

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Convertible bondsPursuant to a subscription agreement between the Company, PLE Investments Pte Ltd (“PLEI”) and FTI Ventures Pte Ltd (“FTIV”), a subsidiary, dated 12 September 2002, FTIV issued 1,375,000 convertible bonds at $1 each to the Company and PLEI, who took up 60% and 40% respectively.

The bondholders are entitled to declare one or more of the convertible bonds to be immediately payable, only upon the occurrence of certain remote events as stipulated in the subscription agreement, with 6% interest per annum on the issue price compounded annually from the issue date up to the redemption date.

The bondholders also have the option to convert the convertible bonds into ordinary shares of FTIV, commencing from the earlier of (i) the date following 36 months from the date of the agreement, and (ii) the date of any of the following events:

(a) receipt by FTIV of an approval in-principal for the listing or quotation of securities in FTIV on any stock exchange, over- the-counter market or organised securities marketplace; or

(b) the acceptance of any third party offer or proposal for the sale, transfer or disposal of any shares or securities in FTIV; or

(c) suspension of the Company’s securities listed on SGX-ST for more than 30 consecutive business days.

In addition, PLEI has the right to swap any of the convertible bonds and/or conversion shares in FTIV into the Company’s shares, commencing from the earlier of:

(a) suspension of the Company’s securities listed on SGX-ST for more than 30 consecutive business days; and

(b) the date following 36 months from the date of the agreement up to but excluding the date falling 72 months from the date of the agreement.

The number of the Company’s shares to be issued upon the swap of the convertible bonds and/or the conversion shares depends on the valuation of the shares and bonds as at the date of swap.

Except for the above, no other options to take up unissued shares of the Company or any subsidiary were granted and no shares were issued by virtue of the exercise of options to take up unissued shares of the Company or any subsidiary.

Warrants >>During the financial year ended 31 March 2001, the Company issued warrants (“CTI Warrants”) to a strategic investor CTI II Limited (“CTI”), a wholly-owned subsidiary of Creative Technologies Limited, to subscribe for 6,000,000 ordinary shares of par value $0.05 each in the Company at an exercise price of $0.25 each. These CTI warrants are exercisable between 16 March 2002 to 15 March 2004. None of the warrants were exercised before the expiry date.

Audit committee >>The Audit Committee comprises one executive director and two independent non-executive directors, one of which is also the Chairman of the Committee. The members of the Audit Committee are:

Tay Swee Sze (Chairman) Harrison Wang Hong She Steve Ting Tuan Toon



Audit committee (cont’d) >>The Audit Committee performs the functions set out in the Companies Act and the Code of Corporate Governance. In performing those functions, the Audit Committee reviewed the overall scope of both internal and external audits and the assistance given by the Company’s officers to the auditors. The Committee met with the internal and external auditors to discuss the results of their respective examinations and their evaluation of the systems of internal accounting controls. The Committee also reviewed the financial statements of the Company and the consolidated financial statements of the Group for the year ended 31 March 2004, as well as the external auditors’ report thereon.

A full report of these functions performed is included in the Report on Corporate Governance.

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

On behalf of the Board of Directors,

Steve Ting Tuan Toon Lim Chin Hu

Director Director

Singapore

30 July 2004

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39 >>

We, Steve Ting Tuan Toon and Lim Chin Hu, being two of the directors of Frontline Technologies Corporation Ltd, do hereby state that, in the opinion of the directors :

(a) the accompanying balance sheets, consolidated profit and loss account, consolidated statements of changes in equity and consolidated statement of cash flows together with the notes thereto, are drawn up so as to give a true and fair view of the state of affairs of the Company and of the Group as at 31 March 2004 and of the results of the business and changes in equity and cash flows of the Group for the financial year then ended; and

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

On behalf of the Board of Directors,

Steve Ting Tuan Toon Lim Chin Hu

Director Director

Singapore

30 July 2004

statement by directors pursuant to

section 201 (15) >>



auditors’

report >>

We have audited the accompanying financial statements of Frontline Technologies Corporation Ltd (the Company) and its subsidiaries (the Group) set out on pages 39 to 79 for the year ended 31 March 2004. These financial statements are the responsibility of the Company’s directors. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the directors, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion,

(a) the consolidated financial statements of the Group and the balance sheet of the Company are properly drawn up in accordance with the provisions of the Singapore Companies Act, Cap. 50 (the Act) and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 March 2004 and the results, changes in equity and cash flows of the Group for the financial year ended on that date; and

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

ERNST & YOUNG

Certified Public Accountants

Singapore

30 July 2004


Note Group Company 2004 2003 2004 2003 ($) ($) ($) ($)

Fixed assets 3 4,514,214 4,183,944 – –Subsidiaries 4 – – 14,220,716 19,595,784Associated companies 5 18,132,788 13,547,585 40,414,331 34,680,960Other investments 6 1,378,483 1,996,180 1,136,848 1,697,939Prepaid maintenance costs 358,269 149,933 – –Deferred tax asset 31 687,896 1,078,439 – –Goodwill on acquisition 7 13,690,662 13,004,814 – –Intangible asset 8 199,350 – – –Miscellaneous deposits 550,188 552,980 – –Deferred charges 102,819 35,805 – –Long term fixed deposits 15 1,000,000 – – –

Current assetsStocks 9 5,052,687 8,536,666 – –Work-in-progress 10 – 203,393 – –Trade debtors 11 37,765,764 41,271,616 – –Other debtors, deposits and pre-payments 12 5,637,156 5,064,278 477,049 284,331Due from subsidiaries (non-trade) 13 – – 12,645,999 18,287,338Due from affiliated companies (non-trade) 13 92,967 26,560 – 26,505Due from affiliated companies (trade) 5,976 163,261 – –Due from an associated company (non-trade) 13 76,184 239,196 76,164 214,224Due from holding companies of corporate shareholders (trade) 2,115,437 2,217,947 – –Short term loan to a subsidiary 13 – – 370,111 370,111Short term loan to affiliated companies 13 874,851 398,276 874,851 398,276Tax recoverable 46,884 47,681 – –Fixed deposits 14 5,170,697 10,257,881 3,758,818 7,742,616Unquoted bond investments 16 – 9,706,668 – 7,206,668Cash and bank balances 45,304,518 33,054,848 8,831,852 1,118,360 102,143,121 111,188,271 27,034,844 35,648,429

balance sheets as at

31 march 2004 >>


Note Group Company 2004 2003 2004 2003 ($) ($) ($) ($)

Current liabilitiesTrade creditors 23,843,439 30,591,236 – 2,246Other creditors and accruals 17 18,034,896 20,644,044 643,969 424,148Provisions 18 400,000 850,000 – – Due to affiliated companies (non-trade) 13 400,439 283,723 67,429 46,063Due to an affiliated company (trade) 98,149 6,974 – – Due to subsidiaries (non-trade) 13 – – 869,561 14,985,609Due to an associated company (trade) 59,191 – – – Due to a director (non-trade) 13 30,000 30,000 30,000 30,000Due to a holding company of corporate shareholder (non-trade) 13 – 2,734 – 2,734Due to an associated company (non-trade) 13 – 16,701 – 16,701Due to directors of subsidiaries (non-trade) 13 75,310 183,304 – – Notes payable 19 2,645,772 3,836,613 – – Provision for taxation 1,855,895 1,784,656 16,087 214,656Hire purchase creditors, current portion 20 465,004 35,024 – – Bills payable to banks 21 3,837,828 2,666,555 – – 51,745,923 60,931,564 1,627,046 15,722,157Net current assets 50,397,198 50,256,707 25,407,798 19,926,272

Non-current liabilitiesDeferred tax liability 31 – 15,148 – – Hire purchase creditors, non-current portion 20 854,916 50,801 – – Unearned revenue, non-current portion 1,027,238 235,511 – –

89,129,713 84,504,927 81,179,693 75,900,955

Share capital and reservesShare capital 22 40,995,380 39,371,485 40,995,380 39,371,485Share premium 23 43,684,411 39,624,675 43,477,795 39,418,059Revenue reserve 24 1,505,603 1,216,236 (3,343,482) (2,938,589)Capital redemption reserve 50,000 50,000 50,000 50,000Translation reserve (1,448,450) (942,478) – –

84,786,944 79,319,918 81,179,693 75,900,955Minority interest 4,342,769 5,185,009 – –

89,129,713 84,504,927 81,179,693 75,900,955

The accounting policies and explanatory notes on pages 47 to 79 form an integral part of the financial statements.

balance sheets as at

31 march 2004 >>


Note 2004 2003 ($) ($)

Turnover 25 106,786,301 122,862,901Cost of sales (84,613,010) (101,391,373)

Gross profit 22,173,291 21,471,528Other operating income 1,681,504 1,957,645 Distribution and selling expenses (11,042,977) (11,647,558)Administrative expenses (8,317,096) (10,828,817)

Profit from operations 26 4,494,722 952,798Financial income 28 463,732 769,589Financial expenses 29 (1,443,641) (1,160,045)Exceptional items 30 (500,000) (7,779,041)

Profit (loss) before share of results of associated companies 3,014,813 (7,216,699)Share of results of associated companies 2,246,247 1,032,671

Profit (loss) before taxation 5,261,060 (6,184,028)Taxation 31 (1,952,358) (1,434,957)

Profit (loss) after taxation 3,308,702 (7,618,985)Minority interest 173,929 2,344,755

Profit (loss) attributable to shareholders 3,482,631 (5,274,230)

Earnings (loss) per share (cents)Basic 32 0.44 (0.67)Diluted 32 0.44 (0.67)


consolidated profit and loss account

31 march 2004 >>


Capital Share Share Revenue redemption Translation Note capital premium reserve reserve reserve Total ($) ($) ($) ($) ($) ($)

Balance at 31 March 2002 39,251,485 39,046,675 8,108,024 – (657,704) 85,748,480Net loss – – (5,274,230) – – (5,274,230) Issue of shares 170,000 578,000 – – – 748,000Shares buyback (50,000) – (86,750) 50,000 – (86,750)Dividend 33 – – (1,530,808) – – (1,530,808)Translation differences – – – – (284,774) (284,774)

Balance at 31 March 2003 39,371,485 39,624,675 1,216,236 50,000 (942,478) 79,319,918Net profit – – 3,482,631 – – 3,482,631Issue of shares 1,623,895 4,059,736 – – – 5,683,631Dividend 33 – – (3,193,264) – – (3,193,264)Translation differences – – – – (505,972) (505,972)

Balance at 31 March 2004 40,995,380 43,684,411 1,505,603 50,000 (1,448,450) 84,786,944


consolidated statement of changes in equity

31 march 2004 >>


2004 2003 ($) ($)

Cash flows from operating activities Profit (loss) before taxation 5,261,060 (6,184,028)Adjustments for: Amortisation of goodwill on acquisition 1,144,740 962,794 Amortisation of intangible asset 22,742 – Depreciation of fixed assets 2,003,917 2,072,444 Reversal of goodwill written off – (371,280) Loss on dilution of interest in subsidiary – 23,453 Write-back of provision for diminution in value of other investments (306,100) – Write-back of provision for product warranty – (200,000) Write-back of provision for doubtful trade debts (539,830) (179,097) Write-back of provision for doubtful non-trade debts (124,749) – Write-back of provision for stock obsolescence (120,500) – Provision for doubtful trade debts 224,595 1,925,108 Provision for doubtful non-trade debts – 103,119 Provision for short term loan to affiliated companies – 93,120 Provision for amount due from affiliated companies 13,070 102,509 Provision for stock obsolescence – 176,870 Stocks written off 248,806 792,524 Waiver of loans from ex-directors of subsidiaries (360,945) – Customer deposits written off – (144,497) Provision for diminution in value of other investments 542,792 6,670,064 (Gain) loss on disposal of fixed assets, net (24,303) 58,439 Fixed assets written off 17,048 204,654 Loss (gain) on disposal of a subsidiary 237,735 (88,015) Loss on disposal of other investment 249,999 – Interest income (463,732) (769,589) Interest expense 639,998 582,854 Provision for restructuring cost – 850,000 Provision for systems integration project 400,000 – (Gain) loss on acquisition of additional investment in subsidiary (124,764) 618,800 Share of results of associated companies (2,246,247) (1,032,671)

consolidated cash flow statement

31 march 2004 >>



31 march 2004 >>

2004 2003 ($) ($)

Operating profit before working capital changes 6,695,332 6,267,575Stocks 2,670,496 3,098,265Work-in-progress, net 203,393 6,657Trade debtors 2,164,496 5,808,486Other debtors, deposits and prepayments (729,164) 130,662Due from associated companies, net 205,502 255,288Short term loan to an affiliated company (476,575) (446,396)Due from affiliated companies, net 307,872 (843,257)Due from holding companies of corporate shareholders 102,510 1,496,734Due from a corporate shareholder (2,734) 32,734Trade creditors (6,371,658) 2,925,249Notes payable and bills payable to a bank (19,568) (2,053,126) Due to a minority corporate shareholder of a subsidiary – (4,342,953) Due to directors of subsidiaries 271,967 –Due to director – 30,000Other creditors and accruals (1,902,602) 5,185,304Translation difference (336,773) (796,377)

Cash generated from operations 2,782,494 16,754,845Income taxes paid (888,084) (2,330,307)Interest received 463,732 769,589Interest paid (639,998) (582,854)

Net cash from operating activities 1,718,144 14,611,273

Cash flows from investing activities Purchase of fixed assets (637,957) (1,844,079)Proceeds from disposal of fixed assets 130,355 186,639Proceeds from disposal of other investment 168,144 – Purchase of other investments (71,184) (404,887)Acquisition of subsidiaries, net of cash acquired (Note B) – 145,489Disposal of subsidiary, net of cash disposed (Note C) 48,334 14,310(Increase) decrease in fixed deposits pledged to banks (258,731) 35,864Dividends from an associated company 337,500 197,802Increase in long term fixed deposits (1,000,000) – Net cash used in investing activities (1,283,539) (1,668,862)

Cash flows from financing activities Proceeds from issuance of ordinary shares by a subsidiary to minority shareholder – 2Net payment to hire purchase creditors (44,254) (38,828)Proceeds from issuance of convertible bonds by a subsidiary – 550,000 Dividends paid by the Company (3,193,264) (1,530,808)Share buyback – (86,750)Dividends paid by a subsidiary to minority shareholder – (223,328)Net cash used in financing activities (3,237,518) (1,329,712)

Net (decrease) increase in cash and cash equivalents (2,802,913) 11,612,699Cash and cash equivalents at beginning of year 52,945,878 41,333,179

Cash and cash equivalents at end of year (Note A) 50,142,965 52,945,878


Note A Cash and cash equivalentsCash and cash equivalents included in the consolidated statement of cash flows comprise the following balance sheet amounts:

2004 2003 ($) ($) Fixed deposits (unpledged portion) 4,838,447 10,184,362Unquoted bond investments – 9,706,668Cash and bank balances 45,304,518 33,054,848

50,142,965 52,945,878

Note B Analysis of acquisition of subsidiariesIn the last financial year, a subsidiary of the Company, FTI Ventures Pte Ltd, acquired a 60% equity interest in ESP Management & Consulting Services Pte Ltd and its subsidiaries, Tinderbox Solutions Pte Ltd and ESP Consulting (Korea) Co, Ltd. On 28 March 2003, 40.8% of the equity interest was disposed. The cash flow effect of the acquisition is as shown below. The cash flow effect of the subsequent disposal is shown in Note C.

2004 2003 ($) ($) Fixed assets – 109,874Trade debtors – 1,124,065Other debtors, deposits and prepayments – 45,651Cash and bank balances – 1,245,489Trade creditors – (20,839)Other creditors and accruals – (269,445)Dividend payable – (330,000)Provision for taxation – (109,382)Deferred taxation – (34,365)Minority interest – (32,432)

Net assets acquired – 1,728,616Goodwill arising from acquisition of subsidiaries – 62,830Less: Minority interest – (691,446)

Total purchase consideration – 1,100,000Less: - Cash and bank balances acquired – (1,245,489)

Acquisition of subsidiaries, net of cash acquired – (145,489)


31 march 2004 >>


Note C Analysis of disposal of subsidiariesOn 31 October 2003, the Group disposed 65% of Green House Design & Communications Pte Ltd (formerly known as Green House Communications Pte Ltd) at cost. On 31 January 2004, there was an additional disposal of 16% of the investment for a consideration of $29,500. The equity interest in Green House Design & Communications Pte Ltd held by the Group after these disposals is 19% and is classified as other investments.

2004 2003 ($) ($)

Fixed assets 6,086 64,471Trade debtors 367,159 821,212Other debtors, deposits and prepayments 16,322 144,714Cash and bank balances 10,666 611,923Trade creditors (268,486) (17,305)Due from immediate holding company, net 60,172 – Other creditors and accruals (18,202) (595,208)Due from related companies, net 126,994 – Finance lease obligations (3,976) – Dividend payable – (106,672)Provision for taxation – (83,142)Minority interest – (47,679)

Net assets disposed 296,735 792,314Loss on disposal (237,735) – Goodwill arising from disposal of subsidiaries – 62,830Less: Minority interest – (316,926)Gain on disposal of subsidiaries – 88,015Amount transferred to cost of other investment – (351,233)

Total sale consideration 59,000 275,000Less: Cash and bank balances disposed (10,666) (611,923)Amount transferred to cost of other investment – 351,233

Disposal of subsidiaries, net of cash disposed 48,334 14,310



31 march 2004 >>


1. Corporate information >>

The Company is a public limited company domiciled and incorporated in Singapore. The address of the Company’s registered office is 750 Chai Chee Road, #02-01/03 Technopark @ Chai Chee, Singapore 469000.

The principal activity of the Company is that of investment holding. The principal activities of the subsidiaries are as shown in Note 4 to the financial statements.

There were no significant changes in the nature of these activities during the financial year.

The total number of employees in the Company and the Group at the end of the financial year was 26 and 314 (2003: 24 and 339) respectively.

2. Significant accounting policies >>

(a) Basis of preparation The financial statements have been prepared in accordance with Singapore Financial Reporting Standards (FRS)

as required by the Singapore Companies Act, Cap. 50. In previous years, the financial statements were prepared in accordance with Singapore Statements of Accounting Standard (SAS). The transition from SAS to FRS did not result in any significant change in accounting policies.

The financial statements have been prepared on a historical cost basis.

The accounting policies have been consistently applied by the Group and the Company and are consistent with those used in the previous financial year.

The financial statements are presented in Singapore Dollars (SGD or $) unless otherwise stated.

(b) Revenue recognition (i) Revenue from short term projects/contracts are recognised using the completed contract method. A project

contract is considered completed when all costs except insignificant items have been incurred and the installation is operating according to specifications. Revenue from long term projects/contracts, as defined by management to be more than 6 months, are recognised using the percentage-of-completion method. The percentage-of-completion for a given project/contract is determined after considering the relationship of value of work done to-date to total project/contract revenue for the project/contract;

(ii) Revenue from sales are recognised at time of delivery of goods and acceptance by customers;

(iii) Maintenance service revenue billed in advance is recorded as unearned revenue and is prorated over the contractual period;

(iv) Consultancy revenue is recognised when the services are rendered to the customers;

(v) Revenue from training contracts is earned upon conducting of training for the customers;

(vi) Commission income is earned on the sales of products to customers when a certain sales quota set by the principal is met and when there is reasonable certainty of collection from the principal;

(vii) Dividend income is recognised on the date dividends are declared to be payable; and

(viii) Management fee is recognised on an accrual basis.notes to the financial statements

31 march 2004 >>


2. Significant accounting policies (cont’d) >>

(c) Basis of consolidation The Group financial statements include the financial statements of the Company and its subsidiaries. The results

of subsidiaries acquired or disposed of during the financial year are included in or excluded from the Group financial statements with effect from the respective dates of acquisition or disposal. Significant intercompany balances and transactions have been eliminated on consolidation.

Acquisitions of subsidiaries are accounted using the purchase method of accounting. Any difference between the consideration paid and the fair values of the net assets acquired represents goodwill on acquisition. This is accounted in accordance with note (i) below.

The result of foreign subsidiaries are translated into Singapore dollars at the average exchange rates for the financial year and balance sheet items are translated at exchange rates ruling at the balance sheet date except for share capital and reserves which are translated at historical exchange rates. Exchange differences arising from the above translation are taken directly to the translation reserve until the disposal of the subsidiary.

(d) Subsidiaries A subsidiary is a company in which the Group, directly or indirectly, holds more than half of the issued share

capital, or controls more than half of the voting power, or controls the composition of the Board of Directors.

Investments in subsidiaries are stated in the financial statements of the Company at cost. Provision is made when there is a decline in value that is other than temporary.

(e) Associated company An associated company is defined as a company, not being a subsidiary, in which the Group has a long-term

interest of not less than 20% of the equity and in whose financial and operating policy decisions the Group exercises significant influence.

Investments in associated companies are stated in the financial statements of the Company at cost. Provision for diminution in investment in associated companies is made when, in the opinion of the directors, there has been a decline in value of the investment that is other than temporary.

At the Group level, the investments in associated companies are accounted for under the equity method whereby the Group’s share of the results of the associated companies is included in the consolidated profit and loss account and the Group’s share of the post-acquisition reserves of associated companies is adjusted against the cost of investment in the consolidated balance sheet.

The excess of the purchase consideration over the Group’s share of the fair value of the associated company at the point of acquisition represents goodwill on acquisition. This is accounted in accordance with note (i) below.

(f) Affiliated company An affiliated company is defined as an investee company, or a company, not being a subsidiary or an associated

company, in which the shareholders and/or directors of the Company have significant equity interests or exercise significant influence.

notes to the financial statements

31 march 2004 >>



(g) Fixed assets Fixed assets are stated at cost or valuation less accumulated depreciation and any impairment in value. The

cost of an asset comprises its purchase price including import duties and non-refundable purchase taxes and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Expenditure incurred after the assets have been put into operation, such as repairs and maintenance and overhaul costs, are normally charged to the profit and loss account in the period in which the costs are incurred. In situations where it can be clearly demonstrated that the expenditures have resulted in an increase in the future economic benefits expected to be obtained from the use of an item of fixed asset beyond its originally assessed standard of performance, the expenditures are capitalised as an additional cost of fixed assets.

Depreciation is provided for all fixed assets at rates calculated to write off the cost or revalued amount, less estimated residual value, of each asset on a straight-line basis over its estimated useful life as follows:

Leasehold improvements 6 years Furniture and fittings 3 - 5 years Office equipment 3 - 5 years Demonstration equipment 3 years Computer hardware and software 3 years Motor vehicles 7 years Renovation 5 years

(h) Other investments Quoted, unquoted and other investments held for the long term are stated at cost. Provision is made for any

decline in value that is other than temporary.

(i) Goodwill on consolidation Goodwill represents the excess of the cost of the acquisition over the fair value of the net underlying assets

of the subsidiary or associated company acquired at the date of acquisition. Goodwill arising from business combinations on or after 1 January 2001 is capitalised and amortised using the straight line method over a period of 15 years that the benefits are expected to be received. Goodwill that was written off directly to revenue reserve prior to 1 January 2001 are retained in reserves.

(j) Intangible assets The intangible asset relates to the cost of licence fee paid under an agreement entered into by a subsidiary

company with Yap Poh Huat, a director of the subsidiary company, whereby the latter has agreed to make available its intellectual proprietary rights (its ownership of the web portal (Unimas) and Share Trading System II (STS II)) to the subsidiary company.

The cost of licence fee is amortised on a straight line basis, through the income statement over the useful life of the licences up to a maximum of 10 years. Where the licence is assessed as having no continuing economic value, the licence fee is written off to the income statement.


31 march 2004 >>



(k) Impairment of assets Fixed assets, goodwill on acquisition, long term investments, intangible asset and other non-current assets are

reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recognised in the profit and loss account for items of fixed assets, goodwill on acquisition, long term investments, intangible asset and other non-current assets carried at cost. The recoverable amount is the higher of an asset’s net selling price and value in use. The net selling price is the amount obtainable from the sale of an asset in an arm’s length transaction. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Recoverable amounts are estimated for individual assets or, if it is not possible, for the cash-generating unit.

Reversal of an impairment loss recognised in prior years is recorded when there is an indication that the impairment loss recognised for an asset no longer exists or has decreased. The reversal is recorded in the profit and loss account.

(l) Prepaid maintenance costs, miscellaneous deposits and deferred charges Prepaid maintenance costs relate to maintenance fees paid in advance to a third party for the contracted period

and are charged to the profit and loss account over the contractual period as the services are performed by the third party. Miscellaneous deposits relate to various deposits with third party suppliers and service providers. Deferred charges relate to various cash performance bonds paid by a subsidiary prior to the start of a certain project or before joining a bid.

(m) Stocks Stocks (consisting of computer software and hardware) are stated at the lower of cost and net realisable value,

with the cost being generally determined using the weighted-average method. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs necessary to make the sale. Provision is made for deteriorated, damaged, obsolete and slow-moving stocks.

(n) Trade and other debtors Trade and other debtors, which generally have 30 – 90 day terms, are recognised and carried at original invoiced

amount less provision for doubtful debts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred.

(o) Amounts due from related companies Related companies refer to subsidiary companies, associated company, affiliated companies and holding

companies of corporate shareholders.

Receivables from related companies are recognized and carried at cost less any allowances for uncollectible amounts.

Payables from related companies are recognized at cost.

(p) Cash and cash equivalents Cash consists of cash on hand and cash with banks, including fixed deposits and bank overdrafts. Cash

equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value.


31 march 2004 >>



(q) Short term investments Short term investments consist of bonds which are stated at lower of cost, adjusted for any amortisation of

premium and accretion of discount, and the market value determined on a portfolio basis.

(r) Trade and other creditors Trade and other creditors, which are normally settled on 30 – 90 day terms, are carried at cost which is the fair

value of the consideration to be paid in the future for goods and services received.

(s) Notes payable Notes payable are carried at cost net of transaction costs.

(t) Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of past

event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Provision for warranty is made on products sold for a period of up to one year from the date of installation. Provision for product warranty cost is made at the time of sale by the Company based on the estimated product returns and costs to be incurred in providing the warranty.

(u) Operating leases Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets

are classified as operating leases. Operating lease payments are recognised as an expense in the profit and loss account on a straight-line basis over the lease term.

(v) Hire purchase Where assets are financed by hire purchase contracts that give rights approximating to ownership, the assets are

capitalised as if they had been purchased outright at the values equivalent to the present value of the total rental payable during the periods of the hire purchase and the corresponding hire purchase commitments are included under liabilities. The excess of the hire purchase payments over the recorded hire purchase obligations is treated as finance charges which are allocated over each hire purchase term to give a constant rate of interest on the outstanding balance at the end of each period.

(w) Employee benefits

Equity compensation benefits The Company has an employee share option scheme whereby employees are granted non-transferable options

to purchase the Company’s shares. There are no charges to earnings upon the grant or exercise of these options. When the options are exercised, the proceeds received net of transaction costs are credited to share capital and share premium accordingly.

Defined contribution plans As required by law, the Group makes contribution to the state pension scheme, the Central Provident Fund (“CPF”) for

Singapore companies and the Employees Provident Fund (“EPF”) for Malaysia companies. CPF and EPF contributions are recognised as compensation expense in the same period as the employment that gives rise to the contributions.


31 march 2004 >>



(w) Employee benefits (cont’d)

Employee leave entitlement Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for

estimated liability for annual leave as a result of services rendered by employees up to the balance sheet date.

(x) Work-in-progress/progress billings Project work-in-progress for longer term contracts of more than 6 months is stated at cost plus attributable profit

to date net of progress billing and provision for foreseeable losses. Costs include direct labour, material and overheads incurred in connection with the project. Provision for anticipated losses on uncompleted contracts are made in the period in which such losses are determined.

(y) Income tax Deferred income tax is provided, using the liability method, on all temporary differences at the balance sheet date

between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all taxable temporary differences unless the deferred tax liability arises from goodwill for which amortisation is not deductible for tax purposes.

Deferred tax assets are recognised for all deductible temporary differences and carry-forward of unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and carry-forward of unused tax losses can be utilised. For deductible temporary differences associated with investments in subsidiaries and associates, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised.

Deferred tax liabilities are not provided on undistributed earnings of foreign subsidiaries to the extent the earnings are intended to remain indefinitely invested in those entities.

The carrying amount of a deferred tax asset is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of the deferred tax asset to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or subsequently enacted at the balance sheet date.

(z) Exceptional items Exceptional items are income or expenses from events or transactions that are of such size, nature or incidence

within profit and loss from ordinary activities that are not expected to recur frequently or regularly.

(aa) Convertible bonds Financial liabilities and equity instruments are classified according to the substance of the contractual agreements

entered into. Convertible bonds issued which carry a right to convert to equity, with no redemption permitted, except for the occurrence of extreme circumstances which are remote, are classified as equity.


31 march 2004 >>



(bb) Foreign currency transactions and balances The accounting records of the companies in the Group are maintained in their respective currencies.

Transactions in foreign currencies during the financial year are recorded in respective currencies using exchange rates approximating those ruling at transaction dates. Foreign currency monetary assets and liabilities at the balance sheet date are translated into respective currencies at exchange rates approximating those ruling at that date. All resultant exchange differences are dealt with through the profit and loss account.

3. Fixed assets >>

At cost Computer Leasehold Furniture Office Demonstration hardware and Motor Group improvements and fittings equipment equipment software vehicles Renovation Total ($) ($) ($) ($) ($) ($) ($) ($)

Cost At 1.4.2003 1,277,864 569,889 2,997,875 2,427,561 2,111,206 325,662 1,143,693 10,853,750 Additions – 5,954 69,397 1,596,123 136,383 1,704 111,655 1,921,216 Arising from disposal of subsidiaries – – (1,668) – (12,694) – – (14,362) Disposals – – (17,329) (33,353) (41,496) (178,650) – (270,828) Write-off – – – – (17,048) – – (17,048) Reclassification from stocks* (35,003) – (14,779) 716,245 – – – 666,463 Exchange difference (116,169) (8,123) (244,155) (208,684) (26,033) (1,207) (1,556) (605,927)

As at 31.3.2004 1,126,692 567,720 2,789,341 4,497,892 2,150,318 147,509 1,253,792 12,533,264

Accumulated depreciation At 1.4.2003 438,131 338,983 2,385,763 1,637,784 1,588,658 155,106 125,381 6,669,806 Charge for the year 184,432 102,150 387,813 717,736 341,987 34,465 235,334 2,003,917 Arising from disposal of subsidiaries – – (501) – (6,347) – – (6,848) Disposals – – (13,194) (12,824) (49,657) (89,100) – (164,775) Reclassification from stocks* – – (10,374) (8,338) – – – (18,712) Exchange difference (48,612) (5,654) (218,261) (171,032) (18,971) (1,129) (679) (464,338)

As at 31.3.2004 573,951 435,479 2,531,246 2,163,326 1,855,670 99,342 360,036 8,019,050

Net book value As at 31.3.2004 552,741 132,241 258,095 2,334,566 294,648 48,167 893,756 4,514,214

As at 31.3.2003 839,733 230,906 612,112 789,777 522,548 170,556 1,018,312 4,183,944

* Reclassifications were made from stocks to demonstration equipment to reflect the change in nature of these items.

During the year, the Group acquired fixed assets with an aggregate cost of $1,921,216 (2003: $1,851,934), of which $1,283,259 (2003: $7,855) was acquired by means of hire purchase. Cash payments of $637,957 (2003: $1,844,079) were made to purchase the fixed assets.

Included in the fixed assets of the Group are motor vehicles under hire purchase with net book value of approximately $47,000 (2003: $169,000), computer hardware and software under hire purchase with net book value of approximately $Nil (2003: $7,000) and demonstration equipment under hire purchase with net book value of approximately $1,350,000 (2003: $Nil).


31 march 2004 >>



31 march 2004 >>

4. Subsidiaries >>

(a) Investment in subsidiaries comprises:

Company 2004 2003 ($) ($)

Unquoted equity shares at cost 19,381,716 19,065,784Unquoted convertible bonds at cost (Note 4(c)) 825,000 825,000

20,206,716 19,890,784Less: Provision for impairment loss Unquoted equity shares (5,328,000) – Unquoted convertible bonds (658,000) (295,000) (5,986,000) (295,000)

14,220,716 19,595,784

(b) Details of the subsidiaries are as follows: Country of incorporation Percentage of Cost of Principal and place equity held investment Name activities of business by the Group by the Company

2004 2003 2004 2003 (%) (%) ($) ($)

Held by the Company Frontline Technologies Sales, marketing, Singapore 100 100 2,834,000 2,834,000 Pte Ltd and support of internet-based infrastructure, including computer systems, software, storage, networking and security systems.

Stor.H Pte Ltd Currently dormant. Singapore 100 100 991,616 991,616

Frontline Solutions Pte Ltd Provision of consulting Singapore 100 100 1,998,908 1,998,908 services in IT-Business and Information Technology, IT-Business systems integration and other IT services.

Frontline Innovations Pte Ltd Currently dormant Singapore and 100 92 1,520,432 1,204,501 (formerly known as CCTPL People’s Republic Pte Ltd) of China respectively

Frontline Systems Design Currently dormant Singapore 100 100 2 2Pte Ltd



31 march 2004 >>

4. Subsidiaries (cont’d) >>

(b) Details of the subsidiaries are as follows: (cont’d)

Country of incorporation Percentage of Cost of Principal and place equity held investment Name activities of business by the Group by the Company

2004 2003 2004 2003 (%) (%) ($) ($)

Held by the Company (cont’d) FTI Ventures Pte Ltd Investment holding Singapore 60 60 3 3 company.

Frontline Technologies Currently dormant. Singapore and 100 100 10 10 (P.R.C.) Pte Ltd People’s Republic of China respectively

Green House Group Pte Ltd Providing business Singapore 100 51 5,250,001 5,250,000 management and consultancy services.

Frontline Technologies Investment holding. Malaysia 100 100 1,836,545 1,836,545 Corporation (M) Sdn. Bhd.**

IT Holdings, Inc.* Investment holding. Philippines 49a 49a 4,950,195 4,950,195

FTI, Inc.# Currently dormant. Mauritius 100 100 4 4

19,381,716 19,065,784

Held by Green House Group Pte LtdGreen House Exhibits Pte Ltd Currently dormant. Singapore 100 51 – –

Green House Design & Acting as professional Singapore 19b 51 – –Communications Pte Ltd ^ copywriters and script writers.

Frontline Practice Pte Ltd Currently dormant Singapore 100 51 – –

Green House Learning Currently dormant. Singapore 100 51 – – Pte Ltd

Green House Solution Currently dormant. Malaysia 100 51 – – Sdn Bhd**##



(b) Details of the subsidiaries are as follows: (cont’d)


2004 2003 2004 2003 (%) (%) ($) ($)

Held by Frontline Technologies Corporation (M) Sdn. Bhd. Frontline Technologies Sales, marketing Malaysia 100 100 – – Malaysia Sdn. Bhd.** and support of internet-based infrastructure including computer systems, software, storage, networking and security systems.

BizFront Sdn. Bhd. ** Provision of end-to-end Malaysia 100 100 – – software solutions and training; and support and maintenance of computer software systems and applications.

Excite Symphony Sdn Bhd ** Currently dormant Malaysia 100 – – –

Held by IT Holdings, Inc. Sun Microsystems Provide IT systems Philippines 24.94 24.94 – – Philippines, Inc.*** and services. Held by Sun Microsystems Philippines, Inc. PSPI-Subic, Inc.*** Dormant. Philippines 24.94 24.94 – –

* Audited by Punongbayan & Araullo in Philippines.

** Audited by Ernst & Young, Malaysia, an associated firm of Ernst & Young, Singapore.

*** Audited by SyCip Gorres Velayo & Company, an associated firm of Ernst & Young, Singapore.

a IT Holdings, Inc. has been consolidated as a subsidiary of the Company since 31 March 2002 as the Company exercises control over the Board of Directors of IT Holdings, Inc.

b The Group’s inter

# Audited by Ernst & Young, Mauritius, an associated firm of Ernst & Young, Singapore.

## Shares held in trust by trustees.

^ Audited by Robin Chia & Co Pte Ltd in Singapore.


31 march 2004 >>



(c) Unquoted convertible bonds: Pursuant to a subscription agreement between the Company, PLE Investments Pte Ltd (“PLEI”) and FTI Ventures

Pte Ltd (“FTIV”) a subsidiary, dated 12 September 2002, FTIV issued 1,375,000 convertible bonds at $1 each to the Company for $825,000 and PLEI for $550,000 (see Note 22).

(d) Acquisition of subsidiaries During the financial year, the Company acquired additional equity interest from the minority shareholders in the

following subsidiaries: Interest Attributable net Date of transfer Subsidiary acquired Consideration (liabilities) assets (%) ($) ($)

31 October 2003 Green House Group Pte Ltd 49 1 (222,340)

13 November 2003 Frontline Innovations Pte. Ltd. 8 315,931 490,134

5. Associated companies >>

(a) Investment in associated companies comprises:

Group Company 2004 2003 2004 2003 ($) ($) ($) ($)

Unquoted equity shares, at cost 40,414,331 34,680,960 40,414,331 34,680,960Goodwill on acquisition written off to revenue reserves in previous years (11,328,838) (11,328,838) – – Goodwill on acquisition (13,289,243) (11,427,015) – –

15,796,250 11,925,107 40,414,331 34,680,960Share of post acquisition profits 3,335,497 2,055,646 – – Translation difference (998,959) (433,168) – –

18,132,788 13,547,585 40,414,331 34,680,960

(b) Details of the associated companies are as follows:


2004 2003 2004 2003 (%) (%) ($) ($)

G-Able Co., Limited# Provision of Thailand 30 30 13,229,641 13,229,641 (formerly known as Logic client-serverCo., Ltd) computing systems and network-related infrastructure products and services.

MDCL – Frontline (China) Ltd##^ Investment holding. British Virgin 43 35 21,451,319 21,461,354 Islands


31 march 2004 >>


5. Associated companies (cont’d) >>

(b) Details of the associated companies are as follows (cont’d):


2004 2003 2004 2003 (%) (%) ($) ($)

Ecquaria Ltd* License of software British Virgin 30 – 5,688,630 – applications and Islands investment holding Vig Solutions Sdn Bhd Sales of software and Malaysia 25 – 44,741 – provision of software implementation services

40,414,331 34,690,995

# Audited by Ernst & Young Office Ltd, Bangkok.

## Audited by Deloitte Touche Tohmatsu, Beijing.

^ On 21 October 2003, the C bonus shares were issued pur US$2.7

* On 2 December 2003, the Company issued 32,477,890 new ordinary shares as full purchase consideration of its 30% interest in Ecquaria Ltd.

6. Other investments >>

Group Company 2004 2003 2004 2003 ($) ($) ($) ($)

Quoted investments 1,419,280 1,419,280 1,419,280 1,419,280Unquoted investments- convertible bonds 245,453 245,453 – – - convertible loan 2,720,000 2,720,000 2,720,000 2,720,000- preference shares 999,992 999,992 999,992 999,992- ordinary shares 3,332,541 3,739,540 2,744,159 3,095,000Club membership 302,845 278,105 285,825 259,383

9,020,111 9,402,370 8,169,256 8,493,655Less: provision for diminution in value Quoted investments 1,419,280 1,193,777 1,419,280 1,193,777Unquoted investments - convertible bonds 245,453 245,453 – – - convertible loan 2,720,000 2,720,000 2,720,000 2,720,000- ordinary shares 3,170,070 3,202,928 2,806,303 2,837,907Club membership 86,825 44,032 86,825 44,032 7,641,628 7,406,190 7,032,408 6,795,716

1,378,483 1,996,180 1,136,848 1,697,939

Market value of quoted investments 51,230 225,503 51,230 225,503


31 march 2004 >>



31 march 2004 >>

6. Other investments (cont’d) >>

Main features of certain investments were as follows:

iASPire.net Pte Ltd (“iASPire”)Pursuant to a subscription agreement dated 8 May 2000, the Company purchased $2,900,000 of convertible loan stock bearing interest at 6% per annum. The convertible loan stock is convertible at the Company’s option into ordinary shares of iASPire. The loan matures on 31 December 2002 and the option also expires on that date. The $2,900,000 convertible loan stock is convertible into ordinary shares representing 66.5% of the equity interest in iASPire. The agreement also contains anti-dilution protection against the Company’s equity interest in iASPire falling below 51%.

On 10 May 2002, the Company entered into an agreement with iASPire to extend the maturity date for the convertible loan stocks to 31 December 2003 and the interest of 6% per annum to be waived for the extended period until 31 December 2003. Pursuant to this agreement, the maturity redemption amount shall be equal to the issue price until the extended maturity date and the other terms and conditions of the first agreement remain unchanged.

As at 31 March 2003, the Company had converted $400,000 convertible loan stock into ordinary shares. The Company had also invested an additional $530,000 in the form of ordinary stocks by capitalising the debts owing by iASPire. The Company’s total investment of $930,000 represents 19.3% of equity share of iASPire. This remained unchanged as of 31 March 2004.

iGine.com Pte Ltd (“iGine”)Under the terms of subscription agreements dated 31 March 2000 and 5 September 2000, the Company purchased 125,000 ordinary shares representing 10% equity interest of iGine for a cash consideration of $500,000. The Company also previously purchased 114,678 redeemable convertible preference shares (“RCPS”) in iGine for a cash consideration of $999,992. These RCPS are convertible to one ordinary share in the capital of iGine.

PalmWindow Pte Ltd (“PalmWindow”) Pursuant to a subscription agreement dated 19 June 2000, the Company purchased 150,000 ordinary shares of

PalmWindow for a consideration of $660,000 and $220,000 of convertible loan stock bearing zero interest or 7% per annum if not converted. The convertible loan stock is convertible at the option of the Company into 50,000 ordinary shares of PalmWindow representing 2% of its share capital. The loans mature on 31 December 2004 and the option expires on that date as well. The Company had also previously acquired an additional 75,000 ordinary shares for a consideration of $330,000.

Incall Systems Inc (“Incall”) In the year 2002, 1st Call Systems Pte Ltd (“1st Call”) was acquired by Incall and the Company’s $880,000 convertible

loan stock investment in 1st Call and short term loan of $434,400 was converted to 334,926 ordinary shares of Incall. In year 2002, the Company also acquired an additional 40,000 ordinary shares of Incall for a cash consideration of $104,880. Incall underwent a share split exercise. Consequently, the Company held 749,852 ordinary shares in Incall.

Beacon Frontline Solutions, Inc. (“Beacon”) Pursuant to an investment agreement dated 1 August 2002, FTI Ventures Pte Ltd (“FTIV”), a subsidiary, purchased

US$133,333 (equivalent to $245,453) convertible bonds of Beacon. The convertible bonds are non-interest bearing. The bonds are convertible into 6,666,667 new common shares of Peso 1 each in the capital of Beacon, or such higher number of shares comprising no less than 25% of the total enlarged capital stock of Beacon as at the date of conversion. The conversion period for the bonds expires on 31 July 2005.



31 march 2004 >>

6. Other investments (cont’d) >>

Movements in provision for diminution in value of the other investments during the financial year are as follows:

Group Company 2004 2003 2004 2003 ($) ($) ($) ($)

At beginning of year 7,406,190 736,433 6,795,716 736,433Provision for the year 542,792 6,670,064 542,792 6,059,283Write back of provision during the year (306,100) – (306,100) – Translation difference (1,253) (307) – –

7,641,629 7,406,190 7,032,408 6,795,716

7. Goodwill on acquisition >>

Group 2004 2003 ($) ($)

At beginning of year 14,489,870 14,560,587Acquisition by a subsidiary – 62,830Acquisition of an associated company 4,287,671 – Adjustment of goodwill relating to an associated company (2,425,443) – Arising from disposal by a subsidiary – (62,830)Exchange difference (45,167) (70,717)

16,306,931 14,489,870Less: Accumulated amortisation (2,616,269) (1,485,056)

13,690,662 13,004,814

Movements in accumulated amortisation of goodwill on acquisition during the financial year are as follows:At beginning of year 1,485,056 547,501Amortisation for the year 1,144,740 962,794Exchange difference (13,527) (25,239)

At end of year 2,616,269 1,485,056

8. Intangible asset >>

Group 2004 2003 ($) ($)

Licence fee, at cost 222,092 – Accumulated amortisation (22,742) –

199,350 –



31 march 2004 >>

9. Stocks >>

Group 2004 2003 ($) ($)

Finished goods - at cost 3,612,357 5,540,429- at net realisable value 166,583 166,071Goods-in-transit, at cost 1,273,747 2,830,166

5,052,687 8,536,666

Finished goods are stated after deducting a provision for stock obsolescence 965,309 1,138,340

Movements in provision for stock obsolescence during the financial year are as follows:At beginning of year 1,138,340 1,014,062Provision for the year – 176,870Translation difference (52,531) (52,592)Write back of provision during the year (120,500) –

965,309 1,138,340

10. Work-in-progress >>

Group 2004 2003 ($) ($)

Costs of uncompleted projects and attributable profits recognised – 2,232,762Less progress billing received and receivable – (2,029,369)

– 203,393

There were no work-in-progress for long-term projects as of 31 March 2004.

11. Trade debtors >>

Group 2004 2003 ($) ($)

Trade debtors 39,055,514 44,296,732Less provision for doubtful trade debts (1,289,750) (3,025,116)

37,765,764 41,271,616

Movements in provision for doubtful trade debts during the financial year are as follows:At beginning of year 3,025,116 1,700,044Provision for the year 224,595 1,925,108Written off against provision (1,339,832) (358,216)Translation difference (80,299) (62,723)Provision written back (539,830) (179,097)

At end of year 1,289,750 3,025,116


12. Other debtors, deposits and prepayments >>

Group Company 2004 2003 2004 2003 ($) ($) ($) ($)

Deposits 71,417 150,040 4,720 800Prepayments - maintenance costs 4,481,508 3,121,062 – – - others 381,871 508,989 301,818 82,514Advances to employees 33,617 158,931 199 61,225Other debtors 871,898 1,443,611 170,312 139,792

5,840,311 5,382,633 477,049 284,331Less provision for doubtful non-trade debts (203,155) (318,355) – –

5,637,156 5,064,278 477,049 284,331

Movements in provision for doubtful debts during the financial year are as follows:

Group 2004 2003 ($) ($)

At beginning of year 318,355 228,096Provision for the year (102,575) 103,119Translation difference (12,625) (12,860)

At end of year 203,155 318,355

13. Due from (to) subsidiaries/affiliated companies/associated company/holding companies of corporate shareholders/ directors (non-trade)/short term loan to a subsidiary/affiliated companies >>

The amounts are unsecured, interest-free and are repayable on demand.

Short term loan to affiliated companies and amount due from affiliated companies are stated after provision for doubtful debts of $93,120 (2003: $93,120) and $Nil (2003: $76,634) respectively.

14. Fixed deposits >>

Fixed deposits mature within 1 to 12 months (2003: 1 to 6 months) and have interest rates ranging from 0.45% to 3.5% (2003: 0.015% to 3.200%) per annum.

Included in the fixed deposits is an amount of $332,250 (2003: $73,519) for the Group which has been pledged to the banks for banking facilities granted (Note 35).

15. Long term fixed deposit >>

These deposits mature on 3 March 2008 and earn interest of up to 2% (2003: Nil%) per annum.


31 march 2004 >>


16. Unquoted bond investments >>

As at 31 March 2004, the Company and the Group do not have unquoted bond investments. The bonds held on 31 March 2003 matured within 2 to 6 months and have coupon rates ranging from 1.25% to 2.625% per annum.

17. Other creditors and accruals >>

Group Company 2004 2003 2004 2003 ($) ($) ($) ($)

Accrued operating expenses 5,539,031 4,520,210 389,050 310,379Unearned revenue 10,569,560 12,649,181 – – Other creditors 1,435,116 2,109,893 254,919 113,769Customer deposits (Note A) 891,189 1,364,760 – –

18,434,896 20,644,044 643,969 424,148

Note A: This includes deposit held in trust for future stock subscription of a subsidiary of approximately $614,000 (2003: $675,000).

18. Provisions >>

Movements in provisions during the financial year are as follows:

Group 2004 2003 ($) ($)

Provision for product warranty At beginning of year – 200,000Write back of provision for the year – (200,000)

At end of year – –

Provision for restructuring costs At beginning of year 850,000 – Provision made during the year – 850,000Written off against provision (850,000) –

At end of year – 850,000

Provision for systems integration project At beginning of year – – Provision made during the year 400,000 –

At end of year 400,000 –

400,000 850,000

Provision for restructuring costs pertained to planned restructuring of businesses in Malaysia.

Provision for systems integration project relates to potential obligations under a systems integration project undertaken during the financial year.


31 march 2004 >>



31 march 2004 >>

19. Notes payable >>

Group 2004 2003 ($) ($)

Promissory notes issued to financial institutions 2,645,772 3,795,000Short term loans from financial institutions – 41,613

2,645,772 3,836,613

The promissory notes and short term loans are unsecured and mature within 1 year (2003: within 1 year) and bear interest rates ranging from 4.80% to 12.40% (2003: 4.80% to 12.40%) per annum.

20. Hire purchase creditors >>

Group Payments Interest Principal ($) ($) ($)

2004Not later than 1 year 543,966 78,962 465,004Between 1 year to 5 years 1,000,146 145,230 854,916

1,544,112 224,192 1,319,920

2003 Not later than 1 year 40,319 5,295 35,024Between 1 year to 5 years 59,568 8,767 50,801

99,887 14,062 85,825

Hire purchase agreements range from 2 to 7 years. Hire purchase agreements do not contain restrictions concerning dividends, additional debt or further leasing.

21. Bills payable to a bank >>

These are secured by letters of credit from a financial institution and bear interest ranging from 4.00% to 14.00% (2003: 5.45% to 14.00%) per annum.


22. Share capital >>

Group 2004 2003 ($) ($)

Authorised: 2,000,000,000 ordinary shares of $0.05 each 100,000,000 100,000,000

Issued and fully paid At beginning of financial year 787,429,702 (2003: 785,029,702) ordinary shares of $0.05 each 39,371,485 39,251,485 Shares buyback during the financial year Nil (2003: 1,000,000) ordinary shares of $0.05 each – (50,000) Issuance of shares 32,477,890 (2003: 3,400,000) ordinary shares of $0.05 each 1,623,895 170,000

At end of financial year 819,907,592 (2003: 787,429,702) ordinary shares of $0.05 each 40,995,380 39,371,485

The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restriction.

Pursuant to the 30% acquisition in the issued and paid-up share capital of Ecquaria Limited on 17 November 2003, the Company issued 32,477,890 new ordinary shares as full purchase consideration of its 30% interest in Ecquaria Limited. These shares were issued with no moratorium condition attached.’

These shares rank pari passu in all respects with the then existing ordinary shares of the Company.

Frontline Technologies Corporation Ltd Share Option Scheme 2000 (“the Scheme”) On 28 January 2002, the Company issued 104,860,000 options to the employees of the Group to subscribe for

ordinary shares of the Company of $0.05 each at the discounted price of $0.22 per share. The exercise period of the option is from 28 January 2004, where up to 33% of options granted to the employees may be exercised, to 28 January 2006 where 100% of the options may be exercised. Options granted are cancelled when the option holder ceases to be in full-time employment of the Company or any corporation in the Group.

Movement in the number of share options outstanding are as follows:

OptionsAs at 28 January 2002 104,860,000Cancellation during the year (13,600,000)



As at 31 March 2004 47,771,000


31 march 2004 >>


22. Share capital (cont’d) >>

As at 31 March 2004, no options have been granted to directors of the Company, controlling shareholders of the Company or associated of the company and no employees have received 5% or more of the total options available under the Scheme.

The options under the Scheme do not entitle the holder to participate in any share issue of any other corporation by virtue of the option. As at 31 March 2004, no options have been exercised under this Scheme in the Group.

Convertible bonds Pursuant to a subscription agreement between the Company, PLE Investments Pte Ltd (“PLEI”) and FTI Ventures

Pte Ltd (“FTIV”) a subsidiary, dated 12 September 2002, FTIV issued 1,375,000 convertible bonds at $1 each to the Company and PLEI, who took up 60% and 40% respectively.

The bondholders are entitled to declare one or more of the convertible bonds to be immediately payable, only upon the occurrence of certain remote events as stipulated in the subscription agreement, with 6% interest per annum on the issue price compounded annually from the issue date up to the redemption date.

The bondholders also have the option to convert the convertible bonds into ordinary shares of FTIV, commencing from the earlier of (i) the date following 36 months from the date of the agreement, and (ii) the date of any of the following events:

(a) receipt by FTIV of any approval in-principal for the listing or quotation of securities in FTIV on any stock exchange, over-the-counter market or organised securities marketplace; or

(b) the acceptance of any third party offer or proposal for the sale, transfer or disposal of any shares or securities in FTIV; or

(c) suspension of the Company’s securities listed on SGX-ST for more than 30 consecutive business days

In addition, PLEI has the right to swap any of the convertible bonds and/or conversion shares in FTIV into the Company’s shares, commencing from the earlier of:

(a) suspension of the Company’s securities listed on SGX-ST for more than 30 consecutive business days; and

(b) the date following 36 months from the date of the agreement up to but excluding the date falling 72 months from the date of the agreement.

The number of the Company’s shares to be issued upon the swap of the convertible bonds and/or the conversion shares depends on the valuation of the shares and bonds as at the date of swap.

23. Share premium >>

Group Company 2004 2003 2004 2003 ($) ($) ($) ($)

At beginning of year 39,624,675 39,046,675 39,418,059 38,840,059Arising from issue of ordinary shares - 32,477,890 (2003: 3,400,000) ordinary shares of $0.05 each at a premium of $0.17 (2003: $0.17) per share 4,059,736 578,000 4,059,736 578,000

At end of year 43,684,411 39,624,675 43,477,795 39,418,059

The share premium account may be applied only for the purposes specified in the Companies Act. The balance is not available for distribution of dividends except in the form of shares.


31 march 2004 >>


24. Revenue reserve >>

Group Company 2004 2003 2004 2003 ($) ($) ($) ($)

At beginning of year 1,216,236 8,108,024 (2,938,589) 1,425,131Net profit (loss) for the year 3,802,631 (5,274,230) 2,788,371 (2,746,162)Share buyback – (86,750) – (86,750)Dividend (3,193,264) (1,530,808) (3,193,264) (1,530,808)

At end of year 1,825,603 1,216,236 (3,343,482) (2,938,589)

Group 2004 2003 ($) ($)

Retained by: Company (150,218) (2,938,589)Subsidiaries 15,285,455 18,744,310Associated companies 3,335,497 2,055,646Net goodwill arising from acquisition of subsidiaries, associated company and business taken directly to revenue reserves in previous years (16,645,131) (16,645,131)

1,825,603 1,216,236

25. Turnover >>

Turnover represents contract revenue and invoiced value of sales, maintenance income, consultancy income, training income, commission and management fees recognised in the normal course of business as follows:

Group 2004 2003 ($) ($)

Contract revenue and sales of products 72,317,814 92,954,849Maintenance income 21,234,155 16,243,841Consultancy 8,059,416 8,980,866Training income 1,246,281 1,314,598Commission 294,661 387,684Management fee from an associated company 166,800 370,748Other service income 3,467,174 2,610,315

106,786,301 122,862,901

Intra-group transactions have been excluded from Group turnover.


31 march 2004 >>


26. Profit from operations >>

This is determined after charging (crediting) the following:

Group 2004 2003 ($) ($)

Amortisation of goodwill on acquisition 1,144,740 962,794Reversal of goodwill written off * – (371,280)Auditors’ remuneration - auditors of the Company 123,000 135,500- auditors of the Company, non-audit services 28,400 12,500- other auditors 15,000 21,713Directors’ remuneration - of the Company 657,985 564,484- of the subsidiaries 391,908 648,576Directors’ fees 30,000 33,226Depreciation of fixed assets 2,003,917 2,072,444Fixed assets written off 17,048 204,654(Gain) loss on disposal of fixed assets (24,303) 58,439Write-back of provision for product warranty – (200,000)Write-back of provision for doubtful debts - due from affiliated companies (124,749) – - trade debts (539,830) (179,097)Provision for doubtful debts - trade debts 224,595 1,925,108- non-trade debts – 103,119- due from affiliated companies 13,070 102,509Bad trade debts written off 47,448 – Write-back of provision for stock obsolescence (120,500) – Provision for stock obsolescence – 176,870Stocks written off 248,805 792,524Operating lease expenses 1,278,516 1,266,276Provision for systems integration project 400,000 – Personnel expenses ** (Note 27) 16,478,655 20,604,413Loss (gain) on disposal of a subsidiary 237,735 (88,015)Loss on dilution of interest in subsidiary – 23,453Compensation income from minority shareholder of a subsidiary – (502,642)Write off of loans by ex-directors of subsidiaries (360,945) –

* This relates to final adjustment written-off previously.

** These expenses include directors’ remuneration as disclosed above.


31 march 2004 >>



31 march 2004 >>

27. Personnel expenses >>

Group 2004 2003 ($) ($)

Key officers and executive directors 802,745 684,318Staff wages and salaries - others 13,598,710 17,238,813Pension contribution 1,495,593 1,761,719Other social expenses 581,607 909,988Termination benefits – 9,575

16,478,655 20,604,413

28. Financial income >>

Group 2004 2003 ($) ($)

Interest income- bank balances 145,307 168,919- fixed deposits 180,128 260,649- bonds 90,242 274,727- others 48,055 65,294

463,732 769,589

29. Financial expenses >>

Group 2004 2003 ($) ($)

Interest expense - short term loan and overdraft 29,743 13,557- notes payable 550,517 358,292- hire purchase 6,745 5,806- bills payable 52,993 205,199Bank charges 96,874 95,775Foreign exchange loss, net 706,769 481,416

1,443,641 1,160,045


30. Exceptional items >>

Group 2004 2003 ($) ($)

Compensation income from minority shareholder of a subsidiary – 1,261,524Loss on acquisition of additional investment in a subsidiary – (618,800)Provision for diminution in value of other investments (500,000) (6,670,064)Fixed assets written off following relocation of premises (Note A) – (197,581)Restructuring cost (Note B) – (611,000)Provision for short term loan to affiliated companies – (93,120)Provision for restructuring costs for Malaysia operations (Note C) – (850,000)

(500,000) (7,779,041)

Note A: These fixed assets were written off following the relocation of the Group’s offices in Singapore to consolidate its operations.

Note B: A subsidiary of the Company, IT Holdings, Inc., incurred these costs in the restructuring of its operations.

Note C: The provision was made following the directors’ decision of planned restructuring of business in Malaysia.

31. Taxation >>

Group 2004 2003 ($) ($)

Current tax - current year 1,137,917 1,037,064- over provision in prior year (26,081) (34,988)Deferred tax - current year 213,678 30,191- overprovision in prior year (2,052) (47,738)Share of associated companies’ tax 628,896 450,428

1,952,358 1,434,957

Group A loss-transfer system of group relief (group relief system) for companies was introduced in Singapore with effect from

year of assessment 2004. Under the group relief system, a company belonging to a group may transfer its current year unabsorbed capital allowances, current year unabsorbed trade losses and current year unabsorbed donations (loss items) to another company belonging to the same group, to be deducted against the assessable income of the latter company.

The Group has unutilised tax losses of approximately $5,900,000 (2003: $5,620,000) available for offset against future taxable income subject to the agreement by tax authorities and compliance with certain tax regulations in the respective countries in which certain subsidiaries operate. The potential deferred tax asset arising from the unabsorbed tax losses of certain subsidiaries have not been recognised in the financial statements due to uncertainty in its realisation.


31 march 2004 >>


31. Taxation (cont’d) >>

The reconciliation of the tax expense and the amount obtained by applying the applicable tax rate on accounting (loss) profit is as follows:

Group 2004 2003 ($) ($)

Accounting profit (loss) 5,261,060 (7,216,699)

Tax at the domestic tax rate of 20% (2003: 22%) 1,052,212 (1,587,674)Tax effect of income that is not taxable (75,290) (277,535)Tax effect of expenses that are not deductible in determining taxable profit 484,669 2,093,414Tax effect of utilising tax losses brought forward (8,228) – Tax effect of utilising capital allowance brought forward (4,738) – Overprovision in prior year - current tax (22,337) (34,988)- deferred tax – (47,738)Tax rebate – (23,100)Tax relief (49,117) (25,026)Deferred tax not recognised 205,902 1,180,327Share of tax of associated companies – 450,428Change in tax rates (26,691) Tax effect of different tax rates in other countries 414,663 (208,603)Deferred tax assets recognised (8,593) – Others (10,094) (84,548)

1,952,358 1,434,957

Deferred taxes as at 31 March related to the following:Deferred tax liability Tax over book depreciation (24,615) (177,828)Foreign exchange difference (55,418) (26,149)

(80,033) (203,977)

Deferred tax asset Provisions 517,167 1,034,949Deferred gain on sale and lease back 59,907 –Tax losses carried forward 152,810 1,330,514Foreign exchange difference 1,806 131,528Deferred tax asset not recognised (10,847) (1,229,723)Book over tax depreciation 40,050 –Others 7,036 –

767,929 1,267,268

Net deferred tax asset 687,896 1,063,291

Classified as: Deferred tax liability – (15,148)

Deferred tax asset 687,896 1,078,439notes to the financial statements

31 march 2004 >>


32. Earnings (loss) per share >>

The calculations of earnings (loss) per share are based on the profit (loss) and number of shares shown below.

Basic Diluted 2004 2003 2004 2003 ($) ($) ($) ($)

Profit (loss) attributable to shareholders 3,482,631 (5,274,230) 3,482,631 (5,274,230)

Weighted average number of shares

Year ended 31 March 2004Issued ordinary shares at beginning of year 787,429,702Weighted average number of ordinary shares issued during the year 10,566,698

Total for basic earnings per share 797,996,400

Year ended 31 March 2003 Issued ordinary shares at beginning of year 785,029,702Weighted average number of ordinary shares issued during the year 819,726Weighted average number of ordinary shares bought back during the year (46,575)

Total for basic loss per share 785,802,853

When calculating diluted earnings per share, the weighted average number of shares is adjusted for the effect of all dilutive potential ordinary shares.

As the potential ordinary shares arising from the exercise of warrants and options will decrease the loss per share, anti-dilutive potential ordinary shares have been ignored for the purpose of calculating the fully diluted loss per share.

33. Dividend >>

Group 2004 2003 ($) ($)

An interim dividend of 0.50 cents (2003: 0.25 cents) per ordinary share, less tax at 22%, paid in respect for the year ended 31 March 2004 3,193,264 1,530,808


31 march 2004 >>


34. Related party information >>

Other than as disclosed elsewhere, the Group had significant transactions with related parties on terms agreed between the parties as follows:

Group 2004 2003 ($) ($)

Income Sales to affiliated companies 62,201 41,993Sales to related companies of the Company’s corporate shareholders 6,448,021 4,790,268Commission from a minority corporate shareholder of a subsidiary – 502,642Management fee from an associated company 163,800 370,748Management fee from investee companies 314,674 – Rental income from an investee company 20,000 – Consultancy income from an associated company 44,386 24,778Compensation from a minority shareholder of a subsidiary – 1,261,523

Expenses Purchases from a minority corporate shareholder of a subsidiary – 2,053,743Telecommunication charges from an affiliated company 225,600 195,292Purchases from an affiliated company 254,387 –

35. Commitments and contingent liabilities >>

(a) Non-cancellable operating lease commitments

Group 2004 2003 ($) ($)

Future minimum lease payments - not later than 1 year 1,833,864 1,298,000 - 1 year through 5 years 2,978,402 3,204,000

4,812,266 4,502,000

Lease terms do not contain restrictions concerning dividends, additional debt or further leasing.

(b) Bank guarantees Contingent liabilities not provided for in the financial statements were:

Group 2004 2003 ($) ($)

Bank guarantees - secured by fixed deposits (Note 14) 332,250 73,519 - secured by corporate guarantee 10,402,715 8,120,311

10,734,965 8,193,830

The bank guarantees are given by the Company and the Group for banking facilities granted to the Company, the Group and an affiliated company.


31 march 2004 >>


35. Commitments and contingent liabilities (cont’d) >>

(c) Other contingent liabilities On 12 September 2002, the Company entered into a deed of indemnity to indemnify Lorani Pte Ltd, a company

acting as the trustee of the Founders’ Share Scheme of the Company from and against any loss or liability incurred in connection with Lorani Pte Ltd’s undertaking to vote in favour of all resolutions to approve of matters facilitating an exercise by PLE Investments Pte Ltd of the share swap option (Note 22).

(d) Forward currency contract As of 31 March 2004, the Group has an outstanding forward contract that gives DBS Bank Ltd the option to

swap SGD13.46 million to USD8 million at agreed fixed rates.

(e) The Company The Company has undertaken to provide continuing financial support to certain subsidiaries and an affiliated

company which have a deficit of shareholders’ fund as at 31 March 2004 of approximately $4,450,000 (2003: $4,700,000). The financial support is to enable these companies to operate as a going concern and to meet its obligations, for at least 12 months from the date of its latest audited report.

36. Segment information >>

(a) Business segments The Group has re-aligned its business segment for better management control and reflection of its operations in

the financial year reported on. The previous period figures have been reclassified for comparative purposes.

The Group’s business is categorised into 4 main areas, namely:

1. Investment Holdings

2. Information Technology (“IT”) Infrastructure

3. IT Consulting and Implementation Services

4. IT Outsourcing

Investment holdings relate to investment activities undertaken by the corporate head office of the Group.

The IT infrastructure business relates to the implementing services, storage, desktop, networking systems as well as software licence sales from our technology partners.

IT Consulting and implementation services encompasses the provision of IT strategy consulting services; software applications consulting, development and implementation; system migration services; IT security risk and management consulting, development and implementation.

IT Outsourcing comprises the provision of IT services related to systems maintenance, 24 x 7 support, system installation and commissioning, warranty, IT facilities management, managed IT services, disaster recover and related professional services.


31 march 2004 >>


36. Segment information (cont’d) >>

(a) Business segments (cont’d) Inter-segment pricing is on arm’s length bases.

IT consulting & Investment IT IT implementation 2004 holdings infrastructure outsourcing services Eliminations Group $’000 $’000 $’000 $’000 $’000 $’000

External sales 167 75,785 22,480 8,354 – 106,786Inter-segmental sales 14,250 701 131 – (15,082) –

106,786

Profit (loss) from operations 4,399 2,983 2,468 (237) (5,118) 4,495Financial income 464Financial expenses (1,444)Exceptional item (500)

Profit before share of results of associated companies 3,015Share of associated companies results 2,246

Profit before taxation 5,261Taxation (1,952)

Profit after taxation 3,309Minority interest 174

Profit attributable to shareholders 3,483

Segment assets 68,586 41,144 8,040 4,238 (35,619) 86,389Unallocated assets 56,369

Consolidated total assets 142,758

Segment liabilities 1,627 29,767 9,246 3,620 (26,828) 17,432Unallocated liabilities 36,196

Consolidated total liabilities 53,628

Capital expenditure – 1,143 526 252 – 1,921Depreciation – 1,174 541 289 – 2,004Other non-cash expenses (income) 1,292 (624) 49 317 – 1,034


31 march 2004 >>


36. Segment information (cont’d) >>

(a) Business segments (cont’d) IT consulting & Investment IT IT implementation 2003 holdings infrastructure outsourcing services Others Eliminations Group $’000 $’000 $’000 $’000 $’000 $’000 $’000

External sales 371 90,864 21,784 8,837 1,007 – 122,863Inter-segmental sales 5,845 870 361 655 – (7,731) –

122,863

(Loss) profit from operations (1,879) 3,304 (2,995) (384) (1,050) 3,957 953Financial income 770Financial expenses (1,160)Exceptional items (7,779)

Loss before share of results of associated companies (7,217)Share of associated companies results – – – 1,033 – – 1,033

Loss before taxation (6,184)Taxation (1,435)

Loss after taxation (7,619)Minority interest 2,345

Loss attributable to shareholders (5,274)

Segment assets 72,027 56,521 2,631 5,464 – (61,074) 75,569Unallocated assets 70,169

Consolidated total assets 145,738

Segment liabilities 15,722 49,875 2,670 5,816 – (52,311) 21,772Unallocated liabilities 39,461

Consolidated total liabilities 61,233

Capital expenditure – 1,551 103 198 – – 1,852Depreciation – 1,504 234 334 – – 2,072Other non-cash expenses 6,557 1,455 2,982 1,527 – 963 13,484

The Group’s businesses segments are managed through three geographical areas, namely Singapore, other ASEAN countries and North-Asia. Turnover is based on the location of customers. Assets and additions to property, plant and equipment are based on the location of those assets.

(b) Geographical segments Turnover Assets Capital expenditure 2004 2003 2004 2003 2004 2003 $’000 $’000 $’000 $’000 $’000 $’000

Singapore 76,526 87,573 111,723 105,572 162 1,319North-Asia – 2,564 – 9,759 – – Other ASEAN countries 30,260 32,726 31,035 30,407 1,759 533

106,786 122,863 142,758 145,738 1,921 1,852


31 march 2004 >>


37. Directors’ remuneration >>

The number of directors (including three non-executive directors who resigned during the year) in the various remuneration bands is as follows:

2004 2003 Executive Non-executive Executive Non-executive directors directors Total directors directors Total

$500,000 and above – – – – – – $250,000 to $499,999 1 – 1 – – – $0 to $249,999 2 8 10 3 8 11

3 8 11 3 8 11

38. Financial instruments >>

Financial risk management objectives and policies The main risks arising from the Group’s financial instruments are interest rate risk, liquidity risk, foreign currency risk and

credit risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below.

Interest rate risk The Group obtains additional financing through bank borrowings and leasing arrangements. The Group’s policy is to

obtain the most favourable interest rates available without increasing its foreign currency exposure.

Surplus funds are placed with reputable banks or invested in bonds to generate some interest income for the Group.

Information relating to the Group’s interest rate exposure is also disclosed in the respective notes to the financial statements.

Liquidity risk The Group monitors and maintains a level of cash and cash equivalent deemed adequate by management to finance

the Group’s operations and mitigate the effects of fluctuation in cash flows.

Foreign exchange risk The Group incurs foreign exchange risk on sales and purchases that are denominated in currencies other than Singapore

dollars. The Group also has exposure to foreign currency risk as a result of its operations in several Asian countries. The primary currencies giving rise to this risk are United States dollars, Malaysian Ringgit, Philippine Peso and Thai Baht.

It is the Group’s policy to use foreign currency borrowings to hedge its foreign currency risk, where appropriate.

Foreign currencies received are kept in foreign currency bank accounts and converted to Singapore dollars on a need-to basis so as to minimise the foreign exchange exposure. The Group also manages foreign exchange risk by closely monitoring the timing of the inception and settlement of transaction.


31 march 2004 >>


38. Financial instruments (cont’d) >>

Credit risk The carrying amount of cash and cash equivalents, trade receivables and other receivables represent the Group’s

maximum exposure to credit risk in relation to financial assets. No other financial assets carrying a significant exposure to credit risk.

Cash and cash equivalents are placed with reputable financial institutions.

The Group has no significant concentrations of credit risk.

Fair valuesFair value is defined as the amount at which the financial instrument could be exchange in a current transaction between knowledgeable willing parties in an arm’s length transaction, other than in a forced or liquidation sale. Fair values are obtained from quoted market prices, discounted cash flow models and option pricing models as appropriate.

The following methods and assumptions are used to estimate the fair value of each class of financial instrument:

Cash and cash equivalents, other current receivables and payablesThe carrying amounts approximate fair values due to the relatively short-term maturity of these financial instruments.

Quoted and unquoted investmentsThe fair values of quoted investments are estimated based on quoted market prices for these investments. For unquoted investments, it is not practical to determine the fair values because of the lack of quoted market prices and the assumptions used in valuation models to value these investments cannot be reasonably determined.

Hire purchase creditorsThe fair value of hire purchase creditors is determined by discounting the relevant cash flow using current interest rates for similar instruments at balance sheet date. The year end balance sheet carrying values of these liabilities approximate fair values.

Forward currency contractThe fair value of the forward currency contract (Note 35(d)) is a loss of $4,000 being the difference between the contracted forward rates and the prevailing exchange rate as at the year end.

As at 31 March 2004, the fair values of financial assets and financial liabilities which do not approximate the carrying amounts in the balance sheet are presented in the following table:

Group Note 2004 2003 Carrying Estimated Carrying Estimated amount fair value amount fair value ($) ($) ($) ($)

Assets Unquoted investment, net of provision for diminution in value 6 1,207,204 * 1,536,604 * Club membership, net of provision for diminution in value 6 216,020 216,020 234,073 198,930notes to the financial statements

31 march 2004 >>


38. Financial instruments (cont’d) >>

Fair values (cont’d)

Forward currency contract (cont’d)Company Note 2004 2003 Carrying Estimated Carrying Estimated amount fair value amount fair value ($) ($) ($) ($)

Assets Unquoted investment, net of provision for diminution in value 6 982,589 * 1,257,085 * Club membership, net of provision for diminution in value 6 199,000 199,000 215,351 179,000Unquoted convertible bonds 4 167,000 * 530,000 *

* In the directors’ opinion, it is not practicable able value of $1,207,204 for the Gr cash flows from these investments are believed to be in excess of the carrying amount.

39. Event occurring after balance sheet date >>

(a) On 1 June 2004, the Company acquired 42% equity interest in Accel ICIM Systems and Services Limited (“Accel”) for a cash consideration of $13 million. Accel is incorporated in India and is in the business of providing comprehensive IT solutions including hardware and system solutions, network design and implementation and customised application development. The financial statements of Accel will be consolidated from the date of acquisition as the Company exercises control over its Board of Directors.

(b) On 8 April 2004 and 11 June 2004, the long term fixed deposits totalling $548,000 (2003: $Nil) was pledged to a bank to secure long term letters of guarantee facilities granted.

(c) Subsequent to the financial year end, the Company entered into an agreement together with the other shareholders of its associated company in Thailand, G-Able Co., Limited (“G-Able”). Under the agreement dated 1 April 2004, G-Able will acquire three other related companies operating in Thailand for the purpose of listing the enlarged G-Able group on the Stock Exchange of Thailand. The companies to be acquired are CDGM System Ltd, The Communication Solutions Co., Ltd and its subsidiary, Technology Devices Company Limited. After the restructure, the Company’s interest in the enlarged G-Able group will reduce to 20.5%.

40. Authorisation of financial statements >>

The financial statements for the year ended 31 March 2004 were authorised for issue in accordance with a resolution of the directors on 30 July 2004.


31 march 2004 >>


FRONTLINE TECHNOLOGIES CORPORATION LTDCompany Registration No. 199801489G

(Incorporated in the Republic of Singapore)

NOTICE IS HEREBY GIVEN that the Annual General Meeting of the Company will be held at The Function Room, Tanah Merah Country Club, 25 Changi Coast Road, Singapore 499803, on 30 August 2004 at 10.30am to transact the following business:

As ordinary business >>1. To receive and adopt the Audited Accounts for the year ended 31 March 2004 and the Directors’

and Auditors’ Report thereon.Resolution 1

2. To re-elect Mr Tay Swee Sze who is retiring as a director of the Company in accordance with Article 104 of the Company’s Articles of Association.

Resolution 2

3. To accept the retirement of Mr Liow Voon Kheong as a director of the Company in accordance with Articles 104 and 106 of the Company’s Articles of Association and to leave his office as director vacant.

Resolution 3

4. To approve Director’s Fees of $30,000 (FY2003: $30,000). Resolution 4

5 To re-appoint Messrs Ernst & Young as auditors of the Company and to authorize the Directors to fix their remuneration.

Resolution 5

As special business >>To consider and, if thought fit, to pass the following resolution as Ordinary Resolution:

6. Authority to grant options and issue shares under Frontline Technologies Corporation Ltd Share Option Scheme 2000That authority be and is hereby given to the Directors to offer and grant options in accordance with the rules and terms of Frontline Technologies Corporation Ltd Share Option Scheme 2000 (“the Scheme”) and to allot and issue from time to time such number of shares in the Company as may be required to be allotted and issued pursuant to the exercise of options under the Scheme, provided that the aggregate number of shares to be issued pursuant to the Scheme does not exceed 15% of the issued share capital of the Company from time to time.

Resolution 6

7. The Proposed Renewal of the Shares Purchase MandateThat, pursuant to Article 54(2) of the Articles of Association of the Company, the Directors of the Company be and are hereby authorized to make purchases of Shares from time to time (whether by way of market purchases or off-market purchases on an equal access scheme) of up to ten per cent (10%) of the issued ordinary share capital of the Company ascertained as at date of this annual general meeting of the Company at the price of up to but not exceeding the Maximum Price, in accordance with the “Guidelines on Shares Purchases” set out in Appendix 1 of this Notice and this mandate shall, unless revoked or varied by the Company in general meeting, continue in force until the date that the next annual general meeting of the Company is held or is required by law to be held, whichever is the earlier.

Resolution 7

notice of annual general meeting

30 august 2004 >>


As special business (cont’d) >>

8. The Proposed Shares Issue MandateThat authority be and is hereby given to the Directors of the Company to:

Resolution 8

(a) (i) issue shares in the capital of the Company (“shares”) whether by way of rights, bonus or otherwise; and/or (ii) make or grant offers, agreements or options (collectively, “Instruments”) that might or would require shares to be issued, including but not limited to the creation and issue of (as well as adjustments to) warrants, debentures or other instruments convertible into shares, at any time and upon such terms and conditions and for such purposes and to such persons as the Directors may in their absolute discretion deem fit; and

(b) notwithstanding the authority conferred by this Resolution may have ceased to be in force, issue shares in pursuance of any Instrument made or granted by the Directors while this Resolution was in force,

Provided that:

(1) the aggregate number of shares to be issued pursuant to this Resolution (including shares to be issued in pursuance of Instruments made or granted pursuant to this Resolution) does not exceed 50 per cent of the issued share capital of the Company (as calculated in accordance with sub-paragraph (2) below), of which the aggregate number of shares to be issued other than on a pro rata basis to shareholders of the Company (including shares to be issued in pursuance of Instruments made or granted pursuant to this Resolution) does not exceed 20 per cent of the issued share capital of the Company (as calculated in accordance with sub-paragraph (2) below);

(2) subject to such manner of calculation as may be prescribed by the SGX-ST for the purpose of determining the aggregate number of shares that may be issued under sub-paragraph (1) above, the percentage of issued share capital shall be based on the issued share capital of the Company at the time this Resolution is passed, after adjusting for: (i) new shares arising from the conversion or exercise of any convertible securities or share options or vesting of share awards which are outstanding or subsisting at the time this Resolution is passed; and (ii) any subsequent consolidation or subdivision of shares;

(3) in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of the Listing Manual of the SGX-ST for the time being in force (unless such compliance has been waived by the SGX-ST) and the Articles of Association for the time being of the Company; and

(4) unless revoked or varied by the Company in General Meeting the authority conferred by this Resolution shall continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is the earlier.


30 august 2004 >>


Other business >>

9. To transact any other business that may properly be transacted at an Annual General Meeting of the Company

Dated this 30th day of July 2004

For and on behalf of the Board

Tan Bak Leng

Company Secretary

Singapore

Note:-

1. A member of the Company entitled to attend and vote at the Meeting is entitled to appoint a proxy to vote in his/her stead.

2. A proxy need not be a member of the Company.

3. The instrument appointing a proxy must be deposited at the registered office of the Company at 750 Chai Chee Road #02-01/03 Technopark @ Chai Chee, Singapore 469000 not later than 48 hours before the time appointed for the Meeting.


30 august 2004 >>


Explanatory notes to notice of annual general meeting (“notice”) >> 1. Definitions and Interpretation

1.1 For the purpose of this Notice, the following definitions have, where appropriate, been used:

“2002 Circular” The Company’s circular to Shareholders dated 13 August 2002 regarding inter alia the Shares Purchase Mandate.

“2002 EGM” The extraordinary general meeting of Frontline held on 27 August 2002.

“2003 EGM” The extraordinary general meeting of Frontline held on 27 August 2003.

“Shares Purchase Mandate” The mandate for Frontline to purchase or otherwise acquire its Shares.

“AGM” Annual General Meeting of the Company.

“Act” or “Companies Act” Companies Act (Cap.50) of Singapore.

“Board” The board of the Directors of the Company.

“CDP” The Central Depository (Pte) Limited.

“Company” or “Frontline” Frontline Technologies Corporation Ltd.

“Council” or “SIC” The Securities Industry Council.

“Directors” Directors of the Company as at the date of this Notice.

“Frontline Technologies Corporation Ltd Share Option Scheme 2000”

The share option scheme adopted at an Extraordinary General Meeting of the Company on 19 September 2000.

“Group” The Company and its subsidiaries.

“Latest Practicable Date” 30th July 2004, being the latest practicable date prior to the printing of this Notice.

“Market Day” A day on which the SGX-ST is open for trading in securities.

“Market Purchases” Market acquisitions of Shares on the SGX-ST undertaken by the Company during the Relevant Period in accordance with the Act and, a “Market Purchase” shall be construed accordingly. For the purposes of this definition, a market acquisition means a purchase transacted through the Central Limit Order Book trading system.

“Maximum Price” The maximum price at which (i) the Shares can be purchased pursuant to the Shares Purchase Mandate (ii) deemed to be adjusted for any corporate action that occurs after the relevant 5-day period; and in the case of an Off-Market Purchase, immediately preceding the date of offer by the Company, as the case may be.notice of annual general meeting

30 august 2004 >>


Explanatory notes to notice of annual general meeting (“notice”) (cont’d) >> 1.1 For the purpose of this Notice, the following definitions have, where appropriate, been used (cont’d) :

“month” Calendar month.

“New Listing Manual” or “Listing Manual”

The new listing manual of the SGX-ST, which became effective on 1 July 2002, including any amendments made thereto up to the date of this Notice.

“NTA” Net tangible assets.

“Off-Market Purchases” Off-market acquisitions of Shares undertaken by the Company during the Relevant Period in accordance with an equal access scheme as defined in Section 76C(6) of the Act by issuing an offer document to all shareholders in compliance with rule 885 of the Listing Manual.

“Offeree Shareholders” Shareholders holding Shares at the time of an offer of Shares Purchase, and an “Offeree Shareholder” shall be construed accordingly.

“Relevant Period” The period commencing from the date the Shares Purchase Mandate is conferred by the Company in general meeting at this AGM and expiring on the earlier of the date the next annual general meeting of the Company is held or is required by law to be held, or the date the said mandate is revoked or varied by the Company in general meeting.

“Required Price” In relation to the offer required to be made under the provisions of Rule 14.1 of the Take-over Code, the offer shall be in cash or be accompanied by a cash alternative at a price in accordance with Rule 14.3 which is the highest of the highest price paid by the offerers and/or person(s) acting in concert with them for the Company’s Shares (i) during the offer period and within the preceding 6 months, (ii) acquired through the exercise of instruments convertible into securities which carry voting rights within 6 months of the offer and during the offer period, or (iii) acquired through the exercise of rights to subscribe for, and options in respect of, securities which carry voting rights within 6 months of the offer or during the offer period; or at such price as determined by Council under 14.3 of the Take-over Code.

“Securities Account” A securities account maintained by a depositor with CDP but does not include a securities sub-account.

“SGX-ST” Singapore Exchange Securities Trading Limited.

“Shares” Ordinary shares of $0.05 each in the capital of the Company.

“Shareholders” Persons who are registered as holders of the Shares except where the registered holder is CDP, in which case the term “Shareholders” shall in relation to such Shares mean the Depositors whose securities accounts with CDP are credited with the Shares.notice of annual general meeting

30 august 2004 >>


Explanatory notes to notice of annual general meeting (“notice”) (cont’d) >> 1.1 For the purpose of this Notice, the following definitions have, where appropriate, been used (cont’d) :

“Shares Issue Mandate” The mandate to empower the Directors to issue Shares in the terms set out in Ordinary Resolution 8 and below.

“Shares Purchases” Off-Market Purchases or Market Purchases undertaken by the Company during the Relevant Period in accordance with the Act and, a “Shares Purchase” shall be construed accordingly.

“Shares Purchase Mandate” The mandate to empower the Directors to make Shares Purchases within the Relevant Period of up to ten per cent. (10%) of the issued ordinary share capital of the Company (ascertained as at the date of the last annual general meeting of the Company or the date of the EGM, whichever is the higher) at the price of up to but not exceeding the Maximum Price, in accordance with the “Guidelines on Shares Purchases” set out in Appendix 1 of this Notice and the rules of the SGX-ST.

“Subsidiaries” The subsidiaries of a company (as defined in Section 5 of the Act) and “Subsidiary” shall be construed accordingly.

“Substantial Shareholder” A person who has an interest in the Shares the nominal amount of which is not less than five percent. (5%) of the nominal amount of all the voting shares of the Company.

“Take-over Code” Singapore Code on Take-over and Mergers Revised Edition, effective 1 January 2002, as the same may be modified, supplemented or amended from time to time.

“$” or “cents” Singapore dollars and cents respectively, unless otherwise stated.

“%” or “per cent.” Per centum or percentage.

1.2 The terms “Depositor” and “Depository Register” shall have the meanings ascribed to them respectively by Section 130A of the Act.

1.3 Words importing the singular shall, where applicable, include the plural and vice versa and words importing the masculine gender shall, where applicable, include the feminine and neuter genders.

1.4 Any reference in this Notice to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any word defined under the Act or any statutory modification thereof and used in this Notice shall have the meaning assigned to it under the said Act.

1.5 Any reference to a time of a day in this Notice is a reference to Singapore Standard Time.


30 august 2004 >>


Explanatory notes to notice of annual general meeting (“notice”) (cont’d) >>2. Ordinary Resolutions No. 2 and 3: Re-Election of Directors

2.1 Mr Tay Swee Sze retires as a Director under Article 104 of the Company’s Articles of Association. Mr Tay is offering himself for re-election. If re-elected as a Director of the Company, Mr Tay shall remain as a member of Nominating Committee and Compensation Committee respectively and the chairman of the Audit Committee, The Board of Directors considers Mr. Tay to be independent.

2.2 Mr Liow Voon Kheong retires as a Director under Article 104 of the Company’s Articles of Association. Mr Liow is not seeking re-election.

3. Ordinary Resolution No. 6: Authority, to grant options and issue shares under Frontline Technologies Corporation Ltd Share Option Scheme 2000

3.1 This resolution is to empower the Directors of the Company to allot and issue shares in the Company pursuant to the exercise of options granted or to be granted under Frontline Technologies Corporation Ltd Share Option Scheme 2000.

3.2 There were no such options exercised during the financial year ended 31st March 2004.

4. Ordinary Resolution No. 7: The Proposed Renewal of the Shares Purchase Mandate

4.1 Background The Shareholders had at the 2002 EGM inter alia approved the Shares Purchase Mandate to enable Frontline to

purchase or otherwise acquire its Shares. The authority and limitations on the Shares Purchase Mandate were set out in the 2002 Circular and the Ordinary Resolution set out in the Notice of the 2002 EGM. The Shares Purchase Mandate was last renewed upon the passing of the Ordinary Resolution at the 2003 EGM and expires upon this AGM. Accordingly, the Directors propose that the Share Purchase Mandate be renewed at this AGM.

4.2 Authority and Limits. The authority and limitations placed on the Shares Purchase Mandate, if renewed at this AGM, are similar to those

previously approved by Shareholders at the 2003 EGM.

4.3 Approval Sought. Shareholders’ approval is sought to renew the mandate for the Directors to make Shares Purchases from time to

time within the Relevant Period in accordance with the Companies Act (Cap 50) of up to ten per cent. (10%) of the issued ordinary share capital of the Company ascertained as at the date of this AGM at the price of up to but not exceeding the Maximum Price in accordance with the “Guidelines on Shares Purchases” set out in Appendix 1 of this Notice and the rules of the SGX-ST. The authority conferred on the Directors by the proposed Shares Purchase Mandate to purchase Shares shall continue in force for the Relevant Period.


30 august 2004 >>


Explanatory notes to notice of annual general meeting (“notice”) (cont’d) >>4.4 Regulatory Updates The Company may purchase Shares by way of Off-Market Purchases and/or Market Purchases, as described in

the “Guidelines on Share Purchases’’ ‘set out in Appendix 1. In the event that subsequent to the EGM, there are new rules, regulations, directives or laws enacted or promulgated by the relevant competent authorities including but not limited to the SGX-ST and the Council (hereinafter, collectively referred to as the “Further Rules”) that augment, supplement or vary the existing provisions governing provisions set out in the Companies Act and/or the Listing Manual, the Company shall, to the extent that the Further Rules impact on the Shares Purchase Mandate, disseminate to the public by announcements), a Memorandum setting out such Further Rules and the extent to which the Shares Purchase Mandate is affected by such Further Rules. In such an event, the Company shall not undertake any purchase of Shares until such a Memorandum has been publicly disseminated. The Company does not intend to set up a special trading counter for the purpose of the Shares Purchases.

4.5 Rationale As previously stated in the 2002 Circular, the proposed Shares Purchase Mandate will:-

(a) provide Directors with the flexibility to purchase Shares when circumstances permit, with the objective of enhancing the earnings per share of the Company and its Subsidiaries. Such flexibility will also allow the Directors to better manage the Company’s capital structure and cash reserves, and to return surplus cash in excess of the Group’s needs;

(b) provide Directors with the opportunity to purchase Shares when the Shares are under-valued, and help buffer short-term share price volatility and off-set the effects of short-term speculators and investors. This will, in turn, bolster shareholder confidence;

(c) provide the Company with an efficient mechanism to enhance returns to Shareholders (including the earnings per share of the Group) when circumstances permit. Shares purchases will only be made when the Directors believe that they are beneficial to and in the best interests of the Company and its Shareholders.

4.6 Manner of Purchases or Acquisitions of Shares Purchases or acquisitions of Shares may be made by way of:

(a) Market Purchases transacted on the SGX-ST or any other stock exchange on which the Shares may for the time being be listed and quoted (“Other Exchange”) through one or more duly licensed dealers appointed by the Company for the purpose; and/or

(b) Off-Market Purchases effected pursuant to an equal access scheme.

The Directors may impose such terms and conditions which are not inconsistent with the Share Purchase Mandate, the New Listing Manual and the Act, as they consider fit in the interests of the Company in connection with or in relation to any equal access scheme or schemes. An Off-Market Purchase must, however, satisfy all the following conditions:

(i) offers for the purchase or acquisition of Shares shall be made to every person who holds Shares to purchase or acquire the same percentage of their Shares;

(ii) all of those persons shall be given a reasonable opportunity to accept the offers made; and


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Explanatory notes to notice of annual general meeting (“notice”) (cont’d) >>

4.6 Manner of Purchases or Acquisitions of Shares (cont’d) (ii) the terms of all the offers shall be the same, except that there shall be disregarded (1) differences in

consideration attributable to the fact that offers may relate to Shares with difference accrued dividend entitlements and (2) differences in the offers introduced solely to ensure that each person is left with a whole number of Shares.

If the Company wishes to make an Off-Market Purchase in accordance with an equal access scheme, it will issue an offer document containing at least the following information:

(I) the terms and conditions of the offer;

(II) the period and procedures for acceptances; and

(III) the information required under Rule 883(2). (3), (4) and (5) of the New Listing Manual For the avoidance of doubt, there shall be no use of contingent purchase contracts.

4.7 Source of Funds In purchasing Shares, the Company may only apply funds legally available for such purchase in accordance with

its Articles of Association and the applicable laws in Singapore. The Company may not purchase Shares for a consideration other than cash or for settlement otherwise in accordance with the trading rules of the SGX-ST. Any Shares Purchase undertaken by the Company shall be made out of profits that are available for distribution as dividends but not from amounts standing in the Company’s share premium account and capital redemption reserve. The Company will use its internal sources of funds (comprising cash and fixed deposits) for the Shares Purchases. The Company has not obtained or incurred nor does it intend to obtain or incur any borrowings to finance the Shares Purchases. (See Clause 2.9 for impact on Company’s financial health)

4.8 Status of Purchased Shares. The listing of all purchased Shares on SGX-ST will be automatically cancelled and the relevant certificates for these

Shares shall be cancelled and destroyed. Subject to the requirements of the Companies Act, (i) the Company’s purchased Shares shall be treated as cancelled and the issued share capital of the Company shall be diminished by the nominal value of these cancelled Shares accordingly and (ii) the amount by which the Company’s issued share capital is diminished on the cancellation of the purchased Shares shall be transferred to the Company’s capital redemption reserve.

4.9 Financial Effects The impact of the Shares Purchases by the Company pursuant to the proposed Shares Purchase Mandate on

the Group’s and the Company’s financial positions is illustrated below:

(a) As of the Latest Practicable Date, the Company’s issued share capital comprises 819,907,592 Shares, and the exercise in full of the Shares Purchase Mandate would result in the purchase of up to 81,990,759 Shares. Assuming that the Maximum Price is $0.143, which is five percent (5%) above the average of the closing prices of the Shares ($0.136) over the five (5) trading days preceding the Latest Practicable Date on which transactions in the Shares were recorded, the maximum amount of funds required for the purchase of up to 81,990,759 Shares is $11,724,679. On this assumption, the impact of the Shares Purchases by the Company undertaken in accordance with the proposed Shares Purchase Mandate on the Company’s and the Group’s audited financial statements for the financial year ended 31 March 2004 is illustrated as follows:-


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4.9 Financial Effects (cont’d)(a) Group Company

Before Shares Purchase

($’000)

After Shares Purchase

($’000)

Before Shares Purchase

($’000)

After Shares Purchase

($’000)

As at 31 March 2004Shareholders’ funds 84,787 84,787 81,180 81,180NTA (1) 70,897 59,172 81,180 69,455Current Assets 102,143 90,418 27,035 15,310Current Liabilities 51,746 51,746 1,627 1,627Working Capital 50,397 38,672 25,408 13,683Total liabilities 53,628 53,628 1,627 1,627

Number of Shares as at 31 March 2004 819,907,592 737,916,833 819,907,592 737,916,833

Financial RatiosNTA Per Share (cents) (1) 8.65 8.02 9.90 9.41Loss Per Share (cents) (2) 0.42 0.47 NA NAGearing (3) 0.09 0.09 NA NACurrent Ratio (4) 1.97 1.75 16.62 9.41

Notes:

(1) NTA equals Shareholders’ funds less intangible assets.

(2) Earnings per share is computed based on the number of shares in issue as at 31 March 2004.

(3) Gearing equals total bank borrowings and hire purchase creditors of $7,804,000 and $nil for the Group and Company respectively, divided by Share holders’ funds.

(4) Current ratio equals current assets divided by current liabilities.

(b) As at 31 March 2004, the Group and the Company had cash and cash equivalents of $50,142,965 and $12,590,670 respectively. In order to effect a purchase of up to 81,990,759 Shares at the Maximum Price computed at the Latest Practicable Date, cash reserves and cash equivalents by the Company of $11,724,679 will be required. Any shortfall in the cash reserve by the Company to effect the purchase of Shares will be made up by utilization of other excess cash reserves available within the Group. As illustrated above, the purchase of Shares will have the effect of reducing the working capital and the net tangible assets of the Company and Group by the dollar value of the Shares purchased. The consolidated NTA per Share as at 31 March 2004 will decrease from 8.65 cents to 8.02 cents.

(c) Assuming that the Shares Purchases had taken place on 31 March 2004, the consolidated basic earnings per Share of the Group for the financial year ended 31 March 2004 would be increased from 0.42 cents per Share to 0.47 cents per Share as a result of the reduction in the number of issued Shares.

SHAREHOLDERS SHOULD NOTE THAT THE FINANCIAL EFFECTS SET OUT ABOVE, BASED ON THE RESPECTIVE AFOREMENTIONED ASSUMPTIONS, ARE FOR ILLUSTRATION PURPOSES ONLY. IN PARTICULAR, IT IS IMPORTANT TO NOTE THAT THE ABOVE ILLUSTRATION IS BASED ON HISTORICAL FINANCIAL YEAR 2004 NUMBERS AND IS NOT NECESSARILY REPRESENTATIVE OF FUTURE FINANCIAL PERFORMANCE.


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Explanatory notes to notice of annual general meeting (“notice”) (cont’d) >> 4.9 Financial Effects (cont’d) (d) Any Shares Purchase will reduce the Company’s retained earnings by the aggregate sum of the purchase

price. As the Shares Purchase will reduce the cash reserves of the Group and the Company, there will be a corresponding reduction in the current assets and the Shareholders’ funds of the Group and the Company. The gearing ratios of the Group and the Company will thus be increased and the current ratios of the Group and the Company will decline. The actual impact of the gearing and current ratios will depend on the number of Shares purchased and the prices at which the Shares were purchased.

(e) As at the Latest Practicable Date, the cash and cash equivalents, including fixed deposits and short term investments, of the Company and the Group were approximately $12,490,000 and $34,800,000 respectively. When undertaking any Shares Purchase, the Directors will ensure that:-

(i) the Company and the Group will at all times have adequate working capital to meet its operational requirements;

(ii) any Shares Purchase will be financed by the Company’s distributable profits; and

(iii) the Group will not obtain nor incur any borrowings to finance any Shares Purchase.

4.10 Listing Status. The Listing Manual requires at least ten percent. (10%) of any class of a company’s listed securities to beheld by

the public at all times. As of the Latest Practicable Date, approximately 463,493,762 Shares (56.53%) of a total of 819,907,592 Shares issued by the Company are held by the public. The Company is of the view that there is a sufficient number of Shares in public hands that would permit the Company to potentially undertake purchases of its Shares through Market Purchases up to the full 10% limit pursuant to the Share Purchase Mandate without affecting adversely the listing status of the Shares on the SGX-ST. Additionally, the Company will consider investor interests when maintaining a liquid market in its securities, and will ensure that there is a sufficient float for an orderly market in its securities when purchasing its issued Shares.

4.11 Tax Implications. Under Section 10J of the Income Tax Act and the Interpretation & Practice Note No. 34 published on 31

December 1998 by the Inland Revenue Authority of Singapore, a company which buys back its own shares using its distributable profits will be regarded as having paid a dividend to the shareholders from whom the shares are acquired. The Company will thus have to provide for franking of the shares purchased at either the prevailing corporate tax rate of 22% (with effect from the Year of Assessment 2004) in the same manner as paying a taxed dividend, the amount paid for the shares purchased being the deemed net dividend, or out of its exempt profits, the amount paid for the shares purchased being the gross tax exempt dividend. Currently, the Company has exempt profits, but if such exempt profits are insufficient for the purposes of the shares purchase, then the Company will have to ensure tax is paid in respect of funds used to purchase Shares, as if for a taxable dividend. Notwithstanding the fact that the Company will be regarded as paying a dividend, the nature of the payment in the hands of Shareholders and whether tax credits, if applicable, can be passed to Shareholders will depend on how the Shares Purchase is effected by the Company. The Shares purchased will not have any effect on the income tax status of the Company as the Company has sufficient tax-exempt profits to support the Share Purchases.


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4.11 Tax Implications. (cont’d) SHAREHOLDERS SHOULD NOTE THAT THE FOREGOING IS NOT TO BE REGARDED AS ADVICE ON

THE TAX POSITION OF ANY SHAREHOLDER. SHAREHOLDERS WHO ARE IN DOUBT AS TO THEIR RESPECTIVE TAX POSITIONS OR THE TAX IMPLICATIONS OF THE SHARES PURCHASED BY THE COMPANY, OR WHO MAY BE SUBJECT TO TAX WHETHER IN OR OUTSIDE SINGAPORE, SHOULD CONSULT THEIR OWN PROFESSIONAL ADVISORS.

4.12 Take-over Implications. Appendix 2 to the Take-over Code contains the Share Buy-Back Guidance Note. The take-over implications

arising from any purchase or acquisition by the Company of its Shares are set our below.

4.12.1 Obligation to make a Take-over Offer If, as a result of any purchase or acquisition by the Company of the Shares, the proportionate interest in the

voting capital of the Company of a Shareholder and persons acting in concert with him increases, such increase will be treated as an acquisition for the purposes of Rule 14 of the Take-over Code. Consequently, a Shareholder or a group of Shareholders acting in concert with a Director would obtain or consolidate effective control of the Company and become obliged to make an offer under Rule 14 of the Take-over Code.

4.12.2 Persons Acting in Concert Under the Take-over Code, persons acting in concert comprise individuals or companies who, pursuant to an

agreement or understanding (whether formal or informal), cooperate, through the acquisition by any of them of shares in a company to obtain or consolidate effective control of that company. Unless the contrary is established, the Take-over Code presumes, inter alia, the following individuals and companies to be persons acting in concert with each other:

(a) the following companies

(i) a company;

(ii) the parent company of (i);

(iii) the subsidiaries of (i);

(iv) the fellow subsidiaries of (i);

(v) the associated companies of any of (i), (ii), (iii) or (iv); and (vi) companies whose associated companies included any of (i),(ii), (iii), (iv) or (v); and

(b) a company with any of its directors (together with their close relatives, related trusts as well as companies controlled by any of the directors, their close relatives and related trusts).

The circumstances under which Shareholders, including Directors and persons acting in concert with them respectively, will incur an obligation to make a take-over offer under Rule 14 of the Take-over Code after a purchase or acquisition of Shares by the Company are set out in Appendix 2 to the Take-over Code.


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4.12.3 Effect of Rule 14 and Appendix 2 In general terms, the effect of Rule 14 and Appendix 2 to the Take-over Code is that, unless exempted, Directors

and persons acting in concert with them will incur an obligation to make a take-over offer under Rule 14 if, as a result of the Company purchasing or acquiring its Shares, the voting rights of such Directors and their concert parties would increase to 30% or more, or in the event that such Directors and their concert parties hold between 30% and 50% of the Company’s voting rights, if the voting rights of such Directors and their concert parties would increase by more than 1% in any period of six (6) months.

Under Appendix 2 to the Take-over Code, a Shareholder not acting in concert with the Directors will not be required to make a take-over offer under Rule 14 if, as a result of the Company purchasing or acquiring its Shares, the voting rights of such Shareholder would increase to 30% or more, or, if such Shareholder holds between 30% and 50% of the Company’s voting rights, the voting rights of such Shareholders would increase by more than 1% in any period of six months. Such Shareholder need not abstain form voting in respect of the resolution authorizing the Share Purchase Mandate.

Shareholders who are in doubt as to their obligations, if any, to make a mandatory take-over offer under the Take-over Code as a result of any share purchase by the Company should consult the Securities Industry Council and/or their professional advisers at the earliest opportunity.

Taking into account the Directors’ and Substantial Shareholders Interests disclosed in the Annual Report accompanying this Notice, the Directors are not aware of any fact(s) of factor(s) which suggest or imply that any particular person(s) and/or Shareholders) are, or may be regarded as, parties acting in concert such that their respective interests in voting shares in the capital of the Company should or ought to be consolidated, and consequences under the Take-over Code would ensue as a result of a purchase of Shares by the Company pursuant to the Shares Purchase Mandate.

The Company is presently not aware of the possibility of any Shareholder(s) becoming a Substantial Shareholder by reason of or in consequence of the Shares Purchases pursuant to this Shares Purchase Mandate. However, should such a situation arise in relation to any particular Shareholder(s) due to the Shares Purchases, the Company shall immediately notify such Shareholder of the same. IN SUCH EVENT, SHAREHOLDERS ARE ADVISED TO CONSULT THEIR OWN PROFESSIONAL ADVISERS AS TO THE IMPLICATIONS AND OBLIGATIONS OF IN RELATION TO A SUBSTANTIAL SHAREHOLDER PURSUANT TO PART IV DIVISION 4 SECTIONS 82-85 OF THE ACT.

4.13 Previous Share Purchases. Since the 2003 EGM and as of the Latest Practicable Date, the Company has not made any purchases of Shares.

5. Ordinary Resolution No. 8: The Proposed Shares Issue Mandate

5.1 Proposed Shares Issue Mandate. Subject to the amendment of Article 8 and addition of New Article 8A as proposed in paragraph 3.2.1 above, the Company is seeking approval of Shareholders at this AGM for the Shares Issue Mandate to be given to the Directors to:

(a) issue shares whether by way of rights, bonus or otherwise; and/or


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5.1 Proposed Shares Issue Mandate. (cont’d) (b) make or grant Instruments that might or would require shares to be issued, including but not limited to the

creation and issue of (as well as adjustments to) warrants, debentures or other instruments convertible into shares, and (notwithstanding that the authority so conferred may have ceased to be in force) issue shares in pursuance of any Instrument made or granted by the Directors while the authority was in force.

5.2 Limit on shares. The aggregate number of shares to be issued pursuant to the Shares Issue Mandate, including shares to be issued in pursuance of Instruments made or granted pursuant thereto, will still be subject to the 50% Limit and the 20% Sub-Limit. The 50% Limit and the 20% Sub-Limit will be calculated based on the issued share capital of the Company at the time of the passing of the Shares Issue Mandate, after adjusting for:

(a) new shares arising upon the conversion or exercise of any convertible securities or share options or vesting of share awards which are outstanding or subsisting at the time of the passing of the Shares Issue Mandate; and

(b) any subsequent consolidation or subdivision of shares. The share options and share awards referred to in sub-paragraph (a) above are those granted by the Company pursuant to share plans governed by Part VIII of Chapter 8 of the New Listing Manual.

In exercising the authority conferred under the Shares Issue Mandate, the Company will comply with the provisions of the New Listing Manual, unless such compliance has been waived by the SGX-ST.

5.3 Duration of Shares Issue Mandate. The Shares Issue Mandate will take effect from the passing of the resolution approving the Shares Issue Mandate at this AGM and will continue in force until the next AGM of the Company unless prior thereto, issues of shares are made to the full extent permitted by the Shares Issue Mandate or the Shares Issue Mandate is revoked or varied by the Company in general meeting. The Shares Issue Mandate, in the form proposed, is intended to be placed before Shareholders for renewal at each subsequent AGM of the Company.

5.4 Rationale for Shares Issue Mandate. If approved, the Shares Issue Mandate will, in addition to the usual authority to issue shares, enable the Company to make or grant Instruments during the validity period of the Shares Issue Mandate, and to issue shares in pursuance of such Instruments subject to the specified limits. A general (as opposed to specific) approval for the Directors to make or grant Instruments will also enable the Company to act quickly and take advantage of market conditions. The expense and delay of otherwise having to convene general meetings of the Company to approve the making or granting of each specific Instrument would thus be avoided.

It is for the above reasons that the Directors believe that the Shares Issue Mandate in the extended form, as proposed, would be in the best interests of the Company and its Shareholders.

6. Directors’ Recommendations

6.1 Authority to grant options and issue shares under Frontline Technologies Corporation Ltd Share Option Scheme 2000. The Directors are of the opinion that the proposed renewal of the Shares Purchase Mandate is in the best interests of the Company. Accordingly, they recommend that Shareholders vote in favour of Resolution 6, being the Ordinary Resolution relating to the proposed grant of authority to grant options and issue shares under Frontline Technologies Corporation Ltd Share Option Scheme 2000.notice of annual general meeting

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6.2 Shares Purchase Mandate. The Directors are of the opinion that the proposed renewal of the Shares Purchase Mandate is in the best interests of the Company. Accordingly, they recommend that Shareholders vote in favour of Resolution 7, being the Ordinary Resolution relating to the proposed Share Purchase Mandate.

6.3 Shares Issue Mandate. The Directors are of the opinion that the proposed Shares Issue Mandate is in the best interests of the Company. Accordingly, they recommend that Shareholders vote in favour of Resolution 8 being the Ordinary Resolution relating to the proposed Shares Issue Mandate.

7. Directors’ Responsibility Statement The Directors collectively and individually accept responsibility for the accuracy of the information given in this

Notice and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, the facts stated and the opinions expressed in this Notice are fair and accurate and that there are no material facts the omission of which would make any statement in this Notice misleading.

8. Documents For Inspection The following documents are available for inspection at the registered office of the Company at 750 Chai Chee

Road #02-01/03 Technopark @ Chai Chee Singapore 469000 during normal business hours from the date of this Notice up to and including the date of the AGM

a) the 2002 Circular; and

b) Frontline Technologies Corporation Ltd Share Option Scheme 2000.


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APPENDIX 1 - GUIDELINES ON SHARES PURCHASES >>

1. Shareholders’ Approval (a) Purchases of Shares by the Company must be approved in advance by the Shareholders at a general meeting of

the Company, by way of a general mandate.

(b) A general mandate authorizing the purchase of Shares by the Company representing up to ten per cent. (10%) of the Company’s issued ordinary share capital will expire on the earlier of:-

(i) the conclusion of the next annual general meeting of the Company;

(ii) the expiration of the period within which the next annual general meeting of the Company is required by law to be held; or

(iii) the time when such mandate is revoked or varied by an ordinary resolution of the Shareholders of the Company in general meeting.

(c) The authority conferred on the Directors by the Shares Purchase Mandate to purchase Shares shall be renewed at the next annual general meeting of the Company.

(d) When seeking Shareholders’ approval for the renewal of the Shares Purchase Mandate, the Company shall disclose details pertaining to the purchases of Shares made during the previous 12 months, including the total number of Shares purchased, the purchase price per Share or the highest and lowest price for such purchases of Shares, where relevant, and the total consideration paid for such purchases.

2. Mode Of Purchase Shares Purchases can be effected by the Company in either one of the following two ways or both:-

(a) by way of market purchases of Shares on-the Official List of SGX-ST, which means a purchase transacted through the Central Limit Order Book trading system; or

(b) by way of off-market acquisitions on an equal access scheme in accordance with section 76C of the Companies Act.

3. Funding Of Shares Purchases (a) In purchasing the Shares, the Company may only apply funds legally permitted for such purchase in accordance

with its Articles of Association, and the relevant laws and regulations enacted or prescribed by the relevant competent authorities in Singapore.

(b) Any purchase by the Company may be made out of profits that are available for distribution as dividends but not from amounts standing in the Company’s share premium account and capital redemption reserve.

(c) The Company may not purchase its Shares on the Official List of SGX-ST for a consideration other than cash or for settlement otherwise than in accordance with the trading rules of the SGX-ST.

4. Trading Restrictions

The number of Shares which can be purchased pursuant to the Shares Purchase Mandate is such number of Shares which represents up to a maximum often percent. (10%) of the issued ordinary share capital of the Company as at date of the last annual general meeting of the Company or at the date of the EGM, whichever is the higher.notice of annual general meeting

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APPENDIX 1 - GUIDELINES ON SHARES PURCHASES (cont’d) >>5. Price Restrictions Any Shares Purchase undertaken by the Company shall be at the price of up to but not exceeding the Maximum Price.

6. Off-Market Purchases (a) For purchases of Shares made by way of an Off-Market Purchase, the Company shall issue an offer document

to all Shareholders. The offer document shall contain, inter alia, the following information :-

(i) the terms and conditions of the offer;

(ii) the period and procedures for acceptances;

(iii) the reasons for the proposed Shares Purchase;

(iv) the consequences, if any, of Shares purchase by the Company that will arise under the Code on Takeovers and Mergers or any other applicable take-over rules;

(v) whether the purchase of Shares, if made, would have any effect on the listing of the Company’s securities on the Official List of SGX-ST; and

(vi) details of any purchase of Shares made by the Company in the previous 12 months whether through Market Purchases or Off-Market Purchases, including the total number of Shares purchased, the purchase price per Share or the highest and lowest prices paid for such purchases of Shares, where relevant, and the total consideration paid for such purchases.

(b) All Offeree Shareholders shall be given a reasonable opportunity to accept any offer made by the Company to purchase their Shares under the Shares Purchase Mandate.

(c) The Company may offer to purchase Shares from time to time under the Shares Purchase Mandate subject to the requirement that the terms of any offer to purchase Shares by the Company shall be pari passu in respect of all Offeree Shareholders save under the following circumstances:-

(i) where there are differences in consideration attributable to the fact that an offer relates to Shares with different dividend entitlements;

(ii) where there are differences in consideration attributable to the fact that an offer relates to Shares with different amounts remaining unpaid; and

(iii) where there are differences in an offer introduced solely to ensure that every Shareholder is left with a whole number of Shares in broad lots of 1000 Shares after the Shares Purchases, in the event there are Offeree Shareholders holding odd numbers of Shares.

7. Status Of Purchased Shares Subject to the requirements of the Companies Act,

(a) The listing of all purchased Shares on SGX-ST will be automatically cancelled and the relative certificates for these Shares shall be cancelled and destroyed. The Company’s purchased Shares shall be treated as cancelled and the issued share capital of the Company shall be diminished by the nominal value of these cancelled Shares accordingly; and


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APPENDIX 1 - GUIDELINES ON SHARES PURCHASES (cont’d) >>7. Status Of Purchased Shares (cont’d) (b) The amount by which the Company’s issued share capital is diminished on the cancellation of the purchased

Shares shall be transferred to the Company’s capital redemption reserve.

8. Notification To The Registrar Of Companies And Businesses (a) Within thirty (30) days of the passing of a Shareholders’ resolution to approve any purchase of Shares, the

Company shall lodge a copy of such resolution with the Registrar of Companies and Businesses.

(b) The Company shall notify the Registrar of Companies and Businesses within thirty (30) days of a purchase of Shares. Such notification shall include details of the date of the purchase, the total number and nominal value of Shares purchased by the Company, the Company’s issued share capital as at the date of the Shareholders’ resolution approving the purchase, the Company’s issued share capital after the purchase and the amount of consideration paid by the Company for the purchase.

9. Notification To The SGX-ST (a) For purchases of Shares made by way of an Off-Market Purchase, the Company shall notify the SGX-ST in

respect of any acquisition or purchase of Shares in the relevant form prescribed by the SGX-ST from time to time, not later than 9.00 a.m. on the second trading day after the close of acceptances of an offer, or within such time period that may be prescribed by the SGX-ST from time to time.

(b) For purchases of Shares made by way of a Market Purchase, the Company shall notify the SGX-ST in respect of any acquisition or purchase of Shares in the relevant form prescribed by the SGX-ST from time to time, not later than 9.00 a.m. on the trading day following the date of market acquisition by the Company, or within such time period that may be prescribed by the SGX-ST from time to time.

10. Suspension Of Purchase (a) The Company may not undertake any Shares Purchase prior to the announcement of any price-sensitive

information by the Company, until such time as the price sensitive information has been publicly announced or disseminated in accordance with the requirements of the New Listing Manual.

(b) The Company may not effect any Shares Purchases on the Official List of SGX-ST during the period commencing one month before the announcement of the Company’s annual or half-year results, as the case may be, and ending on the date of announcement of the relevant results.


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FRONTLINE TECHNOLOGIES CORPORATION LTDCompany Registration No. 199801489G

(Incorporated in the Republic of Singapore)

IMPORTANT

1. For investors who have used their CPF monies to buy Frontline Technologies Corporation Ltd shares, the Annual Report is forwarded to them at the request of their CPF Approved Nominees and is sent FOR INFORMATION ONLY.

2. This Proxy Form is not valid for use by CPF investors and shall be ineffective for ail intent and purposes if used or purported to be used by them.

I/We________________________of_____________________________ being * a member/members of Frontline Technologies Corporation Ltd (“Company”), hereby appoint

Name Address NRIC/ Passport No.Proportion of shareholdings to be

represented by proxy (%)

*and/or

as *my/our *proxy/proxies to vote for *me/us on *my/our behalf and, if necessary, to demand a poll, at the Annual General Meeting of the Company to be held at The Function Room, Tanah Merah Country Club, 25 Changi Coast Road, Singapore 499803 on 30 August 2004 at 10.30am and at any adjournment thereof.*I/we direct *my/our *proxy/proxies to vote for or against the Ordinary Resolutions to be proposed at the Annual General Meeting as indicated with an “X” in the spaces provided hereunder. If no specified directions as to voting are given, the *proxy/proxies will vote or abstain from voting at *his/their discretion.

No. Ordinary Resolutions For Against1. To receive and adopt the Accounts for the year ended 31 March 2004 and the Reports of Directors and Auditors

thereon.

2. To re-elect Mr Tay Swee Sze who is retiring in accordance with the Company’s Articles of Association.

3. To accept the retirement of Mr Liow Voon Kheong as a director of the Company in accordance with the Company’s Articles of Association and to leave his office as director vacant.

4. To approve Director’s fees for the year ended 31 March 2004.

5. To re-appoint Messrs Ernst & Young as auditors of the Company and to authorize the Directors to fix their remuneration.

6. To authorize the Directors to grant options and to issue shares under the Company’s Share Option Scheme 2000.

7. To renew the Share Purchase Mandate

8. To renew the Share Issue Mandate

Signature(s) of Member(s) / Common Seal

Total Number of Shares Held:

Dated this day of August 2004

* Delete accordingly IMPORTANT: Please read notes overleaf

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Notes

1. A member of the Company entitled to attend and vote at the Annual General Meeting is entitled to appoint not more than two proxies to attend and vote in his stead. Such proxy need not be a member of the Company.

2. Where a member of the Company appoints two proxies, he shall specify the proportion of his shareholding (expressed as a percentage of the whole) to be represented by each such proxy.

3. The instrument appointing a proxy or proxies must be under the hand of the appointor or his attorney duly authorized in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed under its common seal or under the hand of its attorney or duly authorized officer.

4. A corporation which is a member of the Company may authorize by resolution of its directors or other governing body such person as it thinks fit to act as its representative at the Annual General Meeting, in accordance with its Articles of Association and Section 179 of the Companies Act, Chapter 50 of Singapore.

5. The instrument appointing proxy or proxies, together with the power of attorney or other authority (if any) under which it is signed, or notarially certified copy thereof, must be deposited at the registered office of the Company at 750 Chai Chee Road #02-01/03 Technopark @ Chai Chee, Singapore 469000 not later than 48 hours before the time set for the Annual General Meeting.

6. A member should insert the total number of shares held. If the member has shares entered against his name in the Depository Register (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore), he should insert that number of shares. If the member has shares registered in his name in the Register of Members of the Company, he should insert the number of shares. If the member has shares entered against his name in the Depository Register and shares registered in his name in the Register of Members of the Company, he should insert the aggregate number of shares. If no number is inserted, this form of proxy will be deemed to relate to all the shares held by the member of the Company.

7. The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies. In addition, in the case of members of the Company whose shares are entered against their names in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if such members are not shown to have shares entered against their names in the Depository Register 48 hours before the time appointed for holding the Annual General Meeting as certified by The Central Depository (Pte) Limited to the Company.

8. A Depositor shall not be regarded as a member of the Company entitled to attend the Annual General Meeting and to speak and vote thereat unless his name appears on the Depository Register 48 hours before the time set for the Annual General Meeting.

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The Company Secretary

FRONTLINE TECHNOLOGIES CORPORATION LTD

750 Chai Chee Road #02-01/03

Technopark @ Chai Chee

Singapore 469000

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