SURBANA CORPORATION
New Frontiers Beyond Borders
S U R B A N A C O R P O R AT I O N A R2 0 0 5 /2 0 0 6
“Swept by the Waves” Marina South Pier, Singapore
NEW FRONTIERS BEYOND BORDERS
Contents A Common Destination
Corporate Vision Organisation Structure Our Shared Values
5 6 8
The Journey Ahead Chairman’s Statement CEO’s Statement
World of Faces
Board of Directors Senior Management
10 12
20 22
Travelogues
Operational Review • Singapore • China • India • Southeast Asia • Middle East
The Right Route
26 32 34 36 38
Corporate Governance 42 HR Initiatives for FY05/06 46 Financial Review 47
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“On the home front� Surbana One, Singapore
NEW FRONTIERS BEYOND BORDERS
A Common Destination To be a world-class building and infrastructure total solutions provider that shapes townships and cities of the future. Surbana is a Singapore-grown company that has made significant headway in the international arena. The company’s holistic offering of building and infrastructure solutions is driven by a dynamic and multi-disciplinary team, comprising architects, planners, engineers, quantity surveyors and a skilled technical crew. At Surbana, these individual energies are channeled into a collaborative effort to create environments that inspire vibrant communities. On the home front, Surbana has honed its residential expertise, creating 26 integrated townships across the island nation. Having redefined the world’s concept of “public housing”, the company continues to create living spaces in Singapore that meet the rising aspirations of the modern generation. Surbana has, in recent years, been relentlessly expanding its portfolio, pursuing projects more varied in type and scope. The company has also successfully exported its capabilities globally, establishing a presence in key markets including China, India, Southeast Asia, the Middle East and most recently, Africa.
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Group Organisation Structure Board of Directors Chairman Ngiam Tong Dow
Executive Committee
Audit Committee
Chairman Ngiam Tong Dow
Chairman lim Jit Poh
Establishment & Compensation Committee CEO Tan Thai Hong
Chairman Ngiam Tong Dow
COO Wong Wing Kien
Corporate Development
Finance & Legal
Chief Information Officer Phua Seow Ann
Chief Financial Officer Ng Kwai Yew
Company Secretary, Director (Corporate Planning & Branding) Ng Beng Eng Director (Human Resource) Quek lee Choo Director (Marketing) Chai Cheng Huan Director (Corporate Research & Risk Management) Quah Soon Tong
Surbana International Consultants Pte. Ltd.
Surbana Construction Resources Pte. Ltd.
Surbana Facilities Management Pte. Ltd.
Chief Executive Officer Tan Thai Hong
Managing Director gan Peng Hong
Managing Director Desmond Wong
Surbana Site Supervisors Pte. Ltd.
Surbana Technologies Pte. Ltd.
Surbana Consultants Pte. Ltd.
Managing Director Harold Ho
Managing Director louis Tay
Surbana Land (China) Pte. Ltd. (30%)
Chief Executive Officer Tan Thai Hong Chief Executive Officer Tan Kiang Hwee
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Surbana International Consultants
CEO Tan Thai Hong
COO Wong Wing Kien
Singapore
International
Executive Director Soh Wah Meng
Executive Director Wong Wing Kien
Development Projects
Estates Renewal
Reclamation & Infrastructure
Executive Vice President Ho Kuet Qeun
Executive Vice President Titus Mohan Alexander
Executive Vice President loh Yan Hui
Master Planning & Urban Design
North & East China
South & West China
Regional Director goh Ah Chye
Regional Director Yeo Eng Chang
Executive Vice President Jeffrey Ho
South Asia Regional Director Chee Kok Weng
Middle East & Southeast Asia Regional Director Chua Keng Chay
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Our Shared Values: i3c Insightful We are knowledge seekers who consider all perspectives before making informed decisions.
Intuitive We are visionaries who instinctively know and creatively adapt to our clients’ needs.
Integrity We are professionals who promise utmost reliability and responsibility in our conduct.
Collaborative We are team-players who integrate our individual abilities to achieve business excellence.
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The Journey Ahead
Chairman’s Statement CEO’s Statement
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Destination: The World The World is a book, and those who do not travel read only a page. St. Augustine, 20,000 Quips and Quotes
The word “dromomania” has been coined to describe a compulsive urge to travel, and I have a nagging suspicion that Surbana may be suffering from it. It is not something that worries me, however. For it is this very affliction that creates restlessness. And the same restlessness, in turn, leads to rewarding results. And sometimes, just sometimes, the results creep up in the form of a 20.6 million profit.
Once dismissed as a mystical expanse of sand, camels and the occasional magic lamp, the Middle East of today brands itself as the epitome of modernity, bursting with business opportunities. In the insightful decision to venture into countries like Bahrain, Oman and Qatar, it would seem that Surbana has stumbled onto her very own lamp, genie attached.
The past financial year recorded our successful exploration of previously uncharted territories – including some exotic places that challenged our grasp of geography and the atlas. The master planning of the Bafokeng Nation earmarked Surbana’s maiden foray into the African continent. Look beyond the grazing gazelles and savannah plains and you will see that post-apartheid South Africa has much potential for Surbana’s expertise to take flight. Morever, the country is but the tip of an iceberg called Africa.
Our bid to travel up the value chain in our provision of services has also witnessed further success in the past year. Through CityOne, Surbana secured a piece of land in Wuxi, a former mining town which acquired its name upon exhausting its supply of tin, to develop its second township in China. Looking ahead, we hope to see our township development business extend beyond the Chinese borders.
The American poet John And the same When we first corporatised, Berryman once wrote “We restlessness, in our intention for the must travel in the direction company was to export the of our fear.” I am glad that turn, leads to expertise in creating and Surbana has done exactly rewarding results. that, not once allowing fear developing world-class townships to our neighbours And sometimes, of failure to intimidate or in Asia. Even the name we hinder us from stepping just sometimes, chose reflected such an out of our comfort zones. intent. Surbana is derived Apart from conquering new the results creep from the word `urban’ markets, Surbana has, in the with the letters `S’ and `A’ up in the form of a last financial year, assumed representing Singapore and that have traveled 20.6 million profit projects Asia, our two key markets. up the value chain. We are But little did we know that now designing prestigious we would travel so far, so fast, that after sea-fronting mixed developments in Abu a brief stint of three years find ourselves Dhabi, creating premium housing townships crossing geographical borders beyond the in Hyderabad and conserving central window of Asia. business districts in Tianjin.
As we travel further and expand our global insights, we must at the same time take
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a step back to reason and contemplate. Seeing more of the world changes our perspectives on things, ourselves included. Indeed, Surbana’s growing global experience has a profound impact on our vision for the Company and what we think the Surbana brand can translate into. Going forward, I see Surbana seeking out greater potential business opportunities in the international arena. No longer are we passive ambassadors of the Singapore brand, but actively spearheading the way for our fellow Singaporean entrepreneurs to share their relevant expertise with the world. After all, Surbana too will reap the fruits of Singapore’s prosperity. For another successful financial year, there are many whom I have to thank. To our shareholder and Board, including our new members - Ms Susan Kong, Mr Manu Bhaskaran, Mr Lim Jit Poh and Mr Edmund Tie - thanks for your insightful guidance which has once again proved invaluable. My heartfelt gratitude to my management and staff, Surbana has only gotten so far
because of your unceasing perseverance and hard work. I am reminded of a short quote by Walt Whitman who declares “Strong and content I travel the open road”. May Whitman’s words, as a parting shot, resonate in our hearts as Surbana continues down the path towards global success. Ngiam Tong Dow Chairman
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Building A Business Across Borders With our international presence spanning across more than 45 cities in 14 countries, we are indeed going places. FY05/06 was another year of good performance for Surbana. On a Groupwide basis, we saw improvements in all our key performance indicators. Apart from a slight increase in the Group’s revenue, there was increased contribution from overseas projects. We have set the stage for the further expansion of our overseas business as we strengthened existing key markets and explored new ones. The regional operations secured an order book of $28.4 million, up from the previous year’s of $13.8 million. We are progressing well towards our goal of increasing our overseas earnings to at least 25% of total revenue by 2008. With our international presence spanning across more than 45 cities in 14 countries, we are indeed going places. Another achievement underpinning our growth was the acquisition of a 35-hectare site in Wuxi, through CityOne, for our second township in China. Following the promising sales of our first development project in Chengdu, we will continue to pursue opportunities in developing comprehensive townships in 2nd tier China cities, where there is still a huge demand for affordable quality housing. Financial Performance The Group’s consolidated revenue for the full year was $140.1 million (compared to $136.8 million in FY2004/05). Contributions from overseas consultancy business doubled from 5% in FY04 to 10% of the Group’s consultancy revenue in this FY. These achievements were the outcomes of the successful execution of our business development initiatives in each region, backed by our strong track record. Business potential in all our key markets remain
strong, in tandem with the robust economic and real estate growth in Asia. Net operating profit after tax for the Group grew 16% to $20.6 million (excluding exceptional item). Strengthening Our Local Niche Singapore Our Singapore business continued to play a vital role in our Group operations with its stable revenue income. During the year, a total of 4,733 new dwelling units were completed, with another 12,216 units under construction. This was a reduction compared to FY2004/05 where 6,164 new dwelling units were completed. However, the volume of upgrading projects increased in FY05. The upgrading works for twelve precincts comprising some 12,971 dwelling units under the Main Upgrading Programme (MUP) were completed, an increase from 10,618 units the previous year. As at end Mar 06, works-in-progress for units under MUP comprised 19,498 units. Under the Lift Upgrading Programme (LUP) and Interim Upgrading Programme (IUP+), 22 precincts were completed with another 41 precincts under construction. In addition, Surbana also carried out consultancy works for neighbourhood parks and mixed developments. In the land reclamation business, Surbana made good progress on the Pulau Tekong, Southern Islands and Pasir Panjang Terminal Phases 3 & 4 reclamation works. And in recognition of our expertise in land reclamation and shore protection, Surbana was appointed the consultant to provide planning, design and implementation of beach protection works at Sentosa’s Siloso
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Beach. Targeted for completion in October 2006, this restored beach is earmarked to house a grandstand for world-class water shows.
by July 2007 and 50% by July 2008. With the Government’s continued emphasis on renewal of older estates, we project that the volume of projects under the Selective En-bloc Redevelopment Scheme (SERS) and the various upgrading programmes will increase in The regional the years ahead and this will operations secured be good for us.
Last year also saw the completion of the iconic Marina South Pier ferry terminal. Designed by Surbana’s architects, an order book of the project included the Besides the main $28.4 million, provision of marine facilities consultancy services, as well as major infrastructure up from the the phased liberalisation works. Covering 5,000 sqm programme will also impact at Singapore’s Marina South, previous year’s the Group’s other businesses this 2-storey pier replaces the managed by its subsidiaries, of $13.8 million. existing Clifford Pier, and will including site supervision, form part of the future Marina management of construction Hub that shapes Singapore’s waterfront resources, building solutions technology, scene of lifestyle and leisure activities. estates management solutions and facilities management. For each of our business, we The phased liberalisation for the public are ready to face the challenges ahead. The housing building programme came into phased liberalisation programme will open force on 1 July 2006. According to the up new opportunities for us in the Singapore schedule, 10% of the programme will be market. When 30% of the building gradually opened up to the other private programme is opened up, Surbana will be consultants. This ratio will increase to 30% allowed to compete for local non-HDB jobs.
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From July 08, we will also be allowed to compete for public housing projects. We will gear ourselves to seize new opportunities. Marketing efforts for the Singapore market will be intensified in the next two years to prepare for the competition ahead. Competition is not new to us as since corporatisation, we have been competing for jobs in the overseas markets.
Bengal and a township in Ghaziabad, Delhi. Complete with an IT Park development, the Kolkata township will provide a high quality living environment for some 100,000 residents. The Ghaziabad project, with its comprehensive range of accommodation and integrated facilities set in a park-like environment, will be a 4,000-acre vibrant town for residents to live, work and play in.
We are determined to do well in our domestic market. This is where we have established a firm foothold. Maintaining a leading position at home will bring credibility when we compete or invest overseas.
The economy of India is expected to grow by at least 7% in these two years due to market liberalisation and inflow of foreign direct investments especially into the IT sector. A spin-off from this continued strong economic growth is a surge in interest in the property and Extending Our construction market. Global Reach India’s real estate is Our regional thrust is expected to grow an equally important “Prestige” Royal Complex, UAE at 30% annually. facet of our growth Recognising the potential of this huge strategies. In the last financial year, we market, we opened our second office in continued to strengthen our international India last November at Kolkata to tap business by securing 51 projects with fees worth a total of $28.4 million. This more than business opportunities in the eastern and northern part of India. doubled the previous year’s $13.8 million of contracts secured. These contracts ranged from master planning to full consultancy services in countries such as China, India, Indonesia, Malaysia, Myanmar, UAE and South Africa. Our performance in each country is influenced by a mix of different factors, such as economic growth, urban population growth, regulatory environment, state of development, match between customers’ needs and our strengths etc. Different strategies would therefore have to be employed for the different key markets. India Two significant consultancy projects secured in India last year were an integrated residential township in Kolkata, West
Middle East Since 2004, Surbana was active in the Middle East region, riding on the high growth potential in these emerging markets. To-date, we have undertaken a good mix of projects from master planning to architectural designs, and from high-end residential apartments to luxury hotels. Amongst these is The Royal (Landmark) Complex in Abu Dhabi, a 1.5-hectare mixed-use development with a themed retail podium in a distinctive waterfront location. This project will no doubt raise Surbana’s profile. On 19 October 2005, we sealed our first consultancy job in Bahrain, with the Ministry of Housing and Works. We were
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commissioned to design 300 units of high-rise housing for the Central Muharraq Project. Middle East also proved to be a lucrative market for master planning. We secured the Al Salam City Master Plan, a 2000-hectare township site in the Emirates of Umm Al Quwain, and the Abu Dhabi Auto City, a 600-hectare automotive centre in Abu Dhabi. In Qatar, Surbana was one of the 10 international consultants invited to take part in the prestigious 200 sq km Greater Doha Master Planning Competition. Surbana is now looking into the feasibility of setting up offices in UAE, Qatar and Bahrain to support and tap the potential of the respective markets. The construction industry in the Gulf region – UAE, Bahrain, Qatar, Oman and Saudi Arabia – has been growing over the past few years. Opportunities exist for the construction of government buildings, shopping and leisure facilities, hotels and residential units. Surbana will leverage on these opportunities and provide value-added services. More importantly, the Middle East presents tremendous opportunities for us to showcase our capabilities in designing mega and iconic projects. Innovative and intuitive design concepts by our technical professional teams will provide us the competitive advantage to meet the specific demands of different clients and cultures.
Mixed Development in Kuala Lumpur, Malaysia. We are now in the process of setting up offices in Kuala Lumpur and Jakarta to provide more effective local support for our projects and further business penetration. In February 2006, Surbana Facilities Management also signed a Memorandum of Understanding with Agung Sedayu Group (ASG), one of the leading developers in Indonesia, to provide property management consultancy services for its mega mall in Jakarta. Though economic growth in the Southeast Asian region slowed a little in 2005 to 5%, as compared to the previous year’s 6.5%, its fundamentals remained strong. We foresee a steady demand for residential and mixed developments in the region. China The China consultancy business continued to grow as Surbana’s good repute become more widely known. Some prominent consultancy projects clinched were the Wang Lan Zhuang residential project and Zi Zhu Lin conservation project in Tianjin, the Jingshen furniture mall and residential development in Wuhan. The Jingshen project will be largest furniture mall in the city, with a gross floor area of 116,800 sqm. Surbana was also engaged to undertake the landscape design for the international portion of the China Flora Expo held in Wenjiang, Chengdu.
Southeast Asia Our primary markets in this region are Indonesia, Vietnam and Malaysia, with secondary markets in developing economies like Myanmar, Laos and Cambodia. During the year, Surbana secured several sizable master planning projects in Indonesia and Vietnam, such as the 2,378-hectare Me Linh township. In December 2005, two big projects were also clinched to provide full consultancy services for the Jalan Imbi Mixed Development and Sri Damansara
Township Development Township development is the other important growth engine for Surbana Corporation. The development business is carried out under Surbana Land (China), a JV between GIC Real Estate, Wuthelam Holdings and Surbana Corporation. Surbana Land (China)’s focus is to develop self-contained townships that provide middle-income housing in China’s secondary cities. After many years of double-digit
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growth in China, the fast growing middleincome population forms an enormous market. Strong demand for residential homes in the secondary cities such as Chengdu was relatively unaffected by the Chinese government’s anti-speculation measures. With rising housing aspirations, there is still optimism in housing demand. The success of our first township project in Chengdu, “The Botanica”, underscores the soundness of our business model. To date, The Botanica’s first phase sold more than 99% of the 970 units released. We have progressively rolled out another 1,500 units for Phase 2 from April 2006. The whole development will have 8,000 residential units when fully completed.
International Consultants won the prestigious Fiabci Prix d’Excellence Awards 2006. Three of our Singapore projects, namely, Marine Terrace Breeze, Goodview Gardens and Punggol West were awarded the Winner, First runner-up and Second runner-up in the public sector category.
Surbana’s design excellence was also affirmed at several design competitions. In a competition organised by the Abu Dhabi Tourism Authority, Surbana’s design won the top prize for an iconic hotel at the Corniche. In China, Surbana emerged winner in the competitions for the Kunming Expo Eco-communities Upmarket Residential “Entrancing” The Botanica Township, Chengdu, China Project and the Chengdu Guo Guang Chang Mixed Development Project. On 21 October 2005, Surbana jointly secured a 35-hectare site for its second In Singapore, Surbana International township development in Wuxi through Consultants won the BCA Best Buildable CityOne (a JV between Surbana Land Design Award 2006 (Gold Award) for (China) and Keppel Land). To be developed Toa Payoh RC30 project, also known as over six years, the site will eventually yield Toa Payoh Towers. Two other projects, about 700,000 sqm of gross floor area Bukit Merah RC29 and Spring Lodge in and more than 5,000 housing units for the Sembawang, won the silver awards. And growing middle-class. The first phase of for our outstanding work on Marine Terrace this township is slated for launch in the first Breeze, we were accorded the HDB Design half of 2007. As with The Botanica, this Awards 2005 (Main Upgrading Programme township will be a self-sufficient enclave, Category). In addition, Surbana International complete with commercial, educational and Consultants was again named one of the top recreational facilities. 10 leading architectural firms in Singapore by the BCI Asia that gives recognition to Buoyed by its progress in Chengdu and architectural firms and design institutes Wuxi, Surbana Land (China) has stepped making the greatest contribution to the up its efforts to further extend its footprint built environment. in China. Bringing Our Business to the Next Winning Awards Level of Growth Our work continued to gain recognition Looking ahead, we will intensify our drive both locally and internationally. Surbana to expand our overseas business in existing
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“A cut of the comtemporary” Punggol West, Singapore
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markets and bring the Surbana brand to new markets such as Saudi Arabia and Algeria. Plans are underway to implement strategies that suit each chosen market. To be more responsive to local environment and reduce operational cost, we will continue to look at localisation of our operations where it is feasible. However, we will retain Singapore input or quality checks for critical processes of the value chain to ensure that high standards are maintained. In the past three years, we have focused our priorities on clinching deals to grow the top line through aggressive BD efforts. Moving forward, we will place greater emphasis on project delivery and growing the bottom line. Good execution of the project is important to build up our reputation as we bring the company to the next level of growth. As we compete globally, we remain focused on enhancing the capabilities of our staff and developing their talent. The different markets provide new challenges and exciting opportunities for staff to hone their skills and boost their credentials. Every staff must adjust their mindset from one that is used to predictable environment to one that is receptive to risk taking and responsive to different economic opportunities. Surbana also remains very committed to deliver our Singapore projects well. With our excellent track record, we will continue to grow our Singapore business. Having contributed significantly to the planning, design, development, upgrading and maintenance of Singapore’s towns, Surbana is well positioned to play a key role in Singapore’s urban design for both private sector and public sector projects. Building Up an International Brand For sustainable business success, we have embarked on a branding exercise to define our brand in our key markets. Surbana
possess many competitive advantages, backed by a strong 45-year track record. We have every reason to look forward to the future with confidence, knowing that we can build on our strong brand, core competencies and the quality of our people. I would like to thank the management team and all staff of this company whose commitment had contributed to another year of success for the Group. My deep appreciation also goes to the Board of Directors for their continual guidance. We have benefited immensely from their experience and invaluable advice. As we look towards taking the Surbana brand to greater heights, we re-affirm our vision to be a “world-class building and infrastructure total solutions provider that shapes townships and cities of the future”. Tan Thai Hong Group CEO
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World of Faces
Board of Directors Senior Management
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Board of Directors
1. NGIAM TONG DOW Mr Ngiam Tong Dow was appointed Chairman of Surbana Corporation Pte. Ltd. (“Surbana Corp”) on 1 July 2003, having served as HDB’s Chairman from 1998 to 2003. In a distinguished public service career of 40 years, he held the post of Permanent Secretary in the Prime Minister’s Office, Ministries of Finance, Trade & Industry, National Development, and Communications. Mr Ngiam is also currently a Board Director of Singapore Press Holdings Ltd, United Overseas Bank Ltd, and Yeo Hiap Seng Ltd. Prior to his present appointments, Mr Ngiam held numerous appointments in both the public and private sector. He was Chairman of the Economic Development Board, ShengLi Holding Co Pte Ltd, Development Bank of Singapore Ltd, and Central Provident Fund Board. He also served on the Boards of Temasek Holdings (Pte) Ltd, Singapore Airlines Ltd, Health Corporation of Singapore Pte Ltd, and Overseas Union Bank Ltd.
2. LIM JIT POH Mr Lim Jit Poh joined the Board of Surbana Corp on 15 August 2005 and was appointed Deputy Chairman on 28 February 2006. Mr Lim is the Chairman of ComfortDelGro Corporation Limited, Vicom Ltd, SBS Transit Ltd, Ascott Residence Trust Management Limited and China Aviation Oil (Singapore) Corporation Ltd as well as a Director of several other listed companies. He is also a director of several unlisted companies under the ownership of the Singapore Labour Foundation. Mr Lim, a former top civil servant and a Fulbright scholar, is a Trustee of the Singapore National Employers Federation. He is also a Fellow Member of the Singapore Institute of Directors.
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3. LIU THAI KER Mr Liu Thai Ker is presently Director of the RSP Architects Planners & Engineers Pte Ltd. He joined Surbana Corp as a Director on 1 July 2003. Mr Liu is also Director of Singapore Offshore Petroleum Services Pte Ltd, Squire Mech Pte Ltd and Metro-City Development Pte Ltd. He has been the Chairman of Singapore Tyler Print Institute since Year 2000 and Adjunct Professor of School of Design & Environment, National University of Singapore since Year 2000.
8. QUEK SZE SWEE Mr Quek Sze Swee is the Chairman and CEO of Parsons Brinckerhoff Pte Ltd. He was appointed as a Director on 1 July 2003. Mr Quek is also a member of the Board of Governor, ITE.
4. TAN THAI HONG Mr Tan Thai Hong is the Group CEO of Surbana Corp. He was appointed to the Board on 1 July 2003 as an executive Director. He also sits on the Board of several companies with the Surbana Corp group.
10. MANU BHASKARAN Mr Manu Bhaskaran joined the Board on 15 Aug 2006. He is a Partner and Head of Economic Research in Centennial Group. Mr Bhaskaran is the Chairman of EH Group and Green Dot Capital Pte Ltd. He also serves as a Director of Silkair (Singapore) Pte Ltd, IFS Capital and CIMB-GK Securities.
5. TOW HENG TAN Mr Tow Heng Tan is Senior Managing Director, Investments in Temasek Holdings (Private) Limited. Mr Tow was appointed to the Surbana Corp Board on 16 September 2004. He is also a Director on the Boards of IE Singapore, ComfortDelGro Corporation Limited and Keppel Corporation Limited, among others.
9. SUSAN KONG YIM PUI Ms Susan Kong is the Managing Director of Compass LLC. She joined the Board of Surbana Corporation on 15 August 2005. Ms Kong currently also sits on the Board of HLN Technologies Ltd.
6. WONG HENG TEW Mr Wong Heng Tew is Managing Director, Investments, in Temasek Holdings (Private) Limited. Mr Wong joined Surbana Corp as a Director on 16 September 2004. He is also a member on the Boards of several other companies, including CISCO Security Pte Ltd and Olam International Ltd. 7. EDMUND TIE NYUK SIONG Mr Edmund Tie is the Managing Director of DTZ Debenham Tie Leung (SEA) Pte Ltd. He was appointed as a Director of Surbana Corp on 15 August 2005. Mr Tie is a Director of New Horizon Holdings Pte Ltd, Ayarapuri Company Limited and related companies of DTZ. He is also a Board Member of LaSalle Foundation.
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Jet Setting the Pace
Left to right:
TAN THAI HONG Group CEO
WONG WING KIEN Group COO & Executive Director (International)
NG KWAI YEW Group CFO
LOW SENG POH Senior Advisor
TAN KENG JOO, TONY Senior Advisor
SOH WAH MENG Executive Director (Singapore)
TITUS MOHAN ALEXANDER Executive Vice President (Estates Renewal)
HO KUET QEUN Executive Vice President (Development Projects)
LOH YAN HUI Executive Vice President (Reclamation & Infrastructure)
TAN KIANG HWEE CEO, Surbana Land (China) Pte. Ltd.
JEFFREY HO Executive Vice President (Master Planning & Urban Design)
YEO ENG CHANG Regional Director (South & West China)
GOH AH CHYE Regional Director (North & East China)
CHUA KENG CHAY Regional Director (Middle East & Southeast Asia)
CHEE KOK WENG Regional Director (South Asia)
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Travelogues
Operational Review • Singapore • China • India • Southeast Asia • Middle East
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Exploring the gateway to Asia Singapore Impeccably clean and remarkably modern, this success story of Asia has come a long way since its humble fishing village beginnings. Singapore’s marked affluence must be accredited to the foresight of its founders, and the government’s ability to foster harmony amongst a richly diverse population of various cultures. It is also on this very island nation that Surbana’s expertise has been honed and henceforth, exported across the globe. OBSERVING THE ITINERARY Building on its rich history of housing the nation, Surbana continued its pursuit of excellence in FY05/06, diversifying its portfolio with an array of developments in Singapore. Contributions from the Singapore business was $129.4m, accounting for more than 90% of the Group’s revenue. Building
complex, a market, a community club, a bus interchange and an entertainment complex.
In addition, Surbana persisted in its bid to endow existing estates in Singapore with a new lease of life, continuing in a strategic relationship with HDB to facilitate its estates renewal programmes. The company received affirmation of its expertise in this field as the majority of precincts under the Main Upgrading Programme (MUP), and all precincts under the Interim Upgrading Programme Plus (IUP+) and Lift Upgrading Programme (IUP) opted Surbana as their design “Refreshing” Marine Terrace Breeze, Singapore consultant.
For new developments, Surbana provided multi-disciplinary consultancy services for a variety of building projects. Some of the company’s residential creations included HDB’s Build-ToOrder (BTO) and Selective En-bloc Redevelopment Scheme (SERS) flats. Surbana also took on a comprehensive mix of non-housing projects encompassing several infrastructure projects, land surveying projects, neighbourhood parks, a mixed commercial and residential
A pillar of any large-scale development is a well-planned transportation and infrastructure network. During the year, Surbana continued to develop the infrastructure for HDB’s new and upgrading projects. Core teams were also set up to
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enhance its various infrastructure capabilities and current scope of services. To remain relevant and up to mark in the building industry, Surbana will further enhance its core competencies and professional standing as the company makes preparations for open competition within Singapore in the coming year. Milestones of Note • • •
4,733 new dwelling units (DUs) completed and 12,216 DUs under construction. Building plans and contract documents prepared for calling of tenders for construction of 2,186 Dus and award of construction contracts for another 3,220 DUs. Completed about 60 strata and 30 land parcel survey projects.
PROJECT TYPE
• • • • •
Stepping up of IUP Plus and LUP programmes (see Table 1 below) Won three major awards at the annual Fiabci Prix d'Excellence 2006. Marine Terrace Breeze (MUP Project), Goodview Gardens and Punggol West were awarded the Winner, First runner-up and Second runner-up in the public sector category. Marine Terrace Breeze also won the HDB Design Awards 2005 (Main Upgrading Programme Category) Toa Payoh Towers, first 40-storey HDB development, received Gold Award in BCA Best Buildable Design Awards 2006. Bukit Merah RC29 and Spring Lodge in Sembawang recognised with Merit (Silver) Awards for buildability. HDB Best Buildable Design Award 2006 (Merit) given to MUP batch 16 PrecintFaber View.
AS AT 1 MAR 006
TOTAl (no. of precincts)
Under Under Design/Tender Construction
Main Upgrading Programme Interim Upgrading Programme Plus lift Upgrading Programme Hawker Centres Upgrading Progamme
Completed
(no.of precincts)
(no.of precincts)
(no.of precincts)
1 6 0 1
1 19
1 0 5
5 111 1
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“Unstated elegance” Marina South Pier, Singapore
Reclamation Surbana retained its position as Singapore’s leading consultant in reclamation with a growing portfolio of reclamation projects in FY05/06. The main reclamation works at the Pasir Panjang Terminal Phases 3 & 4 was on course with the successful completion of preliminary design for the project. The Pulau Tekong Reclamation also progressed favourably with soil investigation works completed and planning for the final phase well underway. When completed, this reclamation will yield 2955 hectares of land. Surbana was appointed the consultant to carry out planning, design and implementation of beach protection works at Siloso Beach, Sentosa. Targeted for completion in October 2006, the restored beach is earmarked to house a proposed grandstand for world-class water shows.
The company recently conducted an R&D project to assess the viability of a Mega Float structure for a cruise centre. Through a strategically executed R&D programme, Surbana will advance its expertise in such technologies to carve out its competitive edge. Milestones of Note • • •
Completed the iconic Marina South Pier ferry terminal. Its design received rave feedback and won the 8th SIA Architectural Design Awards 2006. Engaged in two maritime and coastal engineering R&D projects with Maritime and Port Authority of Singapore (MPA) and local universities. Completed the pilot project to convert toxic industrial wastes and contaminated dredged material into reclamation fill through a patented crystallisation process.
PACKING THE RIGHT GEAR In addition, the company was tasked by HDB to carry out preliminary studies for an offshore containment project off Marina East as well as the proposed Simpang, Sembawang and Lorong Halus reclamation and dam construction projects. Such initial investigations including environmental impact studies and other specialised studies helped ascertain the feasibility and viability of the projects. Surbana aims to remain at the forefront of maritime and coastal engineering research.
Surbana’s core business thrust in consultancy is complemented by the service offerings of its subsidiaries. Equipped with the gear to provide a holistic suite of building solutions, the company has a comparative advantage over other consultancy firms. Technologies Surbana Technologies established its presence in the industry through effective collaboration with major industry players. Surbana Technologies worked with DTZ
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Debenham Tie Leung to jointly develop a property-facility management system, while a collaborative effort with Treetops Executive Residences resulted in a facility-hospitality management system to operate premium apartments. FY05/06 also saw the formation of the Sustainable Design Technologies Team to drive Surbana’s provision of innovative ‘Green’ technology solutions, and collaborations were made with companies having expertise in the design of energy efficient and wellperforming green buildings.
Construction Resources Surbana Construction Resources (Surbana CR) diligently delivered high quality materials supply in FY05/06, supplying HDB projects with a higher monthly average volume of resources as compared to the preceding year.
The past FY proved challenging for Surbana CR due to the fluctuating demand for materials, heightened by the Build-to-Order (BTO) scheme and the newly introduced flexibility for HDB contractors to arrange their own supply of resources. “Novel” RFID system in use, Singapore As a result, Surbana CR adopted a more proactive approach to supply management, and escalated its As part of its technology innovation pursuit, efforts to explore opportunities overseas. Surbana Technologies identified areas of technology integration to further add value Milestones of Note to its clients. These included the wireless • Total quantity of resources supplied Integrated Estate Management System amounted to 222,700 tonnes of cement; (IEMS) with Personal Digital Assistant (PDA), 416,600 tonnes of concreting sand; and CCTV application with IEMS and remote 509,200 tonnes of 20mm aggregate monitoring and control of florescent lights. • Secured 8 supply contracts totaling $40m • Achieved full ISO 14000 certification in Milestones of Note September 2005 for minimising • Surbana Technologies scored an overall environmental impact at stockyards. 93.3% on technical capabilities and • In February 06, commissioned by HDB 100% on service quality in the to provide consultancy for the building Telemonitoring System (TMS) survey up of HDB’s stockpile of 20mm conducted by HDB. aggregate on Gali Batu, amounting to • Successfully commissioned numerous 1.3m tonnes of aggregate. suite of new applications for the Town • Provided consultancy for the direct bulk Councils, including Radio Frequency supply of ready-mixed concrete and Identification (RFID) attendance tracking steel rebars for Phase 2 of the Chengdu system, electronic lift invoicing system, Township Development Project, The RFID system for horticulture works, Botanica. cyclical works module, pump monitoring, LD module and killer litter tracking. Facilities Management • Developed Lift Monitoring System for Surbana Facilities Management (Surbana 14 lifts at the Chengdu Township FM)’s overall performance for FY05/06 was Development Project, The Botanica.
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on the whole commendable, both within Singapore and in its overseas ventures. Surbana FM persisted in its servicing of HDB Hub, Woodlands Civic Centre, Choa Chu Kang Centre and Surbana One (former HDB Centre), overseeing the daily management and maintenance activities for the four office cum commercial buildings.
•
Surbana Land (China) & Keppel Land. Surbana and Keppel Land each holds 40% in the joint venture while EMS holds the remaining 20%. Provided property management consultancy services to Agung Sedayu Group, a major developer in Indonesia, for its mega mall in Jakarta.
Site Supervisors Leveraging on its extensive facilities management experience in Singapore, Surbana FM successfully extended its business operations to China and Indonesia. Milestones of Note • • •
Achieved ISO14000 certification in September 2005 for Environmental Management System (EMS) for the scope of facilities management of commercial buildings HDB Hub, which was serviced by Surbana, was entered for Building and Construction Authority (BCA)’s Green Mark Awards 2006, an award which recognises environmental friendly buildings Entered into a joint venture agreement with Joysville Investment Pte Ltd (Keppel Land’s nominated company) and E M Services (EMS) to form Yihe Holding Pte Ltd to render estate management services in China, focusing initially on residential townships developed by
The team of dedicated site supervisors from Surbana Site Supervisors Ptd Ltd (SSPL) played a vital role in ensuring high quality works and timely completion of public housing and related infrastructure developments, upgrading as well as reclamation projects. Throughout the year, the site supervisors were each provided technical training to not only ensure their versatility on different types of work but also expand their construction consultancy role, e.g., conducting technical audits. Training will form the cornerstone in ensuring the site supervisors’ capabilities match the needs of the client and industry. To remain competitive, SSPL has begun refocusing its strategies to improve the overall effectiveness of its project supervision. The strategies also address new industry standards such as the revised Occupational Safety & Housekeeping (OSH) requirements introduced by the Ministry of Manpower. Milestones of Note • •
Thorough supervision on site
Deployed some 520 site supervisors to various construction projects in Singapore. Started to make inroads overseas by deploying two site supervisors to Vietnam to serve as assistant project managers for Surbana’s projects there.
“A marriage of simplicity and grace� Toa Payoh RC30, Singapore
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Conquering Vastness China Often misrepresented by the tourist clichés of the Great Wall and Forbidden City, China is in fact a melting pot of ethnic cultures and diverse landscapes awaiting discovery. Surbana first ventured into China’s vast territories two years ago with the vision of providing quality housing to the world’s most populated nation. The company has since gained ground, with its first Singapore-styled township being well-received by the Chinese homebuyers. Township Development With the phenomenal success of its maiden township project in Chengdu, The Botanica, Surbana Land (China) (SLC) affirmed its credibility as a township developer in China. The well-planned, integrated residential township not only raised standards of sub-urban living but also introduced a new concept of housing to China’s growing middle-class. Leveraging on this achievement, SLC continued its pursuit of growth and embarked on its second township. Through CityOne, a joint venture between SLC and Keppel Land, a 35-hectare site for township development in Wuxi was secured through a public land tender. Buoyed by strong economic showing in China and rising home ownership aspirations, SLC will build upon its
“Grandeur” The Botanica township, Chengdu, China
fundamentals to deliver steady growth. For the next 2-3 years, SLC expects its combined turnover to increase by more than 50%. Milestones of Note • • •
Almost all 970 units in Botanica Phase 1 sold out. Another 1500 units under Phase 2 has been progressively rolled out since April 2006. The Botanica was honored with several awards, including the “2005 Chengdu Property Developer - Gold Award” jointly conferred by Chengdu Real Estate Management Board and Chengdu Department of Statistics; “2005 Top 10 Developments” and “2005 Sichuan Top 20 Residential Project” by Western China City Daily; and “2006 Most Hotly Anticipated Project” for Phase 2 of The Botanica by the Chengdu Business Times and House Weekly
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“Tranquil living” Kunming expo Eco-Bumgalows, China
• •
Secured a 35-hectare site in Wuxi on 21 October 2005, through CityOne, for SLC’s second township development in China. The first phase of this township is slated for launch in the first half of 2007. The two townships projects in Chengdu and Wuxi have amassed a pipeline of over 12,000 township homes in China.
Consultancy Following the successful execution of The Botanica, for which it provided the full suite of consultancy services, Surbana International Consultants commenced on SLC’s Wuxi township project. It will again provide the complete suite of consultancy services from master planning to architectural, engineering and project management. Having established its reputation, Surbana was also successful in securing a wide range
of projects from prestigious hotels to luxury housing. Such diversification will broaden the team’s experience and fortify Surbana’s predominantly township portfolio, thereby sharpening the company’s competitive edge in China. Milestones of Note • • • • • •
First parcel of Chengdu Township project nearing completion and work on the next few parcels has begun. 2nd township project in Wuxi commenced. The project will be developed in five phases over the next six years. Overwhelming response in the sales of up-market 'Bungalows in the sky' project and near completion of the Hotel-cumOffice project in the Chengdu Century City Development, designed by Surbana. Secured the Wang Lan Zhuang project, a 31-hectare architectural project with interior design elements; the Zi Zhu Lin architectural and landscaping project in Tianjin; and Jingshen Furniture Mall and Residential Development in Wuhan, the largest furniture mall in the city with a gross floor area of 116,800 sqm. Emerged winner for the design of both Kunming Expo Eco-communities Phase 2 (comprising bungalows, terrace house and mid-rise housing), and the Chengdu Guo Guang Chang mixed-development project. Surbana now has technical offices in Shanghai, Chengdu, Tianjin and Wuxi and business offices in Wuhan and Chongqing.
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Hiking Up The Himalayas INDIA In FY05/06, Surbana’s India business scaled up the value chain, transcending beyond its staple in public township projects. In the land crowned by the icy peaks of the Himalayas, Surbana successfully reached the plateau of up-market private sector developments. Surbana now provides the full suite consultancy services for integrated township projects comprising medium to high-end residential apartments, villas, hotels, retail complexes and IT parks. The past financial year also saw a steady expansion of Surbana’s India operations. In addition to ongoing projects, Surbana secured several new projects with major developers in the various cities.
In the coming years, Surbana aims to provide consultancy services for a wider variety of projects. Such diversification will further strengthen its portfolio and raise Surbana’s profile in India.
With a booming real estate market accelerated by relaxed rules on foreign direct investment, the air of optimism surrounding Surbana’s India business is comparable to that of its colourful and crowded bazaars.
Milestones of Note
“Inviting” Orchid Springs, Chennai, India
• Designed more than 43,000 apartment units with a built-up area of over 40 million square feet.
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• Notable projects include: - 150 acres SP City, an integrated residential development, with 20,000 housing units and 50 acres of IT related development, is the largest of its kind in India. - Hill County, an integrated township in Bachupally, Hyderabad comprising 900 units spread over 400 hectares of hilly terrain - Raintree Park, a 2,200 unit high-end development in Hyderabad. - Comprehensive consultancy services for one of the largest integrated residential township with IT Park development in Kolkata, West Bengal; a 4,000 acre self-contained center with comprehensive range of accommodation and integrated facilities in Ghaziabad, Delhi. • New business office in Kolkata opened in November 2005 to reinforce Surbana’s business commitment in the Indian sub-continent.
“Raw beauty” Hill County, Bachupally, India
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Experiencing the Eclectic SOUTHEAST ASIA Southeast Asia is a cluster of countries, starkly diverse in nature, yet stemming from common ancestry and history. While modern Southeast Asia has generally been marked by high economic growth, the surge in oil prices and everimminent threats of bird flu have slowed economic activity in the region to 5% in 2005. In the long run, demand for quality housing and mixed development is expected to remain strong, supported by the burgeoning economies and rising affluence Surbana’s primary markets in Southeast Asia – Indonesia, Vietnam and Malaysia, have shown tremendous growth potential. The company will continue developing relevant strategies, based on extensive market research, to ensure relevancy in a fast changing business environment. For long-term benefits, projects secured will undergo a more stringent selection, ensuring returns that will not only boost the bottom line but serve to build up Surbana’s track record. To accelerate Surbana’s business development efforts and offer better service to clients in the region, plans are underway to set up offices in Kuala Lumpur and Jakarta. Through close contact with the market and constant reviewing of business strategies, revenue for the region is expected to grow significantly over the years.
“Comprehensive” Me Linh Township, Vietnam
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Milestones of Note • • •
13 projects secured in Indonesia, Malaysia, Myanmar and Vietnam. These include several sizeable master planning projects such as the 2,378-hectare Me Linh township, Vietnam; 160-hectare Golf Township in Binh Duoung, Vietnam and the 250- hectare Royal Medan Golf Resort in Indonesia. In December 05, two significant projects clinched to provide full consultancy services for the Jalan Imbi Mixed Development and Sri Damansara Mixed Development in Kuala Lumpur. Technical offices to be set up in Kuala Lumpur and Jakarta to better support ongoing projects and further business penetration in these key markets.
“Texture” Imbi Mixed Development, Malaysia
“Captivating” Sri Damansara Mixed Development, Malaysia
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Sizing Up The Spectacle MIDDLE EAST The Middle East is a mesmerising symphony of sweeping landscapes and ancient civilisations, which have miraculously escaped the clutches of modernity. It is against such a majestic backdrop that Surbana’s Middle East business has proliferated. The past year recorded Surbana’s fullfledged venture into designing iconic projects for the region, designs that rival their surroundings in the spectacular. Through active pursuit and determination, Surbana secured an impressive mix of projects, both in terms of project scope as well as type. Most notable was The Landmark Complex, a 1.5 ha prestigious seafront development which is set to redefine luxury living in Abu Dhabi. Surbana was also appointed to master plan the Al Salam City, a 2000 ha township site in Umm Al Quwain, intended to spur growth in the region.
Surbana was also rewarded with the winning of several concept design competitions. Inspired by the traditional Arab racing dhow, the ingenious proposed architectural form of the Corniche Hotel was deemed the winning entry by the Abu Dhabi Tourism Authority. In addition, Surbana emerged victors in the Doha Area 1 Concept Plan, Qatar and the 36 ha Petroleum Hub Complex. With the internal re-shuffling of resources and plans to establish offices in UAE, Qatar, and Bahrain, the team is further equipped to sustain its drive, fend stiff competition and raise Surbana’s profile in the region.
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“A City to Behold” Al Salam City, Umm Al Quwain, UAE
Milestones of Note • • • • •
Formed the Middle East/South East Asia/ Africa business division in July 05. First consultancy job in Bahrain from Ministry of Housing and Works (MoWH) Appointed lead consultant for The Landmark Complex. Won two major competitions, namely the Corniche Hotel and Petroleum Hub Complex. Two master planning projects clinched – Minimall City for Manazel Properties and Al Salam City for Saudi-based developer Tameer Holdings.
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“Striking magnificence” The Corniche Hotel, UAE
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The Right Route
Corporate Governance HR Initiatives in FY05/06 Financial Review
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Corporate Governance Corporate Governance Overview Surbana Corporation is led by an effective Board comprising a majority of non-executive directors who are independent of Management. Each director brings to the Board his skills, experience, insights and good judgement. Together and individually, in the course of deliberations, the Board is obliged to act in good faith and consider at all times the interests of the Company. The Board meets regularly to oversee the business of the Group. All Directors are provided with adequate and timely information before each meeting. To assist the Board in the discharge of its oversight function, various Board Committees such as Executive Committee, Audit Committee and Establishment and Compensation Committee are formed. Board Matters Board meetings are convened on a quarterly basis. Ad-hoc meetings are held whenever necessary. In addition, approvals from the Board are sought by way of circulating resolutions. At Board meetings, the Board is briefed on all relevant and important business activities. This enables the Board to set strategic directions and ensures competent management of the Group. The Financial Regulations set forth matters that require Board’s approval. An orientation briefing is conducted to ensure that incoming Directors are familiar with the Group’s business and organisational structure. Board’s Conduct of its Affairs The principal functions of Board are to: 1. set strategic directions for the Group; 2. approve annual budgets and financial plans and monitor the organisational performance; 3. review the adequacy and integrity of the Group’s internal controls, risk management systems, and financial information reporting systems; 4. approve the nominations to the Board of Directors and endorse the appointments of management team and external auditors; 5. review and approve the remuneration packages for the key executives; and 6. ensure accurate, adequate and timely reporting to, and communication with the shareholder. Board Membership The Board of Surbana Corporation currently comprises 10 directors, 9 of whom are nonexecutive directors. They are business leaders and professionals from diverse background. Profiles of the directors are found on page 20 and 21 of this Report. As good corporate governance, one-third of the directors are required to submit themselves for re-election by the shareholder at the annual general meeting. Chairman and Chief Executive Officer There is a clear division of responsibilities between the Chairman and CEO, which ensures there is a balance of power and authority at the top of the Group. The posts of Chairman and CEO are held by Mr Ngiam Tong Dow and Mr Tan Thai Hong respectively.
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Access to Information To assist the Board in fulfilling its responsibilities, the Board is provided with management reports containing complete, adequate and timely information. Board papers are sent to directors a few days before board meetings to facilitate discussion and decision-making in the meeting. The management provides all directors on a quarterly basis, with accounts and reports on the Group’s business and financial performance. Other than the periodic updates provided by the management, the directors may at any time seek further information from, and discussion with, the management on the Group’s operations and performance. All directors have access to the advice and services of the Company Secretary. The Company Secretary attends all Board meetings and ensures that Board procedures are followed and that applicable rules and regulations are complied with. Board Committees To assist the Board in the execution of its duties, the Board has established the Executive Committee, Audit Committee and Establishment and Compensation Committee. Executive Committee (“Exco”) The Exco was recently formed on 23 Aug 2005. It comprises Mr Ngiam Tong Dow (Chairman), Mr Lim Jit Poh, Mr Wong Heng Tew, Mr Edmund Tie Nyuk Siong and Mr Manu Bhaskaran. The Board delegates to the Exco the following authorities: 1. reviewing and approving the Group’s investment and divestment policies. 2. approving investments and divestments that are recommended by Management and to recommend larger investments/divestments to the Board in accordance with the financial authority limits. 3. To consider and approve the Group’s annual budget update if the (a) Group manpower and operating expenditure budget exceeds the approved budget up to 20%
(b) Group capital expenditure budget exceeds the approved budget up to 20%
4. To carry out such other functions as may be delegated to it by the Board. Remuneration Matters The Establishment and Compensation Committee (“ECC”) comprises Mr Ngiam Tong Dow (Chairman), Mr Wong Heng Tew and Mr Quek Sze Swee. The role of the ECC is to recommend key positions of management, suitable candidates for the key positions and the remuneration packages. The Group sets remuneration packages to ensure that it is able to attract, retain and motivate the employees needed to manage the group of companies successfully. A proportion of such remuneration is linked to the performance of the Group as well as the individual incumbent.
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Accountability and Audit Audit Committee (“AC”) AC comprises Mr Lim Jit Poh (Chairman), Ms Susan Kong and Mr Manu Bhaskaran. All AC members were appointed on 23 Aug 2005 and are independent directors. AC assists the Board to ensure integrity of financial reporting and that there is in place a sound internal control and risk management system. The functions of AC include: 1. reviewing the financial results and accounting policies; 2. reviewing and evaluating the effectiveness of the Group’s internal controls, including financial, operational and compliance controls and risk management; 3. reviewing the audit plans of external auditors, their evaluation of the internal accounting controls and audit reports; 4. reviewing the audit plans of the internal auditors, the scope and results of internal audit procedures and their evaluation of the overall internal control systems; and 5. reviewing and recommending to the Board the appointment of external auditors. During the year, AC meetings were also attended by the Group CEO, Group COO and Group CFO. The presence of internal and external auditors were requested during some of the meetings. AC had also met with the external auditors without the presence of management. AC has full discretion to invite any Director or executive officer to attend its meetings and has the co-operation of the management. Reasonable resources are available to enable it to discharge its functions properly. Internal Controls & Internal Audit (“IA”) The IA assists the AC and the Board in assessing and reporting on business risks and the internal controls of the Group. IA focuses its efforts on performing audits in accordance with the audit plan which is prioritised based on an audit risk assessment of all auditable areas identified in the Group. The AC reviews the IA plan taking into account the changing business and risk environment. The IA’s findings and recommendations are discussed at the AC meetings. Communication with Shareholder The Board keeps the shareholder updated on the business and affairs of the Group with regular reports on the Group’s performance. The Corporate Planning & Branding Department and Finance Department communicate with the shareholder on a regular basis and attend to its queries and concerns. Risk Management The Group recognises the importance of implementing a holistic risk management system to identify, analyse, evaluate and treat risks across the Group’s subsidiaries and operating divisions. Surbana’s Risk Management Approach was approved in November 2005. To facilitate the efficient functioning of the risk management system, a Risk Management Committee was formed in May 2006, comprising members from the corporate headquarters and major operating divisions and chaired by Mr Wong Wing Kien, the Group Chief Operating Officer.
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Risk management involves managing the group’s various businesses to achieve an appropriate balance between realising opportunities for gains while minimising losses. It is an integral part of good management practice and an essential element of good corporate governance. Risk management and oversight is the responsibility of the Audit Committee. Surbana uses a structured risk management programme adapted from the AS/NZS 4360 Risk Management Standard and which has been developed to suit our business context. The key components of Surbana’s risk management policy are: • Responsibility for the management of risks is assigned to Business Heads and identified key drivers who are empowered with the authority/responsibility to ensure that the risks are managed. • Resources are allocated to the management of risks in such a way as to optimise value for money. • Registers of risks and internal controls in relation to risks are properly documented and evaluated. • Reporting of risk management process and outcomes are made through the Risk Management Committee to the Board of Directors and Audit Committee. • Risk management system is for efficiency and effectiveness integrated with related management processes. Board Composition and Committees Board Members
Main Executive Audit Board Committee Committee
Ngiam Tong Dow
Chairman
Chairman
Lim Jit Poh
Deputy Chairman
Member
Tan Thai Hong
Member
Liu Thai Ker
Member
Tow Heng Tan
Member
Wong Heng Tew
Member
Member
Edmund Tie Nyuk Siong
Member
Member
Quek Sze Swee
Member
Susan Kong Yim Pui
Member
Member
Manu Bhaskaran
Member
Member
Member
Establishment & Compensation Committee
Chairman
Chairman
Member
Member
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HR INITIATIVES IN FY05/06 Organisation Review
Expansion overseas
The last FY saw the formation of the architectural function, which would house and organise all the Surbana architects into various working teams. The objective of centralising the architects in this manner was to create equal job exposure opportunities for the architects as well as optimise resources to support both local and international projects.
In FY05/06, a few overseas technical or representative offices were set up. HR supported these localisation efforts and even helped in the recruitment of the local staff. Leveraging on their relevant experience and expertise, selected Singapore employees were also posted to India, Vietnam and UAE offices, to steer and expedite operations.
Manpower Review A comprehensive manpower review was conducted in July 05. With the aggressive expansion overseas, there was a corresponding rise in recruitment to support the projects out of Singapore. Meanwhile, there was some headcount adjustments in the local business operations. This is in keeping with the company’s long-term intentions to grow its overseas arm.
Arrangements were made for new local China and Indian employees to attend training attachments in Singapore. This not only helped ensure standards, systems and procedures of the company were consistent globally, but enhanced work communications between headquarters and overseas offices.
Compensation Review An external consultant was engaged to review the competitiveness of Surbana’s salary structure and short-term incentive plan. The revised versions have since been implemented. The same consultant was also tasked to recommend a long-term incentive plan, which is currently being finalised.
HR worked with the Technical Directors to identify competency gaps and the relevant training and development opportunities to equip staff with such knowledge and skills. The professionals were provided with the necessary training to help them keep abreast of the latest practices, and to renew their professional practising certificates.
Performance Appraisal
Surbana Bonding Programme
The performance appraisal, facilitated by an enhanced on-line system, formed the basis on which variable bonus was paid out to staff. The results from the performance appraisal also established the follow-up action required of the division and HR, including recognition and promotion and performance counseling.
HR successfully organised and completed the two-day Surbana bonding programme for employees. 13 separate sessions were held from April to November 2005 in Kota Tinggi. The programme uses experiential learning to boost team spirit, as well as enhance inter-working relations. Out of the 680 employees who attended the programme, an overwhelming 90% responded positively to the programme in a subsequent survey.
Staff Development
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FINANCIAL REVIEW (In Singapore Dollars, unless otherwise stated)
(A) HIGHLIGHTS
For the financial year ended 31 March 2006, the Group recorded a net operating profit after tax of $20.6m achieved on Group revenue of $140.1m. Overseas operations continue to increase at a fast pace, doubling its contribution to the Group’s revenue for the current financial year.
Key Events
(i) Merger of Surbana Consultants Pte Ltd’s operations with Surbana International Consultants Pte Ltd
(ii) Exceptional items recorded for the financial year
The Corporate Restructuring exercise completed on 1 July 2005 saw a consolidation of our Consultancy Business under Surbana International Consultants Pte Ltd.
Exceptional items recorded comprised the clawback amount of $15.8m received from the sale of Esmaco Pte. Ltd. and the write-off of unamortised goodwill of $5.2m in a subsidiary, Cesma International Pte. Ltd. The write-off of the unamortised goodwill is to reflect the net tangible asset value of the company. These 2 items have no financial impact on the Group’s operating profit.
(iii) Dividends totaling $53m paid to shareholder
Special exempt dividends of $43m and interim exempt dividends of $10m were paid to our shareholder, Temasek Holdings (Private) Limited.
(B) PROFIT BEFORE TAX
The Group’s result before tax was $26.8m for FY05/06, $3.7m or 16% higher than FY04/05’s results of $23.1m. This improvement is attributable to the increase in revenue from overseas consultancies and prudent cost management.
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(C) Selected financial data
In $m Except Per Share Amount 2005/06 2004/05
Turnover EBITDA (before exceptional items) EBIT (before exceptional items) Earnings per share (cents) (before exceptional items)
140.1 28.5 26.6 19
136.8 27.4 22.8 14
(D) TURNOVER
The Group’s turnover is derived as follows:
2005/06 2004/05
Overseas Business Singapore
10.7 129.4
4.7 132.1
(E) SUMMARISED FINANCIAL STATEMENTS (1) Group Income Statement For the financial year ended 31 March 2006
The Group For the financial year ended 31 March 2006 $M
For the financial year ended 31 March 2005 $M
Revenue Cost of sales Gross profit
140.1 (83.5) 56.6
136.8 (81.3) 55.5
Other operating expenses
(30.1)
(32.6)
Share of associated companies’ & joint ventures’ results 0.3 0.2 Profit before tax 26.8 23.1
Income tax expense (6.2) Net profit after tax 20.6
(5.3) 17.8
Exceptional gain/(loss) 10.6 Net profit/(loss) after exceptional gain/(loss) 31.2
(36.0) (18.2)
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(E) SUMMARISED FINANCIAL STATEMENTS (CONT’D)
(2) Group Revenue, Net Profit After Tax and EVA
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(E) SUMMARISED FINANCIAL STATEMENTS (CONt’D) (3) Group Balance Sheet As at 31 March 2006 Note The Group 2006 2005 $M $M
Asset Cash and cash equivalents Trade and other receivables Investments Fixed assets Intangible assets 1 Total assets
64.5 42.3 68.4 3.6 - 178.8
38.0 46.1 93.6 4.6 5.2 187.5
Liabilities Trade and other payables Tax liabilities Total liabilities
61.8 6.7 68.5
50.6 5.8 56.4
Net assets
110.3
131.1
Shareholder’s euqity Share capital Reserves Retained profit Total shareholder’s equity
106.1 0.1 4.1 110.3
106.1 (0.5) 25.5 131.1
Notes 1. Intangible Assets Comprises mainly of goodwill arising from acquisition of subsidiaries. Goodwill was written off in the current financial year, hence resulting in a nil balance as at 31 March 2006.