MEDIA RELEASE - February 23, 2005 SCS ACHIEVES NET PROFIT OF S$27.8M FOR FY2004 - Strong Turnaround with Record Order Book Results Highlights at a Glance
Singapore, February 23, 2005 – Main Board-listed Singapore Computer Systems Limited (“SCS”), a leading information and communications service provider in the Asia-Pacific region, reported a net profit of S$27.8 million for its financial year ended 31 December 2004 (“FY2004”), marking a strong turnaround from a net loss of S$33.0 million the previous financial year. Excluding the non-operating income of S$21.5 million from the Group's divestments of its interests in Kshema Technologies Limited in India, SCS Computer Systems Sdn Bhd and Ceritas New Zealand Limited, SCS would have registered a net profit of S$6.3 million, compared to the net loss of S$10.3 million (less non-recurring restructuring losses) the previous year. “SCS has delivered four consecutive profitable quarters which attest to the fact that our restructuring initiatives are bearing fruit. The realignment of our businesses, strategic focus on verticals and divestment of non-core and non-profitable businesses have put SCS back on track,” said Mr Pek Yew Chai. President and CEO of SCS. Last year, SCS regrouped its businesses into IT Infrastructure and IT Business Solutions, with a focus on IT Outsourcing and Business Process Outsourcing. This new strategic direction has resulted in better synergies and utilization of resources as well as a more customer-centric focus. Financial Review Group revenue for FY2004 grew from S$418.9 million to S$428 million, reflecting a 2% improvement, notwithstanding its three divestments during the year. However, excluding revenue from these divestments, our revenue growth would have been a credible 24%. This topline improvement is the result of higher revenues from SCS' key markets in Singapore, Greater China and Indonesia. Revenue from Singapore operations grew 10% to S$321 million while Greater China recorded a 7% increase to S$6.4 million. The Group's new joint venture in Indonesia, PT SCS Astragraphia Technologies, made its maiden contribution of S$28.4 million in the fourth quarter of FY2004. The strategic focus amongst various businesses have resulted in lower costs across-the-board and better returns in both its IT Business Solutions and IT Infrastructure business segments. The restructuring and cost management exercise has resulted in a 27% improvement in the cost/revenue ratio. Lower staff and support costs in FY2004 resulted in a 15% decrease in distribution expenses to S$20.7 million and a 22% reduction in administrative expenses to S$21.6 million. Other operating expenses were reduced from S$13.1 million to S$5.1 million, largely due to lower doubtful debt provisions. The lower operating costs and the closure of the Group's loss-making businesses the previous year resulted in improved returns. IT Business Solutions achieved a profit of S$5.6 million compared to a loss of S$11.8 million in FY2003 while IT Infrastructure registered a 29% improvement in profit to S$14.5 million, compared to S$11.2 million last year. Geographically, the Group's operations in Singapore achieved a significant improvement of 66% in profit from S$9.9 million to S$16.4 million. Its newly-established joint-venture company in Indonesia started contributing in the last quarter of the year, with a maiden profit of S$3.1 million. Greater China reduced its losses from S$2.7 million to S$1.7 million. Strong Order Book SCS continued to report a strong order book, which had increased from S$199.1 million at the end of September 2004 to S$237.3 million at the end of the year – the highest the Group has achieved in recent years. IT Business Solutions accounted for S$114.7 million of this order book while IT Infrastructure projects represented S$122.6 million. Outlook According to IDC, IT spending in Asia-Pacific (excluding Japan) is expected to remain robust in 2005. Total IT spending in the region is forecast to reach US$97 billion with healthy growth in both IT infrastructure and IT services. “With the Group's structured strategic focus amongst our various businesses, SCS is well-poised to tap these business opportunities in the region. We are on track to remain profitable in 2005,” added Mr Pek. Dividend Subject to shareholders' approval, SCS' Board had proposed a final cash dividend of 12% per ordinary share less tax. |