ntegra2000 Ltd - 早报 · payroll outsource company servicing the Small & Medium-size Enterprises. integra2000 Ltd is a technology company focused on Human Resource and Payroll

ANNUAL REPORT

ntegra2000 Ltd

2001

CONTENTSCORPORATE PROFILE 1

CHAIRMAN’S MESSAGE 2

CEO’S MESSAGE 3

BOARD OF DIRECTORS 4

CORPORATE INFORMATION 6

FINANCIAL STATEMENTS

REPORT OF THE DIRECTORS 7

STATEMENT OF DIRECTORS 15

AUDITORS’ REPORT 16

BALANCE SHEETS 17

INCOME STATEMENTS 18

STATEMENTS OF CHANGES IN EQUITY 19

CONSOLIDATED CASH FLOW STATEMENTS 20

NOTES TO THE FINANCIAL STATEMENTS 21

CORPORATE GOVERNANCE 39

ANALYSIS OF SHAREHOLDINGS 40

NOTICE OF ANNUAL GENERAL MEETING 41

PROXY FORM

CORPORATE PROFILE

integra2000 Ltd Annual Report 2001 1

integra2000 Ltd was incorporated in 1999. Our subsidiary Integral Systems, Inc. has been aMainframe Human Resource and Payroll software specialist in the USA for 30 years. The newlyacquired subsidiary The Payroll Resource Group, Inc. in the USA specializes in payrolloutsourcing for SMEs.

The integra2000 Ltd group of companies provides a full range of HR/Pay software products forMainframe, client server and the Internet.

The newly developed i -Trust Web is the HR/Pay mainframe product with web access and self-service for Fortune 1000 companies.

ideal is the HR/Pay ASP application in our portal to meet the needs of Small and Medium-sizeCompanies.

Job Match provides online recruitment services.

www.i-hrms.com is the web portal for the global human resource and payroll marketplace.Through this portal businesses will have a cost-effective internet solution for HR/Payneeds.

3

CHAIRMAN’S MESSAGE

2 integra2000 Ltd Annual Report 2001

Financial year 2001 was a major milestone year for integra2000 Ltd as we achieved admissionto the official List of the Stock Exchange Of Singapore Dealing And Automated QuotationSystem ( the “SGX Sesdaq” ). Trading of our shares commenced on 28th February 2001.

During 2001, we acquired a 60% interest in The Payroll Resource Group, Inc. in the USA, apayroll outsource company servicing the Small & Medium-size Enterprises.

integra2000 Ltd is a technology company focused on Human Resource and Payroll. In ourbusiness, ever-changing technology and paradigm shifts call for a constant need to innovateand develop new software products in order to meet customer needs competitively. In spite ofsubstantial development costs during the last two years and the difficult economic situation, Iam pleased to report that we had a profitable year.

On behalf of the Board of Directors, I wish to thank our customers, distributors and businesspartners for their support throughout the year. I take this opportunity also to convey the Board’sappreciation of the management and staff for their dedication and contribution during theyear.

I am confident that the Company will continue to grow and expand to fulfill our motto to “dotevery i …to meet HR/Payroll needs…”

Lim Ho SengChairman

CEO’S MESSAGE


Future Prospects

We are optimistic about the new Mainframe Web product we now have, The response to ourlaunch in the last quarter of year 2001 was very encouraging. During year 2002 we expect thisWeb product to contribute significantly to Revenue growth. The acquisition of PRG will providean opportunity to penetrate the vast SME market in the USA. At the same time we continue toexplore opportunities to expand in Asia. We anticipate a more profitable year ahead.

Kwok Kah KieCEO

Financial Review for year 2001

Revenue for the year ended 31 December 2001 increased by 9.8% to S$21.6 million comparedto S$19.7 million for the year ended 31 December 2000.

Operating profit after tax for the year ended 31 December 2001 was S$2.0 million comparedto an operating profit of S$2.5 million for the year ended 31 December 2000. This was despitean operating loss of S$488,000 in the first half of the year 2001. The operating profit in thesecond half of the year was due to reduced operational costs in our USA subsidiary. Thedevelopment of the Mainframe Web product was completed in August 2001 resulting in lowerdevelopment costs for the rest of the year 2001. The Mainframe Web product was launched inOctober 2001 at our Annual Users’ Conference in the USA.

BOARD OF DIRECTORS


Lim Ho Seng(Chairman and

independent Director)

Kwok Kah Kie(Chief Executive Officer)

Lim Ho Seng, 58, Chairman and Independent Director appointed on 13 September 2000.He is also the Chairman of the Audit Committee and a member of the CompensationCommittee. He currently sits on the Boards of several listed and private companies. HoSeng retired from his post of Chief Executive Officer of NTUC FairPrice Co-operative Ltd in1997 after 14 years at the helm, directing its development and growth. He is a CertifiedPublic Accountant and a Fellow of both the Institute of Chartered Secretaries &Administrators and the Singapore Institute of Directors.

Kwok Kah Kie, 52, Chief Executive Officer and Managing Director of integra2000 sinceinception and Chairman of Integral Systems, Inc. ( Integral ). Prior to forming integra2000he was with the CSA group for 18 years. This included several years managing Integral asits CEO. He was instrumental in initiating the Management buyout of Integral from CSA in1999. He has many years of experience taking charge of Finance in various listedcompanies. Kah Kie has a BAcc.(Hons) degree from the University of Singapore.

Wee Thong Hai, 53, General Manager and Executive Director of integra2000 is in chargeof the Asian Operations. Prior to joining integra2000 he has been in Management andFinance positions with MNCs taking charge of Finance, IT, Manufacturing and Logistics.Thong Hai is a CPA (Singapore) and holds a B Acc degree from the University of Singapore.

Craig Daron Morris, 38, Executive Director of integra2000, Integral Systems, Inc (Integral)and The Payroll Resource Group, Inc (PRG). He is the Chief Financial Officer of bothintegra2000 and Integral and is responsible for all finance activities, including mergerand acquisitions in the North America region. He formed part of the core managementteam in the MBO of Integral from CSA in 1999. Craig is a Chartered Accountant (SA),and holds a post-graduate degree in Accounting from the University of Cape Town.

Wee Thong Hai(General Manager)

Craig Daron Morris(Chief Financial Officer)


Lee Suet Fern, 43, Non-Executive Director appointed on 10 January 2001. She is apracticing advocate and solicitor of the Supreme Court of Singapore. She qualified asa barrister-at-law at Gray’s Inn, London and graduated from Cambridge University witha double first in law. She is the Managing Partner of Shearman & Sterling Stamford andthe Managing Director of Stamford LLC.

Lee Suet Fern(Non-Executive Director)

Sim See Loy, Stephen(Independent Director)

Ong Beng Hong(Independent Director)

Foo Say Mui(Independent Director)

Leong Shin Loong(Independent Director)

Ong Beng Hong, 33, Independent Director appointed 5 November 1999. Beng Hong is aPartner of the law firm Wong Tan and Molly Lim. She is also a member of the AuditCommittee and the Compensation Committee. She is the legal advisor to our Company.Beng Hong is an Advocate and Solicitor of the Supreme Court of Singapore, Solicitor of theSupreme Court of England and Wales and Advocate and Solicitor of the Malaysian Bar.Beng Hong holds a LL.B (Hons.) from Kings College London.

Sim See Loy, Stephen, 73, Independent Director appointed on 11 August 2000 is theChairman of the Compensation Committee. He brings to the Board his vast experiencein Human Resource and Public Relations, having been Director Personnel and PublicAffairs at Shell Eastern Pte Ltd. He was first Chairman of the National Crime PreventionCouncil (NCPC), member of the Public Service Commission (1982 –1985) andCommissioner for Singapore in Hong Kong (1985 –1988). He has received Friend ofLabour awards from both NTUC and UWPI (United Workers of Petroleum Industry).From 1992 to 1996, he was Managing Director of Saudi-owned Nimir Petroleum in Londonand is currently senior consultant to Dhurakipunbdit University and Chairman of RegencyTravel & Education, both in Bangkok. He runs a Management consultants’ firm.

Foo Say Mui @ Bill Foo, 43, Independent Director appointed on 13 September 2000. He isalso a member of the Audit Committee. Bill has extensive experience in the banking industry.Currently Bill works for the Australia and New Zealand Banking Group Ltd (“ANZ”) asGeneral Manager for the Singapore Branch and as Managing Director of ANZ SingaporeLtd, its merchant banking arm. He is also the Council Member Representative for ANZ atthe Association of Banks in Singapore. Bill has a Bachelor of Administration degree fromConcordia University and a Masters of Business Administration from McGill University.

Leong Shin Loong, 47, Independent Director appointed on 4 October 2000. Shin Loongis currently a Director of Planning in Telkomsel, Indonesia. He has a B.Eng(Exe) fromNorthwestern University, USA, a M.Eng from Renesselaer Polytechnic Institute, USAand has completed the Advanced Management Program of the Harvard BusinessSchool.

CORPORATE INFORMATION

Principal Place of Operations :

750C Chai Chee Road #02-03Technopark@Chai CheeSingapore 469003

USA

Integral Systems, Inc.2730 Shadelands Drive, Suite101,Walnut Creek,California 94598, USA

InPower Inc.230 California Street, Suite 410San FranciscoCalifornia 94111, USA

The Payroll Resource Group, Inc.230 California Street, Suite 420 SanFranciscoCalifornia 94111, USA

CANADA

Integral Systems Software Ltd.Suite 3800, South TowerRoyal Bank PlazaToronto, OntarioCanada M5J 2J7

Auditors

Chio Lim and Associates(Member of Horwath International)95 South Bridge Road#07-28 Pidemco CentreSingapore 058717

USA

Markle Stuckey Hardesty & Bott101 Larkspur Landing Circle,Suite 200 Larkspur,California 94939, USA

Audit Committee

Lim Ho Seng (Chairman)Ong Beng HongFoo Say Mui @ Bill Foo

Compensation Committee

Sim See Loy, Stephen (Chairman)Lim Ho SengOng Beng Hong

Company Secretary

Tan Swee Gek

Management Team

Kwok Kah Kie (CEO - integra2000 Ltd, Chairman-Integral Systems, Inc.)

Patsy Bosco (CEO - Integral Systems, Inc.)Grant Morris (CEO - The Payroll Resource

Group, Inc.)Craig Daron Morris (CFO – integra2000 Group,

EVP-Integral Systems, Inc.)Wee Thong Hai (General Manager – integra2000 Ltd)

Registered Office

80 Robinson Road #17-02Singapore 068898Tel: 62228008

Board of Directors

Lim Ho Seng (Chairman and Independent Director)Kwok Kah Kie (Chief Executive Officer)Lee Suet Fern (Non-Executive Director)Ong Beng Hong (Independent Director)Sim See Loy, Stephen (Independent Director)Foo Say Mui @ Bill Foo (Independent Director)Leong Shin Loong (Independent Director)Craig Daron Morris (Chief Financial Officer)Wee Thong Hai (General Manager)


Share Registrar

B.A.C.S. Private Limited63 Cantonment RoadSingapore 089758Tel: 63236200


The directors of the company are pleased to present their report together with the audited financial statements of the companyand of the group for the financial year ended 31 December 2001.

1 DIRECTORS AT DATE OF REPORT

The directors of the company in office at the date of this report are:

Lim Ho Seng (Chairman and Independent Director) (a) (b)Kwok Kah Kie (Chief Executive Officer)Craig Daron Morris (Chief Financial Officer)Wee Thong Hai (General Manager)Foo Say Mui @ Bill Foo (Independent Director) (a)Lee Suet Fern (Non-Executive Director)Leong Shin Loong (Independent Director)Ong Beng Hong (Independent Director) (a) (b)Sim See Loy, Stephen (Independent Director) (b)

(a) Member of audit committee. (b) Member of compensation committee.

2 PRINCIPAL ACTIVITIES

The principal activities of the company are those of an investment holding company and information technology servicesprovider. The principal activities of the subsidiaries are disclosed in the notes to the financial statements.

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

3 RESULTS FOR THE FINANCIAL YEARGroup Company

$’000 $’000

Net profit / (loss) for the year 2,045 (1,122)Accumulated profits / (losses) at beginning of year 2,526 (856)

Accumulated profits / (losses) at end of year 4,571 (1,978)

4 MATERIAL TRANSFERS TO OR FROM RESERVES OR PROVISIONS

During the financial year, there were no material transfers to or from reserves and provisions other than those disclosed inthe attached financial statements.

5 ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES

There were no acquisitions or disposals of subsidiaries during the financial year except for the acquisition as follows :

Name of subsidiary Consideration Net tangible assets Group’s interest

$’000 $’000

The Payroll Resource Group, Inc. S$3,441 (US$1,900) S$1 51%

The above corporation was acquired by a subsidiary of the company.

Also see paragraph 18 below on the purchase of the above subsidiary.

REPORT OF THE DIRECTORS


6 ISSUE OF SHARES OR DEBENTURES

During the financial year, the company or subsidiaries in the group did not issue any shares or debentures except for thecompany as follows:

Ordinary shares

Date Purpose No of shares Amount

S$’000

19 Jan 2001 Redemption of redeemable preference sharesby the issue of ordinary shares of S$0.05 each 38,126,020 1,906

19 Jan 2001 Issue of 5.7 bonus shares for every 1 share outof share premium 217,547,453 10,878

21 Feb 2001 Issue of new ordinary shares through initial publicoffer (at a premium of S$0.16 each) 46,000,000 2,300

Redeemable preference shares

Date Purpose No of shares Amount Amount

US$’000 S$’00019 Jan 2001 Redemption of redeemable

preference shares (see above) (11,260,990) (1,126) (1,906)

7 ARRANGEMENTS TO ENABLE DIRECTORS TO ACCQUIRE BENEFITS BY MEANS OF THE ACQUISITIONOF SHARES AND DEBENTURES

Neither at the end of the financial year nor at any time during the financial year did there subsist any arrangement whoseobject is to enable the directors of the company to acquire benefits by means of the acquisition of shares or debenturesin the company or any other body corporate. In the Initial Public Offering exercise, certain directors who had no shares atthe beginning of the year were allotted 100,000 to 150,000 shares (See paragraph 8 below). Also see paragraph 18below.



8 DIRECTORS’ INTERESTS IN SHARES AND DEBENTURES

The directors holding office at the end of the financial year had no interests in the share capital and debentures of thecompany and related corporations as recorded in the register of directors’ shareholdings kept by the company undersection 164 of the Companies Act except as follows:

Name of directorsand companiesin whichinterests are held Direct Interest Deemed Interest

At beginning At end At beginning At endof year of year of year of year

Integra2000 Ltd (a) Ordinary shares of S$0.05 each /(b) Redeemable preference share of US$0.10 each

Kwok Kah Kie 5,300 (a) 47,559,111(a) 200 (a)(c) 1,135,543(a)(c)2,095,027 (b) – 50,000 (b)(c) –

Craig Daron Morris 3,500 (a) 23,023,263(a) – –1,013,922 (b) – – –

Lee Suet Fern 800 (a) 4,542,158(a) – –200,000 (b) – – –

Wee Thong Hai – 150,000 (a) – –

Lim Ho Seng – 100,000 (a) – –

Foo Say Mui @ Bill Foo – 100,000 (a) – –

Leong Shin Loong – 100,000 (a) – –

Sim See Loy, Stephen – 100,000 (a) – –

Ong Beng Hong – 100,000 (a) – –

(a) Ordinary shares (b) Redeemable preference shares (c) Deemed interests

By virtue of section 7 of the Companies Act, the above directors with shareholdings are deemed to have an interest in allthe related corporations of the company.

Also see paragraph 18 below.

The directors’ interests as at 21 January 2002 were the same as those at the end of the year.

9 DIVIDENDS

No dividend has been paid or declared or recommended by the company since the end of the previous financial year.



10 ACTIONS RELATING TO BAD AND DOUBTFUL DEBTS

Before the income statement and the balance sheet were made out, the directors of the company took reasonable stepsto ascertain that proper action had been taken in relation to the writing off of and the making of provision for bad anddoubtful debts of the company and have satisfied themselves that all known bad debts if any of the company have beenwritten off and that where necessary adequate provision has been made for doubtful debts.

At the date of this report, the directors of the company are not aware of any circumstances which would render amountsif any written off or the amount of provision for bad and doubtful debts for the group of companies in the consolidatedfinancial statements of the company inadequate to any substantial extent.

11 ACTIONS RELATING TO CURRENT ASSETS

Before the income statement and the balance sheet were made out, the directors of the company took reasonable stepsto ascertain that any current assets of the company which were unlikely to realise in the ordinary course of business theirbook values have been written down to their estimated realisable values or were adequately provided for.

At the date of this report, the directors of the company are not aware of any circumstances which would render the valueattributable to current assets in the consolidated financial statements misleading.

12 CHARGES ON ASSETS AND EXISTENCE OF CONTINGENT LIABILITIES AFTER YEAR END DATE

At the date of this report:

a) there does not exist any charge on the assets of the company or any corporation in the group which has arisensince the end of the financial year which secures the liability of any other person; and

b) there does not exist any contingent liability of the company or any corporation in the group which has arisen sincethe end of the financial year.

13 ABILITY TO MEET OBLIGATIONS

No contingent or other liability of the company or any corporation in the group has become enforceable or is likely tobecome enforceable within the period of twelve months after the end of the financial year which, in the opinion of thedirectors of the company, will or may substantially affect the ability of the company and of the group to meet its obligationsas and when they fall due.

14 OTHER CIRCUMSTANCES AFFECTING FINANCIAL STATEMENTS

At the date of this report, the directors of the company are not aware of any circumstances not otherwise dealt with in thereport or consolidated financial statements which would render any amount stated in the financial statements of thecompany and the consolidated financial statements misleading.

15 UNUSUAL ITEMS DURING THE YEAR

In the opinion of the directors of the company, the results of the operations of the company and of the group have notbeen substantially affected by any item, transaction or event of a material and unusual nature during the financial yearexcept as disclosed in the financial statements.



16 UNUSUAL ITEMS AFTER YEAR END DATE

In the opinion of the directors of the company, no item, transaction or event of a material and unusual nature has arisen inthe interval between the end of the financial year and the date of the report which would affect substantially the results ofthe operations of the company and of the group for the financial year in which this report is made.

17 CONTRACTUAL BENEFITS OF DIRECTORS

Since the beginning of the financial year, no director has received or become entitled to receive a benefit which is required tobe disclosed under section 201(8) of the Companies Act, by reason of a contract made by the company or a relatedcorporation with the director or with a firm of which he is a member, or with a company in which he has a substantialfinancial interest except as disclosed in the financial statements. Certain directors of the company received remunerationfrom related corporations in their capacity as directors and or executives of those related corporations.

18 OPTIONS TO TAKE UP UNISSUED SHARES

During the financial year, no option to take up unissued shares of the company or any corporation in the group wasgranted except as follows :

Stock Option Plans of Subsidiaries:

Integral Systems, Inc. (“ISI”) has two stock option plans, the 1993 Plan and the 1982 Plan (collectively, the “ISI Plans”)which provide for the grant of incentive stock options to the ISI employees, directors and officers and nonqualified stockoptions to the ISI officers, employees, consultants, advisors and directors. 5,500,000 shares of common stocks arereserved for issuance under the 1993 Plan and no shares remain in reserve for issuance under the 1982 Plan.

The ISI Plans are administered by its board of directors of ISI or its designees and provides generally that the option pricefor an incentive stock option shall not be less than the fair market value of the shares on the date of grant. The option priceof a nonqualified stock option generally shall not be less than 85% of the fair market value on the date of grant. Under theISI Plans, incentive and nonqualified stock options may be granted to a person who, at the time of the grant, owns stockof more than ten percent of the total combined voting power of all classes of outstanding stock of ISI. However, at thetime such options are granted, the option price must be at least 110% of the fair market value of the stock and suchoption may not be exercisable until after five years from the date of grant. Options generally vest rateably over three yearsand expire ten years from the date of grant.

During 1996, InPower adopted the InPower, Inc. Stock Option Plan (“InPower Plan”) and reserved 2,500,000 shares ofInPower common stock for issuance. The InPower Plan provides for the grant of incentive stock options to employees ofInPower and ISI and the grant of nonqualified stock options and restricted stock options to employees, officers, directors,consultants and advisors of InPower and ISI. The InPower Plan has similar terms and conditions as the ISI Plans. InFebruary 2000, the board of directors discontinued new grants under the InPower Plan and offered all current employeesholding InPower Plan stock options the ability to convert each InPower stock option into two ISI stock options with theexercise price of US$0.10 per share under the ISI 1993 Plan. Service with InPower will be recognised for vesting purposeson converted stock options and the term of each converted stock option will be measured from the grant date of theoriginal InPower stock option. This exchange is, in effect, a repricing of the exchange stock options and results in theseoptions becoming variable stock options. Future increases in the fair value of these options will result in compensationcost to ISI.



Activities under the Plans are as follows :

At At ExerciseDate of Grant 1.1.2001 Cancelled 31.12.2001 price Exercise period

InPower Plan shares:

1 Jan 2001 80,000 (80,000) - US$0.50 N.A.

ISI Plan Shares:

9 Feb 2000 2,627,500 (1,086,500) 1,541,000 US$0.10 9 Feb 2000 – 9 Feb 20101 May 2000 52,800 (19,700) 33,100 US$0.10 1 May 2000 – 1 May 201020 Oct 2000 45,000 (45,000) - US$0.10 N.A.21 Oct 1992 10,750 (7,500) 3,250 US$0.97 21 Oct 1992 – 21 Oct 200216 Sep 1993 250 (250) - US$0.97 N.A.10 May 1994 250 - 250 US$0.97 10 May 1994 – 10 May 200418 Nov 1994 750 (750) - US$1.25 N.A.6 Feb 1995 1,500 (250) 1,250 US$1.25 6 Feb 1995 – 6 Feb 200524 Jul 1995 500 - 500 US$1.25 24 Jul 1995 – 24 Jul 200526 Apr 1995 750 (750) - US$1.25 N.A.15 Jun 1995 750 (500) 250 US$1.25 15 Jun 1995 – 15 June 2005

2,820,800 (1,241,200) 1,579,600

Activities under the Plans for the past year have been disclosed in the directors’ report for last year.

The following table summarises information about director share options under the ISI Plan outstanding as at 31 December2001:

Exercised/Grants from lapsed

start of from startGrants Scheme to of Scheme to Balance at

Participant In 2001 end of 2001 end of 2001 31.12.2001

Directors of the company:Kwok Kah Kie - 500,000 - 500,000(a)Kwok Kah Kie - 80,000 (80,000) -Craig Daron Morris - 750,000 - 750,000(a)Craig Daron Morris - 240,000 (240,000) -

Total - 1,570,000 (320,000) 1,250,000

Exercise price and period:

(a) US$0.10 exercisable between 9 February 2000 and 9 February 2010

No participant has received 5% or more of the total number of the options available under the Scheme except for the abovetwo directors.

Except as disclosed above, there were no options outstanding at the end of the year or granted during the year to (a)directors and controlling shareholders of the company and (b) directors and associates of the controlling shareholders ofthe company.



Warrants of ISI

Effective 1 October 2001, ISI purchased 60% of the outstanding stock, consisting of 30 shares of common stock, ofPayroll Resources Group, Inc. (PRG), incorporated in California from its sole owner, Robeson, Ltd. (Robeson), incorporatedin the British Virgin Islands. ISI paid Robeson US$1,900,000 and 2,550,000 common stock warrants, which Robesonmay exercise to purchase 2,550,000 shares of common stock of ISI for US$0.10 per share, as adjusted. ISI borrowedUS$1,900,000 from the company to finance the acquisition of PRG with an option for the company to convert all or partof the loan to common stock of ISI for US$0.10 per share.

19 OPTIONS EXERCISED

During the financial year, there were no shares of the company or any corporation in the group issued by virtue of theexercise of option to take up unissued shares except as indicated in paragraph 18 above.

20 UNISSUED SHARES UNDER OPTION

At the end of the financial year, there were no unissued shares of the company or any corporation in the group underoption except as indicated in paragraph 18 above.

21 AUDIT COMMITTEE

The members of the audit committee at the date of this report are as follows:

Lim Ho Seng (Chairman)Foo Say Mui @ Bill Foo (Independent Director)Ong Beng Hong (Independent Director)

The audit committee performs the functions specified by section 201B of the Companies Act, and the Listing Manual andthe Best Practices Guide of the Singapore Exchange (SGX”). The audit committee held two meetings since the lastdirectors’ report. It met with the company’s external auditors to discuss the scope of their work and the results of theirexamination and evaluation of the company’s internal accounting control system.

The audit committee also reviewed the following:

• Assistance provided by the company’s officers to the external auditors;

• Financial statements of the group and the company prior to their submission to the directors of the company foradoption; and

• Interested person transactions (as defined in Chapter 9A of the Listing Manual of SGX).

The audit committee has full access to management and is given the resources required for it to discharge its functions.It has full authority and discretion to invite any director or executive officer to attend its meetings.

The audit committee has recommended to the board of directors that the auditors, Chio Lim & Associates, be nominatedfor re-appointment as auditors at the next annual general meeting of the company.



22 AUDITORS

The auditors, Chio Lim & Associates, have expressed their willingness to accept re-appointment.

ON BEHALF OF THE DIRECTORS

Kwok Kah Kie Wee Thong HaiDirector Director

27 February 2002



In the opinion of the directors, the accompanying financial statements are drawn up so as to give a true and fair view of the stateof affairs of the company and of the group as at 31 December 2001 and of the results and changes in equity of the companyand of the group and of the cash flows of the group for the financial year then ended and at the date of this statement there arereasonable grounds to believe that the company will be able to pay its debts as and when they fall due.

ON BEHALF OF THE DIRECTORS

Kwok Kah Kie Wee Thong HaiDirector Director

27 February 2002

STATEMENT OF DIRECTORS


We have audited the accompanying balance sheets of integra2000 Ltd and of the group as at 31 December 2001, and therelated statements of income, and changes in equity and consolidated cash flow for the year then ended set out on pages 17to 38. These financial statements are the responsibility of the company’s directors. Our responsibility is to express an opinionon these financial statements based on our audit.

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

In our opinion,

a) the accompanying financial statements and consolidated financial statements are properly drawn up in accordance withthe provisions of the Companies’ Act, (“Act”) and International Accounting Standards and so as to give a true and fair viewof :

i) the state of affairs of the company and of the group as at 31 December 2001 and of the results and changes inequity of the company and of the group and cash flows of the group for the financial year then ended; and

ii) the other matters required by section 201 of the Act to be dealt with in the financial statements and consolidatedfinancial statements;

b) the accounting and other records, and the registers required by the Act to be kept by the company have been properlykept in accordance with the provisions of the Act.

We have considered the financial statements and auditors’ reports of all the subsidiaries of which we have not acted asauditors, being financial statements included in the consolidated financial statements. The names of these subsidiaries areindicated in Note 7 to the financial statements.

We are satisfied that the financial statements of the subsidiaries that are consolidated with the financial statements of thecompany are in form and content appropriate and proper for the purposes of the preparation of the consolidated financialstatements, and we have received satisfactory information and explanations as required by us for those purposes.

The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification.

Chio Lim & AssociatesCertified Public Accountants

Partner in charge of audit: Kaka Singh

Singapore27 February 2002

AUDITORS’ REPORTTO THE MEMBERS OF INTEGRA2000 LTD


Group Company

Notes 2001 2000 2001 2000

$’000 $’000 $’000 $’000

ASSETSCurrent assets :Cash and cash equivalents 14,767 2,499 3,118 397Marketable securities 4 934 - 934 -Trade receivables 5 2,422 731 181 184Other receivables and prepayments 6 415 646 42 193

Total current assets 18,538 3,876 4,275 774

Non-current assets :Investments in subsidiaries 7 - - 16,952 14,119Other investment 8 - 259 - 250Property, plant and equipment 9 1,563 781 396 106Goodwill on consolidation 10 21,836 19,509 - -Other assets 11 877 801 3,580 -

Total non-current assets : 24,276 21,350 20,928 14,475

Total assets 42,814 25,226 25,203 15,249

LIABILITIES AND EQUITYCurrent liabilities :Trade payables and accrued liabilities 12 8,897 2,098 494 380Deferred revenue 13 7,029 7,125 - -Income tax payable 2,073 1,028 - -Current portion of finance leases 14 - 13 - -

Total current liabilities 17,999 10,264 494 380

Non-current liabilities :Deferred rent - 93 - -

Total non-current liabilities - 93 - -

Minority interests 106 - - -

Capital and reserves :Issued capital 15 15,085 1,908 15,085 1,908Reserves 9,624 12,961 9,624 12,961

Total equity 24,709 14,869 24,709 14,869

Total liabilities and equity 42,814 25,226 25,203 15,249

See accompanying notes to financial statements.

BALANCE SHEETSas at 31 December 2001


Group Company

Notes 2001 2000 2001 2000

$’000 $’000 $’000 $’000

Revenue 17 21,600 19,676 724 469

Cost of sales (4,303) (3,454) (33) (57)

Gross profit 17,297 16,222 691 412

Other operating income 18 334 254 316 14

Distribution costs (1,377) (467) (237) (98)

Administrative expenses (5,497) (3,896) (1,393) (715)

Product development (4,389) (7,063) (330) (471)

Amortisation of goodwill (1,113) (1,027) - -

Loss on phased-out product lines 19 (1,161) (1,399) - -

Other credits / (charges) 20 346 448 331 2

Other Investment written off (500) - (500) -

Profit / (loss) from operations 3,940 3,072 (1,122) (856)

Finance cost 21 (11) (29) - -

Profit / (loss) before income tax 22 3,929 3,043 (1,122) (856)

Income tax expense 23 (1,778) (517) - -

Profit / (loss) after income tax 2,151 2,526 (1,122) (856)

Minority interests (106) - - -

Net profit / (loss) for the year 2,045 2,526 (1,122) (856)

Earnings per share (cents) of $0.05 each 24 - Basic 0.70 0.99

- Diluted 0.70 0.99


INCOME STATEMENTSYear ended 31 December 2001


AccumulatedShare Share Translation Revaluation profits/

capital premium reserves reserves (losses) Total

Group $’000 $’000 $’000 $’000 $’000 $’000

Balance at 31 December 1999 - - - - - -Foreign currency translation

differences - - (499) - - (499)

Net gains and lossesnot recognised in theincome statement - - (499) - - (499)

Issue of share capital 1,908 11,070 - - - 12,978Share issue expenses - (136) - - - (136)Net profit for the year - - - - 2,526 2,526

Balance at 31 December 2000 1,908 10,934 (499) - 2,526 14,869

Foreign currency translationdifferences - - (334) - - (334)

Net gains and lossesnot recognised

in the income statement - - (334) - - (334)Capitalisation (Note 15) 10,877 (10,877) - - - -Issue of share capital (Note 15) 2,300 7,360 - - - 9,660Share issue expenses - (1,531) - - - (1,531)Net profit for the year - - - - 2,045 2,045

Balance at 31 December 2001 15,085 5,886 (833) - 4,571 24,709

Company

Balance at 31 December 1999 - - - - - -Surplus on revaluation

of subsidiaries - - - 2,883 - 2,883Net gains and losses

not recognised in theincome statement - - - 2,883 - 2,883

Issue of share capital 1,908 11,070 - - - 12,978Share issue expenses - (136) - - - (136)Net loss for the year - - - - (856) (856)

Balance at 31 December 2000 1,908 10,934 - 2,883 (856) 14,869

Surplus on revaluationof subsidiaries - - - 2,833 - 2,833

Net gains and lossesnot recognised in theincome statement - - - 2,833 - 2,833

Capitalisation (Note 15) 10,877 (10,877) - - - -Issue of share capital (Note 15) 2,300 7,360 - - - 9,660Share issue expenses - (1,531) - - - (1,531)Net loss for the year - - - - (1,122) (1,122)

Balance at 31 December 2001 15,085 5,886 - 5,716 (1,978) 24,709


STATEMENTS OF CHANGES IN EQUITYYear ended 31 December 2001


2001 2000

$’000 $’000

Cash flows from operating activities :Profit before income tax 3,929 3,043

Adjustments for :-Depreciation expense 489 507Goodwill amortisation expense 1,113 1,027Interest income (334) (254)Interest expense 11 29Loss on disposal of plant and equipment 2 -Investment written off 500 -

Operating profit before working capital changes 5,710 4,352

Marketable securities (934) -Trade receivables (2,310) (266)Other receivables and prepayments 231 1,017Trade payables and accrued liabilities 2,054 (2,784)Deferred revenue (211) 173

Cash generated from operations 4,540 2,492Interest paid (11) (29)Interest received 334 254Income tax paid (809) (290)

Net cash from operating activities 4,054 2,427

Cash flows from investing activities :Purchase of property, plant and equipment (444) (314)Disposal of property, plant and equipment 4 -Increase in other investments (232) (32)Acquisition of subsidiaries net of cash acquired (Note 28) 1,246 5,608

Net cash from operating activities 574 5,262

Cash flows from financing activities :Proceeds from issuing shares 8,129 12,842Decrease in borrowings - (17,243)Decrease in finance leases (13) (33)Decrease in deferred rent (93) (223)

Net cash from (used in) financing activities 8,023 (4,657)

Net effect of exchange rate changes in consolidating subsidiaries (383) (533)

Net increase in cash 12,268 2,499Cash at beginning of year 2,499 -

Cash at end of year (Note 27) 14,767 2,499


CONSOLIDATED CASH FLOW STATEMENTSYear ended 31 December 2001


1. GENERAL

The company is incorporated in Singapore. The financial statements are expressed in Singapore dollars. They are drawnup in accordance with the provisions of the Singapore Companies Act and International Accounting Standards (“IAS”).The IAS cover all the Singapore Statements of Accounting Standard. The financial statements were approved andauthorised for issue to the shareholders by the board of directors on 27 February 2002.

The principal activities of the company are those of an investment holding company and information technology serviceprovider.

The principal activities of the subsidiaries are disclosed in the notes to the financial statements.

The company is listed on the Stock Exchange of Singapore Dealing and Automated Quotation System (“SESDAQ”).

The registered office address is: 80 Robinson Road #17-02, Singapore 068898. The company is domiciled in Singapore.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ACCOUNTING CONVENTION – The financial statements are prepared under the historical cost convention, modified toinclude the revaluation of investments in subsidiaries.

BASIS OF PRESENTATION – The consolidation accounting method is used for the consolidated financial statementswhich include the financial statements of all subsidiaries made up to balance sheet date each year. All significantintercompany balances and transactions have been eliminated on consolidation. The results of subsidiaries acquired ordisposed of during the financial year are consolidated from the respective dates of acquisition or up to the dates ofdisposal. Goodwill on consolidation is measured as the consideration less the fair value of the identifiable assets andliabilities acquired and is amortised over 10 to 20 years. In the company’s own financial statements, investments insubsidiaries are carried at the net book value of the investee companies and the revaluation surplus is taken to reserves.The book values of the subsidiaries are not necessarily indicative of the amounts that would be realised in a currentmarket exchange.

MINORITY INTERESTS – Minority interests are stated at the appropriate proportion of the post-acquisition values of theidentifiable assets and liabilities of the subsidiaries.

OTHER INVESTMENTS – Investments in debt and equity securities that have readily determinable fair values are classifiedand accounted for in one of two categories: held-to-maturity, or available-for-sale. Held-to-maturity securities are recordedat amortised cost in short-term and long-term investments. Available-for-sale securities are recorded at fair value inshort-term or long-term investments with the change in fair value recorded in earnings for short-term investments andexcluded from earnings and recorded net of tax as a component of accumulated other non-owner changes in equity forlong-term investments. Management determines the appropriate classification of its investments in debt and equitysecurities at the time of purchase and reevaluates such determinations at each balance sheet date.

REVENUE RECOGNITION – Maintenance revenue is recognised on a time-proportion basis over the maintenance period,which is generally one year. Service revenue consists primarily of training and consulting services and other revenues arerecognised as the services are completed. Software license revenue is recognised upon delivery provided that no significantobligations remain, no significant uncertainties exist with respect to product acceptance and collection is probable. Thegroup allocates a portion of software license fees to post-contract maintenance activities.

Deferred revenue - Deferred revenue consists of payments received from customers for maintenance, training and consultingfees received for services to be provided in future periods.

Interest revenue - Interest revenue is recognised on a time-proportion basis using the effective interest rate.

Dividend revenue - Dividend revenue is recognised when the shareholder’s right to receive the dividend is legally established.

NOTES TO THE FINANCIAL STATEMENTS31 December 2001



FOREIGN CURRENCY TRANSACTIONS – Transactions in foreign currencies are recorded in Singapore dollars at therates ruling at the dates of the transactions. At each balance sheet date, recorded monetary balances and balancescarried at fair value that are denominated in foreign currencies are reported at the rates ruling at the balance sheet date.All realised and unrealised exchange adjustment gains and losses are dealt with in the income statement.

FOREIGN CURRENCY FINANCIAL STATEMENTS – For the purposes of consolidation, assets and liabilities of self-sustaining subsidiaries denominated in currencies other than Singapore dollars are translated at the year end rates ofexchange and the results of their operations are translated at average rates of exchange for the year. The resultingtranslation adjustments are accumulated in a separate component of shareholders’ equity until the disposal of thesubsidiaries.

RESEARCH AND DEVELOPMENT COSTS – The group charges the costs of research and development incurred toestablish the technological feasibility of computer software products to operations when incurred. Thereafter, it capitalisesall software development costs until the product is available for general release to customers. During the years ended 31December 2001 and 2000, the group did not capitalise any software development costs since the time betweentechnological feasibility and general release of a product is not significant and related costs incurred during that time areimmaterial.

STOCK-BASED COMPENSATION – International Accounting Standard No. 19 “Employee Benefits” which establishes afair value-based method for stock-based compensation plans, also permits an election to continue with disclosures ofproforma net income under the method. The group accounts for stock-based compensation under IAS 19 and complieswith the disclosure provision of IAS 19.

PROPERTY, PLANT AND EQUIPMENT – Property, plant and equipment are stated at cost less accumulated depreciation.When assets are sold or retired, their cost and accumulated depreciation are removed from the financial statements andany gain or loss resulting from their disposal is included in the income statement.

Depreciation is provided on gross carrying amounts in equal annual instalments over the estimated useful lives of theassets as follows:

Leasehold improvements – 3 years or over the remaining lease termPlant, equipment and software – 3 to 10 years

Fully depreciated assets still in use are retained in the financial statements.

INCOME TAXES – Income taxes are accounted for using the asset and liability method. The asset and liability methodrequires the recognition of taxes payable or refundable for the current year and deferred tax liabilities and assets for thefuture tax consequence of events that have been recognised in the financial statement or tax returns. The measurementsof current and deferred tax liabilities and assets are based on provisions of the enacted tax laws; the effects of futurechanges in tax laws or rates are not anticipated. The measurement of deferred tax assets is reduced, if necessary, by theamount of any tax benefits that, based on available evidence, are not expected to be realised.

FINANCE LEASES – A finance lease is recognised as an asset and as a liability in the balance sheet at amounts equal atthe inception of the lease to the fair value of the leased assets or, if lower, at the present value of the lease payments basedon the interest rate implicit in the lease. The excess of the lease payments over the recorded lease obligations are treatedas finance charges which are allocated to each lease term so as to produce a constant rate of charge on the remainingbalance of the obligations. The assets are depreciated as owned depreciable assets.

RETIREMENT BENEFITS COSTS – Contributions to defined contribution retirement benefit plans are recorded as anexpense as they fall due. Contributions made to government managed retirement benefit plan such as the CentralProvident Fund which specifies the employer’s obligations are dealt with as defined contribution retirement benefit plans.



NON-CURRENT ASSETS – Non-current assets, such as property, plant and equipment, goodwill and investments arereviewed for impairment whenever events or changes in circumstances indicate that the net book value of these assetsmay not be recoverable. Impairment losses are determined based on the difference between fair value, which wouldgenerally approximate estimated future cash flows discounted at the group’s cost of capital or where appropriate the salevalue, and net book value.

ACCOUNTING ESTIMATES – The preparation of financial statements in conformity with generally accepted accountingprinciples requires the directors to make estimates and assumptions that affect the reported amounts of assets andliabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amountsof revenue and expenses during the reporting period. Actual results could differ from those estimates.

RISK ON FINANCIAL ASSETS – Financial assets that potentially subject the group and the company to concentrationsof credit and U.S. foreign exchange risks consist principally of cash, cash equivalents and trade and other accountsreceivable and investments. The directors believe that the financial risks associated with these financial instruments areminimal. The group places its cash and cash equivalents with high credit quality institutions. The group performs ongoingcredit evaluation of the debtors’ financial condition and maintains a provision for doubtful trade and other accountsreceivable based upon the expected collectibility of all trade and other accounts receivable. Long-term investments otherthan investments in subsidiaries are stated at cost less impairment losses recognised where the carrying cost exceedsthe estimated recoverable amount. The foreign exchange risk are minimal as the foreign subsidiaries are self-sustainingand operate in U.S.A.

RISK AND UNCERTAINTIES – The group is subject to a number of risks including the development and marketing ofunproven software products, the need to maintain adequate financing, better capitalised competitors and dependenceon essential personnel. The software industry is characterised by rapid technological developments, frequent productsintroductions, evolving industry standards, changes in customer requirements and short product life cycles. Significanttechnological changes or the emergence of competitive products with new capabilities could adversely affect the businessplan and operating results of the group.

FAIR VALUE OF FINANCIAL INSTRUMENTS – The carrying values of cash, accounts receivable, other current assets,short-term borrowings, accounts payable and other current liabilities approximate their fair market values due to theshort-term maturity of these instruments. Where applicable, the fair market value of long-term debt is determined basedon market quoted rates or is estimated using rates currently available to the group for debt with similar terms andmaturities. The fair market value of long-term debt payable was not determined as there are no significant items as at theend of the year.

DERIVATIVE FINANCIAL INSTRUMENTS - The group may, from time to time, enter into borrowing and foreign exchangearrangements or interest rate swap contracts or similar instruments as hedges against changes in interest rates or the fairvalue of the group’s liabilities. The group does not utilise these arrangements for trading or speculative purposes. At 31December 2001 there were no such arrangements, interest rate swap contracts or other derivative instruments outstanding.

CASH AND CASH EQUIVALENTS – Cash and cash equivalents include bank and cash balances and any highly liquiddebt instruments purchased with an original maturity of three months or less. The carrying value of these instrumentsapproximates fair value due to short maturities.

SEGMENT REPORTING – During the year the group operated mainly in the United States in one business segment.Accordingly, no segment reporting is applicable.



3. RELATED PARTY TRANSACTIONS

Related companies transactions:

Related companies in these financial statements refer to the subsidiaries of the company.

Some of the company’s transactions and arrangements are between members of the group and the effect of these on thebasis determined between the parties are reflected in these financial statements. The intercompany balances are withoutfixed repayment terms and interest unless stated otherwise.

Significant intercompany transactions:In addition to the transactions and balances disclosed elsewhere in the notes to the financial statements, this itemincludes the following:

Company

2001 2000

$’000 $’000

Revenue 720 390

Other related party transactions:

Related parties are entities with common direct or indirect shareholders and or directors or management. Parties areconsidered to be related if one party has the ability to control the other party or exercise significant influence over the otherparty in making financial and operating decision.

Some of the company’s transactions and arrangements are with related parties and the effect of these on the basisdetermined between the parties are reflected in these financial statements. The balances are without fixed repaymentterms and interest unless stated otherwise.

Significant related party transactions:In addition to the transactions and balances disclosed elsewhere in the notes to the financial statements, this itemincludes the following:

Group Company

2001 2000 2001 2000

$’000 $’000 $’000 $’000

Revenue - 150 - -

4. MARKETABLE SECURITIESGroup Company

2001 2000 2001 2000

$’000 $’000 $’000 $’000

Quoted investments in bonds of corporations 934 - 934 -

Marketable securities are denominated in US dollars and are stated at fair value and it approximates the market value.



5. TRADE RECEIVABLESGroup Company

2001 2000 2001 2000

$’000 $’000 $’000 $’000

Outside parties 2,476 800 - 34Less provision (54) (69) - -Subsidiaries (Note 3 and 7) - - 181 150

2,422 731 181 184

Movements in above provision:

Balance at beginning of year 69 - - -

Charge (reversed) to income statement (15) 69 - -

Balance at end of year 54 69 - -

The average credit period taken by customers, excluding all items provided for ranges from 14 days to 25 days. Aprovision is made for estimated irrecoverable amounts from the customers. This provision is determined by reference topast default experience. The directors consider that the carrying amount of trade receivables approximates to their fairvalue. The amounts are mainly in US dollars.

6. OTHER RECEIVABLES AND PREPAYMENTSGroup Company

2001 2000 2001 2000

$’000 $’000 $’000 $’000

Sundry receivables 135 93 17 27Prepayments 280 553 25 166

415 646 42 193

The amounts are mainly in US dollars.

7. INVESTMENTS IN SUBSIDIARIESCompany

2001 2000

$’000 $’000

Unquoted equity shares at cost 11,236 11,236Revaluation surplus 5,716 2,883

At directors’ valuation 16,952 14,119



Effective percentageName of subsidiary, country of incorporation, Cost in books of equityplace of operations and principal activities of company held by the group

2001 2000 2001 2000

$’000 $’000 % %

Integral Systems, Inc., USA (“ISI”) 11,236 11,236 85(b) 85(b)Primarily engaged in providing maintenanceservice and support to its existing customerbase and the development and licensing ofan internet delivery system, for its humanresource and payroll application software.(c) Markle Stuckey Hardesty & Bott

InPower Inc., USA (“InPower”) (a) (a) 85 85Dormant(c) Markle Stuckey Hardesty & Bott

Payroll Resource Group, Inc., USA (“PRG”) (a) - 51 -Software development for human resourcesand financial applications.(subsidiary from 1 October 2001)(c) Markle Stuckey Hardesty & Bott

Total 11,236 11,236

(a) Held by Integral Systems, Inc.(b) Ordinary and preference shares. The preference shares are convertible to ordinary stock at the option of the holder.(c) Audited by firms of accountants other than member firms of Horwath International of which Chio Lim & Associates, Singapore is

a member. Their names are indicated above.

Also refer to Note 15 relating to the acquisition of PRG.

8. OTHER INVESTMENTSGroup Company

2001 2000 2001 2000

$’000 $’000 $’000 $’000

Unquoted equity shares at cost 500 259 500 250Less amount written off (500) - (500) -

- 259 - 250

Fair value of other investments - 250 - 250



9. PROPERTY, PLANT AND EQUIPMENT

Group Plant,Leasehold equipment

improvements and software Total

$’000 $’000 $’000

Cost:At beginning of year 392 7,131 7,523Foreign exchange adjustments 17 339 356Subsidiary acquired - 1,014 1,014Additions 5 439 444Disposals (256) (4,926) (5,182)

At end of year 158 3,997 4,155

Accumulated depreciation:At beginning of year 336 6,406 6,742Foreign exchange adjustments 15 291 306Subsidiary acquired - 231 231Depreciation for the year 50 439 489Disposals (256) (4,920) (5,176)

At end of year 145 2,447 2,592

Depreciation for last year 87 420 507

Net book value:At beginning of year 56 725 781

At end of year 13 1,550 1,563

CompanyLeasehold Plant and

improvements equipment Total

$’000 $’000 $’000

Cost:At beginning of year 17 110 127Additions - 364 364

At end of year 17 474 491

Accumulated depreciation:At beginning of year 4 17 21Depreciation for the year 5 69 74


Depreciation for last year 4 17 21

Net book value:At beginning of year 13 93 106




10. GOODWILL ON CONSOLIDATIONGROUP

2001 2000

$’000 $’000

Cost :At beginning of year 20,536 -Additions 3,440 20,536Disposals - -

At end of year 23,976 20,536

Accumulated amortisation:At beginning of year 1,027 -Amortisation for the year 1,113 1,027Disposals - -

At end of year 2,140 1,027

Net book value:At beginning of year 19,509 -

At end of year 21,836 19,509

11. OTHER ASSETSGroup Company

2001 2000 2001 2000

$’000 $’000 $’000 $’000

Note and interest receivable from subsidiary(Notes 3 and 7) - - 3,575 -

Deferred income tax benefit (Note 21) 855 801 - -Deposits to secure services 22 - 5 -

877 801 3,580 -

ISI borrowed US$1,900,000 (S$3,500,000) evidenced by an Unsecured Convertible Promissory Note (Note). Principaland interest, fixed at 8% and compounded monthly from 30 September 2001 is due at maturity on 30 September 2003.Under the terms of the Note, the company may request or require conversion of all or a portion of the balance due underthe Note to common stock of ISI at US$0.10 per share. Also see Note 15 below.

12. TRADE PAYABLES AND ACCRUED LIABILITIES

Group Company

2001 2000 2001 2000

$’000 $’000 $’000 $’000

Outside parties and accrued liabilities 8,897 2,098 494 245Subsidiaries (Notes 3 and 7) - - - 135

8,897 2,098 494 380

The amounts are mainly in US dollars.



13. DEFERRED REVENUEGroup Company

2001 2000 2001 2000

$’000 $’000 $’000 $’000

Balance at beginning of year 7,125 - - -Subsidiary acquired 116 6,952 - -Credits during the year 6,913 7,125 - -Transferred to income statement (7,125) (6,952) - -

Balances at end of year 7,029 7,125 - -

14. OBLIGATIONS UNDER FINANCE LEASES

Minimum Finance PresentGroup Payments Charges value

2000 $’000 $’000 $’000

Minimum lease payments payable:Due within one year 13 - 13

Net book value of plant and equipment under finance leases is not material.

The rates of interest for finance leases ranged between 7% to 9% per year.

15. ISSUED CAPITALNumber of shares Group and Company

2001 2000 2001 2000

$’000 $’000Authorised:Ordinary shares of $0.05 each 600,000,000 600,000,000 30,000 30,000Redeemable preference shares of US$0.10 each - 50,000,000 - 8,675

At the end of year 600,000,000 650,000,000 30,000 38,675

Issued and fully paid:Ordinary shares of $0.05 each 301,713,673 40,200 15,085 2Redeemable preference shares of US$0.10 each - 11,260,990 - 1,906

At the end of year 301,713,673 11,301,190 15,085 1,908

The share premium account balance and the unrealised reserves shown in the statement of changes in equity are notavailable for distribution as cash dividends.



During the financial year, the company did not issue any shares or debentures except as follows:

Ordinary shares

Date Purpose No of shares Amount

S$’000

19 Jan 2001 Redemption of redeemable preference shares by the issue of 38,126,020 1,906ordinary shares of S$0.05 each

19 Jan 2001 Issue of 5.7 bonus shares for every 1 share out of share premium 217,547,453 10,877

21 Feb 2001 Issue of new ordinary shares through initial public offer 46,000,000 2,300

(at a premium of S$0.16 each)

Total issued during the year 301,673,473 15,083

Redeemable preference shares

Date Purpose No of shares Amount Amount

US$’000 S$’000

19 Jan 2001 Redemption of redeemable preference shares (see above) (11,260,990) (1,126) (1,906)

During the financial year, no option to take up unissued shares of the company or any corporation in the group wasgranted except as follows :

Stock Option Plans of Subsidiaries:

Integral Systems, Inc. (“ISI”) has two stock option plans, the 1993 Plan and the 1982 Plan (collectively, the “ISI Plans”)which provide for the grant of incentive stock options to the ISI employees, directors and officers and nonqualified stockoptions to the ISI officers, employees, consultants, advisors and directors. 5,500,000 shares of common stocks (ofUS$0.01 par value) are reserved for issuance under the 1993 Plan and no shares remain in reserve for issuance under the1982 Plan.

The ISI Plans are administered by its board of directors of ISI or its designees and provides generally that the option pricefor an incentive stock option shall not be less than the fair market value of the shares on the date of grant. The option priceof a nonqualified stock option generally shall not be less than 85% of the fair market value on the date of grant. Under theISI Plans, incentive and nonqualified stock options may be granted to a person who, at the time of the grant, owns stockof more than ten percent of the total combined voting power of all classes of outstanding stock of ISI. However, at thetime such options are granted, the option price must be at least 110% of the fair market value of the stock and suchoption may not be exercisable until after five years from the date of grant. Options generally vest rateably over three yearsand expire ten years from the date of grant.

During 1996, InPower adopted the InPower, Inc. Stock Option Plan (“InPower Plan”) and reserved 2,500,000 shares ofInPower common stock for issuance. The InPower Plan provides for the grant of incentive stock options to employees ofInPower and ISI and the grant of nonqualified stock options and restricted stock options to employees, officers, directors,consultants and advisors of InPower and ISI. The InPower Plan has similar terms and conditions as the ISI Plans. InFebruary 2000, the board of directors discontinued new grants under the InPower Plan and offered all current employeesholding InPower Plan stock options the ability to convert each InPower stock option into two ISI stock options with theexercise price of US$0.10 per share under the ISI 1993 Plan. Service with InPower will be recognised for vesting purposeson converted stock options and the term of each converted stock option will be measured from the grant date of theoriginal InPower stock option. This exchange is, in effect, a repricing of the exchange stock options and results in theseoptions becoming variable stock options. Future increases in the fair value of these options will result in compensationcost to ISI.



Activities under the Plans are as follows :

At At ExerciseDate of Grant 1.1.2001 Cancelled 31.12.2001 price Exercise period

InPower Plan shares:1 Jan 2001 80,000 (80,000) - US$0.50 N.A.

ISI Plan Shares:9 Feb 2000 2,627,500 (1,086,500) 1,541,000 US$0.10 9 Feb 2000 – 9 Feb 20101 May 2000 52,800 (19,700) 33,100 US$0.10 1 May 2000 – 1 May 201020 Oct 2000 45,000 (45,000) - US$0.10 N.A.21 Oct 1992 10,750 (7,500) 3,250 US$0.97 21 Oct 1992 – 21 Oct 200216 Sep 1993 250 (250) - US$0.97 N.A.10 May 1994 250 - 250 US$0.97 10 May 1994 – 10 May 200418 Nov 1994 750 (750) - US$1.25 N.A.6 Feb 1995 1,500 (250) 1,250 US$1.25 6 Feb 1995 – 6 Feb 200524 Jul 1995 500 - 500 US$1.25 24 Jul 1995 – 24 Jul 200526 Apr 1995 750 (750) - US$1.25 N.A.15 Jun 1995 750 (500) 250 US$1.25 15 Jun 1995 – 15 June 2005

2,820,800 (1,241,200) 1,579,600

Activities under the Plans for the past year have been disclosed in the directors’ report for last year.

The following table summarises information about director share options under the ISI Plan outstanding as at 31 December2001:

Grants from Exercised/start of lapsed from

Grants Scheme to start of Scheme Balance atParticipant In 2001 end of 2001 to end of 2001 31.12.2001

Directors of the company:Kwok Kah Kie - 500,000 - 500,000(a)Kwok Kah Kie - 80,000 (80,000) -Craig Daron Morris - 750,000 - 750,000(a)Craig Daron Morris - 240,000 (240,000) -

Total - 1,890,000 (320,000) 1,570,000

Exercise price and period:(a) US$0.10 exercisable between 9 February 2000 and 9 February 2010

No participant has received 5% or more of the total number of the options available under the Scheme except for theabove two directors.

Except as disclosed above, there were no options outstanding at the end of the year or granted during the year to (a)directors and controlling shareholders of the company and (b) directors and associates of the controlling shareholders ofthe company.



Fair value disclosures:Had compensation cost for the ISI and InPower Plans been determined based on the fair value at the grant dates for theawards under a method permitted by IAS 19, the group’s proforma net income would not have materially changed for theyear ended 31 December 2001 (2000: $38,000). The fair value of each option is estimated on the date of grant using theminimum value method with the following assumption used for grants:

2001 2000

Annual dividend yield 0.00 0.00Risk-free annual interest rates 3.48 4.81Volatility 0.00 0.00Expected option term of years 3.00 3.00

Warrants of ISI

Effective 1 October 2001, ISI purchased 60% of the outstanding stock, consisting of 30 shares of common stock, ofPayroll Resources Group, Inc. (PRG), incorporated in California from its sole owner, Robeson, Ltd. (Robeson), incorporatedin the British Virgin Islands. ISI paid Robeson US$1,900,000 and 2,550,000 common stock warrants, which Robesonmay exercise to purchase 2,550,000 shares of common stock of ISI for US$0.10 per share, as adjusted. ISI borrowedUS$1,900,000 from the company to finance the acquisition of PRG with an option for the company to convert all or partof the loan to common stock of ISI for US$0.10 per share. In the event Robeson and the company converted thewarrants and loan respectively, the interest of the company in ISI would be increased from 85% to 87%.

16. RETIREMENT PLANS

Employees of the company in Singapore contribute to the government managed retirement benefit plan, the CentralProvident Fund, which specifies the employer’s obligations and these are dealt with as defined contribution retirementbenefit plans.

The subsidiaries, ISI, InPower and PRG sponsor separate defined contribution plans covering substantially all theiremployees. Their board of directors determine annually any contributions to the plans. During the period October 1through December 31, 2001, PRG did not contribute to the plan.

17. REVENUEGroup Company

2001 2000 2001 2000

$’000 $’000 $’000 $’000

Maintenance 16,107 16,506 - -Services 2,196 1,682 720 390Software licence fees 1,475 441 - -Others (i-deal, and Computer Insource) 1,822 1,046 4 79

21,600 19,676 724 469



18. OTHER OPERATING INCOMEGroup Company

2001 2000 2001 2000

$’000 $’000 $’000 $’000

Interest income from subsidiaries - - 75 -Interest income from non-related parties 334 254 241 14

334 254 316 14

19. LOSS ON PHASED-OUT PRODUCT LINESGroup Company

2001 2000 2001 2000

$’000 $’000 $’000 $’000

Revenue 2 426 - -Cost of sales - (258) - -

Gross profit 2 168 - -Product development (890) (900) - -Administrative expenses (273) (667) - -

Loss on phased-out products (1,161) (1,399) - -

20. OTHER CREDITS (CHARGES)Group Company

2001 2000 2001 2000

$’000 $’000 $’000 $’000

Foreign exchange adjustments gain 331 2 331 2Reversal of /(Provision) for trade doubtful debts 15 (69) - -Trade bad debts recovered - 515 - -

346 448 331 2

21. FINANCE COSTGroup Company

2001 2000 2001 2000

$’000 $’000 $’000 $’000

Interest expense to non-related parties 11 29 - -



22. PROFIT (LOSS) BEFORE INCOME TAX

In addition to the charges and credits disclosed elsewhere in the notes to the financial statements, this item includes thefollowing charges (credits):

Group Company

2001 2000 2001 2000

$’000 $’000 $’000 $’000

Directors’ remunerationDirectors of the company 1,440 833 1,186 625

Directors of subsidiaries 226 208 - - Fees to directors of the company 130 - 130 -

Fee to a firm in which a director is a member 15 3 15 2Auditors’ remuneration: Auditors of the company 15 9 15 9 Auditors of subsidiaries 64 48 - -

Other fee to auditors: Auditors of the company 3 - 3 - Auditors of subsidiaries 109 196 - -Depreciation expense 489 507 74 21Staff costs excluding directors 6,887 8,393 323 179Contributions to defined contribution plans

and included under staff costs 189 204 78 21

The share issue expenses not included in the income statement included fees of $112,000 (2000: $22,000) to firms inwhich certain directors are members and $116,000 (2000: $10,000) to the auditors of the company and $58,000 (2000:$151,000) to auditors of subsidiaries.

23. INCOME TAXGroup Company

2001 2000 2001 2000

$’000 $’000 $’000 $’000

Current 1,832 1,318 - -Deferred (benefit) (54) (801) - -

1,778 517 - -

The income tax expense varied from the amount of income tax expense determined by applying the Singapore incometax rate of 24.5% (2000: 25.5%) to profit before income tax as a result of the following differences:-

Group Company

2001 2000 2001 2000

Income tax expense (benefit) at statutory rate 963 776 (275) (218)Non-allowable (taxable) items 60 225 14 7Difference in effective tax rates overseas 494 (695) - -Other items 261 211 261 211

Total income tax expense 1,778 517 - -



Deferred tax assets and liabilities as at the end of year consist of the following :

Deferred tax assets :Group Company

2001 2000 2001 2000

$’000 $’000 $’000 $’000

Tax loss carryforwards 1,915 1,901 321 207Accruals 179 220 - -Deferred revenue 135 220 - -Research credits 498 501 - -Property and equipment 506 284 22 4

Total deferred tax assets 3,233 3,126 343 211Deferred tax assets valuation allowance (2,378) (2,325) (343) (211)

Balance 855 801 - -

The group maintains a valuation allowance against deferred tax assets if sufficient uncertainty exists with regard to realisation.

The tax loss and other tax credit carryforwards of the subsidiaries expire in varying amounts between 2001 and 2018.These tax loss and other tax credit carryforwards are subject to an annual limitation due to cumulative changes in ownershipof and may expire prior to utilisation. The subsidiaries are subject to Federal, State and local taxes in U.S.A.

The realisation of the future income tax benefits from tax loss carryforwards for the company is available for an unlimitedfuture period subject to the conditions imposed by law including the retention of majority shareholders as defined. Whereprovision for deferred tax arising from timing differences has been offset against the above tax loss carryforwards, suchprovision for deferred tax will be required to be set up when the tax losses are utilised in the future.

24. EARNINGS PER SHARE

The earnings per share is calculated by dividing the group’s profit attributable to shareholders before and after extraordinaryitems if any by the weighted number of shares in issue during the year as follows:

2001 2000

Earnings per share (cents) of $0.05 each 0.70c 0.99c

Diluted earnings per share (cents) of $0.05 each 0.70c 0.99c

The calculation of the earnings (loss) per share is based on:

Profit attributable to shareholders (in $’000) 2,045 2,526

The weighted number of fully paid shares in issue during the year (in ‘000s) 294,047 255,713

There is no dilution for the options and warrants of the subsidiaries because the exercise price is more than the fair valueof the shares.

25. NUMBER OF EMPLOYEESGroup Company

2001 2000 2001 2000

Number of employees (including full-time directors)at end of year 52 56 8 8



26. DIRECTORS REMUNERATION

The number of directors of the company in remuneration bands are as follows:

2001 2000

$500,000 and above 1 -$250,000 to $499,999 1 1Below $250,000 7 9

Total 9 10

27. CASH AND CASH EQUIVALENTS IN THE CASH FLOW STATEMENTGroup

2001 2000

$’000 $’000

Cash and cash equivalents 14,767 2,499Effect of exchange rate changes - -

Cash and cash equivalents at end of year 14,767 2,499

There was an amount of Nil (2000: $210,000) not involving cash from the swap of 1,210,990 redeemable preferenceshares for shares in ISI. There were also the issue of shares not involving cash (See Note 15).

The large cash balance is due to advances from the customers.

28. ACQUISITIONS OF SUBSIDIARY

The fair value of assets acquired and liability assumed were as follows :2001 2000

$’000 $’000

Cash and cash equivalents 4,867 16,634Trade receivables (619) 465Other receivables and prepayments - 1,663Other investments/assets 9 227Property, plant and equipment 784 940Short-term borrowings - (17,243)Trade payables and accrued liabilities (4,055) (4,882)Deferred revenue (115) (6,952)Current portion of finance leases - (33)Non-current portion of finance leases - (13)Other liabilities (690) (316)

Net assets (liabilities) 1 (9,510)Goodwill 3,440 20,536Cash and cash equivalents of subsidiaries (4,867) (16,634)

Net cash flow on acquisition of subsidiaries (1,246) (5,608)



29. COMMITMENTS

The companies in the group lease office space and equipment under non-cancellable operating and capital leases withvarious expiration dates through 2004. The leases generally provide for minimum annual rentals with escalation andrenewal provisions. ISI subleases certain properties for the remainder of the life of the lease. Future minimum leasepayments and sublease rental receipts under non-cancellable operating leases as at 31 December 2001 are as follows:

Group Company

2001 2000 2001 2000

$’000 $’000 $’000 $’000

Within one year 423 804 9 20Within 2 to 5 years 347 180 - 9After 5 years - - - -

770 984 9 29

Sublease rental income due:Within next 1 year - 145 - -Within next 2 – 5 years - - - -After 5 years - - - -

- 145 - -

Rental expenses for the year 1,056 1,341 20 14Sublease rental income for the year 184 420 - -

PRG acquired payroll processing computer software licenses from two vendors. In an agreement with one vendor forperiod 28 June 2000 through 31 December 2005, PRG paid and capitalised under plant, equipment and softwareUS$500,000 (S$923,000) for the initial license and pays and expenses one dollar per month per “active employee,” asdefined. In an agreement dated 31 July 2001 and renewable annually for up to 20 years, PRG paid and capitalised underplant, equipment and software US$50,000 (S$92,000) for the initial license and pays and expenses ten cents per “check,”as defined.

30. ADOPTION OF ACCOUNTING STANDARDS

In the current year, the group adopted the following International Accounting Standard for the first time:

IAS 39 Financial Instruments: Recognition and Measurement

Adoption of the Standard has not resulted in any changes in the detailed application of the accounting policies except forthe modifications to financial statement presentation.

IAS 39 establishes accounting and reporting standards that require every derivative instrument (including certain derivativeinstruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at itsfair value. IAS 39 also requires that changes in the derivative’s fair value and in financial assets and liabilities be recognisedcurrently in the income statement unless specific accounting criteria are met. However, given the current level of thegroup’s derivative and hedging activities and financial assets and liabilities, the impact is not expected to be material to thegroup’s financial position, results of operations, or cash flows.

31. SEGMENT INFORMATION

During the year the group operated principally in the United States in one business segment. Accordingly, no segmentreporting is applicable. The assets, liabilities and income statement items not in the United States are principally from thecompany in Singapore.


32. SUBSEQUENT EVENTS

On 12 October 2001, a Consulting Services Agreement between ISI and a vendor that previously provided software andconsulting services to ISI and certain of its customers ended. The agreement was allowed to end because managementbelieved that loosing the vendor would not negatively impact ongoing operations and subsequently entered into a similaragreement with another company. On 14 January 2002, the vendor sued ISI for payment of various amounts it claims arestill due under the Consulting Services Agreement and related agreements totalling US$277,000 (S$511,000). Managementof ISI denies the claims. ISI and its legal counsel intends to defend ISI vigorously against the suit. Due to the recent andsubsequent nature of the suit and the denial and intended vigorous defence by ISI, ISI cannot estimate the eventual cost(or estimated range of costs) of the suit. Consequently, ISI did not accrue any liability herein related to the suit.



CORPORATE GOVERNANCE

A. Audit Committee

The Audit Committee is chaired by Mr Lim Ho Seng and has as its members, Mr Foo Say Mui @ Bill Foo and Ms Ong BengHong, all of whom are independent Directors.

The Board of Directors has decided to implement the recommendations of the Code of Corporate Governance as soonas practicable. Consequently, in the year under review, Mr Foo Say Mui @ Bill Foo, an independent Director, was appointeda member of the Audit Committee on 26 April 2001 in place of Mr Kwok Kah Kie. As a result, the Audit Committee nowcomprises all independent directors, in line with the new Code of Corporate Governance.

The Audit Committee has met twice since the last Annual General Meeting. The Committee reviewed the following, whererelevant, with the executive Directors and the external auditors:

(a) the audit plan of the external auditors and results of their examination and evaluation of the Group’s systems ofinternal accounting controls;

(b) the Group’s financial and operating results and accounting policies;

(c) the financial statements of the Company and the consolidated financial statements of the Group before theirsubmission to the Board of Directors and the external auditors’ report on those financial statements;

(d) the co-operation given by Management to the external auditors; and

(e) the appointment of the external auditors of the Company.

The Audit Committee has full access to and co-operation of Management. The external auditors have unrestricted accessto the Audit Committee.

The Audit Committee has recommended to the Board of Directors the nomination of Chio Lim & Associates for re-appointment as external auditors of the Company at the forthcoming Annual General Meeting.

B. Compensation Committee

The Compensation Committee is chaired by Mr Stephen Sim See Loy and has as its members, Mr Lim Ho Seng and MsOng Beng Hong, all of whom are independent Directors.

The Compensation Committee has met once since the last Annual General Meeting. The Compensation Committeemeets when necessary to recommend and advise the Board of Directors on the remuneration of Executive Directors,senior executives and employees who are related to the substantial shareholders of the Company, if any.

C. Internal Control

The Group’s internal controls and systems are designed to provide reasonable assurance as to the integrity and reliabilityof the financial information and to safeguard and maintain accountability of its assets. Procedures are in place to identifymajor business risks and evaluate potential financial effects, as well as for the authorization of sales contracts, capitalexpenditure and investments. Comprehensive budgeting systems are in place to develop annual budgets covering keyaspects of the business. Actual performance is compared with budgets and revised forecasts for the year are preparedon a regular basis.

D. Code on Securities Transactions by Officers

In compliance with the Best Practices Guide, the Company adopted an internal code to provide guidance to its directorsand employees on their dealings in its securities.

Dealings in the securities of the Company while in possession of price-sensitive information and during the “close period”before the announcement of the annual and interim results is prohibited. Dealings on short-term considerations are alsodiscouraged.


AUTHORISED SHARE CAPITAL : $30,000,000ISSUED AND FULLY PAID-UP CAPITAL : $15,085,683.65CLASS OF SHARES : Ordinary Shares Of S$0.05 Each With Equal Voting Rights

SIZE OF NO. OFSHAREHOLDINGS SHAREHOLDERS % NO. OF SHARES %

1 - 1,000 370 23.43 368,993 0.121,001-10,000 444 28.12 2,655,000 0.8810,001-1,000,000 725 45.92 61,130,118 20.261,000,001 & ABOVE 40 2.53 237,559,562 78.74

TOTAL 1,579 100.00 301,713,673 100.00

TOP TWENTY SHAREHOLDERSNO. OF SHARES %

KWOK KAH KIE 47,559,111 15.76DBS VICKERS SECURITIES (S) PTE LTD 28,947,159 9.59MORRIS CRAIG DARON 23,023,263 7.63UOB KAY HIAN PTE LTD 12,145,000 4.03CHEN WEN SHIANG DOLLY 11,368,480 3.77CHONG MENG TAK CHRISTOPHER 11,003,386 3.65RAFFLES NOMINEES PTE LTD 8,582,510 2.84MORGAN STANLEY ASIA (S’PORE) SECURITIES PTE LTD 8,071,880 2.68NTUC INCOME INSURANCE CO-OPERATIVE LIMITED 7,000,000 2.32MAYBAN NOMINEES (S) PTE LTD 6,370,000 2.11LIE YOK PHING 5,763,243 1.91LOH YONG LIM 4,810,243 1.59LIM SUET FERN 4,542,158 1.51LEE BENNETT 4,441,401 1.47HENG AIK MENG 4,242,158 1.41WONG KOK SIEW 3,942,158 1.31WONG CHIAT HOW BRUCE 3,247,283 1.08ONG CHUN SIONG 2,995,000 0.99KOH SIEW KEE 2,905,000 0.96UNITED OVERSEAS BANK NOMINEES PTE LTD 2,809,000 0.93

TOTAL 203,768,433 67.54

SUBSTANTIAL SHAREHOLDERS(as recorded in the Register of Substantial Shareholders)

No. of shares of $0.05Name of Substantial each fully paidShareholder Direct Interest % Indirect Interest %

KWOK KAH KIE 48,559,111 16.09 1,135,543 0.38CRAIG DARON MORRIS 23,023,263 7.63 - -CHRISTOPHER CHONG MENG TAK 11,003,386 3.65 8,071,880 2.68

Note:(1) Mr Kwok Kah Kie’s indirect interest comprises 1,135,543 shares held by his wife.(2) Mr Kwok Kah Kie’s purchase of 1,000,000 shares on 26 March 2002 was not yet reflected in CDP’s records as at 27 March 2002.(3) Mr Christopher Chong Meng Tak’s indirect interests comprises 8,071,880 shares held by Morgan Stanley Asia (Singapore) Securities Pte

Ltd on trust for himself.

ANALYSIS OF SHAREHOLDINGSas at 27 March 2002 (as reflected in the records of The Central Depository (Pte) Limited (“CDP”))


NOTICE IS HEREBY GIVEN that the Third Annual General Meeting of the Company will be held at 750C Chai Chee Road, #02-03Technopark @ Chai Chee, Singapore 469003 on Friday, 3 May 2002 at 9.00 a.m. for the following purposes:

AS ORDINARY BUSINESS

1. To receive and adopt the Audited Accounts for the financial year ended 31 December 2001 together with the Reports ofthe Directors and the Auditors of the Company. (Resolution 1)

2. To re-elect the following Directors retiring under Article 91 of the Company’s Articles of Association:

i. Mr Lim Ho Seng (Resolution 2)ii. Mr Foo Say Mui @ Bill Foo (Resolution 3)

Mr Lim Ho Seng will, upon re-election as a Director of the Company, remain the Chairman of the Audit Committee and a member of theCompensation Committee and will be considered independent of management.

Mr Foo Say Mui @ Bill Foo will, upon re-election as a Director of the Company, remain a member of the Audit Committee and will beconsidered independent of management.

3. To note the retirement of Mr Leong Shin Loong who retires as a Director pursuant to Article 91 of the Company’s Articlesof Association. Mr Leong Shin Loong does not wish to offer himself for re-election as he is currently based overseas.

(Resolution 4)

4. To note the retirement of Mr Sim See Loy, Stephen, who is above 70 years of age and vacates his office as Director inaccordance with Section 153(2) of the Companies Act, Cap. 50. Mr Sim See Loy, Stephen does not wish to offer himselffor re-election as his current engagements frequently require his presence overseas. (Resolution 5)

5. To approve Directors’ fees of $125,000 for the financial year ended 31 December 2001. (Resolution 6)

6. To re-appoint Chio Lim & Associates as the Company’s Auditors and to authorise the Directors to fix their remuneration.(Resolution 7)

7. To transact any other business that may be transacted at an Annual General Meeting

AS SPECIAL BUSINESS

8. To consider and, if thought fit, to pass the following resolution as an Ordinary Resolution, with or without modifications:

“That pursuant to Section 161 of the Companies Act, Cap. 50 and the listing rules of the Singapore Exchange SecuritiesTrading Limited, authority be and is hereby given to the Directors to issue shares in the Company (whether by way ofrights, bonus or otherwise) at any time and upon such terms and conditions and for such purposes and to such personsas the Directors may in their absolute discretion deem fit provided that the aggregate number of shares to be issuedpursuant to this Resolution does not exceed fifty per cent (50%) of the issued share capital of the Company for the timebeing, of which the aggregate number of shares to be issued other than on a pro rata basis to shareholders of theCompany does not exceed twenty per cent (20%) of the issued share capital of the Company for the time being, and,unless revoked or varied by the Company in general meeting, such authority shall continue in force until the conclusion ofthe next Annual General Meeting of the Company is required by law to be held, whichever is the earlier.” (Resolution 8)

By Order of the Board

Tan Swee GekSecretary

15 April 2002

NOTICE OF ANNUAL GENERAL MEETING


NOTICE OF ANNUAL GENERAL MEETING

Explanatory Note:

The Ordinary Resolution proposed in item 8 above, if passed, will empower the Directors from the passing of the above Meeting until the dateof the next Annual General Meeting, to allot and issue shares in the Company up to an amount not exceeding, in total, 50% of the issued sharecapital of the Company for the time being, of which up to 20% may be issued other than on a pro rata basis to shareholders.

Notes:

1) A member entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy or proxies (not more than two) to attendand vote on his/her behalf. A proxy need not be a member of the Company.

2) The instrument appointing a proxy or proxies must be under the hand of the appointor or of his/her attorney duly authorised in writing.Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its seal or under thehand of an officer or attorney duly authorised.

3) The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 80 Robinson Road, #17-02,Singapore 068898 at least 48 hours before the time fixed for the Meeting.


integra2000 Ltd(Incorporated in the Republic of Singapore)

Proxy Form

I/We ___________________________________________________________________________________________________ (Name)

of ___________________________________________________________________________________________________ (Address)

being a member/members of integra2000 Ltd (the “Company”) hereby appoint

Name Address NRIC/ Proportion of my/Passport our Shareholding (%)

Number No. of shares %

and/or (delete as appropriate)

Name Address NRIC/ Proportion of my/Passport our Shareholding (%)

Number No. of shares %

as my/our proxy/proxies to vote for me/us on my/our behalf at the Third Annual General Meeting of the Company, to be held at750C Chai Chee Road, #02-03 Technopark @ Chai Chee, Singapore 469003 on Friday, 3 May 2002 at 9.00 a.m., and at anyadjournment thereof. I/We direct my/our proxy/proxies to vote for or against the Resolutions to be proposed at the Meeting asindicated hereunder. If no specific direction as to voting is given, the proxy/proxies will vote or abstain from voting at his/theirdiscretion, as he/they will on any other matter arising at the Meeting.

No. Resolutions Relating To: For Against

Ordinary Business

1. Adoption of Reports and Accounts

2. Re-appointment of Mr Lim Ho Seng

3. Re-appointment of Mr Foo Say Mui @ Bill Foo

4. Retirement of Mr Leong Shin Loong

5. Retirement of Mr Sim See Loy, Stephen

6. Approval of Directors’ Fees

7. Re-appointment of Auditors

Special Business

8. Authority to allot and issue new shares

(Please indicate with a cross [X] in the space provided whether you wish your vote to be cast for or against the Resolutions asset out in the Notice of the Meeting.)

Dated this _________________ day of _________________ 2002.

_______________________________________Signature of Shareholder(s) or Common Seal

Important: Please read notes overleaf

Total number of Shares held✃

Notes:

1. Please insert the total number of shares held by you. If you have Shares entered against your name in the Depository Register (as definedin Section 130A of the Companies Act, Cap. 50), you should insert that number of Shares. If you have Shares registered in your name inthe Register of Members, you should insert that number of Shares. If you have Shares registered in your name in the Depository Registerand Shares registered in your name in the Register of Members, you should insert the aggregate number of Shares entered against yourname in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrumentappointing a proxy or proxies shall be deemed to relate to all the Shares held by you.

2. A member entitled to attend and vote at the Meeting is entitled to appoint one or two proxies to attend and vote in his stead.

3. Where a member appoints more than one proxy, the appointments shall be invalid unless he specifies the proportion of his shareholding(expressed as a percentage of the whole) to be represented by each proxy.

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

5. The instrument appointing a proxy or proxies must be deposited at the Company’s registered office at 80 Robinson Road, #17-02,Singapore 068898, not less than 48 hours before the time set for the Meeting.

6. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing. Wherethe instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its common seal or under thehand of its attorney or a duly authorised officer.

7. Where an instrument appointing a proxy is signed on behalf of the appointor by an attorney, the letter of power of attorney or a dulycertified copy thereof must (failing previous registration with the Company) be lodged with the instrument of proxy; failing which theinstrument may be treated as invalid.

8. The Company shall be entitled to reject a Proxy Form which is incomplete, improperly completed, illegible or where the true intentions ofthe appointor are not ascertainable from the instructions of the appointor specified on the Proxy Form. In addition, in the case of sharesentered in the Depository Register, the Company may reject a Proxy Form if the member, being the appointor, is not shown to haveShares entered against his name in the Depository Register as at 48 hours before the time appointed for holding the Meeting, as certifiedby The Central Depository (Pte) Limited to the Company.

ntegra2000 Ltd 750C Chai Chee Road #02-03 Technopark @ Chai Chee Singapore 469003

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ntegra2000 Ltd - 早报 · payroll outsource company servicing the Small & Medium-size Enterprises. integra2000 Ltd is a technology company focused on Human Resource and Payroll